UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.DC 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTIONQuarterly report pursuant to Section 13 ORor 15(d) OF THE SECURITIES EXCHANGE ACT OFof the Securities Exchange Act of 1934

For the quarterly period ended DecemberMarch 31, 20162018

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

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:COMMISSION FILE NO. 333-169802

PRACO CORPORATIONARISTA FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

159 North State Street

Newtown, PA 18940

(Address of principal executive offices) (Zip code)

(215) 968-1600

(Registrants telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)report:Not applicable.

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 issuerregistrant 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,website, 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 registrantRegistrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company filer.or an emerging growth company. See definitionthe definitions of “large accelerated filer”,filer,” “accelerated filer” andfiler,” “smaller reporting company’company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

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 Exchange Act). ☐ Yes ☒ No ☐

IndicateAs of May 7, 2018, the number ofregistrant had 3,148,333 shares outstanding of each of the issuer’s classes of common stock: As of March 16, 2017, there were 6,902,500 shares,stock, par value $0.0001 per share, of Common Stock issued and outstanding.

PRACO CORPORATIONARISTA FINANCIAL CORP.

QUARTERLY REPORT ON FORMForm 10-Q

March 31, 2018

December 31, 2016

TABLE OF CONTENTSINDEX

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

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ARISTA FINANCIAL CORP. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

See accompanying notes to unaudited condensed unauditedconsolidated financial statementsstatements.

ARISTA FINANCIAL CORP. AND SUBSIDIARY

 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

See accompanying notes to unaudited condensed unauditedconsolidated financial statementsstatements.

See accompanying notes to unaudited condensed unauditedconsolidated financial statements

statements.

ARISTA FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

See accompanying notes to condensed unaudited financial statements

MARCH 31, 2018

PRACO CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 1 –ASORGANIZATION AND NATURE OF DECEMBER 31, 2016

(UNAUDITED)OPERATIONS

Organization

Hunt for Travel, Inc.Arista Financial Corp. (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.

2009. 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 timeCorporation (“Praco”) and on January 2, 2018, the Company ceased being a travel agency and became a Public Shell.

The Company is available for another operational companychanged its name to acquire.Arista Financial Corp.

On February 22,April 19, 2017, the Company entered into a Letter of Intent (“LOI”)the Share Exchange Agreement with Arista Capital LTD.Ltd. (“Arista”Arista Capital”) wherebyand the shareholders of Arista will acquire eighty percent (80%Capital Shareholders (the “Share Exchange Agreement”) ofpursuant to which the issuedCompany agreed, subject to the terms and outstandingconditions in the Share Exchange Agreement, to exchange newly issued shares of the Company.Company for shares of Arista Capital held by the Arista Capital Shareholders, with Arista Capital becoming a wholly-owned subsidiary of the Company (the “Transaction”). The closing of the Transaction (the “Closing”) was to take place sixty days after the execution of this Agreement. On July 18, 2017, the parties entered into the First Addendum to the Share Exchange Agreement, pursuant to which the closing date for the Transaction was scheduled for September 15, 2017. In connection with this First Addendum, Arista Capital paid the Company a $15,000 non-refundable deposit, and had the right to extend the closing date in intervals of thirty days upon payment of an additional non-refundable deposit of $10,000 for each requested extension interval. In November 2017, Arista Capital paid the Company an additional $10,000 non-refundable deposit. The Closing occurred on December 14, 2017. At Closing, Arista Capital paid the Company $72,500 which was used to pay all remaining outstanding liabilities of Praco.

Prior to Closing, the Company restructured its equity ownership via a reverse stock split at a ratio of 13.2 to 1 which reduced the number of shares of common stock outstanding to 522,558 shares followed by the issuance of an additional 95,109 shares to certain Praco Shareholders so that there were 617,667 shares outstanding immediately prior to the Closing. On the date of the Exchange Agreement, the fair value of the 617,667 shares retained by Praco shareholders was approximately $401,000, or $0.65 per common share, based on the quoted closing price of the Company common shares. Therefore, the Praco shareholders received aggregate consideration for the above,acquisition of $498,500. At Closing, the Company exchanged two shares of its common stock for each outstanding share of Arista will pay $75,000common stock. This resulted in the issuance at Closing of an additional 2,470,666 shares of common stock which consisted of 2,084,000 common shares issued to Arista Shareholders and will assume all386,666 common shares issued to certain Arista Capital noteholders upon the conversion of convertible notes payable. Accordingly, Arista Capital Shareholders owned in the aggregate approximately 80% of the liabilitiesoutstanding common stock of the Company, with the Praco Shareholders owning the remaining approximately 20% of the Company and Arista Capital became a wholly-owned subsidiary of the Company. At the time of the closing, under the Exchange Agreement, the Company, then known as Praco Corporation, was not engaged in any business activity and was considered a shell.

Also, at Closing, the Praco Shareholders were issued warrants for 283,749 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 without a cashless exercise option. On the date of the Exchange Agreement, the Company calculated the fair value of the 283,749 warrants using the Black-Sholes option pricing method. The fair value of the warrants was approximately $108,000. In addition, immediately following the Closing, the Company exchanged each outstanding Arista warrant for new warrants issued by the Company entitling the holder to purchase an equal number of shares of the Company’s common stock as the number of Arista shares they were entitled to purchase upon exercise, subject to the same terms and conditions as the Arista Capital warrants except without a cashless exercise option. Also, at Closing, the Company exchanged each outstanding Arista Capital convertible note into a convertible note issued by the Company convertible into an equal amount of shares of the Company’s common stock as the number of Arista Capital shares into which such notes were convertible, subject to the same terms and conditions as the convertible notes currently held by Arista Capital convertible noteholders. As a result of such exchange offers, at Closing, the Company issued warrants to purchase 935,000 shares of Common Stock and convertible notes convertible into 199,999 shares of Common Stock.

As of December 31, 2017, the Company has recapitalized the Company to give effect to the Share Exchange Agreement discussed above. Under generally accepted accounting principles, the acquisition by the Company of Arista Capital is considered to be capital transactions in substance, rather than a business combination. That is, the acquisition is equivalent, to the acquisition by Arista Capital of the Company, then known as Praco Corporation, with the issuance of stock by Arista Capital for the net assets of the Company. This transaction is contingent uponreflected as a recapitalization, and is accounted for as a change in capital structure. Accordingly, the accounting for the acquisition is identical to that resulting from a reverse acquisition. Under reverse takeover accounting, the comparative historical financial statements of the Company, andas the legal acquirer, are those of the accounting acquirer, Arista executing a formal “Merger Agreement” which is expectedCapital. Accordingly, the Company’s financial statements prior to occur on or about March 31, 2017. Thethe closing of the transaction is expected to occur sixty (60) days fromreverse acquisition, reflect only the executionbusiness of the Merger Agreement.Arista Capital.

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 PresentationARISTA FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2018

The accompanying unauditedconsolidated financial statements reflect the recapitalization of the stockholders’ deficit as if the transactions occurred as of the beginning of the first period presented. Thus, the 2,000,000 shares of common stock issued to the former Arista Capital stockholders are deemed to be outstanding from December 31, 2015.

Arista Capital was formed on June 10, 2014 as a Nevada corporation. The Company is a finance company that provides financing to other very small finance companies that do not have significant access to the capital markets. Typically, the Company does this by acquiring lease portfolios from such lenders at a purchase price that yields the Company an annual return and these lenders continue to service the portfolios purchased by the Company. The Company is currently focused on leases for trucks and construction equipment.

NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying condensed consolidated financial statements have been prepared in accordanceconformity with accounting principles generally accepted in the United States of America (“GAAP”) andU.S. GAAP pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information. Accordingly they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying condensed consolidated financial statements include all adjustments, which consist of normal recurring adjustments and transactions or events discretely impacting the interim periods, considered necessary for a comprehensive presentationby management to fairly state our results of operations, financial position and cash flows. The operating results for interim periods are not necessarily indicative of operations.

Whileresults that may be expected for any other interim period or for the Company believes that the disclosures presented are adequate to make the information not misleading, thesefull year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto included in the Company’s annual Report onour 2017 Form 10-K for the year ended June 30, 2016.

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

10-K. 

PRACO CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2016

(UNAUDITED)Use of estimates

(B) UseThe preparation of Estimates

In preparingcondensed consolidated financial statements in conformity with GAAP,accounting principles generally accepted in the United States requires 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 consolidated financial statements and revenuesthe reported amounts of revenue and expenses during the reportedreporting period. Actual results could differ from those estimates. Significant estimates for the three months ended March 31, 2018 and 2017 include estimates of allowances for uncollectible finance leases receivable, the useful life of property and equipment, estimates of current and deferred income taxes and deferred tax valuation allowances, the fair value of equity based transactionsequipment held for sale, and the valuationfair value of deferred tax assets.non-cash equity transactions. 

(C) Cash and Cash EquivalentsGoing concern

The Company considers all highly liquid temporary cash investments with an original maturityThese condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in our accompanying condensed consolidated financial statements, for the three months or less to be cash equivalents. At Decemberended March 31, 2016 and June 30, 2016,2018, the Company had no cash equivalents.

(D) Loss Per Share

Basic and diluteda net loss per common share is computed based uponof $231,754 and used cash in operating activities of $60,326, respectively. Additionally, the weighted average common shares outstanding as defined by Financial Accounting Standards Board (“FASB”) ASC No. 260, “Earnings Per Share.” AsCompany had an accumulated deficit of December$1,166,247 and had a stockholders’ deficit of $528,181 at March 31, 20162018, respectively, and 2015, there were no common share equivalents outstanding.

(E) Fair Value of Financial Instruments

The carrying amounts onhad minimal revenues for the Company’s financial instruments including accounts payable and notes payable, approximate fair value due to the relatively short period to maturity forthree months ended March 31, 2018. Management believes that these instruments.

(F) Recent Accounting Pronouncements

In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-15 “Presentation of Financial Statements—Going Concern,” outlining management’s responsibility to evaluate whether there ismatters raise substantial doubt about an entity’sthe Company’s ability to continue as a going concern along withfor twelve months from the required disclosures. ASU 2014-15issuance date of this report. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. Management believes that its capital resources are not currently adequate to continue operating and maintaining its business strategy for a period of twelve months from the issuance date of this report. Although the Company has historically raised capital from the issuance of promissory notes, there is effective forno assurance that it will be able to continue to do so. Management believes that’s its ability to attract debt and equity financing in the annual period ending after December 15, 2016capital markets will be greatly enhanced by becoming a public reporting company. If the Company is unable to raise additional capital or secure additional lending in the near future, management expects that the Company will need to curtail or cease operations. These consolidated financial statements do not include any adjustments related to the recoverability and for annual periodsclassification of recorded asset amounts and interim periods thereafter with early adoption permitted. classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

ARISTA FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2018

Fair value of financial instruments and fair value measurements

The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s (the “FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is currently assessingsignificant to the impact of ASU 2014-15fair value measurement. The Company did not identify any assets or liabilities that are required to be presented on its financial statements.the balance sheet at fair value in accordance with Accounting Standards Codification (“ASC”) Topic 820.

The carrying amounts reported in the consolidated balance sheets for cash, financing lease receivables, due from lease service provider, accrued interest receivables, prepaid expenses, notes payable, accounts payable, accrued expenses, accrued interest payable and amounts due to related party approximate their fair market value based on the short-term maturity of these instruments. The Company does not account for any instruments at fair value using level 3 valuation.

ASC 825-10 “Financial Instruments”, allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.

Credit risk and concentrations

The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. At March 31, 2018 and December 31, 2017, cash in bank did not exceed federally insured limits. The Company has not experienced any losses in such accounts through March 31, 2018.

Financing leases receivable represent amounts due from lessees in various industries, related to equipment on direct financing leases. Currently, the Company relies on one source to acquire financing leases and to service such leases. The Company believes that other lenders are available to acquire lease portfolios if the Company cannot acquire additional financing lease receivable portfolios from its single source. Additionally, as of March 31, 2018, the Company’s portfolio of financing leases consists of five leases. A default on or loss of any of these leases would have a material adverse effect on the Company’s results of operations and financial condition.

Cash and cash equivalent

For purposes of the statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. At March 31, 2018 and December 31, 2017, the Company did not have any cash equivalents.

Financing leases receivable

Financing leases receivable are recorded at the aggregate future minimum lease payments, estimated unguaranteed residual value of the leased equipment less unearned income. Residual values, which are reviewed periodically, represent the estimated amount the Company expects to receive at lease termination from the disposition of the leased equipment. Actual residual values realized could differ from these estimates. The unearned income is recognized in revenues in the statements of operations over the lease term, in a manner that produces a constant rate of return on the lease. Financing leases receivable due after twelve months from the balance sheet date are reflected as a long-term asset. Financing leases receivables are periodically evaluated based on individual credit worthiness of customers. Based on this evaluation, the Company records allowance for estimated losses on these receivables.

Property and equipment

Property are stated at cost and are depreciated using the straight-line method over their estimated useful lives, which range from three to five years. Leasehold improvements are depreciated over the shorter of the useful life or lease term including scheduled renewal terms. Maintenance and repairs are charged to expense as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of these assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. 

Impairment of long-lived assets

In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value.

PRACO CORPORATIONARISTA FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2018

AS OF DECEMBER 31, 2016

(UNAUDITED)Revenue recognition

Income from direct financing lease transactions is reported using the financing method of accounting, in which the Company’s investment in the leased property is reported as a receivable from the lessee to be recovered through future rentals. The interest income portion of each rental payment is calculated so as to generate a constant rate of return on the net receivable outstanding. Allowances for losses on direct financing leases are typically established based on historical charge-off and collection experience and the collectability of specifically identified lessees and billed and unbilled receivables. Direct financing leases are charged off to the allowance as they are deemed uncollectible. Direct financing leases are generally placed in a nonaccrual status (i.e., no revenue is recognized) and deemed impaired when payments are more than 90 days past due. Additionally, management periodically reviews the creditworthiness of all direct finance lessees with payments outstanding less than 90 days. Based upon management’s judgment, the related direct financing leases may be placed on nonaccrual status. Leases placed on nonaccrual status are only returned to an accrual status when the account has been brought current and management believes recovery of the remaining unpaid lease payments is probable. Until such time, all payments received are applied only against outstanding principal balances.

As reflectedIncome taxes

The Company accounts for income tax using the liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the accompanyingyear in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.

The Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740“Income Taxes”. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. As of March 31, 2018 and December 31, 2017, the Company has minimal operations, used cashhad no uncertain tax positions that qualify for either recognition or disclosure in operating activitiesthe financial statements. Tax years that remain subject to examination are the years ending on and after December 31, 2014. The Company recognizes interest and penalties related to uncertain income tax positions in other expense. However, no such interest and penalties were recorded as of $18,675March 31, 2018.

Stock-based compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and hasdirector services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC 505-50 –“Equity-Based Payments to Non-Employees”, all share-based payments to non-employees, including grants of stock options, are recognized in the consolidated financial statements as compensation expense over the service period of the consulting arrangement or until performance conditions are expected to be met. Using a Black-Scholes valuation model, the Company periodically reassessed the fair value of non-employee options until service conditions are met, which generally aligns with the vesting period of the options, and the Company adjusts the expense recognized in the consolidated financial statements accordingly.

Basic and diluted loss per share

Pursuant to ASC 260-10-45, basic loss per common share is computed by dividing net loss by the weighted average number of $59,968shares of common stock outstanding for the six months ended Decemberperiods presented. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares consist of common stock issuable for stock warrants (using the treasury stock method) and common shares issuable upon the conversion of convertible notes payable (using the as-if converted method). These common stock equivalents may be dilutive in the future.

ARISTA FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2016. The2018

All potentially dilutive common shares were excluded from the computation of diluted shares outstanding as they would have an anti-dilutive impact on the Company’s net losses and consisted of the following:

Related parties

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties 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 abilityinclude principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to continue as a going concern is dependent onan extent that one of the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments thattransacting parties might be necessary if the Company is unable to continue as a going concern.prevented from fully pursuing its own separate interests.

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

On June 5, 2012 the Company received $9,000 from a third party. Pursuant to the terms of the note, the note is non-interest bearing, unsecured and is due on demand. Total balance due at December 31, 2016 and June 30, 2016 was $9,000.

On April 1, 2012, the Company entered into a consulting agreement with Europa Capital Investments, LLC for administrative and other miscellaneous services.The agreement is to remain in effect unless either party desired to cancel the agreement.During the six months endedDecember 31, 2016 and 2015, the fees incurred were $-0- and $10,000, respectively.Recent accounting pronouncements

Management does not believe that any recently issued, but not yet effective accounting pronouncements will have a material effect on the accompanying condensed consolidated financial statements.

ARISTA FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2018

NOTE 3 –FINANCING LEASES RECEIVABLE

In December 2017, the Company repossessed one truck from one lessee that defaulted on their lease in 2017. At March 31, 2018 and December 31, 2017, the truck held for sale has an estimated residual value of $15,000 and $15,000, respectively.

The Seller is responsible for administrating the leases, collecting all payments, and distributing funds to the Company. On October 1,a monthly basis, the Company shall pay the seller an administrative fee equal to 2% of the scheduled payment amount of each lease, 50% of all penalties or late fee charges collected, and 50% of all default interest collected. The seller shall remit the remaining amount received from the lessees to the Company. The finance leases require 36 monthly/weekly or bi-weekly payments through February 2020. Each lease is secured by ownership of the related transportation equipment. As of March 31, 2018 and December 31, 2017, financing leases receivable consists of leases for transportation equipment. At March 31, 2018 and December 31, 2017, financing leases receivable consisted of the following:

For the three months ended March 31, 2018 and 2017, activities in the Company’s allowance for uncollectible financing leases receivable were are follows:

At March 31, 2018, the aggregate amounts of future minimum gross lease payments receivable are as follows:

ARISTA FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2018

NOTE 4 –CONVERTIBLE DEBT

During the year ended December 31, 2016, the Company signed two employment agreements, one withissued 10% convertible promissory notes (the “2016 10% Convertible Notes”) to seven third party individuals in the CEO/Presidentaggregate amount of $400,000. The unpaid principal and interest is payable three years from the other with onedate of the Directors. Both agreements are the same which are effective October 1,respective 2016 to September 30,10% Convertible Note through December 2019. The agreements call forCompany may prepay any amount outstanding under the 2016 10% Convertible Note by making a payment to note holder of an annual salaryamount in cash equal to the principal amount multiplied by a prepayment penalty percentage of $48,000 and if not paid by5.0%. The Noteholders are entitled, at their option, at any time after the endissuance of the year,2016 10% Convertible Notes, to convert all or any lesser portion of the compensation would be paid in Companyoutstanding principal amount and accrued but unpaid interest into the Company’s common stock at a 25% discountconversion price of $1.50 per share. The noteholders have the option to extend 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%due date of the gross proceeds.notes for three additional one-year periods. In connection with the two employment agreements,2016 10% Convertible Notes, the Company issued to noteholders five-year warrants to acquire up to 575,000 shares of common stock at $2.00 per share. On December 14, 2017, in connection with the Share Exchange Agreement, the Company issued 266,666 shares to certain noteholders upon conversion of principal amount of $200,000.

During the period from July 1, 2017 to September 30, 2017, the Company issued 12% convertible promissory notes to three individuals in the aggregate amount of $200,000. The unpaid principal and interest is payable three years from the date of the respective 12% Convertible Note through August 1, 2020. The Company may prepay any amount outstanding under the 12% Convertible Note by making a payment to note holder of an amount in cash equal to the principal amount multiplied by a prepayment penalty percentage of 5.0%. The Noteholders are entitled, at their option, at any time after the issuance of the 12% Convertible Notes, to convert all or any lesser portion of the outstanding principal amount and accrued but unpaid interest into the Company’s common stock at a conversion price of $3.00 per share. In connection with the 12% Convertible Notes, the Company issued to noteholders five-year warrants to acquire up to 300,000 shares of common stock at $4.00 per share.

These Convertible Notes contain certain adjustment provisions that apply in connection with any stock split, stock dividend, stock combination, recapitalization or similar transactions.

The Warrants are exercisable for shares of the Company’s common stock upon the payment in cash of the exercise price. The exercise price of the Warrants is subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the Company’s common stock.

The Company evaluated whether or not the convertible notes and warrants above contained embedded conversion options, which meet the definition of a derivatives under ASC Topic 815.  The Company concluded that since the above convertible notes had a fixed conversion price, the convertible notes were not derivative instruments.

The convertible notes were analyzed to determine if the convertible notes have an embedded beneficial conversion feature (BCF). Based on this analysis, the Company concluded that the effective conversion price was greater than the fair value of the Company’s common stock on the note dates and therefore no BCF was recorded.

For the three months ended March 31, 2018 and 2017, amortization of debt discount related to these convertible notes amounted to $11,496 and $13,242, respectively, which has been included in interest expense on the accompanying condensed consolidated statements of operations.

As of March 31, 2018 and December 31, 2017, accrued interest payable amounted to $13,874 and $11,102, respectively. The weighted average interest rate for the three months ended March 31, 2018 and 2017 was approximately 11.0% and 10.0%, respectively.

At March 31, 2018 and December 31, 2017, the convertible debt consisted of the following:

At March 31, 2018, debt maturitiesare $200,000in 2019 and $200,000 in 2020.

ARISTA FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2018

NOTE 5 –NOTE PAYABLE

On December 31, 2017, the Company issued an 8% promissory notes to a third party in the amount of $50,000. In connection with this promissory note, at December 31, 2017, the Company recorded $24,000a subscription receivable of $50,000. The funds were received in compensation expenseJanuary 2018. The unpaid principal and interest is payable on June 8, 2018. In connection with this 8% note, on December 31, 2017, the Company issued to this noteholder five-year warrants to acquire up to 25,000 shares of common stock at $0.01 per share. The warrants are exercisable for shares of the Company’s common stock upon the payment in cash of the exercise price. The exercise price of the Warrants is subject to adjustment in the current periodevent of certain stock dividends and is alsodistributions, stock splits, stock combinations, reclassifications or similar events affecting the Company’s common stock.

As discussed above, in connection with this note payable, the Company granted a warrant to acquire an aggregate of 25,000 shares of common stock to noteholder. In December 2017, on the issuance date of the warrant, the fair value of the warrants of $16,345 was recorded as a debt discount and an increase to paid-in capital, respectively. At March 31, 2018 and December 31, 2017, note payable consisted of the following:

For the three months ended March 31, 2018 and 2017, amortization of debt discount related to this note amounted to $8,173 and $0, respectively, which has been included in accruedinterest expense as of December 31, 2016 on the accompanying balance sheet.condensed consolidated statements of operations.

On January 29, 2015, the Company received $7,000 from an entity owned by a stockholder of the Company. Pursuant to the terms of the note, the note is non-interest bearing, unsecured and is due on demand. Total balance due at December 31, 2016 and June 30, 2016 was $7,000.

TheNotes payable – related parties

In December 2017, 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, 2014issued 8% promissory notes to certain officers and $25,000 on July 10, 2014 from an entity owned by a stockholderdirectors of the Company. Total balance dueCompany in the aggregate amount of $50,000. The unpaid principal and interest is payable on June 8, 2018. In connection with these 8% notes, in December 2017, the Company issued to these related party noteholders five-year warrants to acquire up to 25,000 shares of common stock at $0.01 per share These warrants are exercisable for shares of the Company’s common stock upon the payment in cash of the exercise price and they are also exercisable on a cashless basis. The exercise price of the Warrants is subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the Company’s common stock.

As discussed above, in connection with the notes payable, the Company granted warrants to acquire an aggregate of 25,000 shares of common stock to note holders. In December 2017, on the issuance date of the respective warrants, the fair value of the warrants of $16,053 was recorded as a debt discount and an increase to paid-in capital, respectively.

At March 31, 2018 and December 31, 2016 and June 30, 2016 was $160,000.  Pursuant to the terms2017, notes payable – related parties consisted of the notes, the notes are non-interest bearing, unsecured and are due on demand. following:

In connection with related party convertible note and notes payable, the weighted average interest rate for the three months ended March 31, 2018 and the year ended December 31, 2017 was approximately 8.0% and 9.9%, respectively.

For the three months ended March 31, 2018 and 2017, amortization of debt discount related to these related party convertible notes and notes payable amounted to $8,027 and $189, respectively, which has been included in interest expense – related parties on the accompanying condensed consolidated statements of operations.

As of March 31, 2018 and December 31, 2017, accrued interest payable - related parties amounted to $2,492 and $186, respectively. For the three months ended March 31, 2018 and 2017, interest expense - related parties amounted to $9,635 and $929, respectively.

ARISTA FINANCIAL CORP. AND SUBSIDIARY

PRACO CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2018

AS OF DECEMBER 31, 2016Due to related party

(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 byIn December 2017, a stockholder of the Company. Total balance due at December 31, 2016 and June 30, 2016 was $56,078. Pursuant to the terms of the notes, the notes are non-interest bearing, unsecured and are due on demand. 

As needed, Green Homes Real Estate, LP, an entity indirectly owned by a stockholderdirector of the Company transfers fundsadvanced $15,000 to the Company to cover operating expenses. Those transfers are as follows: $20,722 on November 13, 2014, $10,000 on March 17, 2015, $4,500 on May 22, 2015, $20,000 on July 27, 2015, $20,000 on November 30, 2015, $15,000 on February 11, 2016, $5,000 on July 26, 2016, $3,831 on August 25, 2016 and $600 on December 31, 2016,for working capital purposes. The advance in exchange for various notes payable. Total balance due at December 31, 2016 and June 30, 2016 was $99,653 and $90,222, respectively.  Pursuant to the terms of the notes, the notes are non-interest bearing unsecured and dueis payable on demand.demand, On January 1, 2018, the advance was converted into a line of credit promissory note.

As needed, Philly Residential Acquisition LP, an entity indirectly owned by a stockholderLine 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 17,1, 2018, the Company entered into a line of credit promissory note with a company owned by a director of the Company in the principal amount of $50,000 or such lesser amount as may be borrowed by the Company. This line of credit promissory note shall bear interest at the rate of 12% per annum and such interest shall be paid each month. The entire outstanding principal amount of this Note shall be due and payable on December 31, 2018. On the Maturity Date, if this Note has not been paid in full, it shall bear interest from inception at the rate of 18% per annum until paid in full. On January 1, 2018, the Company reclassified $15,000 of advances received by this related party entity into this promissory note. Additionally, during the three months ended March 31, 2018, the Company borrowed an additional $20,000 pursuant to the line of credit agreement. At March 31, 2018, amounts due under the line of credit amounted to $35,000.

Office rent - related party

During 2016 and through June 2017, the Company received $12,500continued to rent its office space from HWC, LLC, a subsidiary of Hawk Opportunity Fund, L.P. Pursuant to the termsDirector of the note,Company on a month-to-month basis for $500 per month. In July 2017, the note is non-interest bearing, unsecuredCompany continues to rent its office space this Director on a month-to-month basis for $750 per month. For the three months ended March 31, 2018 and 2017, rent expense – related party amounted to $2,250 and $1,500, respectively, and is dueincluded in general and administrative expenses on demand. the accompanying condensed consolidated statements of operations.

NOTE 7 –STOCKHOLDERS’ DEFICIT

Preferred Stock

The Company has 5,000,000 shares of preferred stock authorized. Preferred stock may be issued in one or more series. The Company’s board of directors is authorized to issue the shares of preferred stock in such series and to fix from time to time before issuance thereof the number of shares to be included in any such series and the designation, powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations or restrictions thereof, of such series. 

Common stock issued for services

On March 1, 2018 and effective on March 15. 2018, the Company entered into a six-month consulting agreement for business development services. In connection with the consulting agreement, the Company issued 60,000 shares of its common stock. The shares were valued at their fair value of $69,000 or $1.15 per common share which was the fair value on the date of grant based on the closing quoted share price on the date of grant. In connection with these shares, the Company recorded stock-based consulting fees of $5,750 and prepaid expenses of $63,250 which will be amortized over the remaining agreement term.

Stock options

Effective January 1, 2018, in connection with an employment agreement (see Note 8), the Company granted to its CEO options to purchase 300,000 shares of the Company’s common stock at an exercise price of $1.00 per share. The grant date of the options was January 1, 2018 and the options expire on January 1, 2023. The options vest as to (i) 100,000 of such shares on January 1, 2019, and (ii) as to 100,000 of such shares on January 1, 2020 and 100,000 of such shares on January 1, 2021. The fair value of this option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: dividend yield of 0%; expected volatility of 100%; risk-free interest rate of 2.20%; and, an estimated holding period of 5 years. In connection with these options, the Company valued these options at a fair value of $225,193 and will record stock-based compensation expense over the vesting period. For the three months ended March 31, 2018 and 2017, the Company recorded stock-based compensation expense of $34,404 and $0, respectively.

At March 31, 2018, there were 300,000 options outstanding and no options vested and exercisable. As of March 31, 2018, there was $190,789 of unvested stock-based compensation expense to be recognized through September 2018. The aggregate intrinsic value at March 31, 2018 was approximately $0 and was calculated based on the difference between the quoted share price on March 31, 2018 and the exercise price of the underlying options.

ARISTA FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2018

Stock option activities for the three months ended March 31, 2018 is summarized as follows: