Item 1. Business.
Praco Corporation (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. This segment of the travel industry is referred to as enrichment or adventure travel. We are currently a “shell company” as defined in Rule 12b-2 promulgated under the Exchange Act and have no operations at this time.
On February 16, 2012, the board of directors and the majority shareholder of the Company approved the name change of the Company from Hunt for Travel, Inc. to Praco Corporation.
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.
The closing of the Exchange Agreement (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 lenders, if necessary. These conditions of Closing have not occurred and they may never be fulfilled, so the Exchange Agreement may never close. As the Closing has not yet occurred, 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.
Item 1A.
Item 1A. Risk Factors.
Not required for smaller reporting companies.
Item 1B.
Item 1B. Unresolved Staff Comments.
None.
Item 2.
Item 2. Properties
Our principal executive office is located at 90122 Hoey Road Chapel Hill, North Carolina, 27517. Our telephone number is (919)-889-9461. Office space is provided by our sole officer and director, Carolyn Hunter, at no cost.
Item 3.
Item 3. Legal Proceedings.
We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of the Company, threatened against or affecting the Company, our common stock, or the Company’s officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
Item 4.
Item 4. Mine Safety Disclosures.
Not applicable.
PART II
Item 5.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Our stock is listed on the OTCQB under the symbol “PRAY”. There is currently no established trading market for shares of our common stock of. Management does not expect any viable market to develop in our common stock unless and until we complete an acquisition or merger. In any event, no assurance can be given that any market for our common stock will develop or be maintained.
Common Stock
Our Certificate of Incorporation authorizes the issuance of up to 100,000,000 shares of common stock, par value $0.0001 per share. The Common Stock is listed on the over the counter bulletin board under the symbol “PRAY”. As of October 4, 2013, there were 42 shareholders of record holding an aggregate of 6,902,500 shares of common stock.
Preferred Stock
Our certificate of incorporation authorizes the issuance of up to 5,000,000 shares of preferred stock, par value $0.0001 per share. As of September 27, 2013, there were no shares of preferred stock issued and outstanding.
Dividends
To date, we have not declared or paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors will have the discretion to declare and pay dividends in the future.
Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, which our Board of Directors may deem relevant.
Securities Authorized for Issuance Under Equity Compensation Plans
We presently do not have any equity based or other long-term incentive programs. In the future, we may adopt and establish an equity-based or other long-term incentive plan if it is in the best interest of the Company and our stockholders to do so.
Item 6.
Item 6. Selected Financial Data.
We are not required to provide the information required by this Item because we are a smaller reporting company.
Item 7.
Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations.
The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like “believe”, “expect”, “estimate”, “anticipate”, “intend”, “project” and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.
Plan of Operations
The Company was incorporated on December 15, 2009 as Hunt for Travel, Inc. to design and market travel excursions featuring entertainment, adventure, intellectual stimulation and access to experts on topics related to the destinations they visit. The Company is now a “shell company” as defined in Rule 12b-2 promulgated under the Exchange Act, as amended, as we have no operations. 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.
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, 2013 Compared to the Year Ended June 30, 2012
For the fiscal year ended June 30, 2013, we had $0 in revenue, versus and $76 in revenue for the fiscal year ended June 30, 2012, respectively. The decrease in revenue was the result of the Company ceasing operations in the travel industry sector in anticipation of the Share Exchange Agreement.
Operating Expenses for the fiscal years ended year ended June 30, 2013 and 2012 were $97,551 and $114,331, respectively. Expenses for the year ended June 30, 2013 consisted of $82,730 in professional fees and $14,821 for General and administrative expenses. Expenses for the year ended June 30, 2012 consisted of $96,592 in professional fees and $17,739 for General and administrative expenses.
Capital Resources and Liquidity
As of June 30, 2013, we had $827 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.
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, 2013 and 2012, 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.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are not required to provide the information required by this Item because we are a smaller reporting company.
Item 8.
Item 8. Financial Statements and Supplementary Data.
PRACO CORPORATION
(F/K/A HUNT FOR TRAVEL, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of: Praco Corporation
(A Development Stage Company)
We have audited the accompanying balance sheets of Praco Corporation (a development stage company) (the “Company”) as of June 30, 2013 and 2012 and the related statements of operations, changes in stockholders’ equity/(deficiency) and cash flows for the years ending June 30, 2013 and 2012 and for the period from December 15, 2009 (Inception) to June 30, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of Praco Corporation (a development stage company) as of June 30, 2013 and 2012 and the results of its operations and its cash flows for the years ending June 30, 2013 and 2012 and for the period from December 15, 2009 (inception) to June 30, 2013 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 6 to the financial statements, the Company is in the development stage with minimal operations, used cash in operations of $340,286 from inception and has a net loss since inception of $378,838. The Company also has a working capital deficiency and stockholders’ deficiency of $105,274. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans concerning these matters are also described in Note 6. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
LIGGETT, VOGT & WEBB, P.A.
Certified Public Accountants
Boynton Beach, Florida
October 8, 2013
Praco Corporation
(f/k/a Hunt for Travel, Inc.)
(A Development Stage Company)
Balance Sheets
See accompanying notes to financial statements
Praco Corporation
(f/k/a Hunt for Travel, Inc.)
(A Development Stage Company)
Statements of Operations
See accompanying notes to financial statements
Praco Corporation
(f/k/a Hunt for Travel, Inc.)
(A Development Stage Company)
Statement of Changes in Stockholders' Equity /(Deficiency)
For the period from December 15, 2009 (Inception) to June 30, 2013
See accompanying notes to financial statements
Praco Corporation
(f/k/a Hunt for Travel, Inc.)
(A Development Stage Company)
Statements of Cash Flows
See accompanying notes to financial statements
PRACO CORPORATION
(F/K/A HUNT FOR TRAVEL, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE 30, 2013
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
(A) Organization
Hunt for Travel, Inc. (a development stage company) (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.
Activities during the development stage include developing the business plan and raising capital.
(B) 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. Significant estimates include valuation of equity based transactions, valuation of deferred tax assets and valuation of in-kind contribution of services.
(C) Cash and Cash Equivalents
The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At June 30, 2013 and 2012, 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 FASB ASC No. 260, “Earnings Per Share.” As of June 30, 2013 and 2012 there were no common share equivalents outstanding.
PRACO CORPORATION
(F/K/A HUNT FOR TRAVEL, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE 30, 2013
(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.
As of June 30, 2013, the Company has a net operating loss carryforward of approximately $351,129 available to offset future taxable income through June 30, 2033. The valuation allowance at June 30, 2013 was $135,365. The valuation allowance at June 30, 2012 was $99,764. The net change in the valuation allowance for the year ended June 30, 2013 was an increase of $35,601. The valuation allowance was established to reduce the deferred tax asset to the amount that will more likely than not be realized. This is necessary due to the Company’s continued operating losses and the uncertainty of the Company’s ability to utilize all of the net operating loss carryforwards before they will expire through the year 2033. The Company’s federal income tax returns for the years ended June 30, 2009 through June 30, 2013 remain subject to examination by the Internal Revenue Service as of June 30, 2013.
The net deferred tax liability in the accompanying balance sheets includes the following amounts of deferred tax assets and liabilities:
PRACO CORPORATION
(F/K/A HUNT FOR TRAVEL, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE 30, 2013
The Company's income tax expense differed from the statutory rates (federal 34% and state 6.9%) as follows:
PRACO CORPORATION
(F/K/A HUNT FOR TRAVEL, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE 30, 2013
(F) Business Segments
The Company operates in one segment and therefore segment information is not presented.
(G) Accounts Receivable
Accounts receivable represents obligations from customers that are subject to normal collection terms. The Company periodically evaluates the collectability of its accounts receivable and considers the need to adjust an allowance for doubtful accounts based upon historical collection experience and specific customer information. Actual amounts could vary from the recorded estimates.
(H) 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.
(I) Concentration of Credit Risk
For the year ended June 30, 2012, 100% of sales earned were from one Customer.
(J) 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.
(K) Recent Accounting Pronouncements
Recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC, did not, or are not believed by management, to have a material impact on the Company’s present or future financial statements.
PRACO CORPORATION
(F/K/A HUNT FOR TRAVEL, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE 30, 2013
NOTE2
NOTE PAYABLE
On April 30, 2013 the Company received $30,000 from an unrelated party. Pursuant to the terms of the note, the note was non-interest bearing, unsecured and was due on demand. As of June 30, 2013, the Company recorded $351 as an in-kind contribution of interest (See Note 3(B)).
During the year ended June 30, 2012, the Company received $10,830 from an unrelated party. Pursuant to the terms of the note, the note was non-interest bearing, unsecured and was due on demand. As of June 30, 2012, a stockholder paid $10,830 of the note payable on the Company's behalf, which was recorded as an in kind contribution of capital (See Note 3(E)). Interest of $232 was also recorded an in kind contribution (See Note 3(B)).
The Company has issued three notes payable to a Company as follows: on June 25, 2012 the Company received $8,500, on September 14, 2012 the Company received $20,000, and on January 17, 2013 the Company received $27,578. 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. As of June 30, 2013 and 2012, the Company recorded $2,470 and $158, respectively, as an in-kind contribution of interest (See Note 3(B)).
On June 5, 2012 the Company received $9,000 from an unrelated party. Pursuant to the terms of the note, the note was non-interest bearing, unsecured and was due on demand. For the year ended June 30, 2013 and 2012, the Company recorded $495 and $202, respectively as an in-kind contribution of interest (See Note 3(B)).
NOTE3
STOCKHOLDERS’ EQUITY
(A) Common Stock Issued for Cash
On August 15, 2012, the Company issued 5,000 shares of common stock for $10,000 ($2/share).
For the year ended June 30, 2012, the Company issued 10,000 shares of common stock for $10,000 ($1/share).
For the year ended June 30, 2011, the Company issued 22,500 shares of common stock for $2,250 ($0.10/share) and paid $1,825 in offering costs.
For the year ended June 30, 2010, the Company issued 1,865,000 shares of common stock for $186,500 ($0.10/share) and paid $13,500 in offering costs. The Company also issued 1,000,000 shares of common stock to its founder for $100 ($0.0001 per share) (See Note 5).
PRACO CORPORATION
(F/K/A HUNT FOR TRAVEL, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE 30, 2013
(B) In-Kind Contribution of services and interest
For the year ended June 30, 2013, the Company recorded $3,316 as an in kind contribution of interest (See Note 2).
For the year ended June 30, 2012, the Company recorded $592 as an in kind contribution of interest (See Note 2).
For the year ended June 30, 2013, shareholders of the Company contributed services having a fair value of $5,200 (See Note 5).
For the year ended June 30, 2012, shareholders of the Company contributed services having a fair value of $10,021 (See Note 5).
For the year ended June 30, 2011, a shareholder of the Company contributed services having a fair value of $5,200 (See Note 5).
For the year ended September 30, 2010, a shareholder of the Company contributed services having a fair value of $2,800 (See Note 5).
(C) Stock Issued for Services
On December 15, 2009, the Company issued 4,000,000 shares of common stock to its founder having a fair value of $400 ($0.0001/share) based on a recent cash price in exchange for services provided (See Note 5).
(D) Amendment to Articles of Incorporation
Effective February 21, 2012, the Company Amended its Certificate of Incorporation to change its name from Hunt for Travel, Inc. to Praco Corporation.
(E) Expenses paid on Company's behalf
For the year ended June 30, 2012, stockholders paid $52,510 of accounts payable, loans payable and accrued interest on the Company’s behalf, which was recorded as an in kind contribution of capital (See Note 5).
NOTE 4
COMMITMENTS
On February 8, 2010, the Company entered into a consulting agreement with Europa Capital Investments, LLC to receive 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, the agreement was terminated but services were still provided as a contribution.
PRACO CORPORATION
(F/K/A HUNT FOR TRAVEL, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE 30, 2013
On April 1, 2012, the Company entered into a new consulting agreement with Europa Capital Investments, LLC for administrative and other miscellaneous services. The terms of the agreement remain the same as the prior agreement.
NOTE 5
RELATED PARTY TRANSACTIONS
For the year ended June 30, 2013, shareholders of the Company contributed services having a fair value of $5,200 (See Note 3(B)).
For the year ended June 30, 2012, shareholders of the Company contributed services and in-kind interest having a fair value of $10,613 (See Note 3(B)).
During the year ended June 30, 2012, the principal stockholder paid $52,510 of accounts payable, loans payable and accrued interest on the Company’s behalf, which was recorded as an in kind contribution of capital (See Note 3(E)).
For the year ended June 30, 2011, a shareholder of the Company contributed services having a fair value of $5,200 (See Note 3(B)).
For the year ended June 30, 2010, a shareholder of the Company contributed services having a fair value of $2,800 (See Note 3(B)).
On December 19, 2009, the Company issued 5,000,000 shares of common stock to its founder having a fair value of $500 ($0.0001/share) in exchange for services and cash (See Note 3 (A) and 3 (C)).
NOTE 6 GOING CONCERN
As reflected in the accompanying financial statements, the Company is in the development stage with minimal operations, used cash in operations of $ 340,286 from inception and has a net loss since inception of $378,838. The Company also has a working capital deficiency and stockholders’ deficiency of $105,274. 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.
PRACO CORPORATION
(F/K/A HUNT FOR TRAVEL, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE 30, 2013
NOTE 7
SUBSEQUENT EVENTS
On July 12, 2013, the Company received a note for $30,000. Pursuant to the terms of the note, the note was non-interest bearing, unsecured and was due on demand.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s President, Chief Financial Officer, Secretary, Treasurer and Director, of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Management's Annual Report on Internal Control Over Financial Reporting.
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our internal control system was designed to, in general, provide reasonable assurance to the Company’s management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of the Company’s internal control over financial reporting as of June 30, 2013. The framework used by management in making that assessment was the criteria set forth in the document entitled “ Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our President have determined and concluded that, as of June 30, 2013, the Company’s internal control over financial reporting was effective.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.
Changes in Internal Control over Financial Reporting
No change in our system of internal control over financial reporting occurred during the period covered by this report, fourth quarter of the fiscal year ended June 30, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B.
Item 9B. Other Information.
None.
PART III
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance.
The following table sets forth the name and age of our sole officer and director as of September 30, 2013. Our Executive officer is elected annually by our Board of Director. Our executive officer holds office until she resigns, is removed by the Board, or her successor is elected and qualified.
Set forth below is a brief description of the background and business experience of our executive officers and directors for the past five years.
Carolyn Hunter, President, Chief Financial Officer, Secretary, Treasurer and Director, Age 68, Carolyn Hunter has over twenty two (22) years experience working in the travel services industry. From November 1988 to September 1991, Carolyn Hunter began her career as a travel consultant with Sanditz Travel, formerly known as All Points Travel located in Simsbury, Connecticut. Her responsibilities included providing customers with professional and expert advice regarding the sale of travel related products and services to customers, on behalf of suppliers, such as airlines, car rentals, cruise lines, hotels, railways, sightseeing tours and package holidays. From January 1998 through December 1998, Ms. Hunter worked for WorldTek Travel as a corporate travel manager. Her responsibilities in this capacity included managing and supervising the agency’s sales department. From March 2000 to present, Ms. Hunter has worked as a travel agent on a part-time basis for Traveling of Chapel Hill, North Carolina, formerly known as Circle Travel where she is responsible for consulting potential customers with their travel plans. In December of 1994, Ms. Hunter obtained a Certified Travel Consultant degree. Additionally, from 1961 through 1965, Ms. Hunter obtained a Bachelor of Arts degree from Baker University located in Baldwin, Kansas.
Term of Office
Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.
Employment Agreements
We currently do not have an employment agreement with Ms. Hunter.
Certain Legal Proceedings
To the best of our knowledge, none of our directors or executive officers has, during the past ten years:
·
been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
·
had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;
·
been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;
·
been found by a court of competent jurisdiction in a civil action or by the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
·
been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
·
been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.
Code of Ethics
We have not adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions, because of the small number of persons involved in the management of the Company.
Board Committees
Our Board of Directors has no separate committees and our Board of Directors acts as the audit committee and the compensation committee. We do not have an audit committee financial expert serving on our Board of Directors
Item 11.
Item 11. Executive Compensation.
The following sets forth information with respect to the compensation awarded or paid to Ms. Hunter, our President, Chief Financial Officer, Secretary, Treasurer and Director for all services rendered by her in all capacities to us in fiscal 2012 and 2013.
Summary Compensation Table
The following table sets forth information regarding each element of compensation that we pay or award to Ms. Hunter for fiscal 2012 and 2013.
Outstanding Equity Awards at Fiscal Year-End Table
We had no outstanding equity awards as of the end of fiscal 2013.
Compensation of Directors
Our sole director, Ms. Carolyn Hunter is not compensated for her services as a director.
Compensation Committee Interlocks and Insider Participation
Our Board of Directors does not have a compensation committee and the entire Board of Directors performs the functions of a compensation committee.
No member of our Board of Directors has a relationship that would constitute an interlocking relationship with our executive officers or directors or another entity.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table provides the names and addresses of each person known to us to own more than 5% of our outstanding shares of common stock as of September 27, 2013 and by the officers and directors, individually and as a group. Except as otherwise indicated, all shares are owned directly and the shareholders listed possesses sole voting and investment power with respect to the shares shown.
(1)
Based on 6,902,500 shares of common stock outstanding as of September 30, 2013.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Except as disclosed below, there have been no transactions in which the amount involved exceeds the lesser of $120,000 or one percent of the average of the Company’s total assets at year end for the last two completed fiscal years:
For the year ended June 30, 2013, shareholders of the Company contributed services having a fair value of $5,200.
For the year ended June 30, 2012, shareholders of the Company contributed services and in-kind interest having a fair value of $10,613.
During the year ended June 30, 2012, the principal stockholder paid $52,510 of accounts payable, loans payable and accrued interest on the Company’s behalf, which was recorded as an in kind contribution of capital.
Pursuant to the Exchange Agreement discussed above in “Item 1. Business”, upon the Closing, 4,750,000 of the shares of common stock of the Company held by Carolyn Hunter will be canceled and she will resign from her positions as chief executive officer and sole director of the Company, and appoint R. Scott Williams as the sole member and chairman of the board of directors, Walker Robinson as President, and David S. Callan as Secretary, or their successors or assigns. In addition, within one month of Closing, Ms. Hunter will receive $25,000 from Hawk Opportunity Fund, LP, part of which she must use to pay off all of the outstanding liabilities of the Company.
Director Independence
We do not have any independent directors. Because our common stock is not currently listed on a national securities exchange, we have used the definition of “independence” of The NASDAQ Stock Market to make this determination. NASDAQ Listing Rule 5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the company or any other individual having a relationship which, in the opinion of the Company’s Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The NASDAQ listing rules provide that a director cannot be considered independent if:
●
the director is, or at any time during the past three years was, an employee of the company;
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the director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for board or board committee service);
●
a family member of the director is, or at any time during the past three years was, an executive officer of the company;
●
the director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exclusions);
●
the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the company served on the compensation committee of such other entity; or
●
the director or a family member of the director is a current partner of the company’s outside auditor, or at any time during the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit.
We do not currently have a separately designated audit, nominating or compensation committee.
Item 14.
Item 14. Principal Accounting Fees and Services.
Audit Fees
For the Company’s fiscal years ended June 30, 2013 and June 30, 2012, we were billed approximately $13,400 and $9,500, respectively, for professional services rendered for the audit and reviews of our financial statements.
Audit Related Fees
The Company did not incur any audit related fees, other than the fees discussed in Audit Fees, above, for services related to our audit for the fiscal years ended June 30, 2013 and June 30, 2012.
Tax Fees
For the Company’s fiscal years ended June 30, 2013 and June 30, 2012, we were not billed for professional services rendered for tax compliance, tax advice, and tax planning.
All Other Fees
The Company did not incur any other fees, other than fees discussed in Audit fees, above, for services related to our audit for the fiscal years ended June 30, 2013 and 2012.
Pre-Approval of Services
We do not have an audit committee. As a result, our Board of Directors performs the duties of an audit committee. Our Board of Directors evaluates and approves in advance the scope and cost of the engagement of an auditor before the auditor renders the audit and non-audit services. We do not rely on pre-approval policies and procedures.
PART IV
Item 15.
Item 15. Exhibits, Financial Statement Schedules.
(a)
The following documents are filed as part of this report:
Financial Statements:
The balance sheets of the Company as of June 30, 2013 and June 30, 2012, the related statements of operations, changes in stockholders’ equity (deficiency) and cash flows for the years then ended, the footnotes thereto, and the report of Liggett, Vogt &Webb, P.A., independent auditors, are filed herewith.
Exhibits:
The exhibits listed in the accompanying index to exhibits are filed or incorporated by reference as part of this Report.
(b)
The following are exhibits to this Report and, if incorporated by reference, we have indicated the document previously filed with the SEC in which the exhibit was included.
(1) Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on July 3, 2012.
(2) Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on October 7, 2010.
(3) Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on February 22, 2012.
(4) Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on March 7, 2011
* In accordance with the SEC Release 33-8238, deemed being furnished and not filed.
** Furnished herewith. XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: October 8, 2013
Praco Corporation
/s/ Carolyn Hunter
Name: Carolyn Hunter
President, Chief Financial Officer, Treasurer, Secretary,
Principal Executive Officer,
Principal Financial Officer
Principal Accounting Officer, Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Carolyn Hunter
President, Chief Financial Officer, Treasurer, Secretary, and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)
October 8, 2013
Carolyn Hunter