UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

(Mark One)

  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended June 30, 20162017

 

or

 

  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ___________to ___________

 

Commission file number 333-169802

 

PRACO CORPORATION

(Exact name of registrant as specified in its charter)

 

Nevada 27-1497347
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
   

159 North State Street

Newtown, PA

 18940
(Address of principal executive offices) (Zip Code)

 

 Registrant’s telephone number, including area code:(215) 968-1600

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class: Name of each exchange on which registered:
None None

 

Securities registered pursuant to Section 12(g) of the Act: NoneShares of common stock, par value $0.0001

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☒ No ☐

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes ☐ No ☒

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference Part III of this Form 10-K or any amendment to thisFormthis Form 10-K. ☒

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
(Do not check if a smaller reporting company)Smaller reporting company
Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☒ No ☐

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: N/A

 

As of October 31, 2016,August 24, 2017, the registrant had 6,902,500 shares of its common stock outstanding.

 

 

 

 

TABLE OF CONTENTS

 

  PAGE
 PART I 
Item 1.Business.Business1
Item 1A.Risk Factors.Factors21
Item 2.PropertiesProperties.21
Item 3.Legal Proceedings.Proceeding21
Item 4.Mine Safety Disclosures.Disclosures21
   
 PART III
Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.Securities2
Item 6.Selected Financial Data.Data32
Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operation.Operation32
Item 7A.Quantitative and Qualitative Disclosures About Market Risk.Risk4
Item 8.Financial Statements and Supplementary Data.Data4
Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.Disclosure4
Item 9A.Controls and Procedures5
Item 9A.Controls and Procedures.6
Item 9B.Other Information.Information65
   
 PART III
Item 10.Directors, Executive Officers and Corporate Governance.Governance76
Item 11.Executive Compensation.Compensation9
Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.Matters10
Item 13.Certain Relationships and Related Transactions, and Director Independence.Independence10
Item 14.Principal Accounting Fees and Services.Services12
  
 PART IV 
Item 15.Exhibits, Financial Statement Schedules.SchedulesF-1
   
SIGNATURES14

 

 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Certain information included in this report or in other materials we have filed or will file with the SEC (as well as information included in oral statements or other written statements made or to be made by us) contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934. You can identify these statements by the fact that they do not relate to matters of strictly historical or factual nature and generally discuss or relate to estimates or other expectations regarding future events. They contain words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “may,” “can,” “could,” “might,” “should” and other words or phrases of similar meaning in connection with any discussion of future operating or financial performance. Such statements may include, but are not limited to, information related to: anticipated operating results; consumer demand; financial resources and condition; changes in revenues; changes in profitability; changes in margins; changes in accounting treatment; cost of revenues; selling, general and administrative expenses; interest expense; growth and expansion; anticipated income or benefits to be realized from our investments in unconsolidated entities; the ability to produce the liquidity and capital necessary to expand and take advantage of opportunities; legal proceedings and claims.

 

From time to time, forward-looking statements also are included in other periodic reports on Forms 10-Q and 8-K, in press releases, in presentations, on our website and in other materials released to the public. Any or all of the forward-looking statements included in this report and in any other reports or public statements made by us are not guarantees of future performance and may turn out to be inaccurate. This can occur as a result of incorrect assumptions or as a consequence of known or unknown risks and uncertainties. Many factors mentioned in this report or in other reports or public statements made by us, such as government regulation and the competitive environment, will be important in determining our future performance. Consequently, actual results may differ materially from those that might be anticipated from our forward-looking statements.

 

Forward-looking statements speak only as of the date they are made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

 

 

 

PART I

 

Item 1.Business.

Item 1. Business

 

Praco Corporation (the “Company”), a Nevada corporation, was incorporated on December 15, 2009 as Hunt for Travel, Inc. to design and market travel excursions featuring entertainment, adventure, intellectual stimulation and access to experts on topics related to the destinations they visit. The Company is now a “shell company” as defined in Rule 12b-2 promulgated under the Exchange Act, as amended, as we have no operations. The Company no longer operates in the travel industry sector.

Our current intention is to closesell the Exchange Agreement, as defined and described below. If the Exchange Agreement closes, we will, through our majority-owned subsidiaries, own and manage real estate around Philadelphia and the Delaware Valley.Company to another operational entity.

 

On July 3, 2012,April 19, 2017, the Company, entered into an Equitya Share Exchange Agreement, (the “Exchange“Share 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”),by 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,among the Company, will issue 3,100,000 sharesArista, and the holders 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.

Arista (the “Arista Shareholders”). The closing of the Share Exchange Agreement (the “Closing”) is still subjectwas to certain conditions such astake place sixty days after the execution of this Agreement, conditioned upon the completion of an auditdue diligence by the Parties and is currently scheduled to take place on September 15, 2017 conditioned upon the completion of Philly and GH, anddue diligence by 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.Parties.

 

On May 19, 2015, Carolyn Hunter,July 18, 2017, the Company’s sole officer and sole director, in accordance withParties entered into the by-laws of the Company, increased the number of members on the Company’s Board of Directors (the “Board”) to four members and named three new membersFirst Addendum to the Board. Ms. Hunter named R. Scott Williams, David Callan, and Alan Cohen as new members of the Board, all of whom have accepted their appointments.

Subsequently, on May 19, 2015, Ms. Hunter submitted a letter of resignation to the Board in which she resigned, effective immediately, as an officer and a member of the Board. Ms. Hunter did not resign as the result of any disagreement with the Company on any matter relating to its operation, policies (including accounting or financial policies), or practices.

On May 19, 2015, Carolyn Hunter and R. Scott Williams entered into a Stock PurchaseShare Exchange Agreement, pursuant to which Ms. Hunter soldthe Closing date for the transaction is scheduled for September 15, 2017. In addition, Arista has agreed to Mr. Williams all 5,000,000provide the Company with a $15,000 non-refundable deposit, and has the right to extend the closing date in intervals of the sharesthirty (30) days, and shall be required to deposit an additional non-refundable deposit of the Company’s common stock she previously owned.$10,000 per each requested extension interval.

 

On May 19, 2015,Prior to Closing, Praco will restructure its equity ownership via a reverse stock split at a ratio of 13.2 to 1 in order to reduce the Board accepted Ms. Hunter’s resignation and appointed Mr. Robert Craigamount of common shares outstanding to replace Ms. Hunter521,000 as a member ofset forth in the Board. The Board appointed Mr. Williams as the Company’s sole officer. That is, Mr. Williams now serves as the Company’s Chief Executive Officer, President, Chief Financial Officer, Treasurer, and Secretary. Mr. Craig accepted his appointment to the Board and Mr. Williams accepted his appointment as the Company’s sole officer.

Messrs. Williams and Callan share voting and investment control over Hawk, Philly, and GH, the entities party to theShare Exchange Agreement.

 

Under the terms and conditions of the Share Exchange Agreement, at Closing, the Company will exchange at a rate of two shares of Praco common stock for one common share of Arista common stock. This requires the issuance of an additional 2,084,000 shares of common stock, which would make Arista an 80% shareholder of the Company, subject to the terms and conditions set forth in the Share Exchange Agreement. After the Closing, current Praco Shareholders will own 20% of the common shares outstanding.

1

 

Also, at Closing, the Praco Shareholders shall be issued warrants for 240,417 common shares 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.

Item 1A.Risk Factors.

Item 1A. Risk Factors

 

Not required for smaller reporting companies.

Item 1B.Unresolved Staff Comments.

Item 1B. Unresolved Staff Comments

 

None.

Item 2. Properties

Item 2. Properties

 

Our principal executive office is located at 159 North State Street, Newtown, PA 18940. Our telephone number is (215) 968-1600.

Item 3. Legal Proceedings.

Item 3. Legal Proceedings

 

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of the Company, threatened against or affecting the Company, our common stock, or the Company’s officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 4. Mine Safety Disclosures.

Item 4. Mine Safety Disclosures

 

Not applicable.

 

1

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 

Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

(a)Market Information

 

Our stock is listed on the OTC Pink Current Information marketplace under the symbol “PRAY”. There is currently no established public trading market for shares of our common stock.  Management does not expect any viable market to develop in our common stock unless and until we complete an acquisition or merger such as the Closing. In any event, no assurance can be given that any market for our common stock will develop or be maintained.

 

Common Stock

(b)Holders

 

Our Certificate of Incorporation authorizes the issuance of up to 100,000,000 shares of common stock, par value $0.0001 per share. As of October 31, 2016, 420,000 sharesAugust 24, 2017, there were approximately nine holders of record of our common stockstock. This figure does not take into account those shareholders whose certificates are held by depositaries, brokers andin the name of broker-dealers or other nominees, therefore the number of beneficial holders of our shares is larger than the number of stockholders of record.nominees. 

 

Preferred Stock

Our certificate of incorporation authorizes the issuance of up to 5,000,000 shares of preferred stock, par value $0.0001 per share. As of October 31, 2016, there were no shares of preferred stock issued and outstanding.

Dividends

(c)Dividends

 

To date, we have not declared or paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board will have the discretion to declare and pay dividends in the future.

 

2(d)Securities Authorized for Issuance Under Equity Compensation Plans

 

Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, which our Board of Directors may deem relevant.

Securities Authorized for Issuance Under Equity Compensation Plans

We presently do not have any equity based or other long-term incentive programs. In the future, we may adopt and establish an equity-based or other long-term incentive plan if it is in the best interest of the Company and our stockholders to do so.

Transfer Agent

Our transfer agent is VStock Transfer LLC, 18 Lafayette Place Woodmere, NY 11598.

Recent Sales of Unregistered Securities

During the year ended June 30, 2017, we have not issued any securities which were not registered under the Securities Act and not previously disclosed in the Company’s Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.

Rule 10B-18 Transactions

During the year ended June 30, 2017, there were no repurchases of the Company’s common stock by the Company.

Item 6. Selected Financial Data

 

Item 6.Selected Financial Data.

Not applicable. 

 

We are not required to provide the information required by this Item because we are a smaller reporting company.

Item 7.Management’s Discussion and Analysis of Financial Conditions and Results of Operations.

Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations

 

The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like “believe”, “expect”, “estimate”, “anticipate”, “intend”, “project” and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.

 

Plan of Operations

 

The Company was incorporated on December 15, 2009 as Hunt for Travel, Inc. to design and market travel excursions featuring entertainment, adventure, intellectual stimulation and access to experts on topics related to the destinations they visit. The Company is now a “shell company” as defined in Rule 12b-2 promulgated under the Exchange Act, as amended, as we have no operations.

The Company no longer operates in the travel industry sector. Our current intention is to closesell the Company to another operational entity.

On April 19, 2017, the Company, entered into a Share Exchange Agreement, (the “Share Exchange Agreement”), by and if it closes, we will, through our majority-owned subsidiaries, own and manage real estate around Philadelphiaamong the Company, Arista, and the Delaware Valley.holders of common stock of Arista (the “Arista Shareholders”). The closing of the Share Exchange (the “Closing”) was to take place sixty days after the execution of this Agreement, conditioned upon the completion of due diligence by the Parties and is currently scheduled to take place on September 15, 2017 conditioned upon the completion of due diligence by the Parties.

 

Limited Operating HistoryOn July 18, 2017, the Parties entered into the First Addendum to the Share Exchange Agreement, pursuant to which the Closing date for the transaction is scheduled for September 15, 2017. In addition, Arista has agreed to provide the Company with a $15,000 non-refundable deposit, and has the right to extend the closing date in intervals of thirty (30) days, and shall be required to deposit an additional non-refundable deposit of $10,000 per each requested extension interval.

Prior to Closing, Praco will restructure its equity ownership via a reverse stock split at a ratio of 13.2 to 1 in order to reduce the amount of common shares outstanding to 521,000 as set forth in the Share Exchange Agreement.

2

Under the terms and conditions of the Share Exchange Agreement, at Closing, the Company will exchange at a rate of two shares of Praco common stock for one common share of Arista common stock. This requires the issuance of an additional 2,084,000 shares of common stock, which would make Arista an 80% shareholder of the Company, subject to the terms and conditions set forth in the Share Exchange Agreement. After the Closing, current Praco Shareholders will own 20% of the common shares outstanding. 

Also, at Closing, the Praco Shareholders shall be issued warrants for 240,417 common shares 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.

Results of Operations

For the Year Ended June 30, 2017 Compared to the Year Ended June 30, 2016

 

We had no revenue for the fiscal years ended June 30, 2017 and 2016.

Net loss for the years ended June 30, 2017 and 2016 were $143,056 and $84,349, respectively. For each of the respective years, professional fees amounted to $61,343 and $45,434; general and administrative expenses amounted to $8,767 and $14,451, compensation expense amounted to $72,293 and $0, interest expense amounted to $23 and $24,464. For the years ended June 30, 2017 and 2016, $0 and $24,420 of interest expense related to imputed interest (see Item 13). Professional fees increased by approximately $16,000, which primarily related to an increase in accounting consulting fees. Compensation expense increased $72,293 due to employment contracts entered into with the CEO and a director.

Capital Resources and Liquidity

As of June 30, 2017, we had $2,041 cash on hand.  The Company does not anticipate generating any revenues until it closes the Share Exchange Agreement.

We believe that our expenses will be very limited until the Closing, however, we must obtain additional funds in order to support our daily operations until that time. As a result, we will have generated no independent financial history and have not previously demonstratedto raise funds by obtaining loans from related parties or issue common stock in exchange for cash.  However, we cannot make any assurance that we will be able to expandreceive funds. If the Closing never occurs, we may have difficulty continuing our business. Our businessdaily operations. If this is subjectnot possible, we may be forced to risks inherent in growing an enterprise, including limited capital resources and possible rejection of our business model and/suspend or sales methods.cease operations. The Company does not have enough cash for the next 12 months.

 

We anticipate that depending on market conditions and our plan of operations, we may incur operating losses for the foreseeable future. Therefore, there is substantial doubt about our ability to continue as a going concern.

Cash

The following table summarized the sources and uses of cash for the years then ended. For the same period, the Company held no cash equivalents.

  June 30, 2017  June 30, 2016 
       
Cash, beginning of year $29  $953 
Net cash used in operating activities  (58,954)  (55,924)
         
Net cash provided by financing activities  60,966   55,000 
Cash, end of year $2,041  $29 

For the year ended June 30, 2017:

Operating activities primarily decreased due to an overall loss of $143,056, which is made of mostly professional fees of $61,343 and accrued compensation expense of $72,923 to two directors. The change in financing activities relate to proceeds received from various related parties.

For the year ended June 30, 2016:

Operating activities primarily decreased due to an overall loss of $84,349, offset by non-cash In-kind interest and services in the amount of $29,620. The change in financing activities relate to proceeds received from a related party.

3

Critical Accounting Policies, Estimates, and Judgments

 

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. We continually evaluate our estimates and judgments. Materially different results can occur as circumstances change and additional information becomes known. Besides the estimates identified in the footnotes to our financial statements, we make many other accounting estimates in preparing our financial statements and related disclosures. All estimates, whether or not deemed critical, affect reported amounts of assets, liabilities, revenues and expenses, as well as disclosures of contingent assets and liabilities. These estimates and judgments are also based on historical experience and other factors that are believed to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known, even for estimates and judgments that are not deemed critical.

 

3

Results of Operations

For the Year Ended June 30, 2016 Compared to the Year Ended June 30, 2015

We had no revenue for the fiscal years ended June 30, 2016 and 2015.

Net loss for the years ended June 30, 2016 and 2015 were $84,349 and $100,003, respectively. For each of the respective years, professional fees amounted to $45,434 and $67,573; general and administrative expenses amounted to $14,451 and $13,780, and interest expense amounted to $24,464 and $18,650. For the years ended June 30, 2016 and 2015, $24,420 and $18,650 of interest expense related to imputed interest (see Item 13). Professional fees decreased by approximately $22,000, which primarily related to a reduction in real estate consulting fees.

Capital Resources and Liquidity

As of June 30, 2016, we had $29 cash on hand.  The Company does not anticipate generating any revenues until it closes the Exchange Agreement. After the Closing, if the Closing occurs, the Company will re-position itself as an owner and manager of real estate. At such time, the Company anticipates that it will generate revenues through rental income from the real property owned by its future majority-owned subsidiaries.

We believe that our expenses will be very limited until the Closing, however, we must obtain additional funds in order to support our daily operations until that time. As a result, we will have to raise funds by obtaining loans from related parties or issue common stock in exchange for cash.  However, we cannot make any assurance that we will be able to receive funds. If the Closing never occurs, we may have difficulty continuing our daily operations. Should this occur, we will attempt to combine with another entity. If this is not possible, we may be forced to suspend or cease operations.

We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, there is substantial doubt about our ability to continue as a going concern.

Cash

The following table summarized the sources and uses of cash for the years then ended. For the same period, the Company held no cash equivalents.

  June 30,
2016
  June 30,
2015
 
       
Cash, beginning of year $953  $3,746 
Net cash used in operating activities  (55,924)  (70,015)
         
Net cash provided by financing activities  55,000   67,222 
Cash, end of year $29  $953 

For the year ended June 30, 2016:

Operating activities, primarily decreased due to an overall loss of $84,349, offset by non-cash In-kind interest and services in the amount of $29,620. The change in financing activities relate to proceeds received from GH.

For the year ended June 30, 2015:

Operating activities, primarily decreased due to an overall loss of $100,003, offset by non-cash In-kind interest and services in the amount of $23,850 and an increase in accounts payable by $6,138. The change in financing activities relate to proceeds received from various related parties (see Item 13).

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements as of June 30, 20162017 and 2015.2016.

Item 7A.Quantitative and Qualitative Disclosures About Market Risk.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

 

We are not required to provide the information required by this Item because we are a smaller reporting company.

Item 8. Financial Statements and Supplementary Data.

Item 8. Financial Statements and Supplementary Data

 

The financial statements and notes thereto appear on pages F-1 to F-11F-9 of this Annual Report on Form 10K. 

4

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

We did not have any change in or disagreements with accountants on accounting and financial disclosures.

 

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

(a) Dismissal of Independent Registered Public Accounting Firm

On September 30, 2016, the board of directors (the “Board”) of Praco Corporation (the “Company”) dismissed Liggett and Webb, P.A. (f/k/a Liggett, Vogt & Webb P.A) (“LVW”), as the Company’s independent registered public accounting firm.

LVW’s report on the financial statements for the fiscal year ended June 30, 2015, contained no adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principle other than the substantial doubt that the Company would continue as a going concern. The reports of LVW were prepared on a going concern basis but the Company’s recurring losses from operations and negative cash flows from operating activities raise substantial doubt about its ability to continue as a going concern.

During the fiscal year ended June 30, 2015, and in the subsequent interim periods through September 30, 2016, the date of dismissal of LVW, there were no disagreements between the Company and LVW on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of LVW, would have caused them to make reference to the subject matter of the disagreements in its reports on the financial statements for such year. During the fiscal year ended June 30, 2015, and in the subsequent interim period through September 30, 2016, the date of dismissal of LVW, there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K. 

On October 12, 2016, LVW submitted a letter to the U.S Securities and Exchange Commission on Form 8-K stating their agreement with the above. 

(b) New Independent Registered Public Accounting Firm

Effective as of June 1, 2016, the Board approved the engagement of Friedman LLP (“Friedman”), as the Company’s new independent registered public accounting firm.

During the fiscal year ended June 30, 2015, and the subsequent interim period prior to the engagement of Friedman, the Company has not consulted Friedman regarding (i) the application of accounting principles to any specified transaction, either completed or proposed; (ii) the type of audit opinion that might be rendered on the Company’s financial statements, and either a written report was provided to the registrant or oral advice was provided that the new accountant concluded was an important factor considered by the registrant in reaching a decision as to the accounting, auditing or financial reporting issue; or (iii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(v)) or a reportable event (as defined in Item 304(a)(1)(v)).

 54 

 

Item 9A. Controls and Procedures.Procedures

 

Evaluation of Disclosure Controls and Procedures

(a)Evaluation of Disclosure Controls and Procedures

 

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s President, Chief Financial Officer, Secretary, Treasurer and Director, of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

 

Management's Annual Report on Internal Control Over Financial Reporting.

(b)Management’s Annual Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as required under applicable United States securities regulatory requirements. Internal control over financial reporting is defined in Rule 13a–15(f) or 15d–15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the company’s chief executive and chief financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

 

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

 

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use of disposition of the company’s assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. A system of internal controls can provide only reasonable, not absolute, assurance that the objectives of the control system are met, no matter how well the system is conceived or operated. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Our management assessed the effectiveness of the Company’s internal control over financial reporting as of June 30, 2016.2017. In making this assessment, our management, used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in 2013 in Internal Control Integrated Framework. Based on that evaluation under this framework, our management concluded that our internal control over financial reporting was not effective because of the following significant deficiencies in our internal control over financial reporting:

 

Due to our small number of employees and resources, we have limited segregation of duties, as a result of which there is insufficient independent review of duties performed;

As a result of the limited number of accounting personnel, we rely on outside consultants for the preparation of our financial reports, including financial statements and management discussion and analysis, which could lead to overlooking items requiring disclosure.

 

This annual report does not include an attestation report by our independent registered public accounting firm regarding internal control over financial reporting. As we are neither a large accelerated filer nor an accelerated filer, our management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

 Changes in Internal Control over Financial Reporting

 

(c)Changes in Internal Control over Financial Reporting

None.

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Item 9B. Other Information.Information

 

None.

 

 65 

 

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Executive Officers and Corporate Governance.Directors

 

The following table sets forth the namenames, ages and agepositions of ourall of the directors and executive officers of the Company and directorsthe positions they hold as of October 31, 2016. Our executive officer isthe date hereof. The directors of the Company serve until their successors are elected annually by our Board of Directors. Our executive officer holds office until he resigns, is removedand shall qualify. Executive officers are elected by the Board or his successor is electedof Directors and qualified.serve at the discretion of the directors.

 

Name Age Position
R. Scott Williams 6465 Chief Executive Officer, President, Chief Financial Officer, Treasurer, Secretary, and Director.Director
     
David Callan 5152 Director.Director
     
Alan Cohen 7677 Director.Director
     
Robert Craig 5455 Director.Director

 

Set forth below is a brief description of the background and business experience of our executive officers and directors.

 

Scott Williamsbegan his career in the investment industry in 1978 with A. G. Edwards and Sons, Inc. He has been with firms as diverse as Drexel Burnham Lambert, Prudential Securities, and Pennsylvania Merchant Group a boutique investment-banking firm. Over a 35-year period he has been involved in the management of areas in the industry as diverse as high net worth accounts, a high yield trading desk and banking group, and retail and institutional sales forces.

 

Beginning in 2004, Mr. Williams partnered with David Callan to form Hawk Management. Hawk Management was created to be the investment advisor to Hawk Opportunity Fund. The Fund, launched in 2005, was designed to allow Callan and Williams to use their expertise in distressed and bankrupt securities to take major positions in those situations they deemed investment worthy.

 

To date, the Fund has aggregated over $30,000,000 in assets under management.

 

Mr. Williams attended the University of Oklahoma and received a BA in Political Science and a minor in Economics in 1975.

 

David Callanhas been one of the directors since May 19, 2015 and has, since 2005, been a partner and portfolio manager of Hawk, a distressed public and private debt and equity fund. The fund currently has over $35,000,000 in assets under management. In addition, since 2012 Mr. Callan has been President of Playa Dulce Vida S.A., a Costa Rican holding company that owns the Arenas del Mar Beachfront and Rainforest Resort in Punta Quepos, Costa Rica. Mr. Callan holds a B.S. in Finance from Indiana University of Pennsylvania.

6

 

Alan Cohenhas been one of our directors since May 19, 2015 and has, since 2013, been the President of CA Consulting, a firm that provides accounting services. From 2009 to 2013, Mr. Cohen was the Vice-Chairman and Treasurer of Aim Learning Group, an educational media company. Mr. Cohen was instrumental in Aim’s 2009 acquisition of Learn 360, an interactive media-on-demand service for the K-12 education market. Mr. Cohen then hired the investment bank that arranged the 2013 sale of virtually all the assets of Aim and Learn 360. Mr. Cohen is a licensed CPA, a veteran of the U.S. Army, and he holds a B.S. in accounting from Queens College in New York City.

 

Robert Craighas been one of our directors since May 19, 2015 and has, since March 2011, been CEO and Chairman of the Board of Directors of Next Fuel, Inc. Next Fuel is a provider of water consulting, filtration technology and services to the oil and gas industry, as well as other industrial water users in agriculture and food processing. From January 2003 until December 2010, Mr. Craig was a founder and owner of WYTEX Ventures, LLC, a coal bed methane exploration and production company based in Wyoming. From May 1998 until December 2002, Mr. Craig was the Vice President of JP Morgan Chase, a commercial banking firm in which Mr. Craig managed a commercial banking sales force of seven bankers. Mr. Craig was awarded a BBA in 1998 and an MBA in 2001 from the University of Houston.

 

7

Term of Office

 

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.

 

Family Relationships

 

No family relationship has ever existed between any director, executive officer of the Company, and any person contemplated to become such.

 

Employment Agreements

 

We currently dohave employment agreements with Mr. Williams and Mr. Callan. The contracts were entered into on October 1, 2016 and run through September 30, 2019. The contracts call for a base salary of $48,000 for both Mr. Williams and Mr. Callan. At the end of each contract year, if the Company does not have an employment agreement withthe funds, Mr. Williams.Williams and Mr. Callan have the option to convert the accrued salary in common stock at a 25% discount to market value. Additionally, all refinancing’s, fund raising, debt or equity sales, and acquisitions when completed by Mr. Williams or Mr. Callan will be subject to bonus payment of 10% of gross proceeds of the transaction. Mr. Williams or Mr. Callan will have the option to take the bonus in stock at a 25% discount to market value or cash at his discretion. Mr. Williams or Mr. Callan will be entitled to a production bonus equal to 10% of the value of the increased production over the 2015 fiscal year end production baseline calculated annually.

 

Certain Legal Proceedings

 

To the best of our knowledge, none of our directors or executive officers has, during the past ten years:

 

BeenBeen convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
  
Had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;
  
Been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;
  
Been found by a court of competent jurisdiction in a civil action or by the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

 7 

Been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
  
Been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

 

Code of Ethics

 

We have not adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions, because of the small number of persons involved in the management of the Company.

 

Board Committees

 

Our Board of Directors has no separate committees and our Board of Directors acts as the audit committee and the compensation committee. We do not have an audit committee financial expert serving on our Board of Directors.

 

 8 

 

Item 11.Executive Compensation.Compensation

 

The following sets forth information with respect to the compensation awarded or paid to our officers and directors in fiscal 20162017 and fiscal 2015.2016.

 

Summary Compensation Table

 

The following table sets forth information regarding each element of compensation that we paid or awarded to our officers and directors in fiscal 20162017 and fiscal 2015.2016.

 

All Other
SalaryCompensationTotal
Name and Principal PositionYear($)($)($)
Carolyn Hunter,2015$        -$         -$     -
President, Chief Financial Officer, Secretary, Treasurer2016---
and Director (1)
R. Scott Williams,2015---
President, Chief Financial Officer, Secretary, Treasurer2016---
and Director (2)
David Callan, Director (2)2015---
2016---
Alan Cohen, Director (2) 2015---
2016---
Robert Craig, Director (2)2015---
2016---
        All Other    
Name and    Salary  Compensation  Total 
Principal Position Year  ($)  ($)  ($) 
R. Scott Williams,  2016   -        -   - 
President, Chief Financial Officer, Secretary, Treasurer  2017   36,462   -   36,462 
and Director (1)                
                 
David Callan,Director (1)  2016   -   -   - 
   2017   36,462   -   36,462 
                 
Alan Cohen,Director (1)   2016   -   -   - 
   2017   -   -   - 
                 
Robert Craig,Director (1)  2016   -   -   - 
   2017   -   -   - 

   

(1)Ms. Hunter resigned as an officer and director on May 19, 2015.
(2)Messrs. Williams, Callan, Cohen, and Craig were appointed to their current positions on May 19, 2015.

 

Outstanding Equity Awards at Fiscal Year-End

 

We had no outstanding equity awards as of the end of fiscal 2016.

 

Compensation of Directors

 

Our directors are not compensated for their services as directors.

 

Compensation Committee Interlocks and Insider Participation

 

Our Board does not have a compensation committee and the entire Board performs the functions of a compensation committee.

 

Messrs. Williams and Craig are both members of the board of directors of Next Fuel, Inc. and Mr. Craig is the CEO of Next Fuel.

 

 9 

 

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

The following table provides the names and addresses of each person known to us to own more than 5% of our outstanding shares of common stock as of October 31, 2016August 24, 2017 and by the officers and directors, individually and as a group. Except as otherwise indicated, all shares are owned directly and the shareholders listed possesses sole voting and investment power with respect to the shares shown. Unless otherwise specified, the address of each of the persons set forth below is care of the company at the address of: 159 North State Street, Newtown, PA 18940.

Name Number of Shares Beneficially Owned  Percent of Class (1) 
5% Shareholders:      
       
Hawk Opportunity Fund LP  2,000,000   28.98%
159 North State Street
Newtown, PA 18940
        
         
Executive Officers and Directors:        
         
Scott Williams (2)  5,450,000   78.96%
         
David Callan (3)  2,450,000   34.34%

 

Name Number of Shares Beneficially Owned  Percent of Class (1) 
5% Shareholders:      
       
Hawk Opportunity Fund LP  2,000,000   28.98%
159 North State Street Newtown, PA 18940        
         
Executive Officers and Directors:        
         
Scott Williams (2)  5,450,000   78.96%

(1)

Based on 6,902,500 shares of common stock outstanding as of October 31, 2016.

August 24, 2017.
(2)Scott Williams is only a 3.38%3.42% limited partner of Hawk Opportunity Fund LP, but based on his overall control and management of Hawk, the Hawk shares are combined for this presentation.
(3)David Callan is only a 14.06% limited partner of Hawk Opportunity Fund LP, but based on his overall control and management of Hawk, the Hawk shares are combined for this presentation.

Item 13.Certain Relationships and Related Transactions, and Director Independence.

Item 13. Certain Relationships and Related Transactions, and Director Independence

 

There are no related party transactions with regard to Messrs. Cohen and Craig reportable under Item 404(a) of Regulation S-K.

 

With regard to Messrs. Williams and Callan, they share voting and investment control over Hawk, Philly, and GH, the entities party to the Exchange Agreement more fully discussed under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.

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. Through these majority-owned subsidiaries, the Company will own and manage real estate around Philadelphia and the Delaware Valley.

 10 

 

In addition,With regard to Messrs. Williams and Callan, on the following dates, the Company received the following amounts from or had expenses paid on their behalf by Messrs. Williams and Callan themselves or by entities over which Messrs. Williams and Callan share control:

 

1)For each of the years ended June 30, 20162017 and June 30, 2015,2016, Mr. Williams contributed services having a fair value of approximately $5,200.$0 and $5,200, respectively.

 

2)

On January 29, 2015, the Company received $7,000 from an entity owned by a Mr. Williams.Williams and Mr. Callan. 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 June 30, 2017 and 2016 is $0 and 2015 is $7,000.$7,000, respectively. For the years ended June 30, 20162017 and 2015,2016, the Company recorded $521$0 and $209,$521, respectively as an in-kind contribution of imputed interest.

 

3)

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 Mr. Williams.Williams and Mr. Callan. On January 10, 2017 the Company repaid $3,000 to the related entity. Total balance due at June 30, 2017 and 2016 is $157,000 and 2015 is $160,000.$160,000, respectively.  Pursuant to the terms of the notes, the notes are non-interest bearing, unsecured and are due on demand.  For the years ended June 30, 20162017 and 2015,2016, the Company recorded $12,952$0 and $12,051,$12,952, respectively as an in-kind contribution of imputed interest.

 

4)The Company received $8,500 on June 25, 2012, $20,000 on September 14, 2012 and $27,578 on January 17, 2013, $10,500 on January 11, 2017, $5,000 on April 5, 2017, $5,000 on April 24, 2017, and $2,500 on May 24, 2017 from Hawk.Hawk Opportunity Fund, LP, a 29% owner of the Company, which is also owned indirectly by Scott Williams and David Callan. Total balance due at June 30, 2017 and June 30, 2016 was $79,078 and 2015 is $56,078.$56,078, respectively. Pursuant to the terms of the notes, the notes are non-interest bearing, unsecured and are due on demand.  For the years ended June 30, 20162017 and 2015,2016, the Company recorded $4,880$0 and $4,551,$4,880, respectively as an in-kind contribution of imputed interest.

 

5)The Company received $12,500 on January 17, 2017, and $4,665 on April 1, 2017 from HWC, LLC, an entity indirectly owned by Hawk Opportunity Fund, LP, a 29% owner of the Company, which is also owned indirectly by Scott Williams and David Callan. Total balance due at June 30, 2017 and June 30, 2016 was $17,165 and $0, respectively. Pursuant to the terms of the notes, the notes are non-interest bearing, unsecured and are due on demand. 

6)As needed, GHGreen Homes Real Estate, LP, an entity owned by Hawk Opportunity Fund, LP, a 29% owner of the Company, which is also owned indirectly by Scott Williams and David Callan, 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, and $15,000 on February 11, 2016, $5,000 on July 26, 2016, $3,830 on August 25, 2016 and $600 on December 31, 2016, in exchange for various notes payable. Total balance due at June 30, 2017 and June 30, 2016 was $99,652 and 2015 is $90,222, and $35,222, respectively. Pursuant to the terms of the notes, the notes are non-interest bearing, unsecured and due on demand. For the years ended June 30, 20162017 and 2015,2016, the Company recorded $5,261$0 and $1,088,$5,261, respectively as an in-kind contribution of imputed interest.

 

7)As needed, Philly Residential Acquisition LP, an entity owned by Hawk Opportunity Fund, LP, a 29% owner of the Company, which is also owned indirectly by Scott Williams and David Callan, 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 June 30, 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.

 11 

 

Director Independence

 

Allan Cohen and Robert Craig are independent directors. Because our common stock is not currently listed on a national securities exchange, we have used the definition of “independence” of The NASDAQ Stock Market to make this determination. NASDAQ Listing Rule 5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the company or any other individual having a relationship which, in the opinion of the Company’s Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The NASDAQ listing rules provide that a director cannot be considered independent if:

 

the director is, or at any time during the past three years was, an employee of the company;
  
the director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for board or board committee service);
  
a family member of the director is, or at any time during the past three years was, an executive officer of the company;
  
the director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exclusions);
  
the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the company served on the compensation committee of such other entity; or
  
the director or a family member of the director is a current partner of the company’s outside auditor, or at any time during the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit.

 

We do not currently have a separately designated audit, nominating or compensation committee.

Item 14.Principal Accounting Fees and Services.

Item 14. Principal Accounting Fees and Services

 

Audit Fees

 

For fiscal years ended June 30, 20162017 and June 30, 2015,2016, the Company was billed $14,435$22,000 and $14,700,$13,510, respectively, for professional services rendered for the audit and reviews of our financial statements by Liggett & Webb, P.A.Friedman LLP.

 

Audit Related Fees

 

The Company did not incur any audit related fees other thanfor the fees discussed above.fiscal years ended June 30, 2017 and 2016.

 

Tax Fees

 

For the Company’s fiscal years ended June 30, 20162017 and June 30, 2015, we were2016, the Company was not billed for professional services rendered for tax compliance, tax advice, and tax planning.

 

All Other Fees

 

The Company did not incur any other fees, other than the fees discussed above, for services related to our audit for the fiscal years ended June 30, 20162017 and 2015.2016.

 

Pre-Approval of Services

 

We do not have an audit committee. As a result, our Board of Directors performs the duties of an audit committee. Our Board of Directors evaluates and approves in advance the scope and cost of the engagement of an auditor before the auditor renders the audit and non-audit services. We do not rely on pre-approval policies and procedures.

 

 12 

 

PART IV

Item 15.Exhibits, Financial Statement Schedules.

Item 15. Exhibits, Financial Statement Schedules

 

(a) The following documents are filed as part of this report:

 

Financial Statements:

The balance sheet of the Company as of June 30, 2016, the related statements of operations, changes in stockholders’ deficit and cash flows for the year then ended, the footnotes thereto, and the report have been audited by Friedman LLP, and for the year end June 30, 2015, the financial information was audited by Liggett &Webb, P.A., both being independent auditors, are filed herewith.

PRACO CORPORATION

 

CONTENTS

PAGE
F-2 - 3

REPORTSREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMSFIRM

F 2
  
PAGEF-4BALANCE SHEETS AS OF JUNE 30, 20162017 AND 20152016F 3
  
PAGEF-5STATEMENTS OF OPERATIONS FOR THE YEARS ENDED JUNE 30, 20162017 AND 20152016F 4
  
PAGEF-6STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT FOR THE YEARS ENDED JUNE 30,  20162017 AND 20152016F 5
  
PAGEF-7STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 20162017 AND 20152016F 6
  
PAGESF-8 - 11NOTES TO FINANCIAL STATEMENTSF-7 - F- 9

 


F-1

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Directors ofand

Stockholders of Praco Corporation

 

We have audited the accompanying balance sheetsheets of Praco Corporation.Corporation (the “Company”) as of June 30, 2017 and 2016, and the related statements of operations, changes in stockholders’ deficit and cash flows for the year ended June 30, 2016.years then ended. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.audits.

 

We conducted our auditaudits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the auditaudits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our auditaudits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposepurposes of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit providesaudits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Praco Corporationthe Company as of June 30, 2017 and 2016, and the results of its operations and its cash flows for the yearyears then ended, June 30, 2016 in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company'sCompany’s losses, negative cash flows from operations and working capital deficit raise substantial doubt about its ability to continue as a going concern. Management'sManagement’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

/s/ Friedman LLP

Marlton, New Jersey

October 31, 2016August 24, 2017


 

F-2

432 Park Avenue South, 10th Floor
New York, NY 10016 / (212) 481-3490


1500 Gateway Boulevard, Suite 202
Boynton Beach, FL 33426 / (561) 752-1721

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of:

Praco Corporation

We have audited the accompanying balance sheet of Praco Corporation (the "Company") as of June 30, 2015 and the related statements of operations, changes in stockholders' deficit and cash flows for the year ending June 30, 2015. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of Praco Corporation as of June 30, 2015 and the results of its operations and its cash flows for the year ending June 30, 2015 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 6 to the financial statements, the Company has minimal operations, used cash in operations of $70,015 and has a net loss for the year of $100,003. The Company also has a working capital deficit and stockholders' deficit of $281,661 as of June 30, 2015. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans concerning these matters are also described in Note 6. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

LIGGETT, VOGT & WEBB, P.A.

Certified Public Accountants

Boynton Beach, Florida

October 13, 2015

F-3

PRACO CORPORATION

BALANCE SHEETS

JUNE 30, 2016 AND 2015

  2017  2016 
       
ASSETS      
       
Current Assets      
Cash $2,041  $29 
Total Current Assets  2,041   29 
         
TOTAL ASSETS $2,041  $29 
         
         
LIABILITIES AND STOCKHOLDERS’ DEFICIT        
         
Current Liabilities        
Accounts payable $25,298  $14,119 
Accrued expense  72,923   - 
Note payable  9,000   9,000 
Notes payable - related parties  374,266   313,300 
Total Current Liabilities  481,487   336,419 
         
Stockholders’ Deficit        
Preferred stock, $.0001 par value, 5,000,000 shares authorized, none issued and outstanding  -   - 
Common Stock, $.0001 par value, 100,000,000 shares authorized, 6,902,500 shares issued and outstanding  690   690 
Additional paid-in capital  343,257   343,257 
Accumulated deficit  (823,393)  (680,337)
Total Stockholders’ Deficit  (479,446)  (336,390)
         
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $2,041  $29 

The accompanying notes are an integral part of these financial statements.

F-3

PRACO CORPORATION

STATEMENTS OF OPERATIONS

YEARS ENDED JUNE 30,

  2017  2016 
       
Operating Expenses      
Professional fees $61,343  $45,434 
General and administrative  8,767   14,451 
Compensation expense  72,923   - 
Total Operating Expenses  143,033   59,885 
         
Loss Before Other Expenses  (143,033)  (59,885)
         
Other Expenses        
Interest expense  (23)  (24,464)
Total Other Expense  (23)  (24,464)
         
Net Loss $(143,056) $(84,349)
         
Net Loss Per Share-Basic and Diluted $(0.02) $(0.01)
         
Weighted average number of shares outstanding during the period-Basic and Diluted  6,902,500   6,902,500 

The accompanying notes are an integral part of these financial statements.


PRACO CORPORATION

STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

        Additional     Total 
  Preferred Stock  Common Stock  Paid-in  Accumulated  Stockholders’ 
  Shares  Amount  Shares  Amount  Capital  Deficit  Deficit 
Balance, June 30, 2015  -  $-   6,902,500  $690  $313,637  $(595,988) $(281,661)
                             
In-kind contribution of interest and services  -   -   -   -   29,620   -   29,620 
                             
Net loss for the year ended June 30, 2016  -   -   -   -   -   (84,349)  (84,349)
                             
Balance, June 30, 2016  -   -   6,902,500   690   343,257   (680,337)  (336,390)
                             
Net loss for the year ended June 30, 2017  -   -   -   -   -   (143,056)  (143,056)
                             
Balance, June 30, 2017  -  $-   6,902,500  $690  $343,257  $(823,393) $(479,446)

 

  2016  2015 
ASSETS      
Current Assets      
Cash $29  $953 
Total Current Assets  29   953 
         
TOTAL ASSETS $29  $953 
         
LIABILITIES AND STOCKHOLDERS' DEFICIT
         
Current Liabilities        
Accounts payable $14,119  $15,314 
Note payable  9,000   9,000 
Notes payable - related parties  313,300   258,300 
Total Current Liabilities  336,419   282,614 
         
Stockholders' Deficit        
Preferred stock, $.0001 par value, 5,000,000 shares authorized, none issued and outstanding  -   - 
Common Stock, $.0001 par value, 100,000,000 sharesauthorized, 6,902,500 shares issued and outstanding  690   690 
Additional paid-in capital  343,257   313,637 
Accumulated deficit  (680,337)  (595,988)
Total Stockholders' Deficit  (336,390)  (281,661)
         
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $29  $953 

SeeThe accompanying notes toare an integral part of these financial statementsstatements.


F-4

 

PRACO CORPORATION

STATEMENTS OF OPERATIONSCASH FLOWS

YEARS ENDED JUNE 30,

  2017  2016 
Cash flows from operating activities      
Net loss $(143,056) $(84,349)
Adjustments to reconcile net loss to net cash used in operating activities:        
In-kind contribution of services and interest  -   29,620 
Changes in operating assets and liabilities:        
Increase (decrease) in accounts payable  11,179   (1,195)
Increase in accrued expenses  72,923   - 
Net cash used in operating activities  (58,954)  (55,924)
         
Cash flows from financing activities        
Proceeds from notes payable - related party  70,966   55,000 
Repayments of notes payable - related party  (10,000)  - 
Net cash provided by financing activities  60,966   55,000 
         
Net increase (decrease) in cash  2,012   (924)
         
Cash, beginning of year  29   953 
         
Cash, end of year $2,041  $29 

The accompanying notes are an integral part of these financial statements.

F-6

PRACO CORPORATION

NOTES TO THE FINANCIALS STATEMENTS

YEARS ENDED JUNE 30, 20162017 AND 20152016

  2016  2015 
       
Operating Expenses      
Professional fees $45,434  $67,573 
General and administrative  14,451   13,780 
Total Operating Expenses  59,885   81,353 
         
Loss Before Other Expenses  (59,885)  (81,353)
         
Other Expenses        
Interest expense  (24,464)  (18,650)
Total Other Expense  (24,464)  (18,650)
         
Net Loss $(84,349) $(100,003)
         
Net Loss Per Share-Basic and Diluted $(0.01) $(0.01)
         
Weighted average number of shares outstanding  during the period-Basic and Diluted  6,902,500   6,902,500 

See accompanying notes to financial statements

F-5

PRACO CORPORATION

STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

YEARS ENDED JUNE 30, 2016 AND 2015

  Preferred Stock  Common Stock  Additional     Total 
  Shares  Amount  Shares  Amount  Paid-in Capital  Accumulated Deficit  Stockholders' Deficit 
Balance, June 30, 2014          -  $-   6,902,500  $690  $289,787  $(495,985) $(205,508)
                             
In-kind contribution of interest and services  -   -   -   -   23,850   -   23,850 
                             
Net loss for the year ended June 30, 2015  -   -   -   -   -   (100,003)  (100,003)
                             
Balance, June 30, 2015  -   -   6,902,500   690   313,637   (595,988)  (281,661)
                             
In-kind contribution of interest and services  -   -   -   -   29,620   -   29,620 
                             
Net loss for the year ended June 30, 2016  -   -   -   -   -   (84,349)  (84,349)
                             
Balance, June 30, 2016  -  $-   6,902,500  $690  $343,257  $(680,337) $(336,390)

See accompanying notes to financial statements

F-6

PRACO CORPORATION

STATEMENTS OF CASH FLOWS

YEARS ENDED JUNE 30, 2016 AND 2015

  2016  2015 
Cash flows from operating activities      
Net loss $(84,349) $(100,003)
Adjustments to reconcile net loss to net cash used in operating activities:        
In-kind contribution of services and interest  29,620   23,850 
Changes in operating assets and liabilities:        
(Decrease) increase in accounts payable  (1,195)  6,138 
Net cash used in operating activities  (55,924)  (70,015)
         
Cash flows from financing activities        
Proceeds from notes payable - related party  55,000   67,222 
Net cash provided by financing activities  55,000   67,222 
         
Net decrease in cash  (924)  (2,793)
         
Cash, beginning of year  953   3,746 
         
Cash, end of year $29  $953 

See accompanying notes to financial statements

F-7

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

 

(A)(A) Organization

 

Hunt for Travel, Inc. (the "Company"“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 April 19, 2017, the Company, entered into a Share Exchange Agreement, (the “Share Exchange Agreement”), by and among the Company, Arista Capital LTD. (“Arista”), and the holders of common stock of Arista (the “Arista Shareholders”). The closing of the Share Exchange (the “Closing”) was scheduled to take place on July 19, 2017 conditioned upon the completion of due diligence by Arista and the Company.

On July 18, 2017 an addendum to the Share Exchange Agreement between the Company and Arista was signed. The closing date was extended to September 15, 2017 pending a $15,000 deposit by Arista into an escrow account. Arista will also reimburse the Company $15,000 in expenses related to the preparation and filing of the Form 10-K for the year ended June 30, 2017. Arista has also been granted the ability to extend the closing date in thirty day intervals pending additional $10,000 deposits for each extension requested. All deposits are non-refundable.

(B)(B) Use of Estimates

 

In preparing financial statements in conformity with generally accepted accounting principles in the United States of America (“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 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 June 30, 20162017 and 2015,2016, respectively, 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 June 30, 20162017 and 2015,2016, respectively, there were no common share equivalents outstanding.

(E) Income Taxes

 

The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”).  Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

F-8

(F) 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.

(G) Recent Accounting Pronouncements

In August 2016, FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”, was established to address eight specific cash flow issues with the objective of reducing the existing diversity in practice. For public companies, the ASU is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early application is permitted and the amendment should be applied retrospectively.

In January 2016, FASB issued ASU No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognitionand Measurement of Financial Assets and Financial Liabilities. The new guidance improves certain aspects of recognition, measurement, presentation and disclosure of financial instruments. For public business entities, the new guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early application is not permitted for public companies. 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.

In December 2015, FASB issued ASU No. 2015-17, Income Taxes (Topic 740). To simplify the presentation of deferred income taxes, the amendment requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. For public companies, the ASU is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. 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.

In April 2015, FASB issued ASU No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”, is to simplify presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The ASU does not affect the recognition and measurement guidance for debt issuance costs. For public companies, the ASU is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. 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.

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.

F-9

 

NOTE 2 - GOING CONCERN

 

As reflected in the accompanying financial statements, the Company has minimal operations, used cash in operating activities of $55,924$58,954 and has a net loss of $84,349$143,056 for the year ended June 30, 2016.2017. The Company also has a working capital deficit and stockholders’ deficit of $336,390$479,446 as of June 30, 2016.2017. 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 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.concern, but currently do not believe they have sufficient cash for the next 12 months from this report date.

 


NOTE 3 – NOTE PAYABLEPAYABLE

 

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 June 30, 20162017 and 20152016 is $9,000. For the years ended June 30, 20162017 and 2015,2016, the Company recorded $806$0 and $752,$806, respectively as an in-kind contribution of imputed interest.

 

The imputed interest is not accrued for but charged to additional paid in capital as it is not an obligation of the Company to pay in cash or stock.

 

NOTE 4 - STOCKHOLDERS’ DEFICIT

 

In-Kind Contribution of services and interest

 

For each of the yearsyear ended June 30, 2016, and June 30, 2015, the president contributed services having a fair value of approximately $5,200. In 2017 the Company did not receive contributed services.

 

For the years ended June 30, 20162017 and 2015,2016, the Company recorded $24,420$0 and $18,650,$24,420, respectively, as in-kind contribution of interest.

 

NOTE 5 - COMMITMENTS

 

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 years ended June 30, 20162017 and 2015,2016, the fees incurred were $20,000$0 and $37,500,$20,000, 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 $72,000 in compensation expense as of June 30, 2017.

 

NOTE 6 - RELATED PARTY TRANSACTIONS

 

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. InFor each of the years since the Exchange Agreement was signed, the assetsended June 30, 2017 and June 30, 2016, Mr. Williams contributed services having a fair value of Nidus have been soldapproximately $0 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.$5,200, respectively.

 

On January 29, 2015, the Company received $7,000 from an entity owned by a Mr. Williams.Williams and Mr. Callan. 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 June 30, 2017 and 2016 is $0 and 2015 is $7,000.$7,000, respectively. For the years ended June 30, 20162017 and 2015,2016, the Company recorded $521$0 and $209,$521, respectively as an in-kind contribution of imputed interest.

 

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 Mr. Williams.Williams and Mr. Callan . On January 10, 2017 the Company repaid $3,000 to the related entity. Total balance due at June 30, 2017 and 2016 is $157,000 and 2015 is $160,000.$160,000, respectively.  Pursuant to the terms of the notes, the notes are non-interest bearing, unsecured and are due on demand.  For the years ended June 30, 20162017 and 2015,2016, the Company recorded $12,952$0 and $12,051,$12,952, respectively as an in-kind contribution of imputed interest.

 

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, $5,000 on April 5, 2017, $5,000 on April 24, 2017, and $2,500 on May 24, 2017 from Hawk.Hawk Opportunity Fund, LP, a 29% owner of the Company, which is also owned indirectly by Scott Williams and David Callan. Total balance due at June 30, 2017 and June 30, 2016 was $79,078 and 2015 is $56,078.$56,078, respectively. Pursuant to the terms of the notes, the notes are non-interest bearing, unsecured and are due on demand.  For the years ended June 30, 20162017 and 2015,2016, the Company recorded $4,880$0 and $4,551,$4,880, respectively as an in-kind contribution of imputed interest.

 

The Company received $12,500 on January 17, 2017, and $4,665 on April 1, 2017 from HWC, LLC, an entity owned by Hawk Opportunity Fund, LP, a 29% owner of the Company, which is also owned indirectly by Scott Williams and David Callan. . Total balance due at June 30, 2017 and June 30, 2016 was $17,165 and $0, respectively. Pursuant to the terms of the notes, the notes are non-interest bearing, unsecured and are due on demand.

F-10

 


As needed, GHGreen Homes Real Estate, LP, an entity owned by Hawk Opportunity Fund, LP, a 29% owner of the Company, which is also owned indirectly by Scott Williams and David Callan, 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, and $15,000 on February 11, 2016, $5,000 on July 26, 2016, $3,830 on August 25, 2016 and $600 on December 31, 2016, in exchange for various notes payable. Total balance due at June 30, 2017 and June 30, 2016 was $99,652 and 2015 is $90,222, and $35,222, respectively. Pursuant to the terms of the notes, the notes are non-interest bearing, unsecured and due on demand. For the years ended June 30, 20162017 and 2015,2016, the Company recorded $5,261$0 and $1,088,$5,261, respectively as an in-kind contribution of imputed interest.

 

All the imputed interest referenced above is not accrued for but charged to additional paid in capital as it is notAs needed, Philly Residential Acquisition LP, an obligationentity owned by Hawk Opportunity Fund, LP, a 29% owner of the Company, which is also owned indirectly by Scott Williams and David Callan, transfers funds to pay in cash or stock.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 June 30, 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.

 

NOTE 7 - INCOME TAXES

 

As of June 30, 2016,2017, the Company has a net operating loss carryforward of approximately $588,000$724,600 available to offset future taxable income through June 30, 2036.2037. A valuation allowance is necessary due to the Company’s continued operating losses and the uncertainty of the Company’s ability to utilize all of the net operating loss carryforwards before they will expire.

 

The components of the Company’s deferred tax asset (liability) are as follows:

 

   June 30,
2017
  June 30,
2016
 
 Deferred tax asset (liability):      
        
 Net operating loss carryforward $246,371  $197,732 
 Valuation allowance  (246,371)  (197,732)
          
 Net deferred tax asset (liability) $-  $- 

   (1)
June 30, 2016
  (2)
June 30, 2015
 
 Deferred tax asset (liability):      
        
 Net operating loss carryforward $197,732  $201,853 
 Valuation allowance  (197,732)  (201,853)
          
 Net Deferred Tax Asset (Liability) $-  $- 

 

The Company'sCompany’s income tax expense differed from the statutory rates (federal 34%) as follows:

 

 Statutory rate applied to earnings (loss) before income taxes $(28,679) $(38,555)
 Increase (decrease) in income taxes resulting from:        
 State income taxes  -   - 
 Change in deferred tax asset valuation allowance  18,607   29,361 
 Non-deductible expenses  10,072   9,194 
          
 Income Tax Expense $-  $- 

(1)

During May 2015, there was a substantial change in ownership of the Company. As a result, income tax code section 382, limits the amount of net operating loss allowed to be utilized on an annual basis.

 Statutory rate applied to loss before income taxes $(48,639) $(28,679)
 Increase in income taxes resulting from:        
 Change in deferred tax asset valuation allowance  48,639   18,607 
 Non-deductible expenses  -   10,072 
          
 Income tax expense $-  $- 

 

Tax benefits of uncertain tax positions are recognized only if it is more likely than not that the Company will be able to sustain a position taken on an income tax return. The Company has no liability for uncertain tax positions as of June 30, 20162017 and 2015.2016. Interest and penalties, if any, related to unrecognized tax benefits would be recognized as income tax expense. The Company does not have any accrued interest or penalties associated with unrecognized tax benefits, nor was any significant interest expense recognized during the years ended June 30, 20162017 and 2015.2016.

NOTE 8 - SUBSEQUENT EVENTS

On July 31, 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 $84,078. Pursuant to the terms of the notes, the notes are non-interest bearing, unsecured and are due on demand.

 

F-11

 

Exhibits:

 

The exhibits listed in the accompanying index to exhibits are filed or incorporated by reference as part of this Report.

 

(b)  The following are exhibits to this Report and, if incorporated by reference, we have indicated the document previously filed with the SEC in which the exhibit was included.

 

Exhibit

Number

 Description
   
2.1 Exchange Agreement dated July 3, 2012 (1)
   
3.1 Articles of Incorporation (2)
   
3.2 Certificate of Amendment to the Articles of Incorporation (3)
   
3.3 By-Laws (2)
10.1Share Exchange Agreement, dated April 19, 2017, by and between the Company, Arista Capital, Ltd., a Nevada corporation, and the holders of the commons stock of Arista Capital, Ltd. (4)
10.2*

First Addendum to the Share Exchange Agreement, by and between the Company, Arista Capital, Ltd., a Nevada corporation, and the holders of commons stock of Arista Capital, Ltd.

   
31.1* Certification of Principal Executive and Principal Financial Officer, pursuant to 18 U. S. C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
32.1** Certification of Principal Executive and Principal Financial Officer, pursuant to 18 U. S. C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
101.INS *101.INS* XBRL Instance Document
   
101.SCH *101.SCH* XBRL Taxonomy Schema
   
101.CAL *101.CAL* XBRL Taxonomy Calculation Linkbase
   
101.DEF *101.DEF* XBRL Taxonomy Definition Linkbase
   
101.LAB *101.LAB* XBRL Taxonomy Label Linkbase
   
101.PRE *101.PRE* XBRL Taxonomy Presentation Linkbase

 

(1) Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on July 3, 2012.

 

(2) Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on October 7, 2010.

 

(3) Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on February 22, 2012.

 

(4) Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on ) October 12, 2016.

April 25, 2017.

 

* Filed herewith.

** In accordance with the SEC Release 33-8238, deemed being furnished and not filed.

 

 13 

  

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: October 31, 2016August 24, 2017

 

 Praco Corporation
  
 /s/R. Scott Williams
 

Name: R. Scott Williams

Chief Executive Officer, President,
Chief Financial Officer, Treasurer, and Secretary
(Principal (Principal Executive Officer,

Principal Financial Officer, and

Principal Accounting Officer)

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Signature Title Date
     
/s/ R. Scott Williams 

Chief Executive Officer, President,Chief Financial Officer, Treasurer, and Secretary (Principal Executive Officer,

Principal Financial Officer, and

Principal Accounting Officer)

 October 31, 2016August 24, 2017
R. Scott Williams Treasurer, and Secretary (Principal Executive Officer,
Principal Financial Officer, and
Principal Accounting Officer)  
     
/s/ David Callan Director October 31, 2016August 24, 2017
David Callan    
     
/s/ Alan Cohen Director October 31, 2016August 24, 2017
Alan Cohen    
     
/s/ Robert Craig Director October 31, 2016August 24, 2017
Robert Craig    
     

 

 

14