PINX:PRAY Praco Corp Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
 
FORM 10-Q
_______________
 
(Mark One)
 
x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2012
 
or
 
o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to______
 
PRACO CORPORATION
 (Exact name of registrant as specified in its charter)
 
Nevada
 
333-169802
 
27-1497347
(State or other jurisdiction of incorporation or organization)
 
(Commission File Number)
 
(I.R.S. Employee Identification No.)

90122 Hoey Road
Chapel Hill, NC 27517
 (Address of principal executive offices and zip codes)
 _______________
 
(919) 889-9461
 (Registrants telephone number, including area code)
_______________

Hunt for Travel, Inc.
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company’ in Rule 12b-2 of the Exchange Act. 
 
Large Accelerated Filer o
 
Accelerated Filer o
 
       
Non-Accelerated Filer   o (Do not check if a smaller reporting company)
Smaller Reporting Company x
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No o
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock: As of May 14, 2012, there were 6,897,500 shares, par value $.0001 per share, of Common Stock issued and outstanding.
 
 
 

 
 
PRACO CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FORM 10-Q
 
March 31, 2012
 
TABLE OF CONTENTS
 
 
PART I-- FINANCIAL INFORMATION
 
     
Item 1.
Financial Statements
1
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
12
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
15
Item 4.
Controls and Procedures
15
     
PART II--OTHER INFORMATION
 
     
Item 1.
Legal Proceedings
16
Item 1A.
Risk Factors
16
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
16
Item 3.
Defaults Upon Senior Securities
16
Item 4.
Mine Safety Disclosures
16
Item 5.
Other Information
16
Item 6.
Exhibits
16
     
SIGNATURE
17
 
 
 
 

 
 
PART I-- FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
PRACO CORPORATION
(F/K/A HUNT FOR TRAVEL, INC.)
(A DEVELOPMENT STAGE COMPANY)
 
CONTENTS
 
PAGE
2
CONDENSED BALANCE SHEETS AS OF MARCH 31, 2012 (UNAUDITED) AND JUNE 30, 2011
     
PAGE
3
CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2012 AND 2011, AND FOR THE PERIOD FROM DECEMBER 15, 2009 (INCEPTION) TO MARCH 31, 2012 (UNAUDITED)
     
PAGE
4
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY/(DEFICIENCY)FOR THE PERIOD FROM DECEMBER 15, 2009 (INCEPTION) TO MARCH 31, 2012 (UNAUDITED)
     
PAGE
5
CONDENSED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED MARCH 31, 2012 AND 2011, AND FOR THE PERIOD FROM DECEMBER 15, 2009 (INCEPTION) TO MARCH 31, 2012 (UNAUDITED)
     
PAGES
6 - 11
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
     


 
1

 
 
Praco Corporation
(f/k/a Hunt for Travel, Inc.)
(A Development Stage Company)
Condensed Balance Sheets
   
   
ASSETS
   
March 31,
2012
   
June 30,
2011
 
   
(Unaudited)
       
             
Current Assets
           
  Cash
  $ 24     $ 11,182  
  Accounts Receivable, net of provision for uncollectible accounts of $0 and $0, respectively
    -       3,619  
  Prepaid Expenses
    -       4,000  
Total Assets
  $ 24     $ 18,801  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIENCY)
                 
Current Liabilities
               
  Accounts Payable
  $ 10,092     $ -  
Total  Liabilities
    10,092       -  
                 
Commitments and Contingencies
    -       -  
                 
Stockholders' Equity/(Deficiency)
               
  Preferred stock, $0.0001 par value; 5,000,000 shares authorized,
               
    none issued  and outstanding
    -       -  
  Common stock, $0.0001 par value; 100,000,000 shares authorized, 6,897,500 and 6,887,500 shares
               
    issued and outstanding, respectively
    690       689  
  Additional paid-in capital
    252,698       181,236  
  Less: Stock subscription receivable
    (10,000 )     -  
  Deficit accumulated during the development stage
    (253,456 )     (163,124 )
Total Stockholders' Equity/(Deficiency)
    (10,068 )     18,801  
                 
Total Liabilities and Stockholders' Equity
  $ 24     $ 18,801  
                 
 
See accompanying notes to condensed unaudited financial statements
 
2

 
 
Praco Corporation
 
(f/k/a Hunt for Travel, Inc.)
 
(A Development Stage Company)
 
Condensed Statements of Operations
 
(Unaudited)
 
   
   
   
For the Three Months Ended
   
For the Three Months Ended
   
For the Nine Months Ended
   
For the Nine Months Ended
   
For the period from December 15, 2009(inception) to
 
   
March 31, 2012
   
March 31, 2011
   
March 31, 2012
   
March 31, 2011
   
 March 31, 2012
 
                               
Revenue
  $ -     $ 350     $ 76     $ 700     $ 1,251  
                                         
Operating Expenses
                                       
Professional fees
    22,633       28,171       76,373       82,993       218,621  
General and administrative
    6,539       10,780       13,803       16,863       35,838  
Total Operating Expenses
    29,172       38,951       90,176       99,856       254,459  
                                         
Loss from Operations
    (29,172 )     (38,601 )     (90,100 )     (99,156 )     (253,208 )
                                         
Other Expense
                                       
Interest Expense
    (179 )     -       (232 )     -       (248 )
                                         
Total Other Income / (Expense) - net
    (179 )     -       (232 )     -       (248 )
                                         
LOSS FROM OPERATIONS BEFORE INCOME TAXES
    (29,351 )     (38,601 )     (90,332 )     (99,156 )     (253,456 )
                                         
Provision for Income Taxes
    -       -       -       -       -  
                                         
NET LOSS
  $ (29,351 )   $ (38,601 )   $ (90,332 )   $ (99,156 )   $ (253,456 )
                                         
Net Loss Per Share  - Basic and Diluted
  $ (0.00 )   $ (0.01 )   $ (0.01 )   $ (0.01 )        
                                         
Weighted average number of shares outstanding
                                       
  during the period - Basic and Diluted
    6,887,720       6,887,500       6,887,573       6,880,870          
                                         
 
See accompanying notes to condensed unaudited financial statements
 
3

 
 
Praco Corporation
 
(f/k/a Hunt for Travel, Inc.)
 
(A Development Stage Company)
 
Condensed Statement of Changes in Stockholders' Equity /(Deficiency)
 
For the period from December 15, 2009 (Inception) to March 31, 2012
 
(Unaudited)
 
                                                 
                                                 
                                 
Deficit
             
   
Preferred Stock
   
Common stock
   
Additional
   
accumulated during the
         
Total
Stockholders'
 
                           
paid-in
   
development
   
Subscription
    Equity/  
   
Shares
   
Amount
   
Shares
   
Amount
   
capital
   
stage
   
Receivable
   
(Deficiency)
 
                                                 
Balance December 15, 2009
    -     $ -       -     $ -     $ -     $ -     $ -     $ -  
                                                                 
Common stock issued for services to founder ($0.0001 per share)
    -       -       4,000,000       400       -       -       -       400  
                                                                 
Common stock issued for cash to founder ($0.0001 per share)
                    1,000,000       100       -       -               100  
                                                                 
Common stock issued for cash ($0.10/ per share)
    -       -       1,865,000       187       186,313       -               186,500  
                                                                 
Stock offering costs
    -       -       -       -       (13,500 )                     (13,500 )
                                                                 
In kind contribution of services
    -       -       -       -       2,800       -       -       2,800  
                                                                 
Net loss for the period December 15, 2009 (inception) to June 30, 2010
    -       -       -       -       -       (34,895 )     -       (34,895 )
                                                                 
Balance, June 30, 2010
    -       -       6,865,000       687       175,613       (34,895 )     -       141,405  
                                                                 
Common stock issued for cash ($0.10/ per share)
    -       -       22,500       2       2,248       -               2,250  
                                                                 
Stock offering costs
    -       -       -       -       (1,825 )     -               (1,825 )
                                                                 
In kind contribution of services
    -       -       -       -       5,200       -       -       5,200  
                                                                 
Net loss for the year ended June 30, 2011
    -       -       -       -       -       (128,229 )     -       (128,229 )
                                                                 
Balance, June 30, 2011
    -       -       6,887,500       689       181,236       (163,124 )     -       18,801  
                                                                 
In kind contribution of services and interest
    -       -       -       -       8,953       -       -       8,953  
                                                                 
Payment of accounts payable, debt and interest by shareholders on Company's behalf
    -       -       -       -       52,510       -       -       52,510  
                                                                 
Common stock issued for subscription receivable ($1.00/ per share)
    -       -       10,000       1       9,999       -       (10,000 )     -  
                                                                 
Net loss for the the nine month period ended March 31, 2012
    -       -       -       -       -       (90,332 )     -       (90,332 )
                                                                 
Balance, March 31, 2012
    -     $ -       6,897,500     $ 690     $ 252,698     $ (253,456 )   $ (10,000 )   $ (10,068 )
 
See accompanying notes to condensed unaudited financial statements
 
4

 
 
Praco Corporation
 
(f/k/a Hunt for Travel, Inc.)
 
(A Development Stage Company)
 
Condensed Statements of Cash Flows
 
(Unaudited)
 
                   
                   
   
For the Nine Months Ended
   
For the Nine Months Ended
   
For the period from December 15, 2009(inception) to
 
   
March 31, 2012
   
March 31, 2011
   
 March 31, 2012
 
Cash Flows Used in Operating Activities:
                 
Net Loss
  $ (90,332 )   $ (99,156 )   $ (253,456 )
  Adjustments to reconcile net loss to net cash used in operations
                       
    In-kind contribution of services and interest
    8,953       3,900       16,953  
    Shares issued to founder for services
    -       -       400  
  Changes in operating assets and liabilities:
                       
    (Increase)/Decrease in accounts receivable
    -       1,077       -  
    (Increase)/Decrease in prepaid expenses
    4,000       -       -  
    Decrease/(Increase) in amounts due from customer
    3,619       (3,103 )     -  
    Increase in accounts payable and accrued expenses
    10,092       1,286       10,092  
Net Cash Used In Operating Activities
    (63,668 )     (95,996 )     (226,011 )
                         
Cash Flows From Financing Activities:
                       
Proceeds from a note payable - stockholder
    10,830       -       10,830  
Repayment of note payable - stockholder
    (10,830 )     -       (10,830 )
Proceeds from issuance of common stock, net of offering costs
    -       425       173,525  
Contribution of capital by stockholders
    52,510       -       52,510  
Net Cash Provided by Financing Activities
    52,510       425       226,035  
                         
Net Increase (Decrease) in Cash
    (11,158 )     (95,571 )     24  
                         
Cash at Beginning of Period
    11,182       143,033       -  
                         
Cash at End of Period
  $ 24     $ 47,462     $ 24  
                         
Supplemental disclosure of cash flow information:
                       
                         
Cash paid for interest
  $ 179     $ -     $ 195  
Cash paid for taxes
  $ -     $ -     $ -  
                         
Supplemental disclosure of non-cash investing and financing activities:
                       
                         
Stock issued in exchange for subscription receivable $10,000 See Note 3(F ).
                       
                         
 
See accompanying notes to condensed unaudited financial statements
 
5

 
 
PRACO CORPORATION
(F/K/A HUNT FOR TRAVEL, INC.)
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF MARCH 31, 2012
(UNAUDITED)
 
NOTE 1     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

(A) Basis of Presentation

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

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

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.

(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 March 31, 2012 and June 30, 2011, the Company had no cash equivalents.
 
 
6

 
PRACO CORPORATION
(F/K/A HUNT FOR TRAVEL, INC.)
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF MARCH 31, 2012
(UNAUDITED)
 
 
(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 March 31, 2012 and March 31, 2011 there were no common share equivalents outstanding.

(E) Income Taxes

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

(F) 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 will recognize 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.
 
 
7

 
PRACO CORPORATION
(F/K/A HUNT FOR TRAVEL, INC.)
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF MARCH 31, 2012
(UNAUDITED)
 
(I) Concentration of Credit Risk

For the nine months ended March 31, 2012 and 2011, 100% of sales earned were from one Customer.
 
At June 30, 2011, 100% of accounts receivable were from one Customer.

(J) Fair Value of Financial Instruments
 
The carrying amounts of the Company’s financial instruments including accounts receivable and accounts payable, approximate fair value due to the relatively short period to maturity for these instruments.

(K) Recent Accounting Pronouncments
 
ASU No. 2011-03; Reconsideration of Effective Control for Repurchase Agreements.  In April, 2011, the FASB issued ASU No. 2011-03. The amendments in this ASU remove from the assessment of effective control the criterion relating to the transferor’s ability to repurchase or redeem financial assets on substantially the agreed terms, even in the event of default by the transferee. The amendments in this ASU also eliminate the requirement to demonstrate that the transferor possesses adequate collateral to fund substantially all the cost of purchasing replacement financial assets.

The guidance in this ASU is effective for the first interim or annual period beginning on or after December 15, 2011. The guidance should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. Early adoption is not permitted. The Company has adopted the methodologies prescribed by this ASU by the date required, and it did not have a material effect on its financial position or results of operations.

ASU No. 2011-04; Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.   In May, 2011, the FASB issued ASU No. 2011-04. The amendments in this ASU generally represent clarifications of Topic 820, but also include some instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed.  This ASU results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and IFRSs.  The amendments in this ASU are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted.
 
 
8

 
PRACO CORPORATION
(F/K/A HUNT FOR TRAVEL, INC.)
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF MARCH 31, 2012
(UNAUDITED)
 
 
The Company adopted the methodologies prescribed by this ASU on the date required, and the ASU did  not have a material effect on its financial position or results of operations.

ASU No. 2011-05; Amendments to Topic 220, Comprehensive Income.  In June, 2011, the FASB issued ASU No. 2011-05. Under the amendments in this ASU, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This ASU eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments in this ASU do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income.

The amendments in this ASU should be applied retrospectively. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted, because compliance with the amendments is already permitted. The amendments do not require any transition disclosures. The Company has adopted ASU 2011-05and it did not have a material effect on the Company’s financial position or results of operations.

On September 15, 2011, the FASB issued ASU 2011-08, Intangibles – Goodwill and Other, which simplifies how an entity is required to test goodwill for impairment. This ASU would allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under the ASU, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The ASU includes a number of factors to consider in conducting the qualitative assessment.  The ASU is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011.  Early adoption is permitted. This standard is not expected to have a material impact on the Company’s reported results of operations or financial position.
 
NOTE 2     NOTE PAYABLE

During the nine months ended March 31, 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 March 31, 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)).
 
 
9

 
PRACO CORPORATION
(F/K/A HUNT FOR TRAVEL, INC.)
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF MARCH 31, 2012
(UNAUDITED)
 
NOTE 3     STOCKHOLDERS’ EQUITY

(A) Common Stock Issued for Cash

During 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 period 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).

(B) In-Kind Contribution of services and interest

For the nine months March 31, 2012, shareholders of the Company contributed services and interest having a fair value of $8,953 (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

During the nine months ended March 31, 2012, stockholders paid $52,510 of accounts payable and loans payable on the Company’s behalf, which was recorded as an in kind contribution of capital (See Note 5 and Note 2).

(F) Subscription Receivable

On March 29, 2012, the Company sold 10,000 shares of common stock in exchange for subscriptions receivable totaling $10,000 ($1/share). During April 2012, the Company collected $10,000.
 
 
10

 
PRACO CORPORATION
(F/K/A HUNT FOR TRAVEL, INC.)
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF MARCH 31, 2012
(UNAUDITED)
 

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 and recorded as an in-kind contribution.
 
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 nine months March 31, 2012, shareholders of the Company contributed services and interest having a fair value of $8,953 (See Note 3(B)).

During the nine months ended March 31, 2012, the principal stockholder paid $52,510 of accounts payable and loans payable 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 condensed unaudited financial statements, the Company is in the development stage with minimal operations, used cash in operations of $226,011 from inception and has a net loss since inception of $253,456. The Company also has a working capital deficiency and stockholders’ deficiency of $10,068.  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.
 
 
11

 
 
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 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

On January 10, 2012, Praco Corporation (the “Company”) entered into a binding letter of intent with Hawk Opportunity Fund, LP, a limited partnership (“Hawk”) (the “Letter of Intent”). Pursuant to the Letter of Intent, the Company and Hawk will commence the negotiation and preparation of a share exchange agreement (the “Definitive Agreement”) whereby Hawk will transfer all of its ownership interest in Praco, Inc, a Nevada corporation (“Praco”) in exchange for the value of $18,000,000 in the form of cash payment and shares of the Company’s common stock (the “Transaction”). The Letter of Intent may be terminated by either party after January 31, 2012 if a Definitive Agreement is not executed. No Definitive Agreement has been executed as of the filing of this quarterly report, and therefore the Letter of Intent can be terminated by either the Company or Hawk at any point of time in the future.

Hawk currently manages and/or owns approximately $40 million in income producing and development real estate in the Delaware Valley.  Hawk also seeks to acquire additional income producing real estate over the next 12 month period.  Hawk plans to take its income producing property with the aim of creating a Real Estate Investment Trust.

Until such Definitive Agreement is reached, the Company continues to seek to develop mutually beneficial business relationships with tour operators and other enrichment travel consultants and begin offering programs for sale to U.S. travelers. The Company plans to launch a web site to begin marketing its services online.
 
The Company plans to cultivate customers through a variety of methods. The Company intends to attend wedding shows, cruise shows both locally and regionally. This activity should cost about $2,000. Additionally the Company plans to seek out travel blogs to dialogue with which should cost nothing and seek paid and free advertising in the Chapel Hill Magazine, 15-501 Magazine and Our State Magazine. The Company anticipates spending no more than $5,000 for the advertising. The Company estimates that these marketing and advertising efforts can be accomplished for minimal investment possibly $7,000. The Company is planning to initiate most of the marketing efforts within the next 60 to 90 days.
 
Over the last 24 months, we have taken the followings steps to establish relationships and validity for the Company with the key industry organizations:
 
Gaining membership in valid travel-related organizations
o  
CLIA (Cruise Lines International Association, Inc.) membership ($320/yr)
Gaining travel knowledge and “be up to date” on information
o  
StarService (agent-only hotel and destination service)  ($250/yr)
o  
TravelWeekly (provides travel professionals with a necessary global perspective through in-depth coverage of every business sector, including airline, car rental, cruise, destination, hotel and tour operator as well as technology, economic and governmental issues.)
o  
Recommend Magazine (trade magazine that focuses on worldwide destinations and the travel products within them providing themed issues and hands-on reviews of hotels, destinations and tours, etc.)
o  
As owner operator we spent many hours linking to websites catering to travel information and special rates/fares. Most of this is at no cost other than the time of the president.
 
We provide specific services such as investigating and researching specific companies providing services and destinations that clients are interested in - or suggest alternatives.  We likewise investigate and research countries and areas where travel and service is desired.
 
We provide advice regarding safety, insurance, medical needs, passport and visa requirements, alternative sites and companies, better pricing, and different routing to save money. We plan to make actual travel arrangements as well as provide quotes for travel insurance and apply for visas for clients who wish to purchase these services.
 
 
12

 
 
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.
 
For the three Months Ended March 31, 2012 compared to the three Months Ended March 31, 2011
 
Results of Operations
 
For the three ended March 31, 2012, we had $0 in revenue and for the three months ended March 31, 2011 we had $350 in revenue respectively. Operating expenses for the three months ended March 31, 2012 totaled $29,172 and $38,951 for March 31, 2011 resulting in a net loss equal to $29,351 and $38,601 respectively.
 
Capital Resources and Liquidity
 
As of March 31, 2012 we had $24 of cash on hand.
 
Carolyn Hunter will be the only employee and sole officer and director initially as the company seeks to generate revenue and will not be taking a salary from the company for the foreseeable future.
 
On February 8, 2010, the Company entered into a consulting agreement to receive administrative and other miscellaneous 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. On March 1, 2012 this agreement was terminated and a new agreement was entered into on April 1, 2012 with the same terms.
 
Revenue targets
 
The Company is targeting revenues of $20,000 through the remainder of the year from providing travel consulting services to friends and family and charging minimal commissions while the marketing of core services being finalized.
 
Core services
 
The Company provides specific services such as investigating and researching specific companies providing services and destinations that clients are interested in - or suggest alternatives. The Company will investigate and research countries and areas where travel and service is desired.
 
We currently do not have enough cash to continue operations for the next 12 months.  If we are unable to satisfy our cash requirements we may be unable to proceed with our plan of operations.  We do not anticipate the purchase or sale of any significant equipment. We also do not expect any significant additions to the number of employees. The foregoing represents our best estimate of our cash needs based on current planning and business conditions. In the event we are not successful in reaching our initial revenue targets, we will need to acquire additional fund  in order to proceed with our business plan for the development and marketing of our core services. If we are not able to acquire additional fund, we will suspend or cease operations.
 
We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, 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 obligations, and any new rules and regulations applicable to our Company which may increase our legal and financial compliance costs.
 
 
13

 
 
Critical Accounting Policies

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

Our significant accounting policies are summarized in Note 1 of our financial statements. While all these significant accounting policies impact its financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our results of operations, financial position or liquidity for the periods presented in this report.
 
Recent Accounting Pronouncements

ASU No. 2011-03; Reconsideration of Effective Control for Repurchase Agreements.  In April, 2011, the FASB issued ASU No. 2011-03. The amendments in this ASU remove from the assessment of effective control the criterion relating to the transferor’s ability to repurchase or redeem financial assets on substantially the agreed terms, even in the event of default by the transferee. The amendments in this ASU also eliminate the requirement to demonstrate that the transferor possesses adequate collateral to fund substantially all the cost of purchasing replacement financial assets.

The guidance in this ASU is effective for the first interim or annual period beginning on or after December 15, 2011. The guidance should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. Early adoption is not permitted. The Company has adopted the methodologies prescribed by this ASU by the date required, and it did not have a material effect on its financial position or results of operations.

ASU No. 2011-04; Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.   In May, 2011, the FASB issued ASU No. 2011-04. The amendments in this ASU generally represent clarifications of Topic 820, but also include some instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed.  This ASU results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and IFRSs.  The amendments in this ASU are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted.

The Company adopted the methodologies prescribed by this ASU on the date required, and the ASU did  not have a material effect on its financial position or results of operations.

ASU No. 2011-05; Amendments to Topic 220, Comprehensive Income.  In June, 2011, the FASB issued ASU No. 2011-05. Under the amendments in this ASU, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This ASU eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments in this ASU do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income.
 
 
14

 
 
The amendments in this ASU should be applied retrospectively. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted, because compliance with the amendments is already permitted. The amendments do not require any transition disclosures. The Company has adopted ASU 2011-05and it did not have a material effect on the Company’s financial position or results of operations.

On September 15, 2011, the FASB issued ASU 2011-08, Intangibles – Goodwill and Other, which simplifies how an entity is required to test goodwill for impairment. This ASU would allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under the ASU, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The ASU includes a number of factors to consider in conducting the qualitative assessment.  The ASU is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011.  Early adoption is permitted. This standard is not expected to have a material impact on the Company’s reported results of operations or financial position.
 
Off-Balance Sheet Arrangements
 
We have no off-balance sheet arrangements.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
 
Not applicable to smaller reporting companies.
 
ITEM 4.  CONTROLS AND PROCEDURES
 
a)   Evaluation of Disclosure Controls. Pursuant 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 Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), 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 disclosures 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.
 
(b)   Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 
 
 
15

 
 
PART II - OTHER INFORMATION
 
Item 1.      Legal Proceedings
 
We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
 
Item 1A.
Risk Factors

Smaller reporting companies are not required to provide the information required by this item.
  
Item 2. 
Unregistered Sales of Equity Securities and Use of Proceeds
 
None.
 
Item 3. 
Defaults Upon Senior Securities
 
None
 
Item 4. 
Mine Safety Disclosures
 
The Company is not required to provide disclosures required by this Item.
 
Item 5. 
Other Information
 
None
 
Item 6. 
Exhibits
 
(a) 
Exhibits
 
10.1*
Letter of Intent, dated January 10, 2012 between the Company and Hawk Opportunity Fund, LP.
31.1**
Certification of the President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1+ 
Certification of the President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 
101.INS ***
XBRL Instance Document
101.SCH ***
XBRL Taxonomy Schema
101.CAL ***
XBRL Taxonomy Calculation Linkbase
101.DEF ***
XBRL Taxonomy Definition Linkbase
101.LAB ***
XBRL Taxonomy Label Linkbase
101.PRE ***
XBRL Taxonomy Presentation Linkbase
 
* Incorporated herein by reference to the Company’s current report on Form 8-K filed on January 11, 2012.
** Filed herewith
+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.
 
 
16

 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
PRACO CORPORATION
   
Date: May 15, 2012
By:  
/s/ Carolyn Hunter
   
Carolyn Hunter
   
President and Chief Financial Officer
(Principal executive officer and
principal financial and
accounting officer)
 
 
 
 
17

 

 

PINX:PRAY Praco Corp Quarterly Report 10-Q Filling

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PINX:PRAY Praco Corp Quarterly Report 10-Q Filing - 3/31/2012
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