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PRACO CORP - 10-K - Management's Discussion and Analysis of Financial Conditions and Results of Operations.(Edgar Glimpses Via Acquire Media NewsEdge) The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like "believe", "expect", "estimate", "anticipate", "intend", "project" and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions. Plan of Operations The Company was incorporated on December 15, 2009 as Hunt for Travel, Inc. to design and market travel excursions featuring entertainment, adventure, intellectual stimulation and access to experts on topics related to the destinations they visit. The Company is now a "shell company" as defined in Rule 12b-2 promulgated under the Exchange Act, as amended, as we have no operations. Our current intention is to close the Exchange Agreement, as 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. On July 3, 2012, the Company entered into an exchange agreement (the "Exchange Agreement") with Hawk Opportunity Fund, LP, a Delaware limited partnership ("Hawk"), Philly Residential Acquisition LP, a Pennsylvania limited partnership ("Philly"), Green Homes Real Estate, LP, a Pennsylvania limited partnership ("GH"), Nidus, LP, a Delaware limited partnership ("Nidus"), and several other related parties. Pursuant to the Exchange Agreement, the Company will issue 3,100,000 shares of its common stock, par value $0.0001 per share, to Hawk, and in connection therewith, the Company will receive 89% of the aggregate equity interest of each of Philly, GH, and Nidus. 4 The Closing is still subject to certain conditions such as the completion of an audit of Philly, GH, and Nidus, and the approval of the transaction from lender, if necessary. These conditions of Closing have not occurred and they may never be fulfilled, so the Exchange Agreement may never close. As the Exchange Agreement has not yet closed, the Company has no interest in Philly, GH, Nidus, or any real estate at this time. Philly, GP, and Nidus 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 Exchange Agreement closes, the Company will be the majority-owner and assume the operations of each of Philly, GP, and Nidus. Through these majority-owned subsidiaries, the Company will own and manage real estate around Philadelphia and the Delaware Valley. The Company no longer operates in the travel industry sector. 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 and possible rejection of our business model and/or sales methods. Results of Operations For the Year Ended June 30, 2014 Compared to the Year Ended June 30, 2013 We had $0 in revenue for the fiscal year ended June 30, 2014 as well as the fiscal year ended June 30, 2013. Operating Expenses for the fiscal years June 30, 2014 and 2013 were $105,434 and $97,551, respectively. Expenses for the year ended June 30, 2014 consisted of $84,000 in professional fees and $21,434 for general and administrative expenses. Expenses for the year ended June 30, 2013 consisted of $82,730 in professional fees and $14,821 for general and administrative expenses. Capital Resources and Liquidity As of June 30, 2014, we had $3,746 cash on hand. The Company does not anticipate generating any revenues until it closes the Exchange Agreement. After the Closing, if the Closing occurs, the Company will re-position itself as an owner and manager of real estate. At such time, the Company anticipates that it will generate revenues through rental income from the real property owned by its future majority-owned subsidiaries. We believe that our expenses will be very limited until the Closing, however, we must obtain additional funds in order to support our daily operations until that time. As a result, we will have to raise funds by obtaining loans from related parties or issue common stock in exchange for cash. However, we cannot make any assurance that we will be able to receive funds. If the Share Exchange Agreement is never consummated, 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 raised 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 newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. 5 Off-Balance Sheet Arrangements We have no off-balance sheet arrangements. Critical Accounting Policies Use of Estimates In preparing financial statements in conformity with generally accepted accounting principles, 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. 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 Accounting Standards Codification Topic 260, "Earnings Per Share." As of June 30, 2014 and 2013, 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 reported in the balance sheets for accounts payable and notes payable approximate fair value based on the short-term maturity of these instruments. |