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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 1:  Organization and Basis of Presentation</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">American Realty Funds Corporation (“the Company”) was
incorporated on February 22, 2010 (Date of Inception) in the State of Tennessee. The Company purchases, renovates and resells residential
real estate in the United States.  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Basis of presentation</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Financial statements of the Company have been prepared in accordance
with generally accepted accounting principles in the United States of America.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="margin: 0pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Note 1: 	Background and Basis of Presentation</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 8.25pt; text-align: justify">American Realty Funds Corporation
(the “Company”) was incorporated on February 22, 2010 (Date of Inception) in the State of Tennessee.  The Company
focuses on acquiring, renovating and reselling residential real estate.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The accompanying unaudited financial statements
have been prepared by management in accordance with accounting principles generally accepted in the United States of America ("GAAP")
for interim financial information.  Accordingly, they do not include all of the information and footnotes required by GAAP
for complete financial statements.  In the opinion of management, all adjustments, consisting only of normal and recurring
adjustments considered necessary for a fair statement, have been included.  The reported results of operations are not necessarily
indicative of the results that may be expected for the full year.  These financial statements should be read in conjunction
with the audited financial statements and accompanying notes for the fiscal year ended June 30, 2011.</p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 2:  Going Concern and Operations</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The accompanying financial statements have been prepared assuming
the Company will continue as a going concern.  The Company has incurred losses, has had negative operational cash flows since
inception, and has had no revenues.  The future of the Company is dependent upon future profitable operations and the development
of the business plan.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">These conditions raise substantial doubt about the Company's ability
to continue as a going concern. These financial statements do not include any adjustments that might arise from this uncertainty.</p>
<p style="margin: 0pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 2: 	Going Concern and Operations</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The accompanying financial statements have
been prepared assuming the Company will continue as a going concern.  The Company has incurred losses, has had negative operational
cash flows since inception, and has had minimal revenues.  The future of the Company is dependent upon future profitable operations
and the development of the business plan.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">These conditions raise substantial doubt about
the Company's ability to continue as a going concern. These financial statements do not include any adjustments that might arise
from this uncertainty.</p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 3:  Summary of Significant Accounting Policies</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Use of Estimates</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The preparation of financial  statements in conformity  with
generally  accepted accounting principles 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 reported  amounts of revenues and expenses during the reporting  period.
 Actual results could differ from those estimates.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Cash </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company considers all highly liquid investments with maturities
from date of purchase of three months or less to be cash equivalents. Cash consists of balances on deposit with domestic banks.
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Inventory- Residential Properties </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Pre-renovated residential properties acquisitions, materials, other
direct costs, interests and other indirect costs related to acquisition and renovation of the real estate properties are capitalized.
Indirect costs of renovating several real estate properties are allocated to individual real estate based on their relative sales
value. Capitalized costs of residential properties which is held for sale are recorded at the lower of its carrying amount or fair
value less cost to sell.  Other costs like marketing, etc. incurred in connection with renovated real estate properties and
other selling and administrative costs are charged to earnings when incurred.  If the Company has a continuing obligation
to complete renovations subsequent to the sale of the property, an estimate of the costs to complete are charged to cost of sales
with a corresponding liability at the time of sale.   </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Revenue Recognition </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Sales of the Company’s real estate property occurs through
the use of a sales contract where revenues from renovated real estate property sales is recognized upon closing of the sale.  In
accordance with Accounting Standard 360 <i>Property, Plant, and Equipment</i>, Issue 20 <i>Real Estate Sales </i>(“AS 360-20”),
the Company uses the accrual method and recognizes revenue on the sale of its renovated properties when the earnings process is
complete and the collectability of the sales price and additional proceeds is reasonably assured, which is typically when the sale
of the property closes.   </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company sells most of its real estate properties through land
contracts where the Company conveys to the purchaser real estate by a warranty deed if the purchaser pays a down payment on the
delivery of the contract and pays the remaining sales amount over 30 years at a specified interest rate. During the time when payments
are made, the purchaser has use of the real estate.  In the event of a default by the purchaser, the Company may void the
contract and the property and all the payments made under the contract would be forfeited to the Company as rental for the use
of the real estate and the Company may declare all amounts remaining unpaid under the contract due and payable.  In accordance
with AS 360-20, the Company accounts for these Land Contract sales under the deposit method as the Company does not transfer to
the purchaser all the risk and rewards of ownership of the real estate upon the sale of the property.  For a sale under the
deposit method, the Company does not initially record a profit on the sale, does not record a notes receivable, continues to carry
the property as an asset on it financial statements, and will recognize the down payment and subsequent monthly payments as a Deposit
liability.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">In accordance with AS 360-20, the Company recognizes profit on these
land contracts when the earnings process is complete and the collectability of the sales price and additional proceeds is reasonably
assured.  This will typically occur when the purchase price and all interest is paid in full and legal title to the property
has transferred to the purchaser.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company also enters into sales of land contract interests where
the Company transfers and delivers to the purchaser full interest in the land contracts noted above, including the transfer of
full and legal title to the underlying properties and the right to receive the future payments made under the land contract, upon
full payment of the land contract interest purchase price.  Payments of the land contract interest purchase price typically
occur over a period of time in unequal and irregular installments and are recorded as deposit liabilities per the deposit method
until the earnings process is complete as the Company does not transfer to the purchaser all the risk and rewards of ownership
of the real estate upon the sale of the property.    </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">In accordance with AS 360-20, the Company recognizes profit on these
sales of land contract interests when the earnings process is complete and the collectability of the sales price and additional
proceeds is reasonably assured.  This typically occurs when the purchase price and is paid in full and legal title to the
property has transferred to the land contract interest purchaser.  Additionally, when the earnings process is complete, any
down payments and monthly land contract income previously received and recorded as a deposit liability is recognized as revenue.
 Any down payment or monthly land contract income received and recorded as a deposit liability that was borrowed from a related
party is recorded as an equity recapitalization.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Net Loss per Share</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Basic net loss per share is computed using the weighted average
number of common shares outstanding during the period. As the Company is in a net loss position, there are no outstanding potentially
dilutive securities that would cause diluted earnings per share to differ from basic earnings per share.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Income Taxes</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company recognizes deferred tax liabilities and assets for the
expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this
method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis
of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.   </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company applies the authoritative guidance in accounting for
uncertainty in income taxes recognized in the financial statements. This guidance prescribes a two-step process to determine the
amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained
upon external examination. If the tax position is deemed “more-likely-than-not” to be sustained, the tax position is
then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be
recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company
has established a valuation allowance for all deferred tax assets (consisting of net operating loss carryforwards) as of June 30,
2011 as it has not determined that such assets are likely to be realized.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Recently Issued Accounting Standards</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">In October 2009, the FASB issued Accounting Standards Update (“ASU”)
No. 2009-13, “<i>Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements—a consensus of the
FASB Emerging Issues Task Force</i>” (“ASU 2009-13”), which provides guidance on whether multiple deliverables
exist, how the arrangement should be separated, and the consideration allocated. ASU 2009-13 requires an entity to allocate revenue
in an arrangement using estimated selling prices of deliverables if a vendor does not have vendor-specific objective evidence or
third-party evidence of selling price. ASU 2009-13 was effective for the first annual reporting period beginning on or after June 15,
2010 and could be applied retrospectively for all periods presented or prospectively to arrangements entered into or materially
modified after the adoption date. Early adoption was permitted provided that the revised guidance was retroactively applied to
the beginning of the year of adoption. ASU 2009-13 was effective for the Company on January 1, 2011. The adoption of these
amendments did not have any impact on the consolidated financial statements.  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">In May 2011, the FASB issued Accounting Standards Update (“ASU”)
2011-04, <i>Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial
Reporting Standards</i> (“IFRSs”), which amends ASC 820, <i>Fair Value Measurement</i>. ASU 2011-04 does not extend
the use of fair value accounting, but provides guidance on how it should be applied where its use is already required or permitted
by other standards within U.S. GAAP or IFRSs. ASU 2011-04 changes the wording used to describe many requirements in U.S. GAAP for
measuring fair value and for disclosing information about fair value measurements. Additionally, ASU 2011-04 clarifies the FASB’s
intent about the application of existing fair value measurements. ASU 2011-04 is effective for reporting periods beginning after
December 15, 2011, and is applied prospectively.  The Company is in the process of evaluating the impact that the
adoption of ASU 2011-04 will have on the financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">In June 2011, the FASB issued Accounting Standards Update (“ASU”)
No. 2011-05, “<i>Presentation of Comprehensive Income</i>” (ASU 2011-05). The provisions of ASU 2011-05 amend FASB
ASC Topic 220 “<i>Comprehensive Income</i>” to eliminate the current option to present the components of other comprehensive
income in the statement of changes in equity, and require the presentation of net income and other comprehensive income (and their
respective components) either in a single continuous statement or in two separate but consecutive statements. The amendments do
not alter any current recognition or measurement requirements with respect to items of other comprehensive income. ASU 2011-05
is effective for reporting periods beginning after December 15, 2011, with early adoption permitted. The Company is in
the process of evaluating the impact that the adoption of ASU 2011-05 will have on the financial statements.</p>
<p style="margin: 0pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 3: 	Summary of Significant Accounting Policies</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Use of Estimates</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 8.25pt; text-align: justify"><font style="color: black">The preparation
of financial  statements in conformity  with generally  accepted accounting principles 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 reported  amounts
of revenues and expenses during the reporting  period.  Actual results could differ from those estimates</font>.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Cash </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="color: black">The Company considers
all highly liquid investments with maturities from date of purchase of three months or less to be cash equivalents. Cash consists
of balances on deposit with domestic banks</font>.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 8.25pt"><b><i>Inventory- Residential Properties </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 8.25pt; text-align: justify"><font style="color: black">Pre-renovated
residential properties acquisitions, materials, other direct costs, interests and other indirect costs related to acquisition and
renovation of the real estate properties are capitalized. A flat renovation fee per property of $31,000 is charged by </font>Diversified
Group Partnership Management, LLC ("DGPM") which is owned by the Company’s Co-Chief Executive Officers Joel Wilson
and Michael Kazee to the Company. The fee is based on a non-arm’s length transaction between the Company and DGPM and is
prorated if renovations on a property are not complete as of the end of the period. The properties shall be renovated to a condition
into which they can be sold for a price at around, or above the after repaired value estimate as estimated by the Company. <font style="color: black">Capitalized
costs of residential properties which are held for sale are recorded at the lower of its carrying amount or fair value less cost
to sell.  Other costs like marketing, etc. incurred in connection with renovated real estate properties and other selling
and administrative costs are charged to earnings when incurred.  If the Company has a continuing obligation to complete renovations
subsequent to the sale of the property, an estimate of the costs to complete are charged to cost of sales with a corresponding
liability at the time of sale.   </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 8.25pt; text-align: justify">The Company reviews investments in
real estate assets for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.
The carrying amount of a long lived asset is not recoverable if it exceeds the expected sales price of such real estate assets.
The amount of impairment loss, if any, is measured as the difference between the net book value of the asset and its estimated
fair value.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 8.25pt"><b><i>Revenue Recognition </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 8.25pt; text-align: justify">Sales of the Company’s real
estate property occurs through the use of a sales contract where revenues from renovated real estate property sales is recognized
upon closing of the sale.  In accordance with Accounting Standard 360 <i>Property, Plant, and Equipment</i>, Issue 20 <i>Real
Estate Sales </i>(“AS 360-20”), the Company uses the accrual method and recognizes revenue on the sale of its renovated
properties when the earnings process is complete and the collectability of the sales price and additional proceeds is reasonably
assured, which is typically when the sale of the property closes.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 8.25pt; text-align: justify">The Company sells most of its real
estate properties through land contracts where the Company conveys to the purchaser real estate by a warranty deed if the purchaser
pays a down payment on the delivery of the contract and pays the remaining sales amount over 30 years at a specified interest rate.
During the time when payments are made, the purchaser has use of the real estate.  In the event of a default by the purchaser,
the Company may void the contract and the property and all the payments made under the contract would be forfeited to the Company
as rental for the use of the real estate and the Company may declare all amounts remaining unpaid under the contract due and payable.
 In accordance with AS 360-20, the Company accounts for these Land Contract sales under the deposit method as the Company
does not transfer to the purchaser all the risk and rewards of ownership of the real estate upon the sale of the property.  For
a sale under the deposit method, the Company does not initially record a profit on the sale, does not record a notes receivable,
continues to carry the property as an asset on it financial statements, and will recognize the down payment and subsequent monthly
payments as a Deposit liability.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In accordance with AS 360-20, the Company recognizes
profit on these land contracts when the earnings process is complete and the collectability of the sales price and additional proceeds
is reasonably assured. This will typically occur when the purchase price and all interest is paid in full and legal title to the
property has transferred to the purchaser.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company also enters into sales of land
contract interests where the Company transfers and delivers to the purchaser full interest in the land contracts noted above, including
the transfer of full and legal title to the underlying properties and the right to receive the future payments made under the land
contract.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In accordance with AS 360-20, the Company recognizes
profit on these sales of land contract interests when the earnings process is complete and the collectability of the sales price
and additional proceeds is reasonably assured. This typically occurs when the purchase price and is paid in full and legal title
to the property has transferred to the land contract interest purchaser. Additionally, when the earnings process is complete, any
down payments and monthly land contract income previously received and recorded as a deposit liability is recognized as revenue.
Any <font style="color: black">down payment or </font>monthly land contract income received and recorded as a deposit liability
that was borrowed from a related party <font style="color: black">is recorded as an equity recapitalization</font>.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Net Loss per Share</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Basic net loss per share is computed using
the weighted average number of common shares outstanding during the period. As the Company is in a net loss position, there are
no outstanding potentially dilutive securities that would cause diluted earnings per share to differ from basic earnings per share.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Income Taxes</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company recognizes deferred tax liabilities
and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns.
 Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement
and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to
reverse.   The Company applies the authoritative guidance in accounting for uncertainty in income taxes recognized in the
financial statements. This guidance prescribes a two-step process to determine the amount of tax benefit to be recognized. First,
the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax
position is deemed “more-likely-than-not” to be sustained, the tax position is then assessed to determine the amount
of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that
has a greater than 50% likelihood of being realized upon ultimate settlement.</p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 4:  Investment in Real Estate Assets</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Investment in real estate assets consist of residential properties
held for sale and subject to land contracts.  As of June 30, 2011 the Company sold properties subject to land contracts with
a cost basis of $524,855, which have been reclassified from the Company’s inventory of real estate and is depreciated over
life of 30 years.  As of June 30, 2011, the Company has received payments that have been recorded as a deposit liability totaling
$69,590.  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">In April 2011, the Company entered into three agreements for the
sale of land contract interests.   The Company, upon full payment of the purchase price of the agreements, which final
payments occurred subsequent to year end in August 2011, transferred and delivered to the purchaser full interest in nine land
contracts, including the transfer of full and legal title to the underlying nine properties and the right to receive the future
payments made under the land contract.  The purchasers in all three agreements were limited partnerships, which consisted
of general partner The Diversified Group Partnership Management, LLC, a related party, and multiple limited partners, who were
not related parties to the Company.  No amounts under the agreement were paid by The Diversified Group Partnership Management,
LLC.  As of June 30, 2011, the Company held a deposit of $76,600 relating to installment payments received under the agreements
with the remaining $336,000 was received during July and August 2011.  In August 2011, the total installment payments received
of $412,600 was recognized as revenue and the carrying value of the underlying properties of approximately $433,000 was recorded
as a cost of sale.  Additionally, a deposit liability of approximately $52,000 consisting of down payments and monthly land
contract income previously received under the land contracts was recognized as revenue and a deposit liability of approximately
$27,000 consisting of down payments received by the land contract purchaser that were borrowed from a related party was treated
as a capital contribution.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 9.15pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="margin: 0pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Note 4: 	Investment in Real Estate Assets</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Investment in real estate assets consist of
residential properties held for sale and subject to land contracts.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the three months ended March 31, 2012,
the Company acquired two properties for $42,077 and incurred renovation costs totaling $433,790. During the nine months ended March
31, 2012, the Company acquired 50 properties for $856,323 and incurred renovation costs totaling $1,030,864. There were five properties
that were sold pursuant to land contracts during the nine months ended March 31, 2012. As of March 31, 2012, the Company had 45
real estate inventory properties and 7 land contract properties.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In April 2011, the Company entered into three
agreements for the sale of land contract interests. The Company, upon full payment of the purchase price of the agreements, which
final payments occurred in August 2011, transferred and delivered to the purchaser full interest in nine land contracts, including
the transfer of full and legal title to the underlying nine properties and the right to receive the future payments made under
the land contract. The purchasers in all three agreements were limited partnerships, which consisted of general partner The Diversified
Group Partnership Management, LLC, a related party, and multiple limited partners, who were not related parties to the Company.
No amounts under the agreement were paid by The Diversified Group Partnership Management, LLC. In August 2011, the total installment
payments received of $412,600 was recognized as other income and the carrying value of the underlying properties of $433,214 was
recorded as other expense. Additionally, a deposit liability of $52,387 consisting of down payments and monthly land contract payments
previously received under the land contracts was recognized as revenue and a deposit liability of approximately $27,199 consisting
of down payments received by the land contract purchaser that were borrowed from a related party was treated as a capital contribution.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of March 31, 2012 the Company held 7 properties
subject to land contracts with a carrying value of $291,847, which has been reclassified from the Company’s inventory of
real estate and is depreciated over life of 30 years. As of March 31, 2012, t<font style="color: black">he Company has received
</font>p<font style="color: black">ayments that have been recorded as a deposit liability totaling $28,369.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In August 2011, the Company entered into another
agreement for the sale of land contract interests in two properties subject to land contracts. The Company, upon full payment of
the purchase price of the agreement, agreed to transfer and deliver to the purchaser full interest in two land contracts, including
the transfer of full and legal title to the underlying two properties and the right to receive the future payments made under the
land contract. As of March 31, 2012, full payment had been received but title to the properties was not passed to the purchaser
so the Company retained the properties. The purchaser in the agreement was a limited partnership, which consisted of general partner
The Diversified Group Partnership Management, LLC, a related party, and multiple limited partners, who were not related parties
to the Company. No amounts under the agreement were paid by The Diversified Group Partnership Management, LLC. As of March 31,
2012, the Company held a deposit liability of $69,741 relating to payments received under the agreement. When title to the underlying
properties is transferred to the purchaser, the agreement payments will be recognized as other income and the carrying value of
the underlying properties of approximately $82,000 will be recorded as other expense. Additionally, a deposit liability of approximately
$9,000 consisting of down payments and monthly land contract income previously received under the land contracts will be recognized
as revenue and a deposit liability of $3,610 consisting of down payments received by the land contract purchaser that were borrowed
from a related party will be treated as a capital contribution.</p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 5:  Income Taxes</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company has experienced operating losses since inception. The
Company had net operating loss carry forwards at June 30, 2011 of $746,140 which expire beginning in 2030.  The Company has
provided a full valuation allowance for all deferred tax assets because of the uncertainty regarding the utilization of the net
operating loss carryforwards.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Income taxes are summarized as follows for the year ended June 30,
2011 and period from February 22, 2010 (inception date) to June 30, 2010:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table align="center" cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">2011</td>
<td> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">2010</td></tr>
<tr style="vertical-align: bottom">
<td style="width: 69%"> </td>
<td style="width: 3%"> </td>
<td style="width: 3%"> </td>
<td style="width: 11%"> </td>
<td style="width: 1%"> </td>
<td style="width: 2%"> </td>
<td style="width: 11%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCFFFF">
<td>Current expense (benefit)</td>
<td> </td>
<td>$</td>
<td>    (70,507)</td>
<td> </td>
<td>$</td>
<td>   (192,141)</td></tr>
<tr style="vertical-align: bottom">
<td>Deferred expense</td>
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid">      70,507 </td>
<td style="border-bottom: white 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid">     192,141 </td></tr>
<tr style="vertical-align: bottom; background-color: #CCFFFF">
<td>Net income tax (benefit) expense</td>
<td> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double">                - </td>
<td style="border-bottom: white 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double">                  - </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">A reconciliation of the differences between the effective and statutory
income tax rates are as follows for the year ended June 30, 2011 and period from February 22, 2010 (inception date) to June 30,
2010:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table align="center" cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="4" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">2011</td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="4" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">2010</td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Amount</td>
<td> </td>
<td style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Percent</td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Amount</td>
<td> </td>
<td style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Percent</td></tr>
<tr style="vertical-align: bottom">
<td style="width: 54%"> </td>
<td style="width: 2%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%"> </td>
<td style="width: 2%"> </td>
<td style="width: 9%"> </td>
<td style="width: 2%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%"> </td>
<td style="width: 2%"> </td>
<td style="width: 9%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCFFFF">
<td>Federal statutory rates</td>
<td> </td>
<td>$</td>
<td>  (61,547)</td>
<td> </td>
<td style="text-align: center">  34%</td>
<td> </td>
<td>$</td>
<td style="text-align: right">(192,141)</td>
<td> </td>
<td style="text-align: center">  34%</td></tr>
<tr style="vertical-align: bottom">
<td>State income taxes</td>
<td> </td>
<td> </td>
<td>    (8,960)</td>
<td> </td>
<td style="text-align: center">    5%</td>
<td> </td>
<td> </td>
<td style="text-align: right">(27,973)</td>
<td> </td>
<td style="text-align: center">    0%</td></tr>
<tr style="vertical-align: bottom; background-color: #CCFFFF">
<td>Valuation allowance</td>
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid">    70,507 </td>
<td style="border-bottom: white 1pt solid"> </td>
<td style="text-align: center">(39)%</td>
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">220,114 </td>
<td style="border-bottom: white 1pt solid"> </td>
<td style="text-align: center">(34)%</td></tr>
<tr style="vertical-align: bottom">
<td>Effective rate</td>
<td> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double">               - </td>
<td style="border-bottom: white 2.25pt double"> </td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">- </td>
<td style="border-bottom: white 2.25pt double"> </td>
<td style="text-align: center">    0%</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="margin: 0pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Note 6: 	Income Taxes</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Since inception the Company has been in a cumulative
net loss position. The Company had net operating loss carry forwards at March 31, 2012 of $960,099 which expire beginning in 2030.
The Company has provided a full valuation allowance for all deferred tax assets because of the uncertainty regarding the utilization
of the net operating loss carryforwards.</p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 6:  Shareholders’ Equity </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">On February 22, 2010, the Company was incorporated and authorized
to issue up to 10,000,000,000 shares of Series A preferred stock, par value $10 per share, 90,000,000,000 shares of preferred stock,
with no par value and 100,000,000 shares of common stock, par value $0.001 per share.  The Company issued 8,240,000 shares
of common stock to its founding shareholders.  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">In May 2010, the Company recorded an expense for services performed
for the Company by a non-employee in exchange for 360,000 shares of the Company’s common stock.  The Company recorded
an expense of $144,000 based on the fair value of the Company’s common stock on the date services were performed.  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">In May 2010, the Company recorded an expense for services performed
by a non-employee in exchange for warrants to purchase the Company’s common stock. The warrants issued were at an exercise
price of $0.10 per share.  The warrants were fully vested at the date of grant and the Company recognized an expense of $391,120
during the period from inception to June 30, 2010 equal to the grant date fair value of the warrants using the following assumptions:
volatility of 61%; risk-free interest rate of 2.29%; and expected term of 5 years.  The fair value of the warrants was determined
using the Black-Scholes option valuation model. The warrants expire on May 18, 2015 and have a remaining contractual life of 3.88
years as of June 30, 2011.  These are the only warrants outstanding as of June 30, 2011.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">In February 2010, the shareholders contributed $5,000 to the Company
which is reflected as paid in capital in the accompanying financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">In October 2010, the Company finalized a private offering (the “Offering”)
whereupon it issued an aggregate of 1,498,713 shares of the Company’s common stock in exchange for proceeds of $598,944.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 9.15pt"> </p>
<p style="margin: 0pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Note 7: 	Shareholders’ Equity </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On February 6, 2012 the Company filed with
the Securities Exchange Commission a registration statement on Form S-11 for the registration of their Series A Preferred Stock,
$10 par value. The amount of shares to be registered is 2,500,000 at for a proposed maximum offering share price of $10 per share.
The registration statement has not yet been declared effective.</p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 7:  Related Party Transactions</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">On August 16, 2010, the Company advanced $30,000 to an entity controlled
by Co-Chief Executive Officers Joel Wilson and Michael Kazee.  The advance is non-interest bearing, due on demand, and unsecured.
 The advance was paid back to the Company on October 21, 2010.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company entered into a sublease agreement with the Company’s
shareholders to occupy their current facility.  The agreement is for one year beginning July 1, 2010 and requires the Company
to pay rent of $500 per month.  The Company also made improvements to facilities owned by the majority shareholder totaling
$4,428 that were capitalized as part of property and equipment and are being depreciated over a period of one year. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">On August 11, 2010, the Company entered into a property renovation
agreement with Diversified Group Partnership Management, LLC ("DGPM"), which is owned by the Company’s Co-Chief
Executive Officers Joel Wilson and Michael Kazee.  During year ended June 30, 2011, the Company paid DGPM a total of $239,564
for labor and materials related to the renovations on the properties the Company owned.  These amounts have been allocated
to individual properties and included in investments in real estate assets as of June 30, 2011.  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">In October 2010, the Company finalized a real estate sales contract
to purchase seven residential real estate properties from the DGPM.  DGPM purchased seven properties for $107,500 and under
the terms of the contract sold these properties to the Company for $217,404.  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">During October and November 2010, the Company finalized real estate
sales contracts to purchase four residential real estate properties from DGPM.  The Company paid $79,927 for the four properties.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">During the year ended June 30, 2011, the Company sold eleven properties
to third parties.  These properties were sold pursuant to a land contract which required the buyers to pay 10% down payment
on delivery of the contract and pay the remaining sales amount over 30 years at an interest rate of 9.9% per year. For ten of the
eleven properties sold, the down payments made by the third parties were all or partially funded by a loan from Diversified Lending
Services, LLC, an entity controlled by one the Company’s Co-Chief Executive Officers.  The land contracts contain a
cross-default clause with each down payment loan.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">On October 14, 2010, the Company hired 1 Stop Realty and Mortgage
Services, LLC (“1 Stop”) to advertise and sell several properties the Company owns. 1 Stop is a licensed real estate
agency controlled by Michael Kazee, the Company’s co-Chief Executive Officer. 1 Stop is typically paid a flat-fee of $2,500
for each of the Company’s properties 1 Stop sells. 1 Stop’s fee is paid when the real estate sale transaction is completed.
The Company hired 1 Stop to advertise and sell eleven of the Company’s properties. During the year ended June 30, 2011, 1
Stop sold eleven of the Company’s properties and the Company incurred total fees of $27,500. The Company does not have an
agreement with 1 Stop to sell any other properties the Company purchases, but may engage 1 Stop’s services in the future.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company’s shareholders paid for Company-related expenses
during the year ended June 30, 2011.  Such amount totaling $25,285 were recognized as amounts due to shareholders at June
30, 2011.  These amounts are payable on demand and are non-interest bearing.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company entered into three agreements for the sale of land contract
interests.  The purchasers in all three agreements were limited partnerships, which consisted of general partner The Diversified
Group Partnership Management, LLC, a related party, and multiple limited partners, who were not related parties to the Company
(see Note 4: Investment in Real Estate Assets).  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company repaid its notes payable balance of $10,000 as of June
30, 2011.  The Diversified Group Partnership Management Group, an entity controlled by Co-Chief Executive Officers Joel Wilson
and Michael Kazee, paid</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">$5,000 in May 2011 which is reflected as due to shareholder as of
June 30, 2011.  In June 2011 the Company paid the remaining $5,000.</p>
<p style="margin: 0pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Note 8: 	Related Party Transactions</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 8.25pt; text-align: justify">The Company entered into a sublease
agreement with the Company’s shareholders to occupy their current facility. The agreement expires July 1, 2012 and requires
the Company to pay rent of $500 per month.  The Company also made improvements to facilities owned by the majority shareholder
totaling $4,428 that were capitalized as part of property and equipment and were fully depreciated as of March 31, 2012. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company entered into real estate sales
contracts with DGPM to purchase residential real estate properties. During the three and nine months ended March 31, 2012 the Company
paid DGPM $0 and $<font style="color: black"> 8,445</font>, respectively for one residential property.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company uses DGPM to perform certain renovations
on the Company’s properties. During the three and nine months ended March 31, 2012, DGPM was paid per an agreement a set
amount per property ($31,000) for renovations services of $433,790 and $1,015,864 on properties the Company owned. These amounts
have been allocated to individual properties and included in investments in real estate assets. The labor and materials is a flat
fee per property and is based on a non-arm’s length transaction between the Company and DGPM and is prorated if renovations
on a property are not complete as of the end of the period. The properties shall be renovated to a condition into which they can
be sold for a price at around, or above the after repaired value estimate as estimated by the Company. Any amount paid by the Company
to DGPM that is in excess of renovations performed is recognized as due from shareholders on the balance sheet.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">From time to time, the Company’s shareholders
pay for Company-related expenses. Such amounts are recognized as amounts due to shareholders on the balance sheet. These amounts
are payable on demand and are non-interest bearing. As of March 31, 2012, there were no amounts due to shareholders.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="color: black">The </font>Company
entered into four agreements for the sale of land contract interests. The purchasers in all four agreements were limited partnerships,
which consisted of general partner The Diversified Group Partnership Management, LLC, a related party, and multiple limited partners,
who were not related parties to the Company <font style="color: black">(see Note 4: </font>Investment in Real Estate Assets<font style="color: black">)</font>.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of March 31, 2012, the Company entered into
promissory notes with five limited partnerships, which consisted of general partner The Diversified Group Partnership Management,
LLC, a related party, and multiple limited partners, who were not related parties to the Company <font style="color: black">(see
Note 5: </font>Notes Payable<font style="color: black">)</font>.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The underwriter for the offering of the preferred
shares is <font style="color: black">WR Rice Financial Services, Inc. which is owned by the Company’s Co-Chief Executive
Officers who will receive 10% of the gross proceeds from the offering (see Note 7: Shareholders’ Equity). </font></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 8:  Commitments and Contingencies</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company may from time to time be involved in legal proceedings
arising from the normal course of business.  There are no pending or threatened legal proceedings as of June 30, 2011.</p>
<p style="margin: 0pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Note 9: 	Commitments and Contingencies</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company may from time to time be involved in legal proceedings
arising from the normal course of business. There are no pending or threatened legal proceedings as of March 31, 2012.</p>
<p style="margin: 0pt"></p>
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American Realty Funds Corp
0001496868
S-11
2012-03-31
true
--06-30
No
No
Yes
Smaller Reporting Company
Q3
2012
Provide updated financials
<p style="margin: 0pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Note 5: 	Notes Payable</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In September 2011 the Company entered into
separate promissory notes with The Diversified Group Land Contract Limited Partnership # 5 (“LCLP #5”) and The Diversified
Group Land Contract Limited Partnership # 6 (“LCLP #6”) for $300,000 and $250,000, respectively. LCLP #5 and LCLP #6
both consist of general partner The Diversified Group Partnership Management, LLC, a related party, and multiple limited partners,
who are not related parties to the Company and are not parties in any other Company agreements. No amounts under the promissory
notes were paid by The Diversified Group Partnership Management, LLC. Each note has an interest rate of 9.9% and a term that ends
in December 2011. Monthly payments are required with a final balloon payment due at the end of the loan term. Additionally, in
October 2011 the promissory notes were amended to extend the due date of the final balloon payment to June 1, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In October 2011 the Company entered into the
following separate promissory notes:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 64%; border-bottom: windowtext 1pt solid; font-size: 8pt; font-weight: bold">          Note Description</td>
<td style="width: 1%; border-bottom: windowtext 1pt solid; font-size: 8pt; font-weight: bold; text-align: center"> </td>
<td style="width: 11%; border-bottom: windowtext 1pt solid; font-size: 8pt; font-weight: bold; text-align: center">Amount</td>
<td style="width: 1%; border-bottom: windowtext 1pt solid; font-size: 8pt; font-weight: bold; text-align: center"> </td>
<td style="width: 11%; border-bottom: windowtext 1pt solid; font-size: 8pt; font-weight: bold; text-align: center">Rate</td>
<td style="width: 1%; border-bottom: windowtext 1pt solid; font-size: 8pt; font-weight: bold; text-align: center"> </td>
<td style="width: 11%; border-bottom: windowtext 1pt solid; font-size: 8pt; font-weight: bold; text-align: center">Due Date</td></tr>
<tr style="vertical-align: top">
<td>The Diversified Group Land Contract Limited Partnership #7 (“LCLP#7”)</td>
<td style="text-align: justify"> </td>
<td style="text-align: center">237,500</td>
<td style="text-align: center"> </td>
<td style="text-align: center">13.68%</td>
<td style="text-align: center"> </td>
<td style="text-align: center">6/1/2012</td></tr>
<tr style="vertical-align: top">
<td>The Diversified Group Land Contract Limited Partnership #8 (“LCLP#8”)</td>
<td style="text-align: justify"> </td>
<td style="text-align: center">247,000</td>
<td style="text-align: center"> </td>
<td style="text-align: center">11.13%</td>
<td style="text-align: center"> </td>
<td style="text-align: center">6/1/2012</td></tr>
<tr style="vertical-align: top">
<td>The Diversified Group Land Contract Limited Partnership #9 (“LCLP#9”)</td>
<td style="text-align: justify"> </td>
<td style="text-align: center">450,000</td>
<td style="text-align: center"> </td>
<td style="text-align: center">11.13%</td>
<td style="text-align: center"> </td>
<td style="text-align: center">6/1/2012</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Each promissory note consists of general partner
The Diversified Group Partnership Management, LLC, a related party, and multiple limited partners, who are not related parties
to the Company and are not parties in any other Company agreements. No amounts under the promissory notes were paid by The Diversified
Group Partnership Management, LLC. Monthly payments are required with a final balloon payment due June 1, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In January 2012 the Company entered into separate
promissory notes with The Diversified Group Land Contract Limited Partnership # 10 (“LCLP #10”) and The Diversified
Group Land Contract Limited Partnership # 11 (“LCLP #11”) for $405,000 and $225,000, respectively. LCLP #10 and LCLP
#11 both consist of general partner The Diversified Group Partnership Management, LLC, a related party, and multiple limited partners,
who are not related parties to the Company and are not parties in any other Company agreements. No amounts under the promissory
notes were paid by The Diversified Group Partnership Management, LLC. Each note has an interest rate of 11.13% and a term that
ends June 1, 2012. The proceeds from these loans were received directly by DGPM and applied towards renovations performed or to
be performed by DGPM on the Company’s real estate inventory. Any unused loan proceeds received by DGPM were held for future
renovations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Interest expense for the three and nine months
ended March 31, 2012 was $58,545 and $97,505, respectively.</p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 9: Subsequent Events</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">In August 2011, final installment payments were received in relation
to the sale of land contract interests.  The Company recognized $412,600 as revenue and the carrying value of the underlying
properties of approximately $433,000 was recorded as a cost of sale (see Note 4: Investment in Real Estate Assets).</p>