Overview

In July of 2022 we 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 we will buy and develop real estate for sale or rent of low-income housing. We plan 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. We are currently working with a third-party vendor to facilitate this plan.

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 a South Carolina limited liability company. The note has a 12% interest rate per annum payable as follows: (1) a pre-payment on July 22, 2022 of pro-rated interest for the period from July 22, 2022 through July 30, 2022 in the amount of $2,212.47; (2) a pre-payment of interest on August 1, 2022 for the period from August 1, 2022 through September 30, 2022 in the amount of $13,496.07; and then (3) monthly payments of interest only beginning on October 1, 2022 and continuing on the 1st day of each month thereafter until all principal and accrued interest are paid in full by July 1, 2023. The note is secured by mortgages or deeds of trust on 7 properties. Consideration for the note was paid in part by the Company in the amount of $328,625.72 and in part by an investor, Frank Campanaro, in the amount of $328,625.73 (together both amounts equal $657,251.45 which represent the total note amount of $672,960 minus the two prepayments described above). On July 26, 2022, The Company entered into a partial assignment of the promissory note dated July 25, 2022, with Mr. Campanaro whereby the Company assigned to Mr. Campanaro the right to payment of principal in the amount of $336,480 and the right to half of the amount of any interest payments made on the principal amount of the note.

On August 18, 2022, the Company received a promissory note, in the principal amount of $358,620 from, and entered into a loan agreement, with, Fix Pads Holdings, LLC. The note has a 12% interest rate per annum payable as follows: (1) a pre-payment on August 19, 2022 of pro-rated interest for the period from August 19, 2022 through August 31, 2022 in the amount of $1,414.82; (2) a pre-payment of interest on August 19, 2022 for the period from September 1, 2022 through October 31, 2022 in the amount of $7,192.06; and then (3) monthly payments of interest only beginning on November 1, 2022 and continuing on the 1st day of each month thereafter until all principal and accrued interest are paid in full by August 1, 2023. The note is secured by mortgages or deeds of trust on 4 properties. Consideration for the note was paid in part by the Company in the amount of $175,006.56 and in part by Mr. Campanaro, in the amount of $175,006.56 (together both amounts equal $350,013.12 which represent the total note amount of $358,620 minus the two prepayments described above). On August 18, 2022, the Company entered into a partial assignment of the promissory note with Mr. Campanaro whereby the Company assigned to Mr. Campanaro the right to payment of principal in the amount of $179,310 and the right to half of the amount of any interest payments made on the principal amount of the note.

On October 4, 2022, the Company, through RAC, entered into a Limited Liability Agreement with Fixed Pads Holdings. As a result of the agreement, RAC and Fix Pads Holdings formed a limited liability company called RAC FIXPADS II, LLC, incorporated in the state of Delaware. The purpose of which is to purchase, finance, collateralize, improve, rehabilitate, market, sell or lease property, as well as carry on any lawful business, purpose or activity. The LLC has two members RAC and Fix Pads Holdings, LLC, 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 1 vote per member. The LLC is managed by a manager, Fix Pads Management, LLC.

The Agreement provides that additional capital contributions of the members will be made to the LLC as follows: (i) Fix Pads Holdings, LLC 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.






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Under the Agreement RAC will receive the net cost funded per property which currently is estimated at $92,000 per home refurbished along with the cost RAC paid to clear the Fix Pads Holdings title which currently is estimated at $6,900 per home, the value of the properties contributed by Fix Pads Holdings, LLC and the additional cash contributions by RAC. Distributions to the members under the Agreement will be made as follows: (i) from the sale of each property by the LLC, the LLC shall distribute $13,000 of the net sale proceeds to RAC and distribute and additional amount to RAC equal to the average RAC additional cash capital contribution per property, the balance net proceeds will be distributed to Fix Pads Holdings, LLC; (ii) for any property that is leased by the LLC, RAC will have the option to buy such property from the LLC and for any such property that is not bought by RAC, any net rental income will be retained by the LLC and distributed to the members based on (a) further written agreement of the members or (b) if the members are unable to agree then on such terms as provided in the Agreement.

Since the acquisition of RAC, the Company, through our third-party vendor, has financed the clearance of 55 titles in the name of Fix Pads Holdings, LLC and the 17 homes under construction in the LLC and 11 homes under the two promissory notes. Due to current interest rates and construction costs RAC has made the decision to reduce the homes to be remodeled in the LLC to 30 from 55 and move the focus to Land Bank projects where we have a minimum of 100 lots all in one location and will be able to rent all of the properties through qualified renters and Section 8 coupons from the local municipalities. Our first Land Bank project is in Gadsden Alabama with the Gadsden Land Bank Authority which we have purchased from the Land Bank 23 lots to start new construction of low income single family homes. The initial design is a 3 bedroom 1400 square foot home that will be constructed with new state of the art panel designed homes that will significantly reduce the time of construction for these homes to meet our targeted construction schedule of 20 homes every 60 days. We have ordered and have received the first three pre-engineered homes in Gadsden to determine if RAC will construct pre-engineered or traditional "stick built" homes.

On January 31,2023, the Company changed its corporate name to My City Builders, Inc., through the merger of the Company with its wholly owned subsidiary, My City Builders, Inc., a Nevada corporation (the "Subsidiary"). Pursuant to an agreement and plan of merger between the Company and the Subsidiary, the Subsidiary was merged with and into the Company and the Company's name was changed to My City Builders, Inc. The only change to the Company's articles of incorporation was the change of the Company's corporate name. Pursuant to the Nevada Revised Statutes (NRS) 92A.180, the merger did not require stockholder approval. The change of name will take place in the marketplace upon approval by FINRA.





Results of Operations

Three Months Ended January 31, 2023

For the three months ended January 31, 2023, we generated revenue from interest income of $13,569.

For the three months ended January 31, 2023, we incurred operating expense of $22,575, primarily professional fees, and interest expense - related party of $42,000, resulting in a net loss of $51,006 or ($0.09) per share (basic and diluted).

Six Months Ended January 31, 2023

For the six months ended January 31, 2023, we generated revenue from interest income of $27,824.

For the six months ended January 31, 2023, we incurred operating expense of $59,027, primarily professional fees, and interest expense - related party of $42,000, resulting in a net loss of $73,203 or ($0.12) per share (basic and diluted).

Liquidity and Capital Resources





The following summarizes our change in working capital from July 31, 2022 to
January 31, 2023:



                               January 31,      July 31,
                                   2023           2022           Change           %
Current assets                 $    463,243     $ 337,198     $    126,045          37 %
Current liabilities            $  2,333,041     $  28,635     $  2,304,406       8,048 %

Working capital (deficiency) $ (1,869,798 ) $ 308,563 $ (2,178,361 ) (706 )%







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The following table summarizes our cash flow for the six months ended January 31, 2023:





                                        Six months ended January 31, 2023
Cash used in operating activities       $                          (44,893 )
Cash used in investing activities       $                       (2,142,272 )
Cash provided by financing activities   $                        2,196,000
Cash on hand                            $                            9,553

The cash flow used in operating activities for the six months ended January 31, 2023, reflects our net loss of $73,203. This amount was decreased by amounts due to related parties of $33,780, and accounts payable and accrued interest of $1,278 and increased by deferred interest income of $6,748.

For the six months ended January 31, 2023, the Company received cash from loan receivable of $140,996 and used $1,945,200 for investment, $179,310 for loan receivable and $158,758 for payment of construction.

For the six months ended January 31, 2023, the Company received advance from related parties of $2,616,000 and repaid $420,000 to related parties.





Going Concern

Our financial statements have been prepared assuming that we 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 six months ended January 31, 2023, we incurred net loss of $73,203 and net cash used in operating activities of $44,893. As of January 31, 2023, we had an accumulated deficit of $96,441. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management plans to raise necessary funding through equity and debt financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements. The ability of the Company to continue operations in its new business model is dependent upon, among other things, obtaining financing to continue operations and continue developing the business plan. The Company cannot give any assurance as to the ability to develop or 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.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.





Critical Accounting Policies

Use of Estimates: The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that directly affect the results of reported assets, liabilities, revenue, and expenses, including the valuation of non-cash transactions. Actual results may differ from these estimates.

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