My City Builders Inc

NOTE 1 - ORGANIZATION AND BUSINESS OPERATIONS

My City Builders, Inc. (the “Company” or “My City Builders”) is a Nevada corporation incorporated on October 26, 2010, under the name Oconn Industries Corp. The Company’s name was changed on March 11, 2014, from Oconn Industries Corp. to Diamante Minerals, Inc., and to iMine Corporation on March 20, 2018, and to My City Builders, Inc on January 31, 2023.

In July 2022, the Company acquired RAC Real Estate Acquisition Corp, a Wyoming Corporation ("RAC"). RAC is now a wholly owned subsidiary of the Company. The Company, through RAC, plans to focus on real estate transactions, in which the Company will buy and develop real estate for sale or rent of low-income housing. The Company plans to invest in three sectors of this market by (i) buying, refurbishing and selling traditional foreclosures, (ii) buying, developing and renting “Land Banks” that have an average pool of homes or lots in excess of 100 in one location and (iii) buying, refurbishing or developing and selling homes made available by the government through HECM pools.

On March 27, 2023, RAC, a wholly owned subsidiary of the Company entered into a Limited Liability Company Agreement dated effective March 27, 2023, (the “Agreement”) with, Frank Gillen, an individual (“Mr. Gillen”) and Michael Colvard, an individual (“Mr. Colvard”). The purpose of the LLC is to build 3-bedroom 2-bathroom single-family low-income homes in Gadsden Alabama. On May 05, 2023, Mr. Colvard’s construction agreement with the LLC was terminated and Mr. Colvard transferred his 1% and withdrew as a member and manager of the LLC.

As a result of the Agreement, RAC, formed a limited liability company called RAC Gadsden, LLC (“Gadsden”) incorporated in the state of Alabama. Gadsden will continue until terminated pursuant to the Agreement or as provided for under the laws of Alabama. RAC owns 98% of Gadsden and the purpose of Gadsden is to purchase, finance, collateralize, improve, rehabilitate, market, sell or lease property.

Share Exchange and Reorganization

On July 1, 2022, the Company entered into an Agreement and Plan of Reorganization dated June 30, 2022 with RAC, and the shareholders of RAC, namely Frank Gillen, Francis Pittilloni, and Yolanda Goodell (the “Shareholders”), whereby the Company issued to the Shareholders a combined 100,000 shares of Series A Preferred Stock, par value of $0.001 per share in consideration for a combined 1,000 shares of RAC common stock, par value $0.001, held by the Shareholders, which represents 100% of the issued and outstanding capital stock of RAC. As a result, RAC becomes a wholly owned subsidiary of the Company. Shareholders of RAC paid a combined capital contribution of $500,000 in cash as consideration for their combined 1,000 shares of RAC common stock.

Recapitalization

For financial accounting purposes, this transaction was treated as a reverse acquisition by RAC and resulted in a recapitalization with RAC being the accounting acquirer and the Company as the acquired company. The consummation of this reverse acquisition resulted in a change of control. Accordingly, the historical financial statements prior to the acquisition are those of the accounting acquirer, RAC, and have been prepared to give retroactive effect to the reverse acquisition completed on June 30,2022 and represent the operations of RAC. The consolidated financial statements after the acquisition date, June 30, 2022, include the balance sheets of both companies at fair value, the historical results of RAC and the results of the Company from the acquisition date. All share and per share information in the accompanying consolidated financial statements and footnotes has been retroactively restated to reflect the recapitalization.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The consolidated financial statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States.

Use of Estimates

The preparation of consolidated 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 of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s periodic filings with the SEC include, where applicable, disclosures of estimates, assumptions, uncertainties and markets that could affect the financial statements and future operations of the Company.

Fiscal Period

The Company’s fiscal year end is July 31.

Principles of Consolidation

The consolidated financial statements include the accounts of My City Builders and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated.

Cash and Cash Equivalents

For purposes of balance sheet presentation and reporting of cash flows, the Company considers all unrestricted demand deposits, money market funds and highly liquid debt instruments with an original maturity of less than 90 days to be cash and cash equivalents. The Company had no cash equivalents at July 31, 2024.

Periodically, the Company may carry cash balances at financial institutions more than the federally insured limit of $250,000 per institution. The Company has not experienced losses on account balances and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.

Fair Value Measurements

The Company measures the fair value of financial assets and liabilities based on US GAAP guidance which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

FASB ASC 820, “Fair Value Measurements” defines fair value for certain financial and nonfinancial assets and liabilities that are recorded at fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. It requires that an entity measure its financial instruments to base fair value on exit price, maximize the use of observable units and minimize the use of unobservable inputs to determine the exit price. It establishes a hierarchy which prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy increases the consistency and comparability of fair value measurements and related disclosures by maximizing the use of observable inputs and minimizing the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the assets or liabilities based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy prioritizes the inputs into three broad levels based on the reliability of the inputs as follows:

Financial instruments, including cash, prepaid expense, accrued interest income, accounts payable and accrued liabilities, deferred interest income, and due to related parties, are carried at amortized cost, which management believes approximates fair value due to the short-term nature of these instruments.

Real Estate Property

Real estate properties are stated at cost less accumulated depreciation. We capitalize all costs incurred to acquire, develop, construct, renovate and improve real estate property as part of major repair and maintenance programs, including interest and property taxes incurred during the construction period. We expense routine repair and maintenance costs as incurred. Depreciation is calculated using the straight-line over the estimated useful lives which are reviewed periodically and generally have the following ranges: Home for rent:27 years. Construction in progress is not depreciated until ready for service. The amount of interest capitalized during the years ended July 31, 2024, and 2023 are $35,000 and nil respectively.

Long term investment

The investments for which the Company has the ability to exercise significant influence are accounted for under the equity method. Under the equity method, the Company initially records its investment at cost. The difference between the cost of the equity investment and the amount of the underlying equity in the net assets of the equity investee is recognized as equity method goodwill or as an intangible asset as appropriate.

Impairment of Long-Lived Assets

Long-lived assets with finite lives, primarily investments, real estate inventories, property and equipment, including real estate properties held for lease, and operating lease right-of-use assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value.

Lessor accounting – operating leases

We account for the revenue from our lease contracts by utilizing the single component accounting policy. This policy requires us to account for, by class of underlying asset, the lease component and non-lease component(s) associated with each lease as a single component if two criteria are met:

Lease components consist primarily of fixed rental payments, which represent scheduled rental amounts due under our leases. Non-lease components consist primarily of tenant recoveries representing reimbursements of rental operating expenses, including recoveries for utilities, repairs and maintenance and common area expenses.

If the lease component is the predominant component, we account for all revenues under such lease as a single component in accordance with the lease accounting standard. Conversely, if the non-lease component is the predominant component, all revenues under such lease are accounted for in accordance with the revenue recognition accounting standard. Our operating leases qualify for the single component accounting, and the lease component in each of our leases is predominant. Therefore, we account for all revenues from our operating leases under the lease accounting standard and classify these revenues as rental income.

We commence recognition of rental income related to the operating leases at the date the property is ready for its intended use by the tenant and the tenant takes possession or controls the physical use of the leased asset. Income from rentals related to fixed rental payments under operating leases is recognized on a straight-line basis over the respective operating lease terms. Amounts received currently but recognized as revenue in future periods are classified in other liabilities in our consolidated balance sheets.

Revenue Recognition

The Company recognizes revenue in accordance with Topic 606, which requires the Company to recognize revenues when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the Company expects to be entitled to in exchange for those goods or services. The Company recognizes revenue based on the five criteria for revenue recognition established under Topic 606:

Interest income

The Company records interest income on an accrual basis and recognizes it as earned in accordance with the contractual terms of the loan agreement and underlying debt instrument, to the extent that such amounts are expected to be collected. Debt investments are placed on non-accrual status when it is probable that principal, interest or fees will not be collected according to contractual terms. When a debt investment is placed on non-accrual status, the Company ceases to recognize interest and fee income until the portfolio company has paid all principal and interest due or demonstrated the ability to repay its current and future contractual obligations to the Company. The Company may not apply the non-accrual status to a loan where the investment has sufficient collateral value to collect all of the contractual amount due and is in the process of collection. Interest collected on non-accrual investments are generally applied to the principal.

Rental income

The Company generated rental income from operating leases, which is accounted for under ASC 842. Operating lease revenue is generally recognized on straight-line basis over the terms of the lease agreements.

General and administrative expenses

General and administrative expenses primarily consist of office expenses, travel, meals and entertainment and insurance.

Cost of rental homes

The cost of rental homes are expenses directly related to rental homes, such as lawncare, maintenance and repairs, management fees, utilities, insurance and property taxes.

Share-based expenses

The Company accounts for stock-based compensation arrangements with employees, nonemployee directors and consultants using a fair value method, which requires the recognition of compensation expense for costs related to all stock-based payments, including stock options, on a straight-line basis over the requisite service period in the Company’s consolidated statements of operations. The fair value method requires the Company to estimate the fair value of stock-based payment awards on the date of grant.

Income Taxes

The Company provides income taxes under ASC 740, Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse.

ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Deferred tax assets have been fully provided for by the Company as of July 31, 2024, and 2023, respectively.

The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The Company believes there were no uncertain tax positions as of July 31, 2024, and 2023, respectively.

Concentrations of Credit Risk

The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and related party payables it will likely incur in the near future. The Company places its cash with financial institutions of high credit worthiness. At times, its cash balance with a particular financial institution may exceed any applicable government insurance limits. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.

Net Loss per Share of Common Stock

The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share.” Basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted earnings per share of common stock are computed by dividing net earnings by the weighted average number of shares and potential shares outstanding during the period. Potential shares of common stock consist of shares to be issued taken into account the effect of dilutive instruments. As of July 31, 2024, there were 100,000 shares of series A preferred stock, that were not included in the calculation of dilutive earnings per share as their effect would be anti-dilutive.

Commitments and Contingencies

The Company follows ASC 450-20, “Loss Contingencies”, to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

Related Parties and Transactions

The Company identifies related parties, and accounts for, discloses related party transactions in accordance with ASC Topic 850, “Related Party Disclosures” and other relevant ASC standards.

Parties, which can be an entity or individual, are considered to be related if they have the ability, directly or indirectly, to control the Company or exercise significant influence over the Company in making financial and operational decisions. Entities are also considered to be related if they are subject to common control or common significant influence.

Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

Segments

Operating segments are defined as components of an enterprise engaging in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company operates and manages its business as one operating segment and all of the Company’s revenues and operations are in United States.

Recent Accounting Pronouncements

The Company has implemented all new pronouncements that are in effect and that may impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its consolidated financial statements or results of operations.

Nonmonetary Transactions

The Company follows ASC 450, “Non-Monetary Transactions” and considers ASC 450-30 “Contingencies”, to report accounting for recognition homes inventory for sales and nonmonetary gain.

NOTE 3 - GOING CONCERN AND LIQUIDITY CONSIDERATIONS

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. During the year ended July 31, 2024, the Company generated a net income of $25,752. As of July 31, 2024, the Company had an accumulated deficit of $2,019,954. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plans to raise necessary funding through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ended July 31, 2025. However, until the Company engages in an active business or makes an acquisition the Company is likely not to be able to raise any significant debt or equity financing.

The ability of the Company to begin operations in its new business model is dependent upon, among other things, obtaining financing to commence operations and develop a business plan or making an acquisition. The Company cannot give any assurance as to its ability to develop or acquire a business or to operate profitably.

These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 4 – LOAN RECEIVABLE

On July 22, 2022, the Company received a promissory note, in the principal amount of $672,960 from, and entered into a Loan Agreement dated July 18, 2022, with, Fix Pads Holdings, LLC. The note has a 12% interest rate per annum payable of $672,960. Consideration for the note was paid in part by the Company in the amount of $328,626, net of prepayment interest and in part by a third-party investor in the amount of $328,626.

On August 18, 2022, the Company issued the promissory note of $358,620. The note has a 12% interest rate per annum payable of $358,620 and is due on August 1, 2023. Consideration for the note was paid in part by the Company in the amount of $175,007, net of prepayment interest and in part by a third-party investor in the amount of $175,007.

During the year ended July 31, 2023, the Company collected principal of $444,325 and interest of $67,457, of which principal of $157,105 and interest of $28,133 (totally $185,238) were collected on behalf of a third-party investor and recorded as accrued liabilities as of July 31, 2023. On July 23, 2024, the Company repaid outstanding due of $185,238.

On July 7, 2023, RAC filed an ongoing lawsuit with Fix Pad Holdings, therefore, no further interest income was recognized. During the years ended July 31, 2024, and 2023, the Company recorded interest income of $0 and $49,187, respectively.

In June 2024, the Company entered into two settlement agreements, which FixPads Holdings LLC and the others transfer the title of forty-four (44) properties to the Company for selling and distributing the net proceed from the sales between the parties. According to the terms and condition of settlement agreements, the loan receivable of $228,750 and accrued interest receivable of $2,851 were a part of settlement agreement., which the Company recovered the total loan receivable of $231,421 from nonmonetary gain resulted from properties (see Note 13).

NOTE 5 – PROPERTY AND EQUIPMENT

As of July 31, 2024, and 2023, property and equipment consist of as follows;

During the years ended July 31, 2024, and 2023, five (5) homes and three (3) homes were completed, respectively.

As of July 31, 2024, and 2023, the construction in progress consists of the cost of titles and construction expenses for six (6) homes which have not been completed, respectively.

On July 31, 2024, the Company purchased a piece of land for future construction of 7-8 duplex apartments for the amount of $120,000.

As of July 31, 2024, the Company entered into eight (8) separate lease agreements with monthly lease payments of $1,100 for one home, $1,125 for one home and $1,250 for six homes, each for a period of one year for each home leased.

During the year ended July 31, 2024, the Company recorded a depreciation expense of $31,985.

NOTE 6 – INVESTMENT

On October 4, 2022, the Company, through RAC, entered into a Limited Liability Company Agreement with Fix Pads Holdings, LLC ("Fix Pads"). As a result of the agreement, RAC and Fix Pads formed a limited liability company called RAC FIXPADS II, LLC (“LLC”), incorporated in the state of Delaware. The LLC has two members, RAC and Fix Pads, both providing an initial contribution to the LLC of $1,000 in exchange for a 50% membership interest represented by an issuance of 1,000 Units of the LLC to each party. Each member is entitled to one vote per member. The LLC is managed by a manager, Fix Pads. The agreement provides that additional capital contributions of the members will be made to the LLC as follows: (i) Fix Pads will transfer and assign all rights to and incidents of ownership for up to 60 residential properties it has title, or will have title, to the LLC, as set forth in the agreement; and (ii) RAC will make additional cash contributions to the capital of the LLC, up to a maximum of $5,214,000, on such dates and in such amounts as requested by the LLC, in the manner set forth in the agreement. From the sale of each property by the LLC, the Company shall receive $13,000 and the average additional cash capital contribution per property.

During the years ended July 31, 2024, and 2023, the Company invested $0 and $2,679,500 and recognized impairment loss of $947,500 and $1,732,000, respectively.

NOTE 7 - RELATED PARTY TRANSACTIONS

During the years ended July 31, 2024, and 2023, the Company's shareholders paid operating expenses of $16,889 and $38,710 on behalf of the Company, respectively. The advances are unsecure, due on demand and non-bearing interest.

During the years ended July 31, 2024, and 2023, the Company’s related party advanced $808,700 and $2,670,300 to the Company. The advances are unsecure, due on demand and non-bearing interest.

During the years ended July 31, 2024, and 2023, the Company’s officers advanced $0 and $282,000 to the Company and the Company repaid $29,922 and 73,600, respectively. The advances are unsecured, due on demand and interest 10% of advanced amount will be interest expense when the Company repays.

During the years ended July 31, 2024, and 2023, the Company’s related parties advanced $300,000 and $2,100,000 and the Company repaid $100,000 and $1,300,000, respectively. Theadvances are unsecured, payable during the period of five to ten months with interest of a range from 12% to 24% annual.

During the years ended July 31, 2024, and 2023, the Company recognized and paid interest expenses of $21,920 and $137,360, respectively.

During the year ended July 31, 2024, one related party assigned $500,000 of his amount due from the Company to another related party.

During the year ended July 31, 2024, one related party converted $500,000 of the amount due from the Company to four loan agreements with an interest rate of 9.5% annual with term of 30 years. In July 2024, the Company settled principal of $471,500 (see Note 9). During the year ended July 31, 2024, the Company recognized interest of $31,172 and paid interest of $27,213.

During the year ended July 31,2024, one related party assigned $498,200 obtained loans from the bank to the Company. The loan was utilized for settlement of $471,500 another related party loan (see Note 8) and payment of the Company’s operating expenses of $26,700.

During the year ended July 31, 2024, the Company allocated interest of $25,297 from total interest of $53,092 related to the above loans to construction in progress.

On January 17, 2024, the Company’s Board of Directors approved the settlement of $2,850,000 due to one related party in exchange of issuance of 11,400,000 shares of common stock.

As of July 31, 2024, and 2023, the Company had due to related parties of $1,106,000 and $3,726,222, respectively.

NOTE 8 – BANK BORROWINGS

As of July 31, 2024, bank borrowings consist, as follows;

Loans dated October 27, 2023

The monthly payment of $909 for the first 120 months to be applied to interest, and thereafter, will be in the amount of $1,070 for principal and interest.

During the year ended July 31, 2024, the Company recognized interest of $16,612 amortization of debt discount of $365 and paid interest of $14,541.

Loans dated November 3, 2023

These are construction lines of credit loan (pre-mortgages) that are expected to convert to mortgage loans once the homes are completed. The lines of credit are for a period of five years and the Company has the option of monthly payment of $771.

During the year ended July 31, 2024, the Company borrowed $340,742, recognized interest of $9,795, amortization of debt issuance cost of $1,837 and paid principal of $562 and interest of $7,016.

Loans dated July 26, 2024

On July 26,2024, the Company’s Interim Chief Executive Officer (ICEO) obtained four loans (totally $498,200) for settlement of loans payable -related party for amounts of $471,500 (see Note 9). On July 31,2024, the Company and ICEO entered into an assignment agreement, and the Company accepted the terms and condition of four loans agreements.

During the year ended July 31,2024, the Company recognized and paid interest of $372.

During the year ended July 31, 2024, the Company allocated interest of $9,703 from interest of $26,779 related to the above loans to construction in progress.

The following table outlines maturities of our long-term loans payable, as of July 31, 2024:

NOTE 9 – LOANS PAYABLE- RELATED PARTY

As of July 31, 2024, loans payable – related party consist of as follows;

The monthly payment of $3,958 for the 360 months to be applied to interest, and thereafter, the principal and any unpaid interest due on December 1, 2053.

During the year ended July 31, 2024, the Company recognized interest of $31,172 and paid interest of $27,213.

On July 29,2024, the Company settled $471,500 principal of loans (see Note 8) and the remaining balance of $28,500 was repaid on August 1,2024.

During the year ended July 31, 2024, the Company allocated interest of $12,752 from interest of $31,172 related to the above loans to construction in progress.

The following table outlines maturities of our long-term loans payable - related party, as of July 31, 2024:

NOTE 10 – LOAN PAYABLE

On July 31, 2024, the Company purchased land for the purpose of future construction of 7-8 duplex apartments in amount of $120,000. The Company signed a mortgage and warranty deed agreement with the seller for unpaid purchase price of $50,000, with 5% interest per annum, principal and interest being due and payable in 2 annual installments of $25,000 plus interest, beginning July 31, 2025, and the final instalment being July 31, 2026. As of July 31,2024, the Company had principal due of $50,000.

NOTE 11 - EQUITY

Authorized Preferred Stock

The Company has authorized 10,000,000 shares of preferred stock at par value of $0.001 per share.

Series A Preferred stock

The Company has designated 100,000 shares of preferred stock at par value of $0.001 per share.

As of July 31, 2024 and 2023, the Company had 100,000 shares of preferred stock issued and outstanding.

Authorized Common Stock

The Company has authorized 300,000,000 shares of common stock at par value of $0.001 per share. Each share of common stock entitles the holder to one vote on any matter on which action of the stockholders of the corporation is sought.

During the year ended July 31, 2023, the Company issued 700 shares of common stock for an adjustment of reverse stock split in June 2022.

During the year ended July 31, 2023, a shareholder returned 10,000 shares of common stock and the Company canceled 10,000 shares of common stock.

During the year ended July 31, 2024, the Company issued 11,400,000 shares for the settlement of due to a related party of $2,850,000.

As of July 31, 2024, and 2023, the Company had no options and warrants outstanding.

As of July 31, 2024, and 2023, the Company had 11,986,686 and 586,686 shares of common stock issued and outstanding, respectively.

NOTE 12 - INCOME TAXES

The provision for refundable federal income tax at 21% consists of the following for the periods ending:

The Company assesses the likelihood that deferred tax assets will not be realized. ASC 740, “Income Taxes” requires that a valuation allowance be established when it is “more likely than not” that all, or a portion of, deferred tax assets will not be realized. A review of all available positive and negative evidence needs to be considered, including the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. After consideration of all the information available, management believes that uncertainty exists with respect to future realization of its deferred tax assets and has, therefore, established a full valuation allowance as of July 31, 2024.

Net deferred tax assets consist of the following components as of:

The Company has not completed its evaluation of NOL utilization limitation under IRC Section 382, change of ownership rules, but believes that it had a change of ownership that would limit the amount of the U.S. NOLs that could be utilized each year based on the provisions of Section 382.

NOTE 13 – HOMES INVENTORY FOR SALES

On May 19, 2023, RAC filed a complaint for breach of two promissory notes entered into with Fix Pads Holdings, LLC and for injunctive relief in the 11 th Judicial Circuit Court in Miami-Dade County Florida, as well as an emergency motion for temporary injunction enjoining Fix Pads Holdings, LLC from selling, transferring, conveying or otherwise disposing of any real property assets pledged as collateral in relation to the two promissory notes entered into between RAC and Fix Pads. In addition to the injunctive relief sought above, RAC is also seeking damages for breach of the promissory notes. After RAC filed and served the lawsuit, Fix Pads removed the lawsuit to the United States District Court for the Southern District of Florida on May 24, 2023. As such, the case will now be proceeding in the Southern District of Florida. RAC has obtained temporary injunctive relief against Fix Pads.

On July 7, 2023, RAC filed a complaint for appointment of receiver, breach of Limited Liability Company Agreement, and breach of fiduciary duty in the 11 th Judicial Circuit Court of Miami-Dade County, Florida against Fix Pads Holdings LLC, FixPads Management, LLC and RAC FixPads II, LLC. RAC seeks for a receiver to be appointed to wind up the real property assets of RAC FixPads II, LLC and for damages for breach of the joint venture agreement.

In June 2024, the parties entered into two settlement agreements, which FixPads Holdings LLC and the others transfer the title of forty-four (44) properties to the Company for selling and distribute the net proceed from the sales between the parties. According to the terms and condition of the settlement agreements, the Company shall pay the title search cost, taxes, lien expenses, $50,000 legal fees and $185,238 payable to one of the parties.

During the year ended July 31, 2024, the Company repaid $185,238 obligation and paid $82,888 for title search cost, property taxes, liens, and fines to obtain quitclaim deed certificate of twenty-nine (29) properties and accrued $50,000 legal fees.

Pursuant to title search and settlement of taxes and due related to properties, the Company proceeded for obtaining the Quitclaim Deed Certificate of twenty-nine (29) properties. The Company intends to sell these properties. As of date of this report, twenty - six (26) Quitclaim Deed Certificates were issued, and the rest is under process.

The Company obtained the official fair value reports of properties from an independent firm based on sales comparison and secondary sales and recognized the value of twenty-nine (29) properties based on the valuation reports and physical condition of the homes. Some of the homes must be remodeled, therefore its valuation was based on land price or secondary sales and or value per Square Foot. Those valuations were not more than sales comparison price.

Here is the summary of the fair value of twenty-nine (29) properties as of July 31, 2024, and recognition of nonmonetary gain:

NOTE 14 – CONCENTRATION

As pf July 31, 2024, and 2023 and for the years ended July 31, 2024, and 2023, customer concentrations (more than 10%) were as follows:

Revenue -rental income

Accounts receivable

The rental properties are managed by a management company during the year ended July 31, 2024, therefore 100% of accounts receivable is related to one customer at July 31, 2024.

NOTE 15 - SUBSEQUENT EVENTS

Management has evaluated subsequent events through July 31, 2024, to the date on which the financial statements are available to be issued. Based on our evaluation no material events have occurred that require disclosure.

On September 18,2024, the Company obtained certificates of occupancies of two homes.

On October 18,2024, the Company acquired a property for amount of $7,000 future development.