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EX-32.1 - CERTIFICATION - First Priority Tax Solutions Inc.fpts_ex321.htm
EX-31.1 - CERTIFICATION - First Priority Tax Solutions Inc.fpts_ex311.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

x

ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended June 30, 2016

 

¨

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ____________ to ____________

 

Commission file no.: 333-199336

 

First Priority Tax Solutions Inc.

(Exact Name of Registrant in its Charter)

 

Delaware

 

46-5250836

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer Identification No.)

 

137 N. Main Street, Suite 200A

Dayton, Ohio

 

45402

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (859) 268-6264

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Securities registered pursuant to Section 12(g) of the Act: None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes x No ¨

 

Indicate by check mark whether the registrant: (1) 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for past 90 days. Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 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 ¨

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-BK is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes x No ¨

 

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

 

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

¨

Smaller reporting company

x

(Do not check if a smaller reporting company)

 

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

 

The aggregate market value of the voting and non-voting equity held by non-affiliates of the registrant, as of December 31, 2015 was approximately $34,800 (based on the sale price of the shares in a private placement transaction completed by the registrant in May and June 2014 of $0.02 per share. To date, there is no established public market for the registrant’s shares of common stock.

 

As of October 18, 2016, 5,740,000 shares of the registrant’s common stock were issued and outstanding.

 

Documents Incorporated by Reference: None

 

 

 
 
 

 

First Priority Tax Solutions Inc.

 

2016 ANNUAL REPORT ON FORM 10-K

 

TABLE OF CONTENTS

 

PART I

 

 

ITEM 1.

Business.

3

ITEM 1A.

Risk Factors.

8

ITEM 1B.

Unresolved Staff Comments.

22

ITEM 2.

Properties.

22

ITEM 3.

Legal Proceedings.

22

ITEM 4.

Mine Safety Disclosures.

22

 

 

PART II

 

 

ITEM 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

23

ITEM 6.

Selected Financial Data.

23

ITEM 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

ITEM 7A.

Quantitative and Qualitative Disclosures About Market Risk.

30

ITEM 8.

Financial Statements and Supplementary Data.

30

ITEM 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

30

ITEM 9A.

Controls and Procedures.

30

ITEM 9B.

Other Information.

31

 

 

PART III

 

 

ITEM 10.

Directors, Executive Officers and Corporate Governance.

32

ITEM 11.

Executive Compensation.

35

ITEM 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

36

ITEM 13.

Certain Relationships and Related Transactions, and Director Independence.

37

 

 

PART IV

 

 

ITEM 14.

Principal Accountant Fees and Services.

38

ITEM 15.

Exhibits and Financial Statement Schedules.

39

 

 

SIGNATURES.

40

 

 
2
 

 

PART I

 

ITEM 1. Business

 

This report contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this report. Additionally, statements concerning future matters such as revenue and expense levels and other statements regarding matters that are not historical are forward-looking statements.

 

Although forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include without limitation those discussed under the heading “Risk Factors” below, as well as those discussed elsewhere in this report. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report. Readers are urged to carefully review and consider the various disclosures made in this report, which attempt to advise interested parties of the risks factors that may affect our business, financial condition, results of operations and prospects.

 

Our Company

 

We are engaged in the business of acquiring, developing, managing and selling residential and commercial income-producing properties in the Cincinnati and Dayton, Ohio metropolitan areas. We generate revenue primarily from rental income from the tenants occupying the properties we acquire and from the proceeds of property sales.

 

We were incorporated in the State of Delaware on March 31, 2014. Since starting our business, we have acquired one light industrial facility in Dayton, Ohio. Our commercial property is currently being leased. We intend to expand our acquisitions to other select markets in nearby areas and states that fit our investment criteria as we continue to evaluate new investment opportunities in different markets. All of our properties to date have been managed and improved from available cash.

 

Real Estate Investment Strategy

 

Our principal objective is to generate cash flow while gaining price appreciation at the same time through the ownership and/or management of our properties. With this objective in mind, we have developed our primary real estate investment strategy to focus on:

 

·income-producing residential and commercial properties,

 

 

·properties undervalued and/or in need of some repairs,

 

 

·tax lien sales, bank-owned foreclosures and other lender-owned real estate, and

 

 

·public and private auction properties.

 

We believe the execution of this strategy will allow us to generate immediate and steady cash flow from the rental income from the properties that we acquire and/or manage, while potentially gaining significant appreciation over time after these properties are renovated and, in some cases, environmentally remediated. We expect that the available cash flow generated from the rental income of our properties, as well as net proceeds from their sales, will allow us to pay the operating and improvement costs of our properties.

 

 
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We intend to seek potential property acquisitions located in Ohio and nearby states that meet the above criteria. We believe the most important factors for evaluating the markets in which we intend to purchase properties include:

 

·historic and projected population growth,

 

 

·historically high levels of tenant demand and lower historic investment volatility for the type of property being acquired,

 

 

·markets with historic and growing numbers of a qualified and affordable workforce,

 

 

·high historic and projected employment growth,

 

 

·stable household income and general economic stability, and

 

 

·real estate fundamentals, such as high occupancy rates and strong rent rate potential.

 

The markets in which we invest may not meet all of these criteria and the relative importance that we assign to any one or more of these criteria may differ from market to market or change as general economic and real estate market conditions evolve. We may also consider additional important criteria in the future. In order to diversify our portfolio, we may acquire a portion of our real estate investments through joint ventures with affiliates and third parties, such as institutional investors.

 

We intend to finance future property acquisitions primarily by obtaining mortgages from local and regional banks or other financial institutions and raising equity capital through the sale of our common stock.

 

Competitive Advantage

 

In addition to our real estate investment strategy, we believe that our competitive advantage includes our experienced management team and extensive sourcing network. Our management team has cultivated and developed a wide network of industry relationships over the years with brokers, sellers, property managers, general contractors, institutional investors, policymakers, lenders, aggregators of assets, environmental specialists and real estate lawyers, which we believe provides us with a distinct competitive advantage to source a greater number of off-market transactions. Through this network, we have been able to source attractive portfolio acquisitions and management projects, and we believe they may provide us with additional attractive privately-negotiated acquisition and management opportunities that in some cases may not be available to other market participants. We believe that this can result in more favorable pricing for acquisitions than if we were bidding on fully-marketed deals.

 

Real Estate Activities and Operations

 

The following table presents summary data concerning our owned property as of October 18, 2016:

 

Location

 

Property Type

 

Aggregate Investment

 

 

Status

 

Age
(years)

 

 

Size
(square
feet)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stanley Avenue, Dayton, Ohio

 

Light industrial facility

 

$75,000

 

 

Being marketed for redevelopment, sale or lease

 

 

60

 

 

 

77,792

 

 

 
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1784 Stanley Avenue, Dayton, Ohio – On July 1, 2014, we acquired from the Bank of Scotland (which had previously foreclosed on this property) a light industrial facility located in Dayton, Ohio. The contract purchase price for the property was $75,000, plus closing costs of $4,248, which we paid with cash on hand. In June 2014, we had previously issued a note to Holly1 LLC, an unaffiliated third party, in the amount of $85,000 to fund our purchase of this property. The Stanley Avenue property encompasses 5.55 acres and the building occupies 77,792 rental square feet.

 

The Stanley Avenue property was vacant and being renovated through January 2016. In February 2016, we signed a two-year lease with a third party to occupy this site. Under the lease, the rent escalates for each six-month period, from $2,269 through month 6, $4,538 through month 12, $6,807 through month 18, and $9,400 through month 24. There is also a two-year renewal term, at a higher monthly rental rate. During the first calendar quarter of 2015, we received a grant from Jobs Ohio (a private, non-profit corporation designed to drive job creation and new capital investment in the state) to help fund an environmental study of the commercial site. We also sought to obtain environmental insurance on the property. In October 2015, we attended a Board of Revision hearing in Dayton, Ohio to reduce the amount of realty taxes payable for the property. The property was purchased for $75,000, yet the value on the Montgomery County Property Database was $1,107,210. On March 21, 2016, the Montgomery County Board of Pension re-assessed the fair market value of the property at $125,000 as of January 1, 2014.

 

Currently, we are prepping the site’s underground utilities and sampling onsite wells. We are having meetings with the Ohio EPA and environmental and real estate lawyers and having discussions with Dayton Power & Light about power lines. We are also coordinating with Northrup Grumman and other companies to perform on site environmental tests and Phase II work plans, drilling wells for groundwater screening, and leasing space on the property for advertising billboards.

 

We have engaged Miller-Valentine GEM Real Estate Group, a full-service real estate firm in Dayton (for whom Steve Ireland, our Secretary and Director, is a Vice President), to market this site. Miller-Valentine GEM uses flyers, word of mouth advertising and LoopNet, an online commercial real estate listing service, among other methods, in its marketing efforts. We have agreed to pay Miller-Valentine GEM a brokerage fee of 6% of the sale price for any sale of the property during the listing period or, if the property is leased during such period, a leasing commission of 6% of the total rent for the initial term of the lease, payable in full at the signing of the lease. Additionally, the City of Dayton markets this site through its economic development office.

   

 
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To date, our two officers, Michael Heitz and Steve Ireland, have directed all aspects of our real estate operations, including the selection and management of our properties. We expect them to continue in that role for the foreseeable future, aided from time to time by local real estate firms that market the availability of our properties for a fixed price and on site part-time workers that renovate and clean our properties.

 

Plan of Operation

 

During the next 12 months, our goal is to acquire at least two additional large commercial properties and one other property possibly through the Land Bank, as discussed below. We have been actively searching our target areas in the southern Ohio region and believe this goal is reasonably attainable by that date.

 

Once a property is identified, we believe that we can secure financing on a property in an amount from $25,000 to $500,000. In determining the commercial properties that may be suitable for us to purchase, we look primarily for tax delinquencies, foreclosures and sales by owners, which often results in advantageous purchase prices. We will also be in contact with the Montgomery County, Ohio local government in order to identify attractive tax liens for purchase. We are actively looking at commercial properties that appear on the government’s tax lien database for future properties.

 

Due to the broad range of commercial properties that we review, we are prepared to make a premium investment that exceeds $500,000, if that opportunity exists. In determining to make any such premium investment, we most significantly take into consideration the desirability of the location of the property site and, if applicable, any advantageous tax lien price or potential scrap value of an existing structure. We have no limit in our certificate of incorporation or other governing documents on the amount we may invest in any one property. While we expect our Board of Directors to be involved in any such premium investment given the current size of our company, management does not require any specific Board approval to make such investment.

 

We also intend to be in contact with the Land Bank to identify other properties that we can rehabilitate and eventually sell or lease. Our goal is to acquire at least one property through this method each year. Property purchase prices and associated costs (including refurbishing) by way of acquiring tax liens and through the Land Bank are expected to be below $100,000 per property.

 

We intend to finance future property acquisitions primarily by obtaining mortgages from local and regional banks or other financial institutions and raising equity capital through the sale of our common stock. There is no guarantee that we will be able to obtain financing when it is needed, or that such financing, if available, will be obtainable on terms favorable to or affordable by us.

 

Investment Policies and Policies with respect to Certain Activities

 

The following is a discussion of our investment policies and our policies with respect to certain other activities, including financing matters and conflicts of interest. These policies may be amended or revised from time to time at the discretion of our Board of Directors, without stockholder approval. Any change to any of these policies by our Board of Directors, however, would be made only after a thorough review and analysis of that change, in light of then-existing business and other circumstances, and then only if, in the exercise of its business judgment, our Board of Directors believes that it is advisable to do so in our best interests. We intend to disclose any changes in our investment policies in periodic reports that we file or furnish under the Exchange Act. We cannot assure you that our investment objective will be attained.

 

Investments in Real Estate. We invest principally in residential and commercial properties in the Cincinnati and Dayton, Ohio metropolitan areas and intend in the future to acquire properties in nearby areas and states that we believe exhibit housing, economic, demographic, employment and other characteristics that make investments in those properties attractive as investment properties for redevelopment, sale or lease.

 

 
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We pursue our investment objective through the ownership by our properties. Our management team identifies and negotiates acquisition and other investment opportunities, subject to the oversight of our Board of Directors. Investments are also subject to our policy not to be treated as an investment company under the 1940 Act.

 

We do not have a specific policy to acquire assets primarily for capital gain or primarily for income, although we generally target properties that we believe will generate income in the near term. No limits have been set on the concentration of our investments in any one geographic location or property type. We currently anticipate that our real estate investments will continue to be concentrated in Cincinnati and Dayton, Ohio and in single-family homes and light industrial facilities. We anticipate that, over time, our real estate investments will become more diversified in terms of geographic market, but we expect our assets to be concentrated in certain markets that exhibit the characteristics that support our real estate investment strategy.

 

Purchase and Sale of Investments. We expect to invest in our properties primarily for generation of current income and long-term capital appreciation. Although we do not intend to routinely “flip” our properties, we may be presented with opportunities from the Land Bank and other organizations to renovate dilapidated properties for immediate occupancy within short timeframes. We may also deliberately and strategically dispose of assets in the future and redeploy funds into new acquisitions and development opportunities that align with our strategic objectives.

 

Regulation

 

General. Our properties are subject to various covenants, laws and ordinances and certain of our properties are also subject to the rules of various HOAs where such properties are located. We believe that we are in compliance with such covenants, laws, ordinances and rules, and we also require that our tenants agree to comply with such covenants, laws, ordinances and rules in their leases with us.

 

Fair Housing Act. The Fair Housing Act, or FHA, its state law counterparts and the regulations promulgated by HUD and various state agencies, prohibit discrimination in housing on the basis of race or color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women and people securing custody of children under the age of 18), handicap or, in some states, financial capability. We believe that our properties are in substantial compliance with the FHA and other regulations.

 

Environmental Matters. As a current or prior owner of real estate, we are subject to various federal, state and local environmental laws, regulations and ordinances, and we could be liable to third parties as a result of environmental contamination or noncompliance at our properties, even if we no longer own such properties.

 

Investment Company Act of 1940. We intend to conduct our operations so that we are not required to register as an investment company under the Investment Company Act of 1940, as amended.

 

REIT Status. We do not intend to elect to operate as a real estate investment trust.

 

Competition

 

We face competition from many entities engaged in real estate investment activities, including individuals, other real estate investment companies, including newly formed REITs, and real estate limited partnerships. Our competitors may enjoy significant competitive advantages that result from, among other things, having substantially more available capital, a lower cost of capital and enhanced operating efficiencies. Further, the market for the rental of properties is highly competitive. We also face competition from new home builders, investors and speculators, as well as homeowners renting their properties.

 

Risk Management

 

We face various forms of risk in our business ranging from broad economic, housing market and interest rate risks, to more specific factors, such as credit risk related to our tenants or buyers, re-leasing of properties and competition for properties. We believe that the systems and processes developed by our experienced management team since commencing our real estate investment operations will allow us to monitor and manage these risks.

 

 
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Insurance

 

We maintain property and liability insurance coverage related to our properties, and workers’ compensation coverage for our employees. We believe the policy specifications and insured limits under our insurance program are appropriate and adequate for our business and properties given the relative risk of loss, the cost of the coverage and industry practice. However, our insurance coverage is subject to substantial deductibles and carve-outs, and we will be self-insured up to the amount of such deductibles and carve-outs.

 

Intellectual Property

 

We have no patents or trademarks, which are not material to our business.

 

Legal Proceedings

 

We are not involved in any litigation nor, to our knowledge, is any litigation threatened against us.

 

Employees

 

On October 18, 2016, we had two individuals working for our company, one of whom is Michael Heitz, our President. Mr. Heitz devotes approximately 75% of his business time to our company. There are no written employment contracts or consulting agreements. We do not expect any of our future employees, if any, to be covered by a collective bargaining agreement. From time to time, we hire individuals for daily or weekly clean-up and repair work.

 

ITEM 1A. Risk Factors

 

An investment in our company is highly speculative in nature and involves an extremely high degree of risk. You should carefully consider the following material risks, together with the other information contained in this report, before you decide to buy our common stock. If any of the following risks actually occur, our business, results of operations and financial condition would likely suffer. In these circumstances, the market price of our common stock could decline, and you may lose all or part of your investment.

 

Risks Related to Our Business

 

We have a limited operating history and therefore management cannot ensure the long-term successful operation of our business or the execution of our business plan.

 

We commenced business operations in March 2014. As a result, we have a limited operating history upon which you may evaluate our business and prospects and an investment in our common stock may entail significantly more risk than the shares of common stock of a company with a substantial operating history. Our business operations are subject to numerous risks, uncertainties, expenses and difficulties associated with early stage enterprises. You should consider an investment in our company in light of these risks, uncertainties, expenses and difficulties. Such risks include:

 

·the absence of a lengthy operating history;

 

 

·insufficient capital to fully realize our operating plan;

 

 

·our ability to anticipate and adapt to a developing market;

 

 

·a competitive business environment;

 

 

·our ability to identify, attract and retain qualified personnel;

 

 

·our reliance on key management personnel; and

 

 

·our ability to identify and complete future acquisitions of properties that meet our acquisition criteria.

 

 
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Because we are subject to these risks, evaluating our business may be difficult. We may be unable to successfully overcome these risks, which could harm our business and prospects. Our business strategy may be unsuccessful and we may be unable to address the risks we face in a cost-effective manner, if at all. If we are unable to successfully address these risks, there may be an adverse effect on our business, results of operations, financial condition and cash flows.

 

We have limited financial resources which makes it more difficult for us to operate and to raise capital or other financing. Without substantial financial resources, we will be unable to implement our real estate investment strategy to expand our business.

 

We have limited financial resources and have not established a source of equity or debt financing. We had a working capital deficit of $100,923 and total stockholders’ deficit of $44,423 at June 30, 2016 compared to a working capital deficit of $87,936 and total stockholders' deficit of $14,936 at June 30, 2015. If we are unable to generate meaningful revenue or obtain financing or if the financing that we do raise is insufficient to cover operating losses that we may incur, we may have to curtail all or most of our operations.

 

Our auditors’ report on our financial statements contains an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern, which may make it more difficult for us to be a credible participant in the real estate acquisition business.

 

We had an accumulated deficit of $104,278 and $74,791 at June 30, 2016 and 2015, respectively. We realized a net loss of $29,487 and net cash used in operating activities of $8,600 for the fiscal year ended  June 30, 2016 compared to a net loss of $54,982 and net cash used in operating activities of $47,050 for the fiscal year ended June 30, 2015. Our auditors indicated that there is substantial doubt about our ability to continue as a going concern in an explanatory paragraph to their report on our financial statements for the fiscal year ended June 30, 2016, which may make it more difficult for us to be a credible participant in the real estate acquisition business.

 

We may not have sufficient financial resources or be able to arrange financing to repay our outstanding $85,000 note upon maturity, which would result in an event of default.

 

In June 2014, we issued a note to Holly1 LLC, an unaffiliated thirty party, in the amount of $85,000 to fund the purchase of our light industrial facility in Dayton, Ohio. Pursuant to an extension agreement dated May 18, 2016, the entire outstanding principal amount of the note, together with accrued interest at 4% per annum, will become due and payable by us on January 1, 2017. We cannot assure you that we will have sufficient financial resources, or will be able to arrange financing, to pay the principal amount and interest when due. Our failure to make this payment at maturity would result in an event of default with respect to the note.

 

We have acquired only one real estate property, which is vacant. In the future, the actual rents we receive for the properties may be less than our asking rents, and we may experience a decline in realized rental rates from time to time, negatively impacting our ability to generate cash flow growth.

 

We have acquired one real estate property, which is vacant. We have limited rental income and sales proceeds to date. In the future, we may be unable to realize our asking rents at our properties, which may result of various factors, including competitive pricing pressure in our markets, a general economic downturn and the desirability of our properties compared to other properties in our markets. In addition, the degree of discrepancy between our asking rents and the actual rents we are able to obtain may vary both from property to property and among different leased spaces within a single property. If we are unable to obtain sufficient rental rates across our properties, then our ability to generate cash flow growth will be negatively impacted. In addition, depending on market rental rates at any given time as compared to expiring leases, from time to time rental rates for expiring leases may be higher than starting rental rates for new leases.

 

Competition with third parties for properties and other investments may result in our paying higher prices for properties which could reduce our profitability and the return on our investment.

 

We compete with many other entities engaged in real estate investment activities, including individuals, corporations, banks, insurance companies, real estate investment trusts (REITs) and real estate limited partnerships, many of which have greater resources than we do. Some of these investors may enjoy significant competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies. In addition, the number of entities and the amount of funds competing for suitable investments may increase. Any such increase would result in increased demand for these properties and increased prices. If competitive pressures cause us to pay higher prices for properties, our ultimate profitability may be reduced and the value of our properties may not appreciate or may decrease significantly below the amount paid for such properties. At the time we elect to dispose of one or more of our properties, we will be in competition with sellers of similar properties to locate suitable purchasers, which may result in us receiving lower proceeds from the disposal or result in us not being able to dispose of the property due to the lack of an acceptable return. This may cause you to experience a lower return on our investment, which would likely negatively impact, in turn, our stock price

 

 
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Even though we intend to purchase only those properties that fit our real estate investment strategy, there is a possibility that our purchases may not provide the results predicted which could negatively affect our cash flow.

 

We intend to invest in properties that will be “cash flow positive.” This means properties that have a positive monthly income after all expenses, mortgages, operating expenses, taxes and maintenance reserves are paid. Even though we intend to purchase these types of properties, unforeseen circumstances may cause such properties to become cash flow negative whereby the income from the property does not cover all of its expenses. Some conditions may be neighborhood changes/conditions, economic conditions, property conditions and unforeseen expenses. If this occurs it may have a negative impact on our business and may require us to sell our properties at a loss.

 

If we sell properties by providing financing to purchasers of our properties, net sales proceeds would be delayed and defaults by the purchasers could reduce our cash.

 

We may sell properties to our tenants. If we provide financing to purchasers, we will bear the risk that the purchaser may default. Purchaser defaults could reduce our cash. Even in the absence of a purchaser default, the distribution of the proceeds of sales or their reinvestment in other assets will be delayed until the promissory notes or other property we may accept upon a sale are actually paid, sold, refinanced or otherwise disposed of or completion of foreclosure proceedings.

 

Recent disruptions in the financial markets and continuing poor economic conditions could adversely affect the values of our existing properties and those that we acquire and our ongoing results of operations.

 

Disruptions in the capital markets during the last few years have constrained equity and debt capital available for the acquisition of real property and have consequently caused reductions in property values. Further, the current state of the economy and the implications of future potential weakening may negatively impact real estate fundamentals and result in lower occupancy, lower rental rates and declining values in our properties. The recent downturn may impact our future tenants’ financial resources directly, reducing their ability to pay rent. Liquidity in the global credit market has been significantly contracted by market disruptions in recent years, making it more costly to obtain acquisition financing, new lines of credit or refinance existing debt, when debt financing is available at all.

 

The occurrence of these events could have the following negative effects on us:

 

·the values of our properties could decrease below the amounts we paid for the properties, and

 

 

·revenues from our properties could decrease due to lower occupancy rates, reduced rental rates and potential increases in uncollectible receivables, and we may not be able to refinance any future indebtedness or obtain debt financing on attractive terms.

 

These factors could decrease the value of our properties and ultimately any return to stockholders.

 

Financial markets are still recovering from a period of disruption and recession, and we are unable to predict if and when the economy will stabilize or improve which could adversely affect our financial condition and our ability to raise capital on favorable terms.

 

The financial markets are still recovering from a recession, which created volatile market conditions, resulted in a decrease in availability of business credit and led to the insolvency, closure or acquisition of a number of financial institutions. While the markets show signs of stabilizing, it remains unclear when the economy will fully recover to pre-recession levels. Continued economic weakness in the U.S. economy generally or a new recession would likely adversely affect our financial condition and that of our tenants and could impact the ability of our tenants to pay rent to us.

 

 
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We may not be able to operate our business or implement our operating policies and strategies successfully which could result in the loss of some or all of your investment.

 

The results of our operations depend on many factors, including, without limitation, the availability of opportunities for the acquisition of attractively-priced residential properties, the level and volatility of interest rates, readily accessible funding in the financial markets and our ability to cost-effectively hedge risks, as well as overall economic conditions. We may not be able to maintain any agreements with future lenders on favorable terms or at all. Further, we may not be able to operate our business successfully or implement our operating policies and strategies as described in this report, which could result in the loss of some or all of your investment.

 

Potential losses such as those from adverse weather conditions, natural disasters and title claims, may not be fully covered by our insurance policies resulting in significant costs and the loss of the capital invested in the damaged properties, as well as the anticipated future cash flows from those properties.

 

Our business operations are susceptible to, and could be significantly affected by, adverse weather conditions and natural disasters that could cause significant damage to our properties. Although we intend to obtain insurance for our properties, our insurance may not be adequate to cover business interruption or losses resulting from adverse weather or natural disasters. In addition, our insurance policies may include substantial self-insurance portions and significant deductibles and co-payments for such events, and recent hurricanes in the United States have affected the availability and price of such insurance. As a result, we may incur significant costs in the event of adverse weather conditions and natural disasters. We may discontinue certain insurance coverage on some or all of our properties in the future if the cost of premiums for any of these policies in our judgment exceeds the value of the coverage discounted for the risk of loss.

 

We will not carry insurance for certain losses, including, but not limited to, losses caused by certain environmental conditions, such as mold or asbestos, riots or war. In addition, our title insurance policies may not insure for the current aggregate market value of our properties, and we do not intend to increase our title insurance coverage as the market value of our properties increases. As a result, we may not have sufficient coverage against all losses that we may experience, including from adverse title claims.

 

If we experience a loss that is uninsured or which exceeds our policy limits, we could incur significant costs and lose the capital invested in the damaged properties, as well as the anticipated future cash flows from those properties. In addition, if the damaged properties are subject to recourse indebtedness, we would continue to be liable for the indebtedness, even if these properties were irreparably damaged.

 

In addition, certain of our properties may not be able to be rebuilt to their existing height or size at their existing location under current land-use laws and policies. In the event that we experience a substantial or comprehensive loss of one of our properties, we may not be able to rebuild such property to its existing specifications and otherwise may have to upgrade such property to meet current code requirements.

 

Real estate market conditions at the time we decide to dispose of a property may be unfavorable which could reduce the price we receive for a property and lower the return on our investment.

 

We intend to hold the properties in which we invest until we determine that selling or otherwise disposing of properties would help us to achieve our investment objectives. General economic conditions, availability of financing, interest rates and other factors, including supply and demand, all of which are beyond our control, affect the real estate market. We may be unable to sell a property for the price, on the terms, or within the time frame we want. Accordingly, the gain or loss on your investment could be affected by fluctuating market conditions.

 

 
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We are and will continue to be completely dependent on the services of Michael Heitz, our President, the loss of whose services may cause our business operations to cease, and we will need to engage and retain qualified employees and consultants to further implement our strategy.

 

Our operations and business strategy are completely dependent upon the knowledge and contacts of Michael Heitz, our President. He is under no contractual obligation to remain employed by us. If he should choose to leave us for any reason before we have hired additional personnel, our operations may fail. Even if we are able to find additional personnel, it is uncertain whether we could find someone who could develop our business along the lines described in this report. We will fail without Mr. Heitz or an appropriate replacement.

 

We intend to acquire key-man life insurance on the life of Mr. Heitz naming us as the beneficiary if and when we obtain the resources to do so and Mr. Heitz remains insurable. We have not yet procured such insurance, and there is no guarantee that we will be able to obtain such insurance in the future. Accordingly, it is important that we are able to attract, motivate and retain highly qualified and talented personnel and independent contractors. Competition for highly skilled managerial, investment, financial and operational personnel is intense, and we cannot assure our stockholders that we will be successful in attracting and retaining such skilled personnel. If we are unable to hire and retain qualified personnel as required, our growth and operating results could be adversely affected.

 

Michael Heitz, our President and who will initially serve as our principal financial and accounting officer, has no meaningful accounting or financial reporting education or experience and, accordingly, our ability to meet Securities Exchange Act reporting requirements on a timely basis will be dependent to a significant degree upon others.

 

Michael Heitz, our President and who will initially serve as our principal financial and accounting officer, has no meaningful financial reporting education or experience. He is and will remain heavily dependent on advisors and consultants. As such, there is risk about our ability to comply with all financial reporting requirements accurately and on a timely basis.

 

We are subject to the periodic reporting requirements of the Securities Exchange Act that requires us to incur audit fees and legal fees in connection with the preparation of such reports. These costs could reduce or eliminate our ability to earn a profit.

 

We are required to file periodic reports with the SEC pursuant to the Securities Exchange Act of 1934 and the rules and regulations promulgated under that Act. In order to comply with these requirements, our independent registered public accounting firm will have to review our financial statements on a quarterly basis and audit our financial statements on an annual basis. Our legal counsel will have to review and assist in the preparation of such reports. The costs charged by these professionals for such services cannot be accurately predicted at this time because factors such as the number and type of transactions that we engage in and the complexity of our reports cannot be determined at this time and will have a major effect on the amount of time to be spent by our auditors and attorneys. However, the incurrence of such costs will obviously be an expense to our operations and thus have a negative effect on our ability to meet our overhead requirements and earn a profit.

 

We may be exposed to potential risks resulting from requirements under Section 404 of the Sarbanes-Oxley Act of 2002. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information and the trading price of our common stock, if a market ever develops, could drop significantly.

 

Pursuant to Section 404 of the Sarbanes-Oxley Act, we will be required to include in our annual report our assessment of the effectiveness of our internal control over financial reporting as of the end of the fiscal year ended June 30, 2016. We expect to incur additional expenses and diversion of management’s time as a result of performing the system and process evaluation, testing and remediation required in order to comply with the management certification and auditor attestation requirements.

 

 
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We do not have a sufficient number of employees to segregate responsibilities and may be unable to afford increasing our staff or engaging outside consultants or professionals to overcome our lack of employees. During the course of our testing, we may identify other deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to help prevent financial fraud.

 

Having only two directors limits our ability to establish effective independent corporate governance procedures and increases the control of our President.

 

We have only two directors, one of whom is our President and Chairman of the Board. Accordingly, we cannot establish Board committees comprised of independent members to oversee functions like audit or compensation issues. In addition, a tie vote of Board members is decided in favor of the Chairman, which gives him significant control over all corporate issues.

 

Until we have a larger Board of Directors that would include some independent members, if ever, there will be limited oversight of our President’s decisions and activities and little ability for minority stockholders to challenge or reverse those activities and decisions, even if they are not in the best interests of minority stockholders.

 

Risks Related to the Real Estate Industry Generally

 

There are significant risks involved with any investment in real estate.

 

The performance of our investments, and the performance of our company and our ability to make distributions, is subject to those risks typically associated with investments in real estate. Any change in operating expenses and tax rates could adversely affect operating results or render the sale, financing, or refinancing of a portfolio of properties difficult or unattractive. Certain expenditures associated with the properties will be fixed (principally real estate taxes and maintenance costs) and will be payable even if the properties do not generate sufficient income, which could have a negative impact on us. No assurance can be given that certain assumptions as to future costs of operating any of our properties will be accurate, since such matters will depend on events and factors beyond our control. These factors include, among others:

 

·changes in national, regional, or local economic conditions, including economic slowdowns or recessions and national and international political and socioeconomic circumstances, which could negatively impact our ability to lease or to sell properties on favorable terms and the ability of any tenant to pay rent;

 

 

·changes in local market conditions or characteristics;

 

 

·changes in interest rates and in the availability, costs, and terms of borrowings, including recent unprecedented volatility and disruption in the credit markets, which may make the sale, financing, or refinancing of a portfolio of properties difficult and/or costly;

 

 

·changes in federal, state, or local regulations and controls affecting rents, prices of goods, fuel and energy consumption, environmental restrictions, real estate taxes, and other factors affecting real property;

 

 
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·federal, state, and local regulatory requirements, including state and local fire and life-safety requirements, zoning and permitted use laws;

 

 

·continued validity and enforceability of leases;

 

 

·the vacancy rate and the length of any vacancy for a property;

 

 

·the financial condition of tenants;

 

 

·the ongoing need for capital improvements and our ability to control the costs, plans, specifications, and timing in connection with such improvements;

 

 

·changes in operating costs such as utilities;

 

 

·costs of remediation and liabilities associated with environmental conditions;

 

 

·the perceptions of prospective tenants and residents of the safety, convenience, and attractiveness of the properties and surrounding areas;

 

 

·acts of nature, such as earthquakes, tornadoes, and floods; and

 

 

·utility and other easements in favor of third parties may exist on and encumber a particular property.
 

A worsening of current financial market conditions or events negatively impacting the U.S. banking system could adversely affect our operations and our ability to make distributions.

 

Uninsured or underinsured losses relating to real property may adversely affect our returns.

 

We attempt to ensure that all of the properties we acquire are adequately insured to cover casualty losses. However, there are certain losses, including losses from floods, fires, earthquakes, acts of war, acts of terrorism or riots, that may not always be insured against or that are not generally fully insured against because it is not deemed economically feasible or prudent to do so. In addition, changes in the cost or availability of insurance could expose us to uninsured casualty losses. In the event that any of the properties we acquire incurs a casualty loss that is not fully covered by insurance, the value of our assets will be reduced by the amount of any such uninsured loss, and we could experience a significant loss of capital invested and potential revenues in these properties and could potentially remain obligated under any recourse debt associated with the property. Inflation, changes in building codes and ordinances, environmental considerations and other factors might also keep us from using insurance proceeds to replace or restore a property after it has been damaged or destroyed. Under those circumstances, the insurance proceeds we receive might be inadequate to restore our economic position on the damaged or destroyed property. Any such losses could adversely affect us and the market price of our common stock. In addition, we may have no source of funding to repair or reconstruct the damaged property, and we cannot assure you that any such sources of funding will be available to us for such purposes in the future.

 

Due diligence on properties may not reveal all conditions that may adversely affect the value of our investments.

 

We perform due diligence on each investment prior to its acquisition. Regardless of the thoroughness of the due diligence process, not all circumstances affecting the value of an investment can be ascertained through the due diligence process. If the due diligence materials provided to us are inaccurate, if we do not sufficiently investigate or follow up on matters brought to our attention as part of the due diligence process, or if the due diligence process fails to detect material facts that impact the value determination, we may acquire an investment that results in significant losses to us or may overpay for an investment, which would cause our financial results to suffer.

 

 
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Contingent or unknown liabilities could adversely affect our financial condition.

 

Our acquisition activities are subject to many risks. We may acquire properties that are subject to unknown or contingent liabilities, including liabilities for or with respect to liens attached to properties, unpaid real estate taxes, utilities or homeowner’s association (“HOA”) charges for which a prior owner remains liable, clean-up or remediation of environmental conditions or code violations, claims of vendors or other persons dealing with the acquired properties and tax liabilities, among other things. In each case, our acquisition may be without any, or with only limited, recourse with respect to unknown or contingent liabilities or conditions. As a result, if any such liability were to arise relating to our properties, or if any adverse condition exists with respect to our properties that is in excess of our insurance coverage, we might have to pay substantial sums to settle or cure it, which could adversely affect us. The properties we acquire may also be subject to covenants, conditions or restrictions that restrict the use or ownership of such properties, including prohibitions on leasing or requirements to obtain the approval of HOAs prior to leasing. We may not discover such restrictions during the acquisition process and such restrictions may adversely affect our ability to operate such properties as we intend.

 

In addition, purchases of single-family homes acquired as part of a portfolio typically involve few or no representations or warranties with respect to the properties and may allow us limited or no recourse against the sellers of such properties. Such properties also often have unpaid tax, utility and HOA liabilities for which we may be obligated but fail to anticipate.

 

Costs of complying with governmental laws and regulations may reduce our income and cash available for distributions.

 

Real property and the operations conducted on real property are subject to federal, state and local laws and regulations relating to, among other things, environmental protection, human health and safety and access by persons with disabilities. We could be subject to liability in the form of fines or damages for noncompliance with these laws and regulations, even if we did not cause the events(s) resulting in liability.

 

Environmental Laws Generally. Environmental laws and regulations generally govern wastewater discharges, air emissions, the operation and removal of underground and above-ground storage tanks, the use, storage, treatment, transportation and disposal of solid hazardous materials, the remediation of contaminated property associated with the disposal of solid and hazardous materials and other health and safety-related concerns. Some of these laws and regulations may impose joint and several liability on tenants, owners or operators of real property for the costs to investigate or remediate contaminated properties, regardless of fault, whether the acts causing the contamination were legal, regardless of whether the contamination was present prior to a purchaser’s acquisition of a property, and whether an owner knew of such contamination. The conditions of investments at the time we acquire them, operations in the vicinity of our investments, such as the presence of underground tanks, or activities of unrelated third parties may affect the value or performance of our investments.

 

Hazardous Substances. The presence of hazardous substances on owned real estate owned by us, or the failure to properly remediate these substances, may hinder our ability to sell, rent or pledge investments as collateral for future borrowings Any material expenditures, fines, or damages that we must pay will reduce our ability to make distributions to stockholders and may reduce the value of an investment in our common stock.

 

Other Regulations. We may be required to operate our properties in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become applicable to our properties. We may be required to make substantial capital expenditures to comply with those requirements, and these expenditures could adversely affect our performance and ability to make distributions to stockholders.

 

 
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We may obtain only limited warranties when we purchase a property and would have only limited recourse in the event our due diligence did not identify any issues that lower the value of our property.

 

The seller of a property often sells such property in its “as is” condition on a “where is” basis and “with all faults” without any warranties of merchantability or fitness for a particular use or purpose. In addition, purchase and sale agreements may contain only limited warranties, representations and indemnifications that will only survive for a limited period after the closing. The purchase of properties with limited warranties increases the risk that we may lose some or all of our invested capital in the property, as well as the loss of rental revenue from that property.

 

We may have difficulty selling real estate investments, and our ability to distribute all or a portion of the net proceeds from such sales to our stockholders may be limited.

 

Real estate investments are relatively illiquid, and, as a result, we may have a limited ability to sell our properties should the need arise. When we sell our properties, we may not realize gains on such sales. We may elect not to distribute any proceeds from the sales of properties to our stockholders; for example, we may use such proceeds to:

 

·purchase additional properties;

 

 

·repay debt, if any;

 

 

·create working capital reserves;

 

 

·complete repairs, maintenance or other capital improvements or expenditures to our remaining properties; or

 

 

·for general corporate purposes.

 

Increases in property taxes could adversely affect the value of a property or our ability to hold the property long enough to realize the desired return on its investment.

 

Property taxes may increase as tax rates change and as the properties are assessed or reassessed by taxing authorities. As the owner of real estate properties, we will be responsible for payment of the taxes to the applicable government authorities. If real property taxes increase, we may or may not be able to raise rents to offset such increased taxes. Because such changes in property taxes are difficult to predict when a property is acquired, the financial results projected at the time of our investment may be realized during the period of our ownership and, therefore, cash flows and property values could be materially and negatively affected in a manner that we cannot foresee. If we fail to pay any such taxes, the applicable taxing authority may place a lien on the property and the property may be subject to a tax sale.

 

Risks Related to Our Common Stock

 

Stockholders may be diluted significantly through our efforts to obtain financing and satisfy obligations through issuance of additional shares of our common stock.

 

We have no committed source of financing. Wherever possible, our Board of Directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common stock. Our Board of Directors has authority, without action or vote of the stockholders, to issue all or part of the authorized (92,000,000) but unissued (86,260,000) shares of common stock. In addition, if a trading market develops for our common stock, we may attempt to raise capital by selling shares of our common stock, possibly at a discount to market. These actions will result in dilution of the ownership interests of existing stockholders and may further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing management’s ability to maintain control of our company because the shares may be issued to parties or entities committed to supporting existing management.

 

 
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The interests of stockholders may be hurt because we can issue shares of our common stock to individuals or entities that support existing management with such issuances serving to enhance existing management’s ability to maintain control of the company.

 

Our Board of Directors has authority, without action or vote of the stockholders, to issue all or part of the authorized (92,000,000) but unissued (86,260,000) shares of common stock. Such issuances may be issued to parties or entities committed to supporting existing management and the interests of existing management which may not be the same as the interests of other stockholders. Our ability to issue shares without stockholder approval serves to enhance existing management’s ability to maintain control of the company.

 

Our certificate of incorporation provides for indemnification of officers and directors at our expense and limits their liability that may result in a major cost to us and hurt the interests of our stockholders because corporate resources may be expended for the benefit of officers and/or directors.

 

Our certificate of incorporation and applicable Delaware law provide for the indemnification of our directors, officers, employees and agents, under certain circumstances, against legal fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf. We will also bear the expenses of such litigation for any of our directors, officers, employees or agents, upon such person’s written promise to repay us for those expenses if it is ultimately determined that any such person would not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us that we may be unable to recoup.

 

We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification for liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with the securities being registered, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either of which factors is likely to materially reduce the market price for our shares, if such a market ever develops.

 

Currently, there is no established public market for our securities, and there can be no assurance that any established public market will ever develop and, even if quoted, it is likely to be subject to significant price fluctuations.

 

There has not been any established trading market for our common stock, and there is currently no established public market whatsoever for our securities. Although we received the trading symbol “FPTA” from FINRA effective on September 22, 2015, there can be no assurance as to whether:

 

·any market for our shares will develop,

 

 

·the prices at which our common stock will trade, or

 

 

·the extent to which investor interest in us will lead to the development of an active, liquid trading market. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors.

 

In addition, our common stock is unlikely to be followed by any market analysts, and there may be few institutions acting as market-makers for our common stock. Either of these factors could adversely affect the liquidity and trading price of our common stock. Until our common stock is fully distributed and an orderly market develops in our common stock, if ever, the price at which it trades is likely to fluctuate significantly. Prices for our common stock will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity of the market for shares of our common stock, developments affecting our business, including the impact of the factors referred to elsewhere in these “Risk Factors,” investor perception of our company and general economic and market conditions. No assurance can be given that an orderly or liquid market will ever develop for the shares of our common stock.

 

 
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Because of the anticipated low price of the securities being registered, many brokerage firms may not be willing to effect transactions in these securities. Purchasers of our securities should be aware that any market that develops in our stock will be subject to the penny stock rules. See the next two risk factors for implications of holding a penny stock.

 

Any market that develops in shares of our common stock will be subject to the penny stock rules and restrictions pertaining to low-priced stocks that will create a lack of liquidity and make trading difficult or impossible.

 

The trading of our shares, if any, will be in the over-the-counter market as maintained by FINRA. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the price of, our securities.

 

Rule 3a51-1 of the Securities Exchange Act of 1934 establishes the definition of a “penny stock,” for purposes relevant to us, as any equity security that has a market price of less than $4.00 per share or with an exercise price of less than $4.00 per share, subject to a limited number of exceptions which are not available to us. It is likely that our shares will be considered to be penny stock for the immediately foreseeable future. This classification adversely affects market liquidity for our common stock.

 

For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person’s account for transactions in penny stock and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person’s account for transactions in penny stock, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stock are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stock.

 

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth:

 

·the basis on which the broker or dealer made the suitability determination, and

 

 

·the fact that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

 

Disclosure also has to be made about the risks of investing in penny stock in both public offerings and in secondary trading, commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.

 

Because of these rules, broker-dealers may not wish to engage in the necessary paperwork and disclosures and may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling stockholders or other holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in any secondary market. These additional sales practice and disclosure requirements could impede the sale of our shares, if and when our shares become publicly traded. In addition, the liquidity for our shares may decrease, with a corresponding decrease in the price of our securities. Our shares, in all probability, will be subject to such penny stock rules for the foreseeable future and our stockholders will, in all likelihood, find it difficult to sell their shares.

 

 
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The market for penny stock has experienced numerous frauds and abuses that could adversely impact investors in our stock.

 

We believe that the market for penny stock has suffered from patterns of fraud and abuse. Such patterns include:

 

·control of the market for the stock by one or a few broker-dealers that are often related to the promoter or issuer;

 

 

·manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;

 

 

·“boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;

 

 

·excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and

 

 

·wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

 

If a market develops for our shares, sales of our shares relying upon Rule 144 may depress prices in that market by a material amount.

 

All of the outstanding shares of our common stock held by present stockholders are “restricted securities” within the meaning of Rule 144 under the Securities Act of 1933.

 

As restricted shares, these shares may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions from registration under the Act and as required under applicable state securities laws. Rule 144 provides in essence that a person who is not an affiliate and has held restricted securities for a prescribed period of at least six months if purchased from a reporting issuer or 12 months (as is the case in this instance) if purchased from a non-reporting issuer, may, under certain conditions, sell all or any of his shares without volume limitation, in brokerage transactions. Affiliates, however, may not sell shares in excess of 1% of a company’s outstanding common stock each three months. There is no limit on the amount of restricted securities that may be sold by a non-affiliate (i.e., a stockholder who has not been an officer, director or control person for at least 90 consecutive days) after the restricted securities have been held by the owner for the prescribed period of time. A sale under Rule 144 or under any other exemption from the Act, if available, or pursuant to registration of shares of common stock of present stockholders, may have a depressive effect upon the price of the common stock in any market that may develop.

 

Any trading market that may develop may be restricted by virtue of state securities “blue sky” laws that prohibit trading absent compliance with individual state laws. These restrictions may make it difficult or impossible to sell shares in those states.

 

There is currently no established public market for our common stock, and there can be no assurance that any established public market will develop in the foreseeable future. Transfer of our common stock may also be restricted under the securities or securities regulations laws promulgated by various states and foreign jurisdictions, commonly referred to as “blue sky” laws. Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been registered for resale under the blue sky laws of any state, the holders of such shares and persons who desire to purchase them in any trading market that might develop in the future, should be aware that there may be significant state blue sky law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the shares. These restrictions prohibit the secondary trading of our common stock. We currently do not intend to and may not be able to qualify securities for resale in approximately nine states which do not offer manual exemptions and require shares to be qualified before they can be resold by our stockholders. Accordingly, investors should consider the secondary market for our securities to be a limited one.

 

 
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If our common stock is quoted on the OTC Market and a public market for our common stock develops, short selling could increase the volatility of our stock price.

 

Short selling occurs when a person sells shares of stock which the person does not yet own and promises to buy stock in the future to cover the sale. The general objective of the person selling the shares short is to make a profit by buying the shares later, at a lower price, to cover the sale. Significant amounts of short selling, or the perception that a significant amount of short sales could occur, could depress the market price of our common stock. In contrast, purchases to cover a short position may have the effect of preventing or retarding a decline in the market price of our common stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of our common stock. As a result, the price of our common stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued at any time. These transactions may be effected on the OTC Market or any other available markets or exchanges. Such short selling, which we believe affects smaller publicly-held companies more than larger ones, if it were to occur, could impact the value of our common stock in an extreme and volatile manner to the detriment of our stockholders.

 

Our Board of Directors has the authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial to common stockholders and with the ability to adversely affect stockholder voting power and perpetuate their control over the company.

 

Our certificate of incorporation allows us to issue shares of preferred stock without any vote or further action by our stockholders. Our Board of Directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our Board of Directors also has the authority to issue preferred stock without further stockholder approval, including large blocks of preferred stock. As a result, our Board of Directors could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock.

 

The ability of Michael Heitz, our President, to control our business may limit or eliminate minority stockholders’ ability to influence corporate affairs.

 

Michael Heitz, our President, beneficially owns approximately 70% of our outstanding shares of common stock. Because of his beneficial stock ownership, Mr. Heitz is in a position to have significant influence in the election of our Board of Directors, decide all matters requiring stockholder approval and determine our policies. The interests of Mr. Heitz may differ from the interests of other stockholders with respect to the issuance of shares, business transactions with or sales to other companies, selection of officers and directors and other business decisions. The minority stockholders would have a difficult time of overriding decisions made by Mr. Heitz. This level of control may also have an adverse impact on the market value of our shares because Mr. Heitz may institute or undertake transactions, policies or programs that result in losses, may not take any steps to increase our visibility in the financial community and may sell sufficient numbers of shares to significantly decrease our price per share.

 

We do not expect to pay cash dividends in the foreseeable future.

 

We have never paid cash dividends on our common stock. We do not expect to pay cash dividends on our common stock at any time in the foreseeable future. The future payment of dividends directly depends upon our future earnings, capital requirements, financial requirements and other factors that our Board of Directors will consider. Since we do not anticipate paying cash dividends on our common stock, return on your investment, if any, will depend solely on an increase, if any, in the market value of our common stock.

 

 
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Because we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our stockholders have limited protections against interested director transactions, conflicts of interest and similar matters.

 

The Sarbanes-Oxley Act of 2002, as well as rule changes enacted by the SEC, the New York Stock Exchange and the NASDAQ Stock Market as a result of Sarbanes-Oxley, requires the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities which are listed on those exchanges. Because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than legally required, we have not yet adopted these measures.

 

Because none of our directors are independent directors, we do not currently have independent audit or compensation committees. As a result, these directors have the ability, among other things, to determine their own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations.

 

We intend to comply with all corporate governance measures relating to director independence as and when required. However, we may find it very difficult or be unable to attract and retain qualified officers, directors and members of Board committees required to provide for our effective management as a result of the Sarbanes-Oxley Act. The enactment of the Sarbanes-Oxley Act has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles.

 

We are an “emerging growth company” under the JOBS Act of 2012, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

 

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

 

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards. As a result of this election, our financial statements may not be comparable to those of companies that comply with public company effective dates as to new or revised accounting standards.

 

We will remain an “emerging growth company” for up to five years, although we will lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three-year period, or if the market value of our common stock that is held by non-affiliates exceeds $700 million as of May 30 of any year.

 

 
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Our status as an “emerging growth company” under the JOBS Act of 2012 may make it more difficult to raise capital as and when we need it.

 

Because of the exemptions from various reporting requirements provided to us as an “emerging growth company” and because we will have an extended transition period for complying with new or revised financial accounting standards, we may be less attractive to investors and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.

 

For all of the foregoing reasons and others set forth herein, an investment in our securities in any market which may develop in the future involves a high degree of risk.

 

ITEM 1B. Unresolved Staff Comments

 

None

 

ITEM 2. Properties

 

Our principal executive office is located at 137 N. Main Street, Suite 200A, Dayton, Ohio 45402. We have been provided office space by our President at no cost.

 

ITEM 3. Legal Proceedings

 

There are no pending legal proceedings to which we are a party or of which any of our property is the subject.

 

ITEM 4. Mine Safety Disclosures

 

Not applicable

 

 
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PART II

 

ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 

There is no established public market for our shares of common stock and a public market may never develop. We received the trading symbol “FPTA” from FINRA effective on September 22, 2015, but no trades have occurred to date. There may never be substantial activity in such market. If there is substantial activity, such activity may not be maintained, and no prediction can be made as to what prices may prevail in such market.

 

Holders

 

There were approximately 34 record holders of our common stock as of October 18, 2016.

 

Dividends

 

We have never paid a cash dividend or any other form of dividend on our common stock, and we do not anticipate paying cash dividends in the foreseeable future. Moreover, any future credit facilities might contain restrictions on our ability to declare and pay dividends on our common stock. We plan to retain all earnings, if any, for the foreseeable future for use in the operation of our business and to fund the pursuit of future growth. Future dividends, if any, will depend on, among other things, our results of operations, capital requirements and on such other factors as our Board of Directors, in its discretion, may consider relevant.

 

Recent Sales of Unregistered Securities

 

There were no sales of unregistered securities other than as reported in prior reports on Forms 10-Q or 8-K.

 

Purchases of Equity Securities by the Registrant and Affiliated Purchasers

 

We did not repurchase any shares of our common stock during the fourth quarter of our fiscal year ended June 30, 2016.

 

ITEM 6. Selected Financial Data

 

Not applicable

 

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included in this report. This discussion includes forward-looking statements that involve risks and uncertainties. As a result of many factors, our actual results may differ materially from those anticipated in these forward-looking statements.

 

Introduction

 

We are engaged in the business of acquiring, developing, managing and selling residential and commercial income-producing properties in the Cincinnati and Dayton, Ohio metropolitan areas. We generate revenue primarily from rental income from the tenants occupying the properties we acquire and from the proceeds of property sales.

 

 
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Since starting our business in March 2014, we have acquired one light industrial facility in Dayton, Ohio. 

 

Our commercial property was vacant and being renovated through January 2016. In February 2016, we signed a two-year lease with a third party to occupy this site. Under the lease, the rent escalates for each six-month period, from $2,269 through month 6, $4,538 through month 12, $6,807 through month 18, and $9,400 through month 24. There is also a two-year renewal term, at a higher monthly rental rate. During the first calendar quarter of 2015, we received a grant from Jobs Ohio (a private, non-profit corporation designed to drive job creation and new capital investment in the state) to help fund an environmental study of the commercial site. We also sought to obtain environmental insurance on the property. In October 2015, we attended a Board of Revision hearing in Dayton, Ohio to reduce the amount of realty taxes payable for the property. The property was purchased for $75,000, yet the value on the Montgomery County Property Database was $1,107,210. On March 21, 2016, the Montgomery County Board of Pension re-assessed the fair market value of the property at $125,000 as of January 1, 2014.

 

We intend to expand our acquisitions to other select markets in nearby areas and states that fit our investment criteria as we continue to evaluate new investment opportunities in different markets. All of our properties to date have been acquired and improved from available cash.

 

Our principal objective is to generate cash flow while gaining price appreciation at the same time through the ownership of our properties. We believe the execution of this strategy will allow us to generate immediate and steady cash flow from the rental income from the properties that we acquire, while potentially gaining significant appreciation over time after these properties are renovated and, in some cases, environmentally remediated. We expect that the available cash flow generated from the rental income of our properties, as well as net proceeds from their sales, will allow us to pay the operating and improvement costs of our properties.

 

We intend to seek potential property acquisitions that are located in Ohio and nearby states meeting the above criteria.

 

Critical Accounting Policies

 

Our management is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of our financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. Several of our significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.

   

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date(s) of the financial statements and the reported amounts of revenues and expenses during the reporting period(s).

 

 
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Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. Our critical accounting estimates and assumptions affecting the financial statements were:

 

 

·

Assumption as a going concern: Management assumes that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

 

 

 

 

·

Valuation allowance for deferred tax assets: Management assumes that the realization of our net deferred tax assets resulting from our net operating loss (“NOL”) carry-forwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance. Management made this assumption based on (a) our company has incurred recurring losses, (b) general economic conditions, and (c) our ability to raise additional funds to support our daily operations by way of a public or private offering, among other factors.

 

These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

 

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

 

Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates.

 

Revenue Recognition

 

We follow paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. We will recognize revenue when it is realized or realizable and earned. We consider revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectibility is reasonably assured. In addition to the aforementioned general policy, the following are the specific revenue recognition policies for each major category of revenue:

 

Residential property leases will be for terms of generally one year or less. Rental income is recognized on a straight-line basis over the term of the lease.

 

Rent concessions, including free rent if incurred in connection with residential property leases, will be amortized on a straight-line basis over the terms of the related leases (generally one year) and will be charged as a reduction of rental revenue.

 

Matters That May or Are Currently Affecting Our Business

 

The main challenges and trends that could affect or are affecting our financial results include:

 

·a failure by any tenant to make rental payments to us, and our ability to renew leases, lease vacant space or re-lease space as leases expire, because we depend on rental income;

 

 

·a downturn in residential and commercial markets in the geographic areas in which we operate, so as to cause our properties to be vacant for long periods of time; and

 

 

·our ability to raise significant financing to acquire additional properties, which we anticipate may be easier as a public company.

 

 
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Results of Operations – Fiscal Year ended June 30, 2016 and 2015

 

Revenue

 

We recorded $28,767 in revenue for the fiscal year ended June 30, 2016 as a result of rent from our Dayton industrial property, and no revenue for the fiscal year ended June 30, 2015. We currently generate revenue from the rental income of the properties that we acquired and expect to acquire in the future.

 

Operating Expenses

 

We recorded $55,330 and $52,752 in total operating expenses for the fiscal years ended June 30, 2016 and 2015, respectively. For those periods, our operating expenses consisted of professional fees of $41,289 and $45,681, respectively, and general and administrative costs of $12,041 and $5,071, respectively. Depreciation expense for the years ended June 30, 2016 and June 30, 2015 were $2,000 and $2,000, respectively. Future operating expenses will consist of personnel costs, insurance and facility costs, depreciation and amortization, marketing and sales, professional fees such as legal and accounting, and other general and administrative costs.

 

Liquidity and Capital Resources

 

As of June 30, 2016, we had $8,675 in cash and a working capital deficit of $100,923. As of June 30, 2015, we had cash of $7,275 and a working capital deficit of $87,936.

 

Net cash provided by our operating activities for the fiscal year ended June 30, 2016 totaled $8,600, compared to net cash used in our operations for the fiscal year ended June 30, 2015 of $47,050. The decrease in cash used was due primarily to a net loss of $29,487 for the fiscal year ended June 30, 2016 as compared to a net loss of $54,982 for the fiscal year ended June 30, 2015.

 

Net cash flows used by investing activities for the fiscal year ended June 30, 2016 totaled $0 compared to net cash used in our investing activities for the fiscal year ended June 30, 2015 of $70,000. In 2015, this was due mainly to the purchase of real estate for $75,000.

 

Cash flows provided in financing activities was $10,000 for fiscal year ended June 30, 2016, compared to net cash provided by financing activities of $45,851 for the fiscal year ended June 30, 2015. On October 19, 2015, we entered into a note payable with a related party in the amount of $10,000. The note bears no interest, and principal is due on October 19, 2017. The note proceeds are being used for working capital and general corporate purposes.

 

In May and June 2014, we sold 1,740,000 shares of our common stock to 32 individuals for $36,951. No one purchaser acquired more than 287,000 shares in the private placement, or 5% of our outstanding common stock.

 

Private capital, if sought, will be sought from former business associates of our founder or private investors referred to us by those business associates. To date, we have not sought any funding source and have not authorized any person or entity to seek out funding on our behalf. If a market for our shares ever develops, of which there can be no assurance, we may use restricted shares of our common stock to compensate employees/consultants and independent contractors wherever possible. We believe that operations are generating sufficient cash to continue operations for the next 12 months from the date of this report provided that our costs of being a public company remain equal to or below the maximum estimate provided below.

 

 
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We have embarked upon an effort to become a public company and, by doing so, have incurred and will continue to incur additional significant expenses for legal, accounting and related services. We will incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses for annual reports and proxy statements. We estimate that these costs will range up to $50,000 per year for the next few years and will be higher if our business volume and activity increases but lower during the first year of being public because our overall business volume will be lower, and we will not yet be subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. These obligations will reduce our ability and resources to fund other aspects of our business. We hope to be able to use our status as a public company to increase our ability to use noncash means of settling obligations and compensate vendors and professionals who provide products and services to us, although there can be no assurance that we will be successful in any of those efforts. To date, we have not identified any obligations that we may seek to settle in this manner nor have we identified any vendors, professionals or other creditors that we may approach with this idea.

 

There are no current plans to seek private investment. We do not have any current plans to raise funds through the sale of securities. We hope to be able to use our status as a public company to enable us to use non-cash means of settling obligations and compensate persons and/or firms providing services or products to us, although there can be no assurance that we will be successful in any of those efforts. We believe that the perception that many people have of a public company make it more likely that they will accept restricted securities from a public company as consideration for indebtedness to them than they would from a private company. We have not performed any studies of this matter. Our conclusion is based on our own beliefs. Issuing shares of our common stock to such persons instead of paying cash to them would increase our chances to expand our business. To date, we have not identified any obligations that we may seek to settle in this manner nor have we identified any vendors, professionals or other creditors that we may approach with this idea. Having shares of our common stock may also give persons a greater feeling of identity with us which may result in referrals. However, these actions, if successful, will result in dilution of the ownership interests of existing stockholders, may further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing management’s ability to maintain control of our company because the shares may be issued to parties or entities committed to supporting existing management.

 

On June 1, 2014, we issued a note to Holly1 LLC, an unaffiliated third party, in the amount of $85,000 to fund the purchase of our light industrial facility in Dayton, Ohio. Pursuant to an extension agreement dated May 18, 2016, the note bears interest at 4% per annum with the entire outstanding principal amount of the note, together with accrued interest, due and payable on January 1, 2017, and is an unsecured obligation. Accrued interest totaled $3,409 as of June 30, 2016 compared to $3,400 in 2015. Holly1 LLC is an existing investment vehicle of Rebecca McKinnon, a business acquaintance of management who is not affiliated with our company.

 

We have no current plans, commitments or arrangements to enter into any merger or acquisition, nor have we in the past entered into any negotiations, received a letter of intent relating thereto or otherwise initiated the process of identifying or acquiring any business opportunity.

 

Recent Accounting Pronouncements

 

In May 2014, the FASB issued the FASB Accounting Standards Update No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). This guidance amends the existing FASB Accounting Standards Codification, creating a new Topic 606, Revenue from Contracts with Customer. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

 

To achieve that core principle, an entity should apply the following steps:

 

 

1.Identify the contract(s) with the customer.

 

 

 

 

2.Identify the performance obligations in the contract.

 

 

 

 

3.Determine the transaction price.

 

 

 

 

4.Allocate the transaction price to the performance obligations in the contract.

 

 

 

 

5.Recognize revenue when (or as) the entity satisfies a performance obligations.

 

 
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The ASU also provides guidance on disclosures that should be provided to enable financial statement users to understand the nature, amount, timing, and uncertainty of revenue recognition and cash flows arising from contracts with customers. Qualitative and quantitative information is required about the following:

 

 

1.Contracts with customers – including revenue and impairments recognized, disaggregation of revenue, and information about contract balances and performance obligations (including the transaction price allocated to the remaining performance obligations).

 

 

 

 

2.Significant judgments and changes in judgments – determining the timing of satisfaction of performance obligations (over time or at a point in time), and determining the transaction price and amounts allocated to performance obligations.

 

 

 

 

3.Assets recognized from the costs to obtain or fulfill a contract.

 

In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this guidance remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.

 

The June 2014 amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations.

 

Further, the June 2014 amendments remove paragraph 810-10-15-16. Paragraph 810-10-15-16 states that a development stage entity does not meet the condition in paragraph 810-10-15-14(a) to be a variable interest entity if (1) the entity can demonstrate that the equity invested in the legal entity is sufficient to permit it to finance the activities that it is currently engaged in and (2) the entity’s governing documents and contractual arrangements allow additional equity investments.

 

The June 2014 amendments also eliminate an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The amendments to eliminate that exception simplify U.S. GAAP by reducing avoidable complexity in existing accounting literature and improve the relevance of information provided to financial statement users by requiring the application of the same consolidation guidance by all reporting entities. The elimination of the exception may change the consolidation analysis, consolidation decision, and disclosure requirements for a reporting entity that has an interest in an entity in the development stage.

 

The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which shall be applied prospectively. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein.

 

Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915.

 

 
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In August 2014, the FASB issued the FASB Accounting Standards Update No. 2014-15 “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”).

 

In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued (or at the date that the financial statements are available to be issued when applicable). Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). The term probable is used consistently with its use in Topic 450, Contingencies.

 

When management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern, management should consider whether its plans that are intended to mitigate those relevant conditions or events will alleviate the substantial doubt. The mitigating effect of management’s plans should be considered only to the extent that (1) it is probable that the plans will be effectively implemented and, if so, (2) it is probable that the plans will mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

 

If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, but the substantial doubt is alleviated as a result of consideration of management’s plans, the entity should disclose information that enables users of the financial statements to understand all of the following (or refer to similar information disclosed elsewhere in the footnotes):

 

 

(a)Principal conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans),

 

 

 

 

(b)Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations, and

 

 

 

 

(c)Management’s plans that alleviated substantial doubt about the entity’s ability to continue as a going concern

 

If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, and substantial doubt is not alleviated after consideration of management’s plans, an entity should include a statement in the footnotes indicating that there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued). Additionally, the entity should disclose information that enables users of the financial statements to understand all of the following:

 

 

(a)Principal conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern,

 

 

 

 

(b)Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations, and

 

 

 

 

(c)Management’s plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

 

 
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The August 2014 amendments are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.

 

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

 

Seasonality

 

We have not noted a significant seasonal impact in our business.

 

Off-Balance Sheet Arrangements

 

We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

Emerging Growth Company

 

We are an “emerging growth company” under the federal securities laws and will be subject to reduced public company reporting requirements. In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have chosen to take advantage of the extended transition period for complying with new or revised accounting standards.As a result of this election, our financial statements may not be comparable to those of companies that comply with public company effective dates as to new or revised accounting standards.

 

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk

 

As a smaller reporting company, we elected scaled disclosure reporting obligations and therefore are not required to provide the information required by this Item.

 

ITEM 8. Financial Statements and Supplementary Data

 

Our audited financial statements for the fiscal years ended June 30, 2016 and 2015 are included as a separate section of this report beginning on page F-1.

 

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

None.

 

ITEM 9A. Controls and Procedures

 

Our management, including our President and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based upon that evaluation, our President and Chief Financial Officer have concluded that the disclosure controls and procedures as of June 30, 2016 were not effective, due to the material weaknesses discussed below, to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our President and Chief Financial Officer, to allow timely decisions regarding disclosure.

 

 
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Management’s Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining an adequate system of internal control over financial reporting. Our internal control over financial reporting includes those policies and procedures that:

 

·pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

 

 

·provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted accounting principles in the United States, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

 

 

·provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

 

Our management assessed the effectiveness of our system of internal control over financial reporting as of June 30, 2016. In making this assessment, our management used the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission COSO). Based on our assessment and the criteria set forth by COSO, our management believes that we did not maintain effective internal control over financial reporting as of June 30, 2016 due to the material weaknesses discussed below.

 

The aforementioned evaluation identified material weaknesses that relate to the fact that that our overall financial reporting structure, internal accounting information systems and current staffing levels are not sufficient to support our financial reporting requirements. To address the weaknesses, we performed additional analyses and other post-closing procedures to ensure that our consolidated financial statements are prepared in accordance with generally accepted accounting principles. Accordingly, our management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

 

As noted above, the issues that resulted from these weaknesses were properly addressed before the completion of our consolidated financial statements. In addition, our management is working to identify and implement corrective actions where required to improve our internal controls, including the enhancement of our systems and procedures to assure that the weaknesses noted above are corrected. We are working to remedy our deficiency.

 

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Our management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only our management’s report in this annual report.

 

ITEM 9B. Other Information

 

None

 

 
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PART III

 

ITEM 10. Directors, Executive Officers and Corporate Governance

 

Executive Officers and Directors

 

Our Board of Directors consists of two members. Neither member is considered “independent” (with independence being determined in accordance with the listing standards established by the NASDAQ Stock Market), because each of them is also an executive officer of our company.

 

Set forth below are the names, ages and positions of our executive officers and directors as of October 18, 2016:

 

Name

Age

Positions

 

 

 

 

 

Michael Heitz

65

President and Chairman of the Board

 

 

 

 

 

Steve Ireland

55

Secretary and Director

 

Set forth below is biographical information for each of our executive officers and directors.

 

Michael Heitz is a real estate developer based in Lexington, Kentucky. For more than the past 30 years, he has worked as an entrepreneur and sole proprietor in the commercial real estate field, through Garrett LLC, a Kentucky limited liability company that he controls and will continue to operate part-time. In 2008, Mr. Heitz began working on environmentally-challenged properties. Through Garrett LLC, he has received more than $3,000,000 in assessment and clean-up grants from the State of Ohio. Securing these funds has assisted Mr. Heitz in acquiring, remediating and demolishing structures and readying these sites for enhanced development and sale. Mr. Heitz received a B.A. degree from West Virginia University. Mr. Heitz devotes approximately 75% of his business time to our company.

 

Mr. Heitz’s substantial knowledge and years of working experience in real estate development and acquisitions makes him well qualified as a member of our Board.

 

Steve Ireland is a commercial real estate agent in Dayton, Ohio and, since January 2010, has been and will continue to be a Vice President of Miller-Valentine GEM Real Estate Group. Miller-Valentine GEM is a full-service real estate firm that works in all facets of the market from development, construction and multi-family to brokerage and appraisal. He has been involved in the real estate field for the last five years and, in particular, in the industrial market. His projects have included working with clients on remediation needs and addressing the various zoning and other regulations at the state, county and city level. In 2009, Mr. Ireland was self-employed and began his involvement in the real estate field. Prior to his real estate experience, Mr. Ireland owned and managed Main Line Supply Co. Inc., a wholesale industrial distribution business serving the Ohio Valley region, from 1983 through 2008. He managed its sales network, compensation programs and sales platforms. Mr. Ireland received a B.A. degree from Wake Forest University.

 

Mr. Ireland’s extensive experience in all aspects of the local real estate market, including finding and vetting suitable acquisition targets, makes him well qualified as a member of our Board.

 

 
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Possible Potential Conflicts

 

No member of management is or will be required by us to work on a full time basis, although our President devotes approximately 75% of his business time to our company. Accordingly, certain conflicts of interest may arise between us and our officer(s) and director(s) in that they may have other business interests in the future to which they devote their attention, and they may be expected to continue to do so although management time must also be devoted to our business. As a result, conflicts of interest may arise that can be resolved only through their exercise of such judgment as is consistent with each officer’s understanding of his fiduciary duties to us.

 

Currently we have only two officers and two directors (the same persons) and will seek to add additional officer(s) and/or director(s) as and when the proper personnel are located and terms of employment are mutually negotiated and agreed, and we have sufficient capital resources and cash flow to make such offers.

 

Board of Directors

 

All directors hold office until the completion of their term of office, which is not longer than one year, or until their successors have been elected. Both directors’ terms of office expire on June 30, 2017. All officers are appointed annually by the Board of Directors and, subject to existing employment agreements (of which there are currently none) and serve at the discretion of the Board. Currently, directors receive no compensation for their role as directors but may receive compensation for their role as officers.

 

As long as we have an even number of directors, tie votes on issues are resolved in favor of the Chairman of the Board’s vote.

 

Committees of the Board of Directors

 

Concurrent with having sufficient members and resources, our Board of Directors will establish an audit committee and a compensation committee. We believe that we will need a minimum of five directors to have an effective committees system. The audit committee will review the results and scope of the audit and other services provided by the independent auditors and review and evaluate the system of internal controls. The compensation committee will manage the stock option plan and review and recommend compensation arrangements for the officers. No final determination has yet been made as to the memberships of these committees or when we will have sufficient members to establish committees. See “Executive Compensation” below.

 

All directors will be reimbursed by us for any expenses incurred in attending directors’ meetings provided that we have the resources to pay these fees. We will consider applying for officers and directors liability insurance at such time when it has the resources to do so.

 

Code of Ethics

 

Our Board of Directors has adopted a code of ethics, which applies to all our directors, officers and employees. Our code of ethics is intended to comply with the requirements of Item 406 of Regulation S-K.

 

Our code of ethics is posted on our Internet website at www.firstprioritytaxsolutions.com. We will provide our code of ethics in print without charge to any stockholder who makes a written request to Michael Heitz, our President, at First Priority Tax Solutions Inc., 137 N. Main Street, Suite 200A, Dayton, Ohio 45402. Any waivers of the application, and any amendments to, our code of ethics must be made by our Board of Directors. Any waivers of, and any amendments to, our code of ethics will be disclosed promptly on our Internet website, www.firstprioritytaxsolutions.com.

 

 
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Stock Option Plan

 

Pursuant to the October 9, 2014 Board of Directors’ approval and subsequent stockholder approval, we adopted our 2014 Non-Statutory Stock Option Plan (the “Plan”) whereby we reserved for issuance up to 1,000,000 shares of our common stock. Non-Statutory Stock Options do not meet certain requirements of the Internal Revenue Service as compared to Incentive Stock Options which meet the requirements of Section 422 of the Internal Revenue Code. Nonqualified options have two disadvantages compared to incentive stock options. One is that recipients have to report taxable income at the time that they exercise the option to buy stock, and the other is that the income is treated as compensation, which is taxed at higher rates than long-term capital gains. We intend to file a registration statement on Form S-8 so as to register those 1,000,000 shares of common stock underlying the options in the Plan once we are eligible to do so which will be after we are subject to the reporting requirements under the Securities Exchange Act of 1934 and have filed all required reports during the preceding 12 months or such shorter period of time as required.

 

No options are outstanding or have been issued under the Plan.

 

Our Board of Directors adopted the Plan to provide a long-term incentive for employees, non-employee directors, consultants, attorneys and advisors of our company. The Board of Directors believes that our policy of granting stock options to such persons will provide us with a potential critical advantage in attracting and retaining qualified candidates. In addition, the Plan is intended to provide us with maximum flexibility to compensate plan participants. We believe that such flexibility will be an integral part of our policy to encourage employees, non-employee directors, consultants and advisors to focus on the long-term growth of stockholder value. The Board of Directors believes that important advantages to our company are gained by an option program such as the Plan which includes incentives for motivating our employees, while at the same time promoting a closer identity of interest between employees, non-employee directors, consultants and advisors on the one hand, and our stockholders on the other.

 

The principal terms of the Plan are summarized below.

 

Summary Description of Stock Option Plan

 

The purpose of the Plan is to provide directors, officers and employees of, as well as consultants, attorneys and advisors to, our company with additional incentives by increasing their ownership interest in the company. Our directors, officers and other employees are eligible to participate in the Plan. Options in the form of Non-Statutory Stock Options (“NSO”) may also be granted to directors who are not employed by us and consultants, attorneys and advisors to us providing valuable services to us and our subsidiaries, if any. In addition, individuals who have agreed to become an employee, director, consultant or advisor to us and/or our subsidiaries are eligible for option grants, conditioned in each case on actual employment, directorship, advisor and/or consultant status. The Plan provides for the issuance of NSOs only, which are not intended to qualify as “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code, as amended. Further, NSOs have two disadvantages compared to ISOs in that recipients of NSOs must report taxable income at the time of NSO option exercise and income from NSOs is treated as compensation which is taxed at higher rates than long-term capital gains.

 

Our Board of Directors or a compensation committee (once established) will administer the Plan with the discretion generally to determine the terms of any option grant, including the number of option shares, exercise price, term, vesting schedule and the post-termination exercise period. Notwithstanding this discretion (i) the term of any option may not exceed ten years and (ii) an option will terminate as follows: (a) if such termination is on account of termination of employment for any reason other than death, without cause, such options shall terminate one year thereafter; (b) if such termination is on account of death, such options shall terminate 15 months thereafter; and (c) if such termination is for cause (as determined by the Board of Directors and/or compensation committee), such options shall terminate immediately. Unless otherwise determined by the Board of Directors or compensation committee, the exercise price per share of common stock subject to an option shall be equal to no less than 10% of the fair market value of the common stock on the date such option is granted. No NSO shall be assignable or otherwise transferable except by will or the laws of descent and distribution or except as permitted in accordance with SEC Release No. 33-7646, effective April 7, 1999.

 

 
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The Plan may be amended, altered, suspended, discontinued or terminated by the Board of Directors without further stockholder approval, unless such approval is required by law or regulation or under the rules of the stock exchange or automated quotation system on which the common stock is then listed or quoted. Thus, stockholder approval will not necessarily be required for amendments which might increase the cost of the Plan or broaden eligibility except that no amendment or alteration to the Plan shall be made without the approval of stockholders which would:

 

·decrease the NSO price (except as provided in the Plan) or change the classes of persons eligible to participate in the Plan, or

 

 

·extend the NSO period, or

 

 

·materially increase the benefits accruing to Plan participants, or

 

 

·materially modify Plan participation eligibility requirements, or

 

 

·extend the expiration date of the Plan.

 

Unless otherwise indicated, the Plan will remain in effect for a period of ten years from the date adopted unless terminated earlier by the Board of Directors except as to NSOs then outstanding, which shall remain in effect until they have expired or been exercised.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Rules adopted by the SEC under Section 16(a) of the Exchange Act, require our officers and directors, and persons who own more than 10% of the issued and outstanding shares of our equity securities, to file reports of their ownership, and changes in ownership, of such securities with the SEC on Forms 3, 4 or 5, as appropriate. Such persons are required by the regulations of the SEC to furnish us with copies of all forms they file pursuant to Section 16(a).

 

We believe that all of the officers, directors, and owners of more than ten percent of the outstanding shares of our common stock complied with Section 16(a) of the Exchange Act for the fiscal year ended June 30, 2016.

 

ITEM 11. Executive Compensation

 

Summary Compensation Table

 

The following table shows, for the fiscal years ended June 30, 2016 and 2015, compensation awarded to or paid to, or earned by, our Chief Executive Officer and only other employee (the “Named Executive Officer”).

 

Name and Principal Position

 

Fiscal Year

 

Salary

 

 

Bonus

 

 

Option Awards

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Michael Heitz, President

 

2016

 

$-

 

 

$-

 

 

$-

 

 

$-

 

 

 

2015

 

$-

 

 

$-

 

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Steve Ireland, Secretary

 

2016

 

$-

 

 

$-

 

 

$-

 

 

$-

 

 

 

2015

 

$-

 

 

$-

 

 

$-

 

 

$-

 

 

 
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Outstanding Equity Awards at Fiscal Year End

 

There were no outstanding equity awards as of June 30, 2016 and 2015, or through the filing date of this report.

 

Employment Agreements

 

As of June 30, 2016 and 2015, and through the filing date of this report, we have no employment agreements in place with any person.

 

Director Compensation

 

Directors currently receive no compensation for serving on our board of directors, other than reimbursement of reasonable expenses for attendance at board meetings.

 

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

As of October 18, 2016, we had 5,740,000 shares of common stock outstanding which were held by 34 stockholders. The table below sets forth the ownership of certain individuals and entities. This table discloses those persons known by the Board of Directors to have, or claim to have, beneficial ownership of more than 5% of the outstanding shares of our common stock as of October 18, 2016, of all our directors and executive officers, and of our directors and officers as a group.

 

Name and Address of Beneficial Owner (1)

 

Number of Shares
Beneficially Owned (2)

 

 

Percent of Class

 

 

 

 

 

 

 

 

Michael Heitz

 

 

4,000,000

 

 

 

69.7%

 

 

 

 

 

 

 

 

 

Steve Ireland

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Officers and directors as a group (2 persons)

 

 

4,000,000

 

 

 

69.7%

_____________________

(1)The address for each person is 137 N. Main Street, Suite 200A, Dayton, Ohio 45402

 

 

(2)Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of the common stock beneficially owned by them. A person is deemed to be the beneficial owner of securities which may be acquired by such person within 60 days from the date indicated above upon the exercise of options, warrants or convertible securities. Each beneficial owner’s percentage ownership is determined by assuming that options, warrants or convertible securities that are held by such person (but not those held by any other person) and which are exercisable within 60 days of the date indicated above, have been exercised.

 

 
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Change in Control

 

There are no arrangements currently in effect which may result in our “change in control,” as that term is defined by the provisions of Item 403(c) of Regulation S-K.

 

Equity Compensation Plan Information

 

Plan category

 

Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a)

 

 

Weighted-average exercise price of outstanding options, warrants and rights
(b)

 

 

Number of securities remaining available

for future issuance under equity compensation plans (excluding securities reflected in column
(a))(c)

 

 

 

 

 

 

 

 

 

 

 

Equity compensation plans approved by security holders

 

 

-

 

 

 

-

 

 

 

1,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity compensation plans not approved by security holders

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

-

 

 

 

-

 

 

 

1,000,000

 

 

ITEM 13. Certain Relationships and Related Transactions, and Director Independence

 

Related Transactions

 

To date, we have not purchased any properties from, or sold any properties to, any of our officers, directors or stockholders, or companies affiliated with any of them, and we believe it is unlikely that any such transaction would occur in the future. We have no current policy or limiting provisions in any governing instruments to handle these kinds of conflicts of interest, except that we would expect related party transactions to be made at fair market values and within the scope of our business plan.

 

Michael Heitz, our President and Chairman of the Board, will devote approximately 75% of his business time to our company. While Mr. Heitz will continue to work through his company, Garrett LLC, that company is predominantly engaged in significant environmental clean-up situations outside of our southern Ohio target area and we do not believe Mr. Heitz’s activities with Garrett will conflict with our operations in terms of identifying appropriate projects. Similarly, Steve Ireland, our Secretary and a director, will continue to work with Miller-Valentine GEM Real Estate Group, a full-service real estate firm in Dayton. That firm does not participate as a principal in real estate transactions and we do not believe Mr. Ireland’s services at Miller-Valentine GEM will conflict with our operations.

 

We have agreed to pay Miller-Valentine GEM a brokerage fee of 6% of the sale price for any sale of the property during the listing period ending on July 23, 2015 (which period renews automatically for successive 12-month periods) or, if the property is leased during such period, a leasing commission of 6% of the total rent for the initial term of the lease, payable in full at the signing of the lease. We believe that our agreement with Miller-Valentine GEM is on terms no less favorable to us than could have been obtained from unaffiliated third parties. In fiscal 2016, we paid a commission to Miller-Valentine GEM in the amount of $8,284 in connection with the lease of our Stanley Avenue commercial property. No payments were made to them in fiscal 2015.

 

On October 19, 2015, we entered into a note payable with a related party in the amount of $10,000. The note bears no interest, and principal is due on October 19, 2017. The note proceeds are being used for working capital and general corporate purposes.

 

We have been provided office space by Michael Heitz at no cost.

 

Director Independence

 

Our two current directors are not “independent” as they are executive officers of our company.

 

 
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PART IV

 

ITEM 14. Principal Accountant Fees and Services

 

Audit Fees

 

Audit fees are those fees billed for professional services rendered for the audit of the annual financial statements and reviews of the financial statements included in Forms 10-Q. For the fiscal year ended June 30, 2016, $14,500 in audit fees were billed by RBSM LLP and, for the fiscal year June 30, 2015, $9,600 in audit fees were billed by Li & Company, PC related to the audit and reviews of our financial statements.

 

Audit-related Fees

 

Audit-related fees are fees billed for professional services other than the audit of our financial statements. For the fiscal year ended June 30, 2016, no audit-related fees were billed by RBSM LLP and, for the fiscal year June 30, 2015, no audit-related fees were billed by Li & Company, PC.

 

Tax Fees

 

Tax fees are those fees billed for professional services rendered for tax compliance, including preparation of corporate federal and state income tax returns, tax advice and tax planning. For the fiscal year ended June 30, 2016, no tax fees were billed by RBSM LLP and, for the fiscal year June 30, 2015, no tax fees were billed by Li & Company, PC.

 

All Other Fees

 

No other fees were billed by our independent auditors in fiscal 2016 and 2015.

 

Audit Committee

 

We have not established an audit committee. Our board of directors approved the services rendered and fees charged by our independent auditors. Our board of directors has reviewed and discussed our audited financial statements for the fiscal year ended June 30, 2016, with our management. In addition, our board of directors has discussed with RBSM LLP, our independent registered public accountants, the matters required to be discussed by Statement of Auditing Standards No. 61 (Communications with Audit Committee). Our board of directors also has received the written disclosures and the letter from as required by the Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) and our board of directors has discussed the independence of RBSM LLP with that firm.

 

Based on our board of directors’ review of the matters noted above and its discussions with our independent auditors and our management, our board of directors approved the audited financial statements included in our annual report on Form 10-K for the fiscal year ended June 30, 2016.

 

 
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Policy for Pre-Approval of Audit and Non-Audit Services

 

Our board of directors’ policy is to pre-approve all audit services and all non-audit services that our independent auditor is permitted to perform for us under applicable federal securities regulations. As permitted by the applicable regulations, our board of directors’ policy utilizes a combination of specific pre-approval on a case-by-case basis of individual engagements of the independent auditor and general pre-approval of certain categories of engagements up to predetermined dollar thresholds that are reviewed annually by our board of directors. Specific pre-approval is mandatory for the annual financial statement audit engagement, among others.

 

The pre-approval policy was implemented effective in fiscal 2014. All engagements of the independent auditor to perform any audit services and non-audit services since that date have been pre-approved by our board of directors in accordance with the pre-approval policy. The policy has not been waived in any instance. All engagements of the independent auditor to perform any audit services and non-audit services prior to the date the pre-approval policy was implemented were approved by our board of directors in accordance its normal functions.

 

ITEM 15. Exhibits and Financial Statement Schedules

 

(a) Exhibits

 

Exhibit Number

 

Description

 

 

 

3.1

 

Certificate of Incorporation of First Priority Tax Solutions Inc. (1)

 

 

 

3.2

 

By-Laws of First Priority Tax Solutions Inc. (1)

 

 

 

10.1

 

2014 Non-Statutory Stock Option Plan. (1)

 

 

 

10.2

 

Agreement between First Priority Tax Solutions Inc. and its President. (1)

 

 

 

10.3

 

Form of Subscription Agreement. (1)

 

 

 

10.4

 

Promissory Note issued to Holly1 LLC. (1)

 

 

 

14.1

 

Code of Business Conduct and Ethics. (1)

 

 

 

14.2

 

Code of Ethics for the CEO and Senior Financial Officers. (1)

 

 

 

21.1

 

Subsidiaries of the Registrant. (1)

 

 

 

31.1*

 

Certification of Principal Executive Officer and Principal Financial Officer required by Rule 13(a)-14(a).

 

 

 

32.1*

 

Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

_______________

*Filed herewith.

 

 

(1)Incorporated by reference to the exhibits included with our Registration Statement on Form S-11 (No. 333-199336), originally filed with the U.S. Securities and Exchange Commission on October 15, 2014 and effective on February 5, 2015.

 

 
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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

FIRST PRIORITY TAX SOLUTIONS

Dated: October 21, 2016

By:

/s/ Michael Heitz

 

Michael Heitz

 

President and Chairman of the Board
(principal executive officer and principal financial and accounting officer)

 

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/ Michael Heitz

President and Chairman of the Board

October 21, 2016

Michael Heitz

(principal executive officer and principal financial and accounting officer)

 

/s/ Steve Ireland

Secretary and Director

October 21, 2016

Steve Ireland

 

 

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First Priority Tax Solutions Inc.

June 30, 2016 and 2015

Index to Financial Statements

 

Contents 

 

Page(s)

 

 

 

 

 

Report of Independent Registered Public Accounting Firm 

 

F-2

 

 

 

 

 

 

Balance Sheets as of June 30, 2016 and 2015 (restated)

 

 F-3

 

 

 

 

 

 

Statements of Operations for the years ended June 30, 2016 and 2015 (restated)

 

 F-4

 

 

 

 

 

 

Statement of changes in stockholders’ Deficit for the years ended June 30, 2016 and 2015 (restated)

 

F-5

 

 

 

 

 

 

Statements of Cash Flows for the years ended June 30, 2016 and 2015 (restated)

 

F-6

 

 

 

 

 

 

Notes to the Financial Statements

 

F-7

 

 

 
F-1
 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

 

Board of Directors

First Priority Tax Solutions, Inc.

Dayton, Ohio

 

We have audited the accompanying balance sheets of First Priority Tax Solutions, Inc. and (the “Company”) as of June 30, 2016 and 2015 and the related statements of operations, deficit and cash flows for each of the two years in the period ended June 30, 2016. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based upon 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 misstatements. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. 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 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 First Priority Tax Solutions, Inc. June 30, 2016 and 2015, and the results of its operations and its cash flows for each of the two years in the period ended June 30, 2016, in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in the Note 3 to the accompanying financial statements, the Company has suffered recurring losses from operations, generated negative cash flows from operating activities since inception and incurred significant deficit.  These 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 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

As discussed in Notes 1 and 10, the previously issued financial statements as of and for the periods June 30, 2015 and 2014 have been restated by the Company to correct for misstatements.

 

/s/ RBSM LLP

New York, New York

October 20, 2016 

 

 
F-2
Table of Contents

 

First Priority Tax Solutions Inc.

Balance Sheets

 

 

 

June 30,
2016

 

 

June 30,
2015

 

 

 

 

 

 

(restated)

 

Assets

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash

 

$8,675

 

 

$7,275

 

Accounts receivable

 

 

441

 

 

 

-

 

Deferred rent asset

 

 

17,422

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Total current assets

 

 

26,538

 

 

 

7,275

 

 

 

 

 

 

 

 

 

 

Real Estate

 

 

 

 

 

 

 

 

Land

 

 

15,000

 

 

 

15,000

 

Building

 

 

60,000

 

 

 

60,000

 

Accumulated depreciation

 

 

(4,000)

 

 

(2,000)

 

 

 

 

 

 

 

 

 

Real estate, net

 

 

71,000

 

 

 

73,000

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$97,538

 

 

$80,275

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Deficit

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accrued expenses

 

$42,461

 

 

$10,211

 

Note payable

 

 

85,000

 

 

 

85,000

 

 

 

 

 

 

 

 

 

 

Total current liabilities

 

 

127,461

 

 

 

95,211

 

 

 

 

 

 

 

 

 

 

Non-current Liabilities

 

 

 

 

 

 

 

 

Note payable, related party

 

 

10,000

 

 

 

-

 

Lease deposits from customers

 

 

4,500

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Total non-current liabilities

 

 

14,500

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

141,961

 

 

 

95,211

 

 

 

 

 

 

 

 

 

 

Stockholders' Deficit

 

 

 

 

 

 

 

 

Preferred stock par value $0.000001: 8,000,000 shares authorized; none issued or outstanding

 

 

-

 

 

 

-

 

Common stock par value $0.000001: 92,000,000 shares authorized; 5,740,000 shares issued and outstanding

 

 

6

 

 

 

6

 

Additional paid-in capital

 

 

59,849

 

 

 

59,849

 

Accumulated deficit

 

 

(104,278)

 

 

(74,791)

 

 

 

 

 

 

 

 

 

Total Stockholders' Deficit

 

 

(44,423)

 

 

(14,936)

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Deficit

 

$97,538

 

 

$80,275

 

  

See accompanying notes to the financial statements.

 

 
F-3
Table of Contents

 

First Priority Tax Solutions Inc.

Statements of Operations

 

 

 

 

For the year

 

 

For the year

 

 

 

 

ended

 

 

ended

 

 

 

 

June 30, 2016

 

 

June 30, 2015

 

 

 

 

 

 

(restated)

 

 

 

 

 

 

 

 

 

Revenue

 

 

$28,767

 

 

$-

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

 

4,252

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

 

24,514

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

Depreciation expense

 

 

 

 2,000

 

 

 

 2,000

 

Professional fees

 

 

 

41,289

 

 

 

45,681

 

General and administrative

 

 

 

12,041

 

 

 

5,071

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

 

55,330

 

 

 

52,752

 

 

 

 

 

 

 

 

 

 

 

Loss from Operations

 

 

 

(30,815)

 

 

(52,752)

 

 

 

 

 

 

 

 

 

 

Other (Income) Expense

 

 

 

 

 

 

 

 

 

Other income

 

 

 

(4,738)

 

 

(940)

Interest Income

 

 

 

-

 

 

 

(230)

Interest expense

 

 

 

3,409

 

 

 

3,400

 

 

 

 

 

 

 

 

 

 

 

Other (income) expense, net

 

 

 

(1,329)

 

 

2,230

 

 

 

 

 

 

 

 

 

 

 

Loss before Income Tax Provision

 

 

 

(29,487)

 

 

(54,982)

 

 

 

 

 

 

 

 

 

 

Income Tax Provision

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

$(29,487)

 

$(54,982)

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

 

 

-Basic and Diluted

 

 

$(0.01)

 

$(0.01)

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

-Basic and Diluted

 

 

 

5,740,000

 

 

 

5,740,000

 

 

 See accompanying notes to the financial statements.

 

 
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First Priority Tax Solutions Inc.

 

Statement of Changes in Stockholders' Equity (Deficit)

For the reporting period ending June 30, 2016

   

 

 

Common Stock par value $0.000001

 

 

Additional

 

 

 

 

Total

 

 

 

Number of

 

 

 

 

Paid-in

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity (Deficit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2014 (restated)

 

 

5,740,000

 

 

$

6

 

 

$

50,949

 

 

$

(19,809)

 

$

31,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contributed capital

 

 

 

 

 

 

 

 

 

 

8,900

 

 

 

 

 

 

 

8,900

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(54,982)

 

 

(54,982)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2015 (restated)

 

 

5,740,000

 

 

 

6

 

 

 

59,849

 

 

 

(74,791)

 

 

(14,936)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(29,487)

 

 

(29,487)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2016

 

 

5,740,000

 

 

$6

 

 

$59,849

 

 

$(104,278)

 

$(44,423)

 

 See accompanying notes to the financial statements.

 

 
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First Priority Tax Solutions Inc.

 

Statements of Cash Flows

 

 

 

For the year

 

 

For the year

 

 

 

ended

 

 

ended

 

 

 

June 30, 2016

 

 

June 30, 2015

 

 

 

 

 

(restated)

 

 

 

 

 

 

 

 

Cash Flows from Operating Activities

 

 

 

 

 

 

Net loss

 

$(29,487)

 

$(54,982)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

2,000

 

 

 

2,000

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(441)

 

 

-

 

Deferred rent asset

 

 

(17,422)

 

 

-

 

Accrued expenses

 

 

28,841

 

 

 

2,532

 

Accrued interest

 

 

3,409

 

 

 

3,400

 

Lease deposits from customers

 

 

4,500

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Net Cash Used in Operating Activities

 

 

(8,600)

 

 

(47,050)

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activitites

 

 

 

 

 

 

 

 

Deposit on acquisition of real estate

 

 

-

 

 

 

5,000

 

Purchase of real estate

 

 

-

 

 

 

(75,000)

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

-

 

 

 

(70,000)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Proceeds from note payable

 

 

10,000

 

 

 

-

 

Contribution to capital

 

 

-

 

 

 

8,900

 

Proceeds from sales of stock for cash

 

 

-

 

 

 

36,951

 

 

 

 

 

 

 

 

 

 

Net Cash Provided by Financing Activities

 

 

10,000

 

 

 

45,851

 

 

 

 

 

 

 

 

 

 

Net Change in Cash

 

 

1,400

 

 

 

(71,199)

 

 

 

 

 

 

 

 

 

Cash - beginning of reporting period

 

 

7,275

 

 

 

78,474

 

 

 

 

 

 

 

 

 

 

Cash - end of reporting period

 

$8,675

 

 

$7,275

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Interest paid

 

$-

 

 

$-

 

Income tax paid

 

$-

 

 

$-

 

 

 See accompanying notes to the financial statements.

 

 
F-6
Table of Contents

 

First Priority Tax Solutions Inc.

June 30, 2016 and 2015

Notes to the Financial Statements

 

Note 1 - Organization, Operations and Restatement of Previously Issued Financial Statements

 

First Priority Tax Solutions, Inc. (“First Priority” or the “Company”) was incorporated on March 31, 2014 under the laws of the State of Delaware.

 

The Company engages in the business of acquiring, developing and managing residential and commercial income-producing properties in the Cincinnati and Dayton, Ohio metropolitan areas. Revenue is generated primarily from rental income.

 

Overview of Restatement

 

In this annual report on Form 10-K, the Company:

 

(a)

restates its audited balance sheets as of June 30, 2014 and June 30, 2015;

(b)

restates its audited statements of operations from March 31, 2014 (inception) through June 30, 2014 and for the year ended June 30, 2015;

(c)

restates its audited statements of changes in stockholder’s deficit from March 31, 2014 (inception) through June 30, 2014 and for the year ended June 30, 2015; and

(d)

restates its audited statements of cash flows from March 31, 2014 (inception) through June 30, 2014 and for the year ended June 30, 2015

 

Background on the Restatement

 

As previously disclosed in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on October 5, 2016, management concluded that, because of errors identified in the Company’s previously issued financial statements from March 31, 2014 (inception) through June 30, 2014 and for the year ended June 30, 2015, the Company would restate its previously issued financial statements.

 

These errors were discovered by management during the Company’s normal closing process in the course of the Company’s regularly scheduled audit by its newly appointed independent registered public accountants. The restatements reflect adjustments to correct errors in the Company’s revenues, accounting expenses and contributed capital. The restated financial statements correct the following errors:

 

Revenues/Contributed Capital

 

Contributed capital in the amount of $8,900 was recorded as revenues for the year ended June 30, 2015.

 

Accrued Property Taxes

 

For the year ended June 30, 2015, $58,801 was accrued for property taxes due to a higher assessed value that the city had assigned to the property purchased by the Company. The Company was contesting the value of the property of which the city settled and assigned a value that is closer to the purchase price of the property in March 2016. Accordingly, the Company reversed the property taxes that were accrued as of June 30, 2015 of $58,801 instead of in the audit year ended June 30, 2016.

 

Professional Fees

 

During the audit for the year ended June 30, 2016 financial statements, the Company identified certain expenses that were recorded in the incorrect period. $4,000 of professional fees were recorded as expense for the year ended June 30, 2015 instead of June 30, 2014. For the year ended June 30, 2015 $2,500 of professional fees were recorded in the year ended June 30, 2016 instead of June 30, 2015.

 

 
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Note 2 - Significant and Critical Accounting Policies and Practices

 

The Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.

     

Basis of Presentation

 

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

Fiscal Year End

 

The Company elected June 30th as its fiscal year end date upon its formation.

 

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

 

Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimates and assumptions affecting the financial statements were:

 

 

(i)Assumption as a going concern: Management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

 

 

(ii)Fair value of long-lived assets: Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.

 

 

 

 

(iii)Valuation allowance for deferred tax assets: Management assumes that the realization of the Company’s net deferred tax assets resulting from its net operating loss (“NOL”) carry–forwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance. Management made this assumption based on (a) the Company has incurred recurring losses, (b) general economic conditions, and (c) its ability to raise additional funds to support its daily operations by way of a public or private offering, among other factors.

 

 
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These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

 

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

 

Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.

 

Actual results could differ from those estimates.

 

Fair Value of Financial Instrument and Fair Value Measurements

 

The Company adopted ASC 820, “Fair Value Measurements (“ASC 820”) .”   ASC 820 establishes a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets the lowest priority to unobservable inputs to fair value measurements of certain assets and Liabilities.  The three levels of the fair value hierarchy under ASC 820 are described below:

 

·

Level 1 — Quoted prices for identical instruments in active markets. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market, as well as certain securities that are highly liquid and are actively traded in over-the-counter markets.

 

·

Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which all significant inputs and significant value drivers are observable in active markets.

 

·

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value measurements. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques based on significant unobservable inputs, as well as management judgments or estimates that are significant to valuation.

 

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. For some products or in certain market conditions, observable inputs may not always be available.

  

 
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Carrying Value, Recoverability and Impairment of Long-Lived Assets

 

The Company has adopted Section 360-10-35 of the FASB Accounting Standards Codification for its long-lived assets. Pursuant to ASC Paragraph 360-10-35-17 an impairment loss shall be recognized only if the carrying amount of a long-lived asset (asset group) is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset (asset group) is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset (asset group). That assessment shall be based on the carrying amount of the asset (asset group) at the date it is tested for recoverability. An impairment loss shall be measured as the amount by which the carrying amount of a long-lived asset (asset group) exceeds its fair value. Pursuant to ASC Paragraph 360-10-35-20 if an impairment loss is recognized, the adjusted carrying amount of a long-lived asset shall be its new cost basis. For a depreciable long-lived asset, the new cost basis shall be depreciated (amortized) over the remaining useful life of that asset. Restoration of a previously recognized impairment loss is prohibited.

 

Pursuant to ASC Paragraph 360-10-35-21 the Company’s long-lived asset (asset group) is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The Company considers the following to be some examples of such events or changes in circumstances that may trigger an impairment review: (a) significant decrease in the market price of a long-lived asset (asset group); (b) A significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition; (c) A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator; (d) An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group); (e) A current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset group); and (f) A current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The Company tests its long-lived assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.

 

Pursuant to ASC Paragraphs 360-10-45-4 and 360-10-45-5 an impairment loss recognized for a long-lived asset (asset group) to be held and used shall be included in income from continuing operations before income taxes in the income statement of a business entity. If a subtotal such as income from operations is presented, it shall include the amount of that loss. A gain or loss recognized on the sale of a long-lived asset (disposal group) that is not a component of an entity shall be included in income from continuing operations before income taxes in the income statement of a business entity. If a subtotal such as income from operations is presented, it shall include the amounts of those gains or losses.

 

Foreign Currency Transactions

 

The Company applies the guidelines as set out in Section 830-20-35 of the FASB Accounting Standards Codification (“Section 830-20-35”) for foreign currency transactions. Pursuant to Section 830-20-35 of the FASB Accounting Standards Codification, foreign currency transactions are transactions denominated in currencies other than U.S. Dollar, the Company’s reporting currency or Canadian Dollar, the Company’s operating functional currency. Foreign currency transactions may produce receivables or payables that are fixed in terms of the amount of foreign currency that will be received or paid. A change in exchange rates between the functional currency and the currency in which a transaction is denominated increases or decreases the expected amount of functional currency cash flows upon settlement of the transaction. That increase or decrease in expected functional currency cash flows is a foreign currency transaction gain or loss that generally shall be included in determining net income for the period in which the exchange rate changes. Likewise, a transaction gain or loss (measured from the transaction date or the most recent intervening balance sheet date, whichever is later) realized upon settlement of a foreign currency transaction generally shall be included in determining net income for the period in which the transaction is settled. The exceptions to this requirement for inclusion in net income of transaction gains and losses pertain to certain intercompany transactions and to transactions that are designated as, and effective as, economic hedges of net investments and foreign currency commitments. Pursuant to Section 830-20-25 of the FASB Accounting Standards Codification, the following shall apply to all foreign currency transactions of an enterprise and its investees: (a) at the date the transaction is recognized, each asset, liability, revenue, expense, gain, or loss arising from the transaction shall be measured and recorded in the functional currency of the recording entity by use of the exchange rate in effect at that date as defined in section 830-10-20 of the FASB Accounting Standards Codification; and (b) at each balance sheet date, recorded balances that are denominated in currencies other than the functional currency or reporting currency of the recording entity shall be adjusted to reflect the current exchange rate.

 

 
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Table of Contents

 

Cash Equivalents

 

For the purpose of the accompanying financial statements, all highly liquid investments with a maturity of three months or less are considered to be cash equivalents.

 

Real Estate

 

Real Estate is recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the respective assets as follows:

 

 

 

Estimated Useful Life (Years)

 

 

 

 

 

Building

 

 

30

 

 

 

 

 

 

Land

 

 

N/A

 

 

Upon sale or retirement, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the statements of operations.

 

Related Parties

 

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.

 

Pursuant to Section 850-10-20 the related parties include a. affiliates (“Affiliate” means, with respect to any specified Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act) of the Company; b. entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

 

The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. The disclosures shall include: a. the nature of the relationship(s) involved b.  description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

 

 
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Commitment and Contingencies

 

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

 

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

 

Revenue Recognition

 

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. In addition to the aforementioned general policy, the following are the specific revenue recognition policies for each major category of revenue:

 

Residential property leases will be for terms of generally one year or more. Rental income is recognized on a straight-line basis over the term of the lease.

 

Rent concessions, including free rent if incurred in connection with residential property leases, will be amortized on a straight-line basis over the terms of the related leases and will be charged as a reduction of rental revenue.

 

Deferred Tax Assets and Income Tax Provision

 

The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the current enacted tax rates and laws. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.

 

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

 

 
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Table of Contents

 

The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.

 

Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.

 

Tax years that remain subject to examination by major tax jurisdictions

 

The Company discloses tax years that remain subject to examination by major tax jurisdictions pursuant to the ASC Paragraph 740-10-50-15.

 

Earnings per Share

 

Earnings per share ("EPS") are the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16 Basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.

 

Pursuant to ASC Paragraphs 260-10-45-45-21 through 260-10-45-45-23 Diluted EPS shall be based on the most advantageous conversion rate or exercise price from the standpoint of the security holder. The dilutive effect of outstanding call options and warrants (and their equivalents) issued by the reporting entity shall be reflected in diluted EPS by application of the treasury stock method unless the provisions of paragraphs 260-10-45-35 through 45-36 and 260-10-55-8 through 55-11 require that another method be applied. Equivalents of options and warrants include non-vested stock granted to employees, stock purchase contracts, and partially paid stock subscriptions (see paragraph 260–10–55–23). Anti-dilutive contracts, such as purchased put options and purchased call options, shall be excluded from diluted EPS. Under the treasury stock method: a. Exercise of options and warrants shall be assumed at the beginning of the period (or at time of issuance, if later) and common shares shall be assumed to be issued. b. The proceeds from exercise shall be assumed to be used to purchase common stock at the average market price during the period. (See paragraphs 260-10-45-29 and 260-10-55-4 through 55-5.) c. The incremental shares (the difference between the number of shares assumed issued and the number of shares assumed purchased) shall be included in the denominator of the diluted EPS computation.

 

There were no potentially dilutive common shares outstanding for the reporting periods ending June 30, 2016 and 2015.

 

Cash Flows Reporting

 

The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.  The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.

 

 
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Table of Contents

 

Subsequent Events

 

The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued.  Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.

 

Recently Issued Accounting Pronouncements

 

In May 2014, the FASB issued the FASB Accounting Standards Update No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”)

 

This guidance amends the existing FASB Accounting Standards Codification, creating a new Topic 606, Revenue from Contracts with Customer. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

 

To achieve that core principle, an entity should apply the following steps:

 

1.    Identify the contract(s) with the customer

 

2.    Identify the performance obligations in the contract

 

3.    Determine the transaction price

 

4.    Allocate the transaction price to the performance obligations in the contract

 

5.    Recognize revenue when (or as) the entity satisfies a performance obligations

 

The ASU also provides guidance on disclosures that should be provided to enable financial statement users to understand the nature, amount, timing, and uncertainty of revenue recognition and cash flows arising from contracts with customers.  Qualitative and quantitative information is required about the following:

 

6.    Contracts with customers – including revenue and impairments recognized, disaggregation of revenue, and information about contract balances and performance obligations (including the transaction price allocated to the remaining performance obligations)

 

7.    Significant judgments and changes in judgments – determining the timing of satisfaction of performance obligations (over time or at a point in time), and determining the transaction price and amounts allocated to performance obligations

 

8.    Assets recognized from the costs to obtain or fulfill a contract.

 

In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation.

 

 
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The amendments in this Update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.

 

The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations.

 

Finally, the amendments remove paragraph 810-10-15-16. Paragraph 810-10-15-16 states that a development stage entity does not meet the condition in paragraph 810-10-15-14(a) to be a variable interest entity if (1) the entity can demonstrate that the equity invested in the legal entity is sufficient to permit it to finance the activities that it is currently engaged in and (2) the entity’s governing documents and contractual arrangements allow additional equity investments.

 

The amendments in this Update also eliminate an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The amendments to eliminate that exception simplify U.S. GAAP by reducing avoidable complexity in existing accounting literature and improve the relevance of information provided to financial statement users by requiring the application of the same consolidation guidance by all reporting entities. The elimination of the exception may change the consolidation analysis, consolidation decision, and disclosure requirements for a reporting entity that has an interest in an entity in the development stage.

 

The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which shall be applied prospectively. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein.

 

Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915.

 

In August 2014, the FASB issued the FASB Accounting Standards Update No. 2014-15 “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”).

 

In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued (or at the date that the financial statements are available to be issued when applicable). Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). The term probable is used consistently with its use in Topic 450, Contingencies.

 

When management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern, management should consider whether its plans that are intended to mitigate those relevant conditions or events will alleviate the substantial doubt. The mitigating effect of management’s plans should be considered only to the extent that (1) it is probable that the plans will be effectively implemented and, if so, (2) it is probable that the plans will mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

 

 
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Table of Contents

 

If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, but the substantial doubt is alleviated as a result of consideration of management’s plans, the entity should disclose information that enables users of the financial statements to understand all of the following (or refer to similar information disclosed elsewhere in the footnotes):

 

a. Principal conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans)

b. Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations

c. Management’s plans that alleviated substantial doubt about the entity’s ability to continue as a going concern.

 

If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, and substantial doubt is not alleviated after consideration of management’s plans, an entity should include a statement in the footnotes indicating that there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued). Additionally, the entity should disclose information that enables users of the financial statements to understand all of the following:

 

a. Principal conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern

b. Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations

c. Management’s plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

 

The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.

 

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

 

Note 3 – Going Concern

 

The Company has elected to adopt early application of Accounting Standards Update No. 2014-15, “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”).

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  As shown in the accompanying financial statements, the Company has incurred recurring losses and generated negative cash flows from operating activities since inception.  As of June 30, 2016 and 2015, the Company had an accumulated deficit of $104,278 and $74,791, respectively. The Company has a working capital deficit (total current liabilities exceeded total current assets) of $100,923 and $87,936 respectively.  The Company’s cash balance and revenues generated are not currently sufficient and cannot be projected to cover its operating expenses for the next twelve months from the filing date of this report.  These factors among others raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

 

The Company’s existence is dependent upon management’s ability to develop profitable operations.  Management is devoting substantially all of its efforts to developing its business and raising capital and there can be no assurance that the Company’s efforts will be successful.  No assurance can be given that management’s actions will result in profitable operations or the resolution of its liquidity problems.  The accompanying consolidated financial statements do not include any adjustments that might result should the Company be unable to continue as a going concern.

 

In order to improve the Company’s liquidity, the Company’s management is actively pursuing additional equity financing through discussions with investment bankers and private investors.  There can be no assurance that the Company will be successful in its effort to secure additional equity financing.

 

 
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Table of Contents

 

Note 4 - Real Estate

 

As of June 30, 2016 and 2015, real estate investment consisted of one commercial property located at 1784 Stanley Avenue, Dayton, Ohio, which was leased in February 2016.

 

Depreciation expense for the year ended June 30, 2016 and 2015 totaled $2,000, respectively.

 

Note 5 - Revenue from rental income

 

On February 1, 2016, the Company entered into an agreement with GSH, LLC. to lease the commercial property it owns at 1784 Stanley Avenue, Dayton, OH. The lease is for the initial term of 24 months. Rental income is recognized on a straight-line basis over the term of the lease.

 

Note 6 - Note Payable

 

On June 1, 2014, the Company entered into a note payable with a third-party in the amount of $85,000. The note bears interest at 4% per annum with interest and principal due on June 1, 2016. Accrued interest totaled $3,409 and $3,400 for the reporting period ended June 30, 2016 and 2015, respectively. As of June 30, 2016, this note has been extended.

  

Note 7 - Equity Transactions

 

Shares Authorized

 

Upon formation, the total number of shares of all classes of stock which the Company is authorized to issue is Ninety Two Million (92,000,000) shares of Common Stock, par value $0.000001 per share, and Eight Million (8,000,000) shares of Preferred Stock, par value $0.000001 per share.

 

Common Stock

 

On March 31, 2014, upon formation, the Company issued an aggregate of 4,000,000 shares of the newly formed corporation’s common stock to its Chief Executive Officer at the par value of $0.000001 per share or $4 for compensation.

 

From March 31, 2014 through June 30, 2014, the Company authorized the issuance of 1,740,000 shares of its common stock for cash at $0.02 per share for a total of $36,951.

 

In June 2014, the Company’s president paid $14,000 in legal expenses for the Company which has been treated as a contribution to capital.

 

The Company’s president also contributed $8,900 in the form of two promissory notes from fees he obtained from performing services.

   

Note 8 - Related Party Transactions

 

On October 19, 2015, the Company entered into a related party note payable in the amount of $10,000. The note bears no interest, and principal is due on October 19, 2017.

  

A Director of the Company is also the real estate agent for the Company's rental property.

 

 
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Note 9 - Concentration

 

The Company operates in the Real Estate industry and owns one property in Dayton, Ohio.

 

Deferred Tax Assets

 

At June 30, 2016 and 2015, the Company had net operating loss (“NOL”) carry–forwards for Federal income tax purposes of $104,278 and $74,791 that may be offset against future taxable income through 2036. No tax benefit has been recorded with respect to these net operating loss carry-forwards in the accompanying financial statements as the management of the Company believes that the realization of the Company’s net deferred tax assets of approximately $35,454 was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by the full valuation allowance.

 

Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realization.  The valuation allowance increased approximately $10,025 for the fiscal year ended June 30, 2016 and $18,694 for the fiscal year ended June 30, 2015.

 

Components of deferred tax assets are as follows:

 

 

 

June 30, 2016

 

 

June 30, 2015

 

Net deferred tax assets – Non-current:

 

 

 

 

 

 

 

 

 

 

 

 

 

Expected income tax benefit from NOL carry-forwards

 

$35,454

 

 

$25,429

 

 

 

 

 

 

 

 

 

 

Less valuation allowance

 

 

(35,454)

 

 

(25,429)

 

 

 

 

 

 

 

 

 

Deferred tax assets, net of valuation allowance

 

$-

 

 

$-

 

 

Income Tax Provision in the Statement of Operations

 

A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as follows:

 

 

 

For the fiscal year ended June 30, 2016

 

 

For the fiscal year ended June 30, 2015

 

 

 

 

 

 

 

 

Federal statutory income tax rate

 

 

34.0%

 

 

34.0%

 

 

 

 

 

 

 

 

 

Increase (reduction) in income tax provision resulting from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating loss (“NOL”) carry-forwards

 

 

(34.0)

 

 

(34.0)

 

 

 

 

 

 

 

 

 

Effective income tax rate

 

 

0.0%

 

 

0.0%

 

 
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Table of Contents

 

Tax Returns Remaining subject to IRS Audits

 

The Company has not yet filed its corporation income tax return for the reporting period ended June 30, 2016. The Company's corporation income tax returns for the reporting periods ended June 30, 2016 and 2015 will remain subject to audit under the statute of limitations by the Internal Revenue Service for a period of three (3) years from the date they are filed.

 

Ohio - Commercial Activity Tax (CAT)

 

The Commercial Activity Tax (CAT) is an annual tax imposed on the privilege of doing business in Ohio, measured by gross receipts from business activities in Ohio. Businesses with Ohio taxable gross receipts of $150,000.00 per calendar year are subject to the CAT tax. Such "taxable gross receipts", include 1) gross rents and royalties from real property located in Ohio, and 2) gross receipts from the sale of real property located in Ohio. For calendar years 2006 and thereafter, the first $1 million in taxable gross receipts are taxed at $150, thereafter at a rate of 0.2600%. For tax years prior to December 31, 2013, there is an annual minimum tax (AMT) of $150.00. Since the Company has not had gross receipts for the periods ended June 30, 2016 and 2015, the CAT tax is not applicable to the Company for the periods indicated.

  

Note 10 –Restatements of Previously Issued Financial Statements

 

Subsequent to the original issuance of First Priority Tax Solutions' financial statements as of and for the period from March 31, 2014 (inception) through June 30, 2014 and for the year ended June 30, 2015, the management of the Company identified certain misstatements during the periods. As a result of certain misstatements identified, management concluded that its previously issued financial statements for the periods should no longer be relied upon because of certain misstatements identified.

 

The impact of this restatement on the Company's financial statements for the year from inception through June 30, 2014 and for the year ended June 30, 2015 is reflected in the totals below.

  

 
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Table of Contents

  

First Priority Tax Solutions Inc.

 Balance Sheets

 

 

 

June 30,
2014

 

 

June 30,
2014

 

 

June 30,
2014

 

 

 

(previously

reported)

 

 

(adjustments)

 

 

(restated)

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

Cash

 

$78,474

 

 

$-

 

 

$78,474

 

Stock subscription receivable

 

 

36,951

 

 

 

-

 

 

 

36,951

 

Dsposit on acquisition of real estate

 

 

5,000

 

 

 

-

 

 

 

5,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current assets

 

 

120,425

 

 

 

-

 

 

 

120,425

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

Land

 

 

-

 

 

 

-

 

 

 

-

 

Building

 

 

-

 

 

 

-

 

 

 

-

 

Accumulated depreciation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate, net

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$120,425

 

 

$-

 

 

$120,425

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity (Deficit)

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Accrued expenses

 

$279

 

 

$4,000

 

 

$4,279

 

Note payable, current maturity

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current liabilities

 

 

279

 

 

 

4,000

 

 

 

4,279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Note payable, net of current maturity

 

 

85,000

 

 

 

-

 

 

 

85,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total non-current liabilities

 

 

85,000

 

 

 

-

 

 

 

85,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

85,279

 

 

 

4,000

 

 

 

89,279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity (Deficit)

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock par value $0.000001: 8,000,000 shares authorized; none issued or outstanding

 

 

-

 

 

 

-

 

 

 

-

 

Common stock par value $0.000001: 92,000,000 shares authorized; 5,740,000 shares issued and outstanding

 

 

6

 

 

 

-

 

 

 

6

 

Additional paid-in capital

 

 

50,949

 

 

 

-

 

 

 

50,949

 

Accumulated deficit

 

 

(15,809)

 

 

(4,000)

 

 

(19,809)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Stockholders' Equity (Deficit)

 

 

35,146

 

 

 

(4,000)

 

 

31,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity (Deficit)

 

$120,425

 

 

$-

 

 

$120,425

 

 

See accompanying notes to the financial statements.

 

 
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First Priority Tax Solutions Inc.

 Statements of Operation 

 

 

 

For the Period from

March 31, 2014

(Inception) through

June 30, 2014

 

 

For the Period from

March 31, 2014

(Inception) through

June 30, 2014

 

 

For the Period from

March 31, 2014

(Inception) through

June 30, 2014

 

 

 

(previously

reported)

 

 

(adjustments)

 

 

(restated)

 

 

 

 

 

 

 

 

 

 

 

Rental Revenue

 

$-

 

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Professional fees

 

 

14,000

 

 

 

4,000

 

 

 

18,000

 

General and administrative

 

 

1,530

 

 

 

-

 

 

 

1,530

 

Total operating expenses

 

 

15,530

 

 

 

4,000

 

 

 

19,530

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from Operations

 

 

(15,530)

 

 

(4,000)

 

 

(19,530)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (Income) Expense

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

-

 

 

 

-

 

 

 

-

 

Interest Income

 

 

-

 

 

 

-

 

 

 

-

 

Interest expense

 

 

279

 

 

 

-

 

 

 

279

 

Other (income) expense, net

 

 

279

 

 

 

-

 

 

 

279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before Income Tax Provision

 

 

(15,809)

 

 

(4,000)

 

 

(19,809)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Provision

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

$(15,809)

 

$(4,000)

 

$(19,809)

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

- Basic and  Diluted

 

$(0.00)

 

$-

 

 

$(0.00)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

- Basic and Diluted

 

 

4,000,000

 

 

 

-

 

 

 

4,000,000

 

 

See accompanying notes to the financial statements.

 

 
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First Priority Tax Solutions Inc.

 Statement of Cash Flows

 

 

 

For the Period from

March 31, 2014

(Inception) through

June 30, 2014

 

 

For the Period from

March 31, 2014

(Inception) through

June 30, 2014

 

 

For the Period from

March 31, 2014

(Inception) through

June 30, 2014

 

 

 

(prevoiusly stated)

 

 

(adjustments)

 

 

(restated)

 

 

 

 

 

 

 

 

 

 

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

 

Net loss

 

$(15,809)

 

$(4,000)

 

$(19,809)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

-

 

 

 

-

 

 

 

-

 

Stock compensation

 

 

4

 

 

 

-

 

 

 

4

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accrued expenses

 

 

-

 

 

 

4,000

 

 

 

4,000

 

Accrued interest

 

 

279

 

 

 

-

 

 

 

279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Cash Used in Operating Activities

 

 

(15,526)

 

 

-

 

 

 

(15,526)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activitites

 

 

 

 

 

 

 

 

 

 

 

 

Deposit on acquisition of real estate

 

 

(5,000)

 

 

-

 

 

 

(5,000)

Purchase of real estate

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

(5,000)

 

 

-

 

 

 

(5,000)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from note payable

 

 

85,000

 

 

 

-

 

 

 

85,000

 

Contribution to capital

 

 

14,000

 

 

 

-

 

 

 

14,000

 

Proceeds from sales of stock for cash

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Cash Provided by Financing Activities

 

 

99,000

 

 

 

-

 

 

 

99,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Change in Cash

 

 

78,474

 

 

 

-

 

 

 

78,474

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash - beginning of reporting period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash - end of reporting period

 

$78,474

 

 

$-

 

 

$78,474

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

Interest paid

 

$-

 

 

$-

 

 

$-

 

Income tax paid

 

$-

 

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Stock subscription receivable

 

$36,951

 

 

$-

 

 

$36,951

 

 

See accompanying notes to the financial statements.

 

 
F-22
Table of Contents

      

First Priority Tax Solutions Inc.

Balance Sheets

 

 

 

June 30,

2015

 

 

June 30,

2015

 

 

June 30,

2015

 

 

 

(previously

reported)

 

 

(adjustments)

 

 

(restated)

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

Cash

 

$7,275

 

 

$-

 

 

$7,275

 

Stock subscription receivable

 

 

-

 

 

 

-

 

 

 

-

 

Dsposit on acquisition of real estate

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current assets

 

 

7,275

 

 

 

-

 

 

 

7,275

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

Land

 

 

15,000

 

 

 

-

 

 

 

15,000

 

Building

 

 

60,000

 

 

 

-

 

 

 

60,000

 

Accumulated depreciation

 

 

(2,000)

 

 

-

 

 

 

(2,000)

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate, net

 

 

73,000

 

 

 

-

 

 

 

73,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$80,275

 

 

$-

 

 

$80,275

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity (Deficit)

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Accrued expenses

 

$66,512

 

 

$(56,301)

 

$10,211

 

Note payable, current maturity

 

 

85,000

 

 

 

-

 

 

 

85,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current liabilities

 

 

151,512

 

 

 

(56,301)

 

 

95,211

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Note payable, net of current maturity

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total non-current liabilities

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

151,512

 

 

 

(56,301)

 

 

95,211

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity (Deficit)

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock par value $0.000001: 8,000,000 shares authorized; none issued or outstanding

 

 

-

 

 

 

-

 

 

 

-

 

Common stock par value $0.000001: 92,000,000 shares authorized; 5,740,000 shares issued and outstanding

 

 

6

 

 

 

-

 

 

 

6

 

Additional paid-in capital

 

 

53,349

 

 

 

6,500

 

 

 

59,849

 

Accumulated deficit

 

 

(124,592)

 

 

49,801

 

 

 

(74,791)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Stockholders' Equity (Deficit)

 

 

(71,237)

 

 

56,301

 

 

 

(14,936)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity (Deficit)

 

$80,275

 

 

$-

 

 

$80,275

 

 

See accompanying notes to the financial statements.

 

 
F-23
Table of Contents

 

First Priority Tax Solutions Inc.

Statements of Operations

 

 

 

For the fiscal
year
ended
June 30, 2015

 

 

For the fiscal
year
ended

June 30, 2015

 

 

For the fiscal
year
ended

June 30, 2015

 

 

 

(previously

reported)

 

 

(adjustments)

 

 

(restated)

 

 

 

 

 

 

 

 

 

 

 

Revenue  

 

$8,900

 

 

$(8,900)

 

$-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue 

 

 

2,400

 

 

 

(2,400)

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin 

 

 

6,500

 

 

 

(6,500)

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation expense

 

 

 -

 

 

 

 2,000

 

 

 

 2,000

 

Professional fees 

 

 

47,181

 

 

 

(1,500)

 

 

45,681

 

General and administrative 

 

 

65,872

 

 

 

(60,801)

 

 

5,071

 

Total operating expenses 

 

 

113,053

 

 

 

(60,301)

 

 

52,752

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from Operations 

 

 

(106,553)

 

 

53,801

 

 

 

(52,752)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (Income) Expense 

 

 

 

 

 

 

 

 

 

 

 

 

Other income 

 

 

(940)

 

 

-

 

 

 

(940)

Interest Income 

 

 

(230)

 

 

-

 

 

 

(230)

Interest expense 

 

 

3,400

 

 

 

-

 

 

 

3,400

 

Other (income) expense, net 

 

 

2,230

 

 

 

-

 

 

 

2,230

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before Income Tax Provision 

 

 

(108,783)

 

 

53,801

 

 

 

(54,982)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Provision 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss 

 

$(108,783)

 

$53,801

 

 

$(54,982)

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share 

 

 

 

 

 

 

 

 

 

 

 

 

-Basic and Diluted

 

$(0.02)

 

$-

 

 

$(0.01)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding 

 

 

 

 

 

 

 

 

 

 

 

 

-Basic and Diluted

 

 

5,740,000

 

 

 

-

 

 

 

5,740,000

 

 

See accompanying notes to the financial statements.

 

 
F-24
Table of Contents

  

First Priority Tax Solutions Inc.

Statement of Cash Flows

  

 

 

For the fiscal
year ended

June 30, 2015

 

 

For the fiscal
year ended

June 30, 2015

 

 

For the fiscal
year ended

June 30, 2015

 

 

 

(previously

reported)

 

 

(adjustments)

 

 

(restated)

 

 

 

 

 

 

 

 

 

 

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

 

Net loss

 

$(108,783)

 

$53,801

 

 

$(54,982)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

2,000

 

 

 

-

 

 

 

2,000

 

Stock compensation

 

 

-

 

 

 

-

 

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accrued expenses

 

 

62,833

 

 

 

(60,301)

 

 

2,532

 

Accrued interest

 

 

3,400

 

 

 

-

 

 

 

3,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Cash Used in Operating Activities

 

 

(40,550)

 

 

(6,500)

 

 

(47,050)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activitites

 

 

 

 

 

 

 

 

 

 

 

 

Deposit on acquisition of real estate

 

 

-

 

 

 

5,000

 

 

 

5,000

 

Purchase of real estate

 

 

(70,000)

 

 

(5,000)

 

 

(75,000)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

(70,000)

 

 

-

 

 

 

(70,000)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from note payable

 

 

-

 

 

 

-

 

 

 

-

 

Contribution to capital

 

 

2,400

 

 

 

6,500

 

 

 

8,900

 

Proceeds from sales of stock for cash

 

 

36,951

 

 

 

-

 

 

 

36,951

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Cash Provided by Financing Activities

 

 

39,351

 

 

 

6,500

 

 

 

45,851

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Change in Cash

 

 

(71,199)

 

 

-

 

 

 

(71,199)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash - beginning of reporting period

 

 

78,474

 

 

 

-

 

 

 

78,474

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash - end of reporting period

 

$7,275

 

 

$-

 

 

$7,275

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

Interest paid

 

$-

 

 

$-

 

 

$-

 

Income tax paid

 

$-

 

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Stock subscription receivable

 

$-

 

 

$-

 

 

$-

 

  

See accompanying notes to the financial statements.

 

Note 11 - Subsequent Events

 

The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that there were no reportable subsequent events to be disclosed. 

 

 

F-25