| DISCOUNTINUED OPERATIONS |
NOTE 4 – DISCONTINUED OPERATIONS The disposition of RAC Real Estate Acquisition Corp. represented a strategic shift in the Company’s operations. Following the sale, the Company no longer operates rental real estate properties and instead intends to focus on the development of multifamily housing projects. Accordingly, the results of operations and cash flows of RAC have been presented as discontinued operations in the accompanying financial statements in accordance with ASC 205-20. On July 8, 2025, the Company and RAC Merger LLC (“RAC Merger”) entered into a share purchase agreement in order to sell 100% issued and outstanding shares of RAC Real Estate Acquisition Corp., to RAC Merger for a total purchase amount of $2,374,896. At the time of the transaction, RAC Merger owned 98.5% of the total issued and outstanding shares of the Company. Therefore, in lieu of any cash distribution to RAC Merger as a shareholder of the Company, RAC Merger agreed that its 98.5% interest in the total purchase amount as a shareholder of the Company was satisfied by the assignment of the 100% issued and outstanding shares of RAC Real Estate Acquisition Corp. The remaining shareholders of the Company, which comprised 1.5% of the Company’s issued and outstanding shares as of the date of the transaction, received a cash distribution in the total amount of $35,623, which equals 1.5% of the total purchase amount. The following is a summary of the assets and liabilities of the Company’s discontinued operations at January 31, 2025: | | January 31, | | | | 2025 | | Cash | | $ | 14,979 | | Prepaid expenses | | | 6,218 | | Accounts receivable | | | 1,124 | | Homes inventory for sales | | | 1,875,367 | | Total current assets from discontinued operations | | | 1,897,688 | | | | | | | Property and equipment, net | | | 2,067,841 | | Total assets from discontinued operations | | $ | 3,965,529 | | | | | | | Accounts payable and accrued liabilities | | | 50,212 | | Loan payable - current portion | | | 25,000 | | Due to My City Builders, Inc. | | | 3,956,204 | | Bank borrowings - current portion, net | | | 432,204 | | Total current liabilities from discontinued operations | | | 4,463,620 | | | | | | | Bank borrowings, net | | | 710,558 | | Loan payable | | | 25,000 | | Total liabilities from discontinued operations | | $ | 5,199,178 | |
The following is a summary of discontinued operations for the three and six months ended January 31, 2025: | | Three Months Ended | | | Six Months Ended | | | | January 31, | | | January 31, | | | | 2025 | | | 2025 | | Revenues | | | | | | | Rental income | | $ | 29,743 | | | $ | 55,271 | | Total revenues from discontinued operations | | | 29,743 | | | | 55,271 | | Operating expenses: | | | | | | | | | Cost of rental homes | | | 6,256 | | | | 12,849 | | Depreciation | | | 17,415 | | | | 32,366 | | General and administrative | | | 14,027 | | | | 21,238 | | Professional fees | | | - | | | | 13,520 | | Total operating expenses from discontinued operations | | $ | 37,698 | | | $ | 79,973 | | | | | | | | | | | Loss from discontinued operations | | | (7,955 | ) | | | (24,702 | ) | | | | | | | | | | Other income and expense: | | | | | | | | | Interest expense | | | (29,774 | ) | | | (49,695 | ) | Total other expenses from discontinued operations | | $ | (29,774 | ) | | $ | (49,695 | ) | | | | | | | | | | Loss before income taxes | | | (37,729 | ) | | | (74,397 | ) | | | | | | | | | | Income taxes | | | - | | | | - | | Loss from discontinued operation, net of tax | | $ | (37,729 | ) | | $ | (74,397 | ) |
The following is a summary of discontinued cash flows for the six months ended January 31, 2025: | | Six Months Ended | | | | January 31, | | | | 2025 | | Cash Flows from Discontinued Operating Activities: | | | | Net (loss) income | | $ | (74,397 | ) | Adjustments to reconcile net loss to net cash used in discontinued operating activities: | | | | | Depreciation | | | 32,366 | | Amortization of debt discount | | | 1,489 | | Prepaid expenses | | | (6,218 | ) | Accounts receivable | | | 1,483 | | Accounts payable and accrued liabilities | | | (12,226 | ) | Homes inventory cost for sales | | | (262,362 | ) | Due to related parties | | | (141,825 | ) | Net cash used in discontinued operating activities | | | (461,690 | ) | | | | | | Cash Flows from Discontinued Investing Activities: | | | | | Payments for construction | | | (254,015 | ) | Purchases of property and equipment | | | (13,000 | ) | Net cash used in discontinued investing activities | | | (267,015 | ) | | | | | | Cash Flows from Discontinued Financing Activities: | | | | | Proceeds from bank borrowing | | | 102,534 | | Repayment of bank borrowing | | | (4,567 | ) | Repayment of loans payable - related party | | | (28,500 | ) | Advances from related parties | | | 835,000 | | Repayments to related parties | | | (178,478 | ) | Net cash provided by discontinued financing activities | | | 725,989 | | | | | | | Net change in cash | | | (2,716 | ) | Cash, beginning of period | | | 17,695 | | Cash, end of period | | $ | 14,979 | | | | | | | Supplemental cash flow information | | | | | Cash paid for interest | | $ | 52,553 | | Cash paid for taxes | | $ | - | | | | | | | Supplemental disclosure of non-cash financing activity | | | | | Common stock issued for settlement of debt-related party | | $ | 1,716,000 | |
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