UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 20152016

or

☐ TRANSITION REPORT PURSUANT TO 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)

90122 Hoey Road159 North State Street

Chapel Hill, NC 27517Newtown, PA 18940

(Address of principal executive offices) (Zip code)

(919) 889-9461(215) 968-1600

(Registrants telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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 issuer 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 files). Yes ☐  No ☒

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock: As of February 11, 2016,March 16, 2017, there were 6,902,500 shares, par value $0.0001 per share, of Common Stock issued and outstanding.

PRACO CORPORATION

QUARTERLY REPORT ON FORM 10-Q

December 31, 20152016

TABLE OF CONTENTS

As used in this report, the term “the Company” means Praco Corporation unless the context clearly indicates otherwise.

Special Note Regarding Forward-Looking Information

This quarterly report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words such as “anticipates,” “estimates,” “expects,” “intends,” “plans” and “believes,” among others, generally identify forward-looking statements. These forward-looking statements include, among others, statements relating to: the Company’s future financial performance, the Company’s business prospects and strategy, anticipated trends and prospects in the industries in which the Company’s businesses operate and other similar matters. These forward-looking statements are based on the Company’s management's expectations and assumptions about future events as of the date of this quarterly report, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict.

Actual results could differ materially from those contained in these forward-looking statements for a variety of reasons, including, among others, the risk factors set forth below. Other unknown or unpredictable factors that could also adversely affect the Company’s business, financial condition and results of operations may arise from time to time. In light of these risks and uncertainties, the forward-looking statements discussed in this quarterly report may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of the Company’s management as of the date of this quarterly report. The Company does not undertake to update these forward-looking statements.

In this quarterly report on Form 10-Q, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in the Company’s capital stock.

An investment in the Company’s common stock involves a number of very significant risks.  You should carefully consider the following risks and uncertainties in addition to other information in this quarterly report on Form 10-Q in evaluating the Company and its business before purchasing shares of the Company’s common stock.  The Company’s business, operating results and financial condition could be seriously harmed as a result of the occurrence of any of the following risks.  You could lose all or part of your investment due to any of these risks. You should invest in the Company’s common stock only if you can afford to lose your entire investment.

PRACO CORPORATION

CONTENTS

See accompanying notes to condensed unaudited financial statements

Praco Corporation

Condensed Balance Sheets

See accompanying notes to condensed unaudited financial statements

Praco Corporation

Condensed Statements of Operations

(Unaudited)

See accompanying notes to condensed unaudited financial statements

Praco Corporation

Condensed Statement of Changes in Stockholder's Deficit

For the six months ended December 31, 2015

See accompanying notes to condensed unaudited financial statements

Praco Corporation

Condensed Statements of Cash Flows

(Unaudited)

See accompanying notes to condensed unaudited financial statements 

PRACO CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 20152016

(UNAUDITED)

Hunt for Travel, Inc. (the "Company") was incorporated in Nevada on December 15, 2009 to design and market enrichment excursions for U.S. travelers. The enrichment component of these trips can be educational, informational or experiential and is tailored to the travelers’ specific interests and tastes. Enrichment travel can also be referred to as adventure travel.

Effective February 21, 2012, the Company filed with the State of Nevada a Certificate of Amendment to the Articles of Incorporation changing the Company’s name from Hunt for Travel, Inc. to Praco Corporation. At the same time the Company ceased being a travel agency and became a Public Shell.

The Company is available for another operational company to acquire.

On February 22, 2017, the Company entered into a Letter of Intent (“LOI”) with Arista Capital LTD. (“Arista”) whereby the shareholders of Arista will acquire eighty percent (80%) of the issued and outstanding shares of the Company. In consideration for the above, Arista will pay $75,000 and will assume all of the liabilities of the Company. This transaction is contingent upon the Company and Arista executing a formal “Merger Agreement” which is expected to occur on or about March 31, 2017. The closing of the transaction is expected to occur sixty (60) days from the execution of the Merger Agreement.

The LOI may be terminated by (a) mutual consent of the parties, (b) by the Company if (i) a definitive Merger Agreement is not executed and delivered by the parties, (ii) the Merger Agreement is enjoined by a court or any governmental body, or (iii) by Arista if they are not satisfied with the results of their due diligence investigation of the Company. 

(A) Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information necessary for a comprehensive presentation of financial position and results of operations.

While the Company believes that the disclosures presented are adequate to make the information not misleading, these financial statements should be read in conjunction with the financial statements and accompanying notes included in the Company’s annual Report on Form 10-K for the year ended June 30, 2016.

It is management’s opinion however, that all material adjustments (consisting of normal recurring adjustments) have been made, which are necessary for a fair financial statements presentation. The results for the interim period are not necessarily indicative of the results to be expected for thea full year.

PRACO CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2016

(UNAUDITED)

(B) Use of Estimates

In preparing financial statements in conformity with generally accepted accounting principles,GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include valuation of equity based transactions and the valuation of deferred tax assets.

(C) Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At December 31, 20152016 and June 30, 2015,2016, the Company had no cash equivalents.

(D) Loss Per Share

Basic and diluted net loss per common share is computed based upon the weighted average common shares outstanding as defined by FASBFinancial Accounting Standards Board (“FASB”) ASC No. 260, “Earnings Per Share.” As of December 31, 20152016 and 20142015, there were no common share equivalents outstanding.

PRACO CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2015

(UNAUDITED)

(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) Business Segments

The Company operates in one segment and therefore segment information is not presented.

(G) Revenue Recognition

The Company recognizes revenue on arrangements in accordance with FASB ASC No. 605, “Revenue Recognition”. In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. The Company recognizes revenue derived from travel related transactions on the net basis when the Company is not the merchant of record and the prices and services are determined by and provided by third parties.

(H) Fair Value of Financial Instruments

The carrying amounts on the Company’s financial instruments including accounts payable and notenotes payable, approximate fair value due to the relatively short period to maturity for these instruments.

(I)(F) Recent Accounting Pronouncements

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.

PRACO CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2015

(UNAUDITED)

In April 2015, FASBAugust 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-15 “Presentation of Financial Statements—Going Concern,” outlining management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern, along with the required disclosures. ASU No. 2015-04, “Compensation – Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets”, permits the entity to measure defined benefit plan assets and obligations using the month-end that is closest to the entity’s fiscal year-end and apply that practical expedient consistently from year to year. The ASU2014-15 is effective for public business entities for financial statements issued for fiscal years beginningthe annual period ending after December 15, 2015,2016 and for annual periods and interim periods within those fiscal years. Early applicationthereafter with early adoption permitted. The Company is permitted. We are currently reviewingassessing the provisionsimpact of this ASU to determine if there will be any impact2014-15 on our results of operations, cash flows orits financial condition.statements.

In April 2015, FASB issued ASU No. 2015-05, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement”, provides guidance to customers about whether a cloud computing arrangement includes a software license. If such includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If the arrangement does not include a software license, the customer should account for it as a service contract. For public business entities, the ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. 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. 2015-06, “Earnings Per Share (Topic 260): Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions”, specifies that, for purposes of calculating historical earnings per unit under the two-class method, the earnings (losses) of a transferred business before the date of a drop down transaction should be allocated entirely to the general partner. In that circumstance, the previously reported earnings per unit of the limited partners (which is typically the earnings per unit measure presented in the financial statements) would not change as a result of the dropdown transaction. Qualitative disclosures about how the rights to the earnings (losses) differ before and after the dropdown transaction occurs for purposes of computing earnings per unit under the two-class method also are required. The ASU is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Earlier application is permitted. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

PRACO CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2015

(UNAUDITED)

In June 2014, FASB issued ASU No. 2014-12, “Compensation – Stock Compensation (Topic 718); Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period”. The amendments in this ASU apply to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. For all entities, the amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities may apply the amendments in this ASU either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this Update as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition. 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”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, 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). 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.

All other newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable.

PRACO CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 20152016

(UNAUDITED)

As reflected in the accompanying financial statements, the Company has minimal operations, used cash in operating activities of $18,675 and has a net loss of $59,968 for the six months ended December 31, 2016. The Company also has a working capital deficit and stockholders’ deficit of $396,358 as of December 31, 2016. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern. 

(A) Notes Payable – Related Party

On January 29, 2015,June 5, 2012 the Company received $7,000$9,000 from a relatedthird party. Pursuant to the terms of the note, the note is non-interest bearing, unsecured and is due on demand. For the six months ended December 31, 2015, the Company recorded $258 as an in-kind contribution of interest (See Note 3(A) and 5).

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 a related party. Total balance due is $160,000. Pursuant to the terms of the notes, the notes are non-interest bearing, unsecured and are due on demand. For the six months endedat December 31, 2015, the Company recorded $6,363 as an in-kind contribution of interest (See Note 3(A)2016 and 5).

The Company received $8,500 on June 25, 2012, $20,000 on September 14, 2012 and $27,578 on January 17, 2013 from a related party. Total balance due is $56,078. Pursuant to the terms of the notes, the notes are non-interest bearing, unsecured and are due on demand. For the six months ended December 31, 2015, the Company recorded $2,397 as an in-kind contribution of interest (See Note 3(A) and 5).

On November 13, 2014, a related party paid operating expenses on behalf of the Company totaling $20,722, $10,000 on March 17, 2015, $4,500 on May 22, 2015, $20,000 on July 27, 2015 and $20,000 on November 30, 2015, in exchange for note payable. Pursuant to the terms of the note, the note is non-interest bearing, unsecured and due on demand. The Company recorded a total of $2,005 in imputed interest as in-kind contributions for the six months ended December 31, 2015 (See Note 5).

(B) Note Payable

On June 5, 2012 the Company received $9,000 from an unrelated party. Pursuant to the terms of the note, the note is non-interest bearing, unsecured and is due on demand. For the six months ended December 31, 2015, the Company recorded $396 as an in-kind contribution of interest (See Note 3(A) and 5).2016 was $9,000.

(A) In-Kind Contribution of services and interest

For the six months ended December 31, 2015, the Company recorded $11,419 as an in kind contribution of interest (See Note 2).

PRACO CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2015

(UNAUDITED)

For the six months ended December 31, 2015, a shareholder of the Company contributed services having a fair value of $2,600 (See Note 5).

For the year ended June 30, 2015, the Company recorded $18,650 as an in kind contribution of interest (See Note 2).

For the year ended June 30, 2015, a shareholder of the Company contributed services having a fair value of $5,200 (See Note 5).

On February 8, 2010,April 1, 2012, the Company entered into a consulting agreement with Europa Capital Investments, LLC to receivefor administrative and other miscellaneous consulting services. The Company is required to pay $5,000 a month. The agreement is to remain in effect unless either party desired to cancel the agreement. Effective March 1, 2012,During the agreement was terminated but servicessix months endedDecember 31, 2016 and 2015, the fees incurred were still provided as a contribution.$-0- and $10,000, respectively.

On AprilOctober 1, 2012,2016, the Company entered into a new consulting agreementsigned two employment agreements, one with Europa Capital Investments, LLC for administrativethe CEO/President and the other miscellaneous services. The termswith one of the agreement remainDirectors. Both agreements are the same aswhich are effective October 1, 2016 to September 30, 2019. The agreements call for an annual salary of $48,000 and if not paid by the prior agreement. Currentlyend of the year, the compensation would be paid in Company stock at a 25% discount to the market value. All refinancing, fund raising, debt or equity sales, and acquisitions when completed by the individuals would be subject to a bonus payment of 10% of the gross proceeds. In connection with the two employment agreements, the Company recorded $24,000 in compensation expense in the current period and is utilizingalso included in accrued expense as of December 31, 2016 on the consulting services on as needed basis.accompanying balance sheet.

For the six months ended December 31, 2015, shareholders of the Company contributed services having a fair value of $2,600 (See Note 3(A)).

For the year ended June 30, 2015, shareholders of the Company contributed services having a fair value of $5,200 (See Note 3(A)).

On January 29, 2015, the Company received $7,000 from an entity owned by a related party.stockholder of the Company. Pursuant to the terms of the note, the note is non-interest bearing, unsecured and is due on demand. For the six months endedTotal balance due at December 31, 2015, the Company recorded $258 as an in-kind contribution of interest (See Note 2).2016 and June 30, 2016 was $7,000.

The Company received $30,000 on April 30, 2013, $30,000 on July 12, 2013, $25,000 on October 9, 2013, $25,000 on January 9, 2014, $25,000 on April 11, 2014 and $25,000 on July 10, 2014 from an entity owned by a related party.stockholder of the Company. Total balance due isat December 31, 2016 and June 30, 2016 was $160,000.  Pursuant to the terms of the notes, the notes are non-interest bearing, unsecured and are due on demand. For the six months ended December 31, 2015, the Company recorded $6,363 as an in-kind contribution of interest (See Note 2).

PRACO CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 20152016

(UNAUDITED)

The Company received $8,500 on June 25, 2012, $20,000 on September 14, 2012 and $27,578 on January 17, 2013 from Hawk Opportunity Fund, LP, an entity indirectly owned by a related party.stockholder of the Company. Total balance due isat December 31, 2016 and June 30, 2016 was $56,078. Pursuant to the terms of the notes, the notes are non-interest bearing, unsecured and are due on demand. For the six months ended December 31, 2015, the Company recorded $2,397 as an in-kind contribution of interest (See Note 2).

On November 13, 2014,As needed, Green Homes Real Estate, LP, an entity indirectly owned by a related party paid operating expenses on behalfstockholder of the Company totalingtransfers 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, and $20,000 on November 30, 2015, $15,000 on February 11, 2016, $5,000 on July 26, 2016, $3,831 on August 25, 2016 and $600 on December 31, 2016, in exchange for notevarious notes payable. Total balance due at December 31, 2016 and June 30, 2016 was $99,653 and $90,222, respectively.  Pursuant to the terms of the notes, the notes are non-interest bearing, unsecured and due on demand.

As needed, Philly Residential Acquisition LP, an entity indirectly owned by a stockholder of the Company transfers funds to the Company to cover operating expenses. Those transfers are as follows: $3,831 on August 25, 2016, $1,000 on October 19, 2016, $5,000 on December 1, 2016 and $600 on December 15, 2016. Total balance due at December 31, 2016 and June 30, 2016 was $10,431 and $-0-, respectively. Pursuant to the terms of the notes, the notes are non-interest bearing, unsecured and are due on demand.

The Company recorded no income tax expense for the six months ended December 31, 2016 and 2015 because the estimated annual effective tax rate was zero. As of December 31, 2016, the Company continues to provide a valuation allowance against its net deferred tax assets especially since the Company believes it is more than likely than not that its deferred tax assets will not be realized.

On January 11, 2017, the Company received $10,500 from Hawk Opportunity Fund, L.P. This brings the total balance due to Hawk Opportunity Fund, L.P. to $66,578. Pursuant to the terms of the notes, the notes are non-interest bearing, unsecured and are due on demand. 

On January 17, 2017, the Company received $12,500 from HWC, LLC, a subsidiary of Hawk Opportunity Fund, L.P. Pursuant to the terms of the note, the note is non-interest bearing, unsecured and is due on demand. The Company recorded a total of $2,005 in imputed interest as in-kind contributions for the six months ended December 31, 2015 (See Note 2).

As reflected in the accompanying condensed unaudited financial statements, the Company has minimal operations, used cash in operations of $40,836 and has a net loss of $47,336 for the six months ended December 31, 2015. The Company also has a working capital deficit and stockholders’ deficit of $314,978 as of December 31, 2015. 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.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following information should be read together with the financial statements and the notes thereto and other information included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended June 30, 2016.

Forward-Looking Statements

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”,“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.

Overview

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

The Company is available for another operational company to close 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.acquire. 

On July 3, 2012,May 19, 2015, Carolyn Hunter, the Company’s sole officer and sole director, in accordance with 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 members 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.

On February 22, 2017, the Company entered into an Equity Exchange Agreement (the “Exchange Agreement”a Letter of Intent (“LOI”) with Hawk Opportunity Fund, LP, a Delaware limited partnershipArista Capital LTD. (“Hawk”Arista”), Philly Residential Acquisition LP, a Pennsylvania limited partnership (“Philly”), Green Homes Real Estate, LP, a Pennsylvania limited partnership (“GH”), Nidus, LP, a Delaware limited partnership (“Nidus”), and several other related parties. In whereby the years since the Exchange Agreement was signed, the assetsshareholders of Nidus have been sold and NidusArista will no longer be a partacquire eighty percent (80%) of the transactions contemplated byissued and outstanding shares of the Exchange Agreement. Pursuant toCompany. In consideration for the Exchange Agreement,above, Arista will pay $75,000 and will assume all of the liabilities of the Company. This transaction is contingent upon the Company will issue 3,100,000 shares of its common stock, par value $0.0001 per share,and Arista executing a formal “Merger Agreement” which is expected to Hawk, and in connection therewith, the Company will receive 89% of the aggregate equity interest of each of Philly and GH.

occur on or about March 31, 2017. The closing of the Exchange Agreement (the “Closing”)transaction is still subjectexpected to certain conditions such asoccur sixty (60) days from the completion of an audit of Philly and GH, and the approvalexecution of the transaction from a lender, if necessary. These conditionsMerger Agreement.

The LOI may be terminated by (a) mutual consent of Closing have not occurred and they may never be fulfilled, so the Closing may never occur. As the Closing has not yet occurred,parties, (b) by the Company has no interest in Phillyif (i) a definitive Merger Agreement is not executed and GHdelivered by the parties, (ii) the Merger Agreement is enjoined by a court or any real estate at this time.governmental body, or (iii) by Arista if they are not satisfied with the results of their due diligence investigation of the Company.

Philly and GP own and manage real estate around Philadelphia and the Delaware Valley. Together these entities own approximately 225 separate properties with a current aggregate market value of approximately $15 million. 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 GP. Although in the years since the Exchange Agreement was signed, the assets of Nidus have been sold and Nidus will no longer be a partThe foregoing description of the transactions contemplatedMOU does not purport to be complete and is qualified in its entirety by reference to the Exchange Agreement, Philly and GP have acquired more rental properties. Due to these acquisitions, the total number of rental properties the Company will be the majority-owner and assume the operations of will still be approximately 225 separate properties (as it was when the Exchange Agreement was signed in 2012 and Nidus’ properties were included as partcomplete text of the property count). Through these majority-owned subsidiaries, the Company will ownMOU, which is filed as Exhibit 99.1 to this 10-Q Report and manage real estate around Philadelphia and the Delaware Valley.incorporated herein by reference.

Limited Operating History

We have generated no independent financial history and have not previously demonstrated that we will be able to expand our business. Our business is subject to risks inherent in growing an enterprise including limited capital resources.

Results of Operations

For the Three Months Ended December 31, 20152016 Compared to the Three Months Ended December 31, 20142015

Results of Operations

We had $0 in revenue for bothFor the three months ended December 31, 20152016 and the three months ended December 31, 2014. Operating expenses2015, we had $0 in revenue. Net loss for the three months ended December 31, 2016 and 2015 totaled $41,044 and December 31, 2014 totaled, respectively, $14,606$20,491, respectively. For each of the respective periods, professional fees amounted to $12,170 and $17,517. Interest$10,740; general and administrative expenses amounted to $28,874 and $3,866, and interest expense amounted to $-0- and $5,885. The increase in general and administrative expenses are directly related to accrued compensation for the three months ended December 31, 2015CEO/president and December 31, 2014, totaled, respectively, $5,885 and $4,787. These expenses resultedone of the Directors. The increase in a net loss of $20,491 for the three months ended December 31, 2015was primarily due to an increase in professional fees and a net loss of $22,304 for the three months ended December 31, 2014.general and administrative expenses.

For the Six Months Ended December 31, 20152016 Compared to the Six Months Ended December 31, 20142015

We had $0 in revenue for bothFor the six months ended December 31, 20152016 and the six months ended December 31, 2014. Operating expenses2015, we had $0 in revenue. Net loss for the six months ended December 31, 2016 and 2015 totaled $59,968 and December 31, 2014 totaled, respectively, $35,917$47,336, respectively. For each of the respective periods, professional fees amounted to $30,275 and $49,236. Interest$27,770; general and administrative expenses amounted to $29,352 and $8,147, and interest expense foramounted to $23 and $11,419. For the six monthsperiod ended December 31, 2015, interest expense related to imputed interest. The increase in general and December 31, 2014, totaled, respectively, $11,419administrative expenses are directly related to accrued compensation for the CEO/president and $8,580. These expenses resultedone of the Directors. The increase in a net loss of $47,336 for the six months ended December 31, 2015was primarily due to an increase in professional fees and a net loss of $57,816 for the six months ended December 31, 2014.general and administrative expenses.

Capital Resources and Liquidity

As of December 31, 2015,2016, we had $117cash of cash on hand.$1,216 as compared to $29 as of June 30, 2016. The Company also has a working capital deficit and stockholders’ deficit of $396,358 as of December 31, 2016.

The ability of the Company to realize its business plan is dependent upon, among other things, the closing of the merger with Arista. If the closing of the merger does not occur, the Company does not anticipate generating any revenues until the Closing. 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 ownedcan be acquired by its future majority-owned subsidiaries.another operational company.

WeIf the closing of the merger with Arista does not occur, we believe that our expenses will be very limited until the Closing andwe can find another operational company to acquire or merge with us. 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 obtain enough cashbe able to support our daily operations until that time through future financings. However, ifreceive funds. If the Exchange Agreement isclosing on the merger never consummated or if we fail to obtain financing,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.

The foregoing represents our best estimate of our cash needs based on current planning and business conditions. We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raisedThese factors, among others, raise substantial doubt about our ability to continue as a going concern.

Our liquidity may be negatively impacted by the significant costs associated with our public company reporting requirements, costs associated with corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission.

As reflected in the accompanying condensed unaudited financial statements, the Company has minimal operations, used cash in operations of $40,836 and has a net loss of $47,336 for the six months ended December 31, 2015. The Company also has a working capital deficit and stockholders’ deficit of $314,978 as of December 31, 2015. This raises substantial doubt about itsCompany’s 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. Theaccompanying financial statements do not include any adjustments that might be necessary ifresult from the outcome of this uncertainty. 

Cash Flows

The following table summarized the sources and uses of cash for the periods then ended.

Net Cash Used in Operating Activities

Our cash used in operating activities was $18,675 for the six-month period ended December 31, 2016 as compared to $40,836 for the same period ended 2015. The primary reason for the different in cash flows used in operating activities decreasing from the prior period is the Company is unable to continue as a going concern.has larger accounts payable and accrued expense balances than the period.

Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunityNet Cash Used in Investing Activities

We did not use cash in investing activities for the six-month period ended December 31, 2016 and 2015.

Net Cash Provided by Financing Activities

Our cash provided by financing activities was $19,862 for the six-month period ended December 31, 2016 as compared to $40,000 for the same period ended 2015. The primary reason for the different in cash flows provided by financing activities is that in the current period the Company was not lent as much from related parties to continue as a going concern.pay down our accounts payable and accrued expense balances. 

Critical Accounting Policies

Use of Estimates

In preparingThe financial statements and accompanying footnotes included in conformitythis report have been prepared in accordance with accounting principles generally accepted accounting principles, management is required to makein the United States with certain amount based on management’s best estimates and assumptions that affect the reported amountsjudgments. To determine appropriate carrying values of assets and liabilities that are not readily available from other sources, management uses assumptions based on historical results and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period.other factors that believe are reasonable.  Actual results could differ from those estimates. Significant estimates include valuation

Our critical accounting policies are described in our Annual Report on Form 10-K for the year ended June 30, 2016.  There have been no material changes to our critical accounting policies as of equity based transactions and for the valuation of deferred tax assets. six months ended December 31, 2016.

Loss Per Share

Basic and diluted net loss per common share is computed based upon the weighted average common shares outstanding as defined by FASB ASC No. 260, “Earnings Per Share.” As of December 31, 2015 and 2014 there were no common share equivalents outstanding. 

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.

Fair Value of Financial Instruments

The carrying amounts on the Company’s financial instruments including accounts payable and note payable, approximate fair value due to the relatively short period to maturity for these instruments.

Recent Accounting Pronouncements

For information on recent accounting pronouncements, see Recent Accounting Pronouncements in note 1 to the condensed financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosure About Market Risk.

Not applicable to smaller reporting companies.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls. Pursuant

We maintain disclosure controls and procedures designed to Rule 13a-15(b)provide reasonable assurance that material information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934, (“Exchange Act”), the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), carried out an evaluation 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 as of December 31, 2015 to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act,amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’sSEC's rules and forms. The Company’s disclosure controlsforms, and procedures are not designed to ensure that suchthe information is accumulated and communicated to the Company’sour management, including the Company’s CEOour Chief Executive Officer and CFO,Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. The Company’s CEOWe performed an evaluation, under the supervision and CFO came to this conclusion becausewith the current CEOparticipation of our management, including our Chief Executive Officer and Chief Financial Officer, of the Company doeseffectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2016.  Based on the existence of the material weakness in internal control over financial reporting discussed in our Form 10-K for the year ended June 30, 2016, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were not effective as of December 31, 2016 to provide such reasonable assurances.

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud.  Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met.  Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs.  Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have signing powers with regard todetected all our control deficiencies and instances of fraud, if any.  The design of disclosure controls and procedures is also based partly on certain assumptions about the Company’s bank account.

likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

(b) Changes in internal control over financial reporting. There have been

During the six months ended December 31, 2016, there were no changes in our internal controlcontrols over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the last fiscal quarter that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. 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 our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1A. Risk Factors.

SmallerNot applicable for small reporting companies are not required to provide the information required by this item.companies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

* Filed herewith

+ In accordance with SEC Release 33-8238, Exhibit 32.1 is deemed furnished and not filed.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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