Hubilu Venture Corp 10-Q for FY2023 Q3
Hubilu Venture Corp (HBUV)
About this 10-Q
Hubilu Venture Corp filed this 10-Q on November 8, 2023, covering the quarter ended September 30, 2023 (FY2023 Q3).
Headline figures
Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $473.11K
- up 32.1% from $358.15K a year earlier
- Net income
- $62.04K
- compared with a net loss of $42.26K a year earlier
- Diluted EPS
- $0.00
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended:
OR
For the transition period from __________ to __________
Commission
File No.
(Exact Name of Registrant as Specified in its Charter)
(State or other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s
telephone number, including area code:
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§230.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated file,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Smaller
reporting company |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | HBUV | OTC Pink |
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section l2, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes ☐ No ☐
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of November 8, 2023 the number of shares outstanding of the issuer’s sole class of common stock, $0.001 par value per share, is .
TABLE OF CONTENTS
| 2 |
Part I – FINANCIAL INFORMATION
Item 1. Financial Statements
HUBILU VENTURE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2023 | December 31, 2022 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Total current assets | ||||||||
| Property and equipment: | ||||||||
| Land | ||||||||
| Building and capital improvements | ||||||||
| Property acquisition and financing | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total property and equipment, net | ||||||||
| Security deposits | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Advanced rents received | ||||||||
| Accrued interest | ||||||||
| Security deposits payable | ||||||||
| Due to related party, current maturities | ||||||||
| Mortgages payable, current maturities | ||||||||
| Dividends payable | ||||||||
| Total current liabilities | ||||||||
| Promissory notes, related parties | ||||||||
| Mortgages payable | ||||||||
| Preferred shares payable | ||||||||
| Total liabilities | ||||||||
| Stockholders’ equity (deficit): | ||||||||
| Common stock, $ par value, shares authorized, shares issued and outstanding | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity (deficit) | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ equity (deficit) | $ | $ | ||||||
See accompanying notes to financial statements.
| 3 |
HUBILU VENTURE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Rental Income | $ | $ | $ | $ | ||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative expenses: | ||||||||||||||||
| Salaries and benefits | ||||||||||||||||
| Utilities | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Property taxes | ||||||||||||||||
| Other general and administrative expenses | ||||||||||||||||
| Total general and administrative expenses | ||||||||||||||||
| Depreciation | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Net operating income | ||||||||||||||||
| Other income (expense): | ||||||||||||||||
| Other income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other income (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Weighted average common shares outstanding - basic | ||||||||||||||||
| Net income (loss) per common share - basic | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Weighted average common shares outstanding - diluted | ||||||||||||||||
| Net income (loss) per common share - diluted | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
See accompanying notes to financial statements.
| 4 |
HUBILU VENTURE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| For the Three Months Ended September 30, 2023 | ||||||||||||||||||||
| Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Imputed interest | - | |||||||||||||||||||
| Net income | - | |||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| For the Three Months Ended September 30, 2022 | ||||||||||||||||||||
| Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balance, June 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Imputed interest | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| For the Nine Months Ended September 30, 2023 | ||||||||||||||||||||
| Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Imputed interest | - | |||||||||||||||||||
| Net loss | - | |||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| For the Nine Months Ended September 30, 2022 | ||||||||||||||||||||
| Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Imputed interest | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
See accompanying notes to financial statements.
| 5 |
HUBILU VENTURE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| 2023 | 2022 | |||||||
| For the Nine Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Depreciation | ||||||||
| Imputed interest | ||||||||
| Cumulative preferred stock dividends payable | ||||||||
| Decrease (increase) in current assets: | ||||||||
| Security deposits | ||||||||
| Increase (decrease) in current liabilities: | ||||||||
| Accounts payable | ||||||||
| Advanced rents received | ||||||||
| Accrued expenses | ||||||||
| Security deposits payable | ||||||||
| Net cash provided by operating activities | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds received from mortgages payable | ||||||||
| Repayments on mortgages payable | ( | ) | ( | ) | ||||
| Proceeds received from the sale of preferred stock | ||||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | ( | ) | ( | ) | ||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | ||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | $ | ||||||
| SUPPLEMENTAL INFORMATION: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Non-cash investing and financing transactions: | ||||||||
| Acquisitions of assets financed through debt | $ | $ | ||||||
See accompanying notes to financial statements.
| 6 |
HUBILU VENTURE CORPORATION
Notes to the Consolidated Financial Statements
September 30, 2023
(unaudited)
NOTE 1 – NATURE OF BUSINESS
Hubilu Venture Corporation (“the Company”) was incorporated under the laws of the state of Delaware on March 2, 2015 and is a publicly traded real estate consulting, asset management and business acquisition company, which specializes in acquiring student housing income properties and development/business opportunities located near the Los Angeles Metro/subway stations and within the Los Angeles area.
NOTE 2 – BASIS OF PRESENTATION AND ABILITY TO CONTINUE AS A GOING CONCERN
The accompanying consolidated financial statements include the accounts of the Company and each of its wholly owned subsidiaries: Akebia Investments LLC, Zinnia Investments, LLC, Sunza Investments, LLC, Lantana Investments LLC, Elata Investments, LLC, Trilosa Investments, LLC, Kapok Investements, LLC, Boabab Investments, LLC and Mopane Investments, LLC. All intercompany transactions have been eliminated on consolidation.
The
financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States
of America (“US GAAP”) on the basis that the Company will continue as a going concern, which assumes that the Company will
be able to meet its obligations and continue its operations for the next year. Realization values may be substantially different from
carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values
and classification of assets and liabilities should the Company be unable to continue as a going concern. At September 30, 2023, the
Company had not yet achieved profitable operations, had an accumulated deficit of $
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation and Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with Securities and Exchange Commission rules and regulations and generally accepted accounting principles in the United States of America (“US GAAP”) and in the opinion of management contain all adjustments necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Reclassification
Certain reclassifications have been made to the prior years’ financial statements to conform to current year presentation. These reclassifications had no effect on previously reported results of operations or retained earnings.
| 7 |
Fair Value Measurements
The fair value hierarchy under GAAP is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:
| Level 1 | quoted prices (unadjusted) in active markets for identical assets or liabilities. |
| Level 2 | observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and |
| Level 3 | assets and liabilities whose significant value drivers are unobservable by little or no market activity and that are significant to the fair value of the assets or liabilities. |
Recent Accounting Standards
From time to time, new accounting pronouncements are issued by the FASB that are adopted by the Company as of the specified effective date.
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
NOTE 4 - PROPERTY ACQUISITIONS - Related Party
As of September 30, 2023, we have not acquired any additional properties since the year ended December 31, 2022.
On
January 1, 2023 we refinanced 2029 W. 41st Place in Los Angeles. Terms of the refinance are as follows: (1) A first position
note with payment on principal balance of $
In
February 2023, we entered a three-month loan extension with Center Street Lending on 1733 W. 37th Place with a due date of
June 22, 2023. In June, we extended our loan to September 22, 2023. In October, we extended our loan again to December 20, 2023 with
a new interest rate of
| 8 |
NOTE 5 - INVESTMENTS IN REAL ESTATE- Related party
The change in the real estate property investments for the nine months ended September 30, 2023 and the year ended December 31, 2022 is as follows:
SUMMARY OF CHANGES IN REAL ESTATE PROPERTY INVESTMENTS
SUMMARY OF CHANGES IN REAL ESTATE PROPERTY INVESTMENTS
| Nine months ended September 30, 2023 | Year ended December 31, 2022 | |||||||
| Balance, beginning of the period | $ | $ | ||||||
| Acquisitions: | | |||||||
| Real estate investment property, at cost | | |||||||
| Capital improvements | | |||||||
| Balance, end of the period | $ | $ | ||||||
The change in the accumulated depreciation for the nine months ended September 30, 2023 and 2022 is as follows:
SCHEDULE OF CHANGES IN ACCUMULATED DEPRECIATION
SCHEDULE OF CHANGES IN ACCUMULATED DEPRECIATION
| September 30, 2023 | September 30, 2022 | |||||||
| Balance, beginning of the period | $ | | $ | | ||||
| Depreciation charge for the period | | |||||||
| Balance, end of the period | $ | $ | ||||||
The Company’s real estate investments as of September 30, 2023 is summarized as follows:
SCHEDULE OF REAL ESTATE INVESTMENT
SCHEDULE OF REAL ESTATE INVESTMENT
| Initial Cost to the Company | Capital | Accumulated | Security | Closing | ||||||||||||||||||||||||
| Land | Building | Improvement | Depreciation | Encumbrances | Deposits | Costs | ||||||||||||||||||||||
| 3711 South Western Ave | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| 2909 South Catalina | |
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| 3910 Wisconsin Ave | |
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| 3910 Walton Ave | |
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| 1557 West 29th | |
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| 1267 West 38th Street | |
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| 1618 West 38th | |
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| 4016 Dalton Avenue | |
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| 1981 West Estrella Avenue | |
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| 2115 Portland Street | |
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| 717 West 42nd Place | |
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| 3906 Denker Street | |
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| 3408 S Budlong Street | |
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| 3912 S. Hill Street | |
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| 4009 Brighton Avenue | |
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| 3908 Denker Avenue | |
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| 4021 Halldale Avenue | |
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| 1284 W. 38th Street | |
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| 4505 Orchard Avenue | |
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| 3777 Ruthelen Street | |
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| 3791 Normandie Avenue | |
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| 2029 W. 41st Place | |
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| 4517 Orchard Avenue | |
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| 1733 W. 37th Street | |
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| $ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
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| 9 |
NOTE 6 – ADVANCED RENTS RECEIVED
The
Company received $
NOTE 7 - PROPERTY INDEBTEDNESS
The Company’s mortgages are summarized as follows:
SCHEDULE OF MORTGAGES PAYABLE
SCHEDULE OF MORTGAGES PAYABLE
| Principal Balance | ||||||||||||||||
| September 30, 2023 | December 31, 2022 | Interest Rate | Maturity Date | |||||||||||||
| 3711 South Western Ave | $ | $ | |
% | |
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| 2909 South Catalina Street | |
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% | |
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| -Second Note | |
- | |
% | |
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| 3910 Walton Ave. | |
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% | |
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| 3910 Wisconsin Street | |
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| 1557 West 29 Street | |
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% | |
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| 1267 West 38 Street | |
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% | |
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| 4016 Dalton Avenue | |
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| 1618 West 38 Street | ||||||||||||||||
| - First Note | |
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| - Second Note | |
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| 1981 Estrella Ave | |
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| 717 West 42 Place | ||||||||||||||||
| - First Note | |
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| - Second Note | |
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| 2115 Portland Street | ||||||||||||||||
| - First Note | |
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| -Second Note | |
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| 3906 Denker | ||||||||||||||||
| -First Note | |
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| -Second Note | |
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| 3408 Budlong | ||||||||||||||||
| -First Note | |
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| -Second Note | |
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| 3912 S. Hill Street | ||||||||||||||||
| -First Note | |
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| - Second Note | |
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| 4009 Brighton Avenue | |
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| 3908 Denker Avenue | |
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| 4021 Halldale Avenue | |
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| 1284 W. 38th Street | ||||||||||||||||
| -First Note | |
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| -Second Note | |
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| 4505 Orchard Avenue | |
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| 3777 Ruthelen Street | |
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| 3791 S. Normandie Avenue | ||||||||||||||||
| - First Note | |
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| -Second Note | |
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| 2029 W. 41st Place | |
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| 4517 Orchard Avenue | ||||||||||||||||
| -First Note | |
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| -Second Note | |
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| 1733 W. 37th Place | ||||||||||||||||
| -First Note | |
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| -Second Note | |
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| Hubilu General Loan | |
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% | On Demand | |||||||||||
| $ | $ | |||||||||||||||
| Less: current maturities | |
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| Mortgages payable | $ | $ | ||||||||||||||
| 10 |
NOTE 8 – PROMISSORY NOTES PAYABLE-Related Party
Esteban
Coaloa, who was owed $
NOTE 9 –RELATED PARTY TRANSACTIONS
As
of September 30, 2023 and December 31, 2022, Jacaranda Investments, Inc., had provided total advances of $
NOTE 10 – SERIES 1 CONVERTIBLE PREFERRED SHARES
On September 8, 2016, the Company authorized and designated shares of Series 1 convertible preferred stock (the “Preferred Stock”).
Effective
September 30, 2019,
The Preferred Stock has the following rights and privileges:
Voting – The holders of the Preferred Stock shall be entitled to the number of votes equal to the number of shares of common stock into which such shares of Preferred Stock could be converted.
Conversion
–
Dividends
– The holders of the Preferred Stock in preference to the holders of common stock, are entitled to receive dividends at the
rate of
Liquidation
– In the event of any liquidation, dissolution, winding-up or sale or merger of the Company, whether voluntarily or involuntarily,
each holder of Preferred Stock is entitled to receive, in preference to the holders of common stock, a per-share amount equal to the
original issue price of $
| 11 |
SCHEDULE OF ISSUANCE OF CONVERTIBLE PREFERRED SHARES SETTLEMENT OBLIGATION
| # of Shares | Amount | Dividend in Arrears | Total | |||||||||||||
| Balance, December 31, 2022 | | $ | $ | $ | ||||||||||||
| Dividends accrued | | |||||||||||||||
| Balance, September 30, 2023 | | $ | $ | $ | ||||||||||||
NOTE 11 – CONTINGENCY/LEGAL
As of September 30, 2023, and during the preceding ten years, no director, person nominated to become a director or executive officer, or promoter of the Company has been involved in any legal proceeding that would require disclosure hereunder.
From time to time, the Company may become subject to various legal proceedings and claims that arise in the ordinary course of our business activities. However, litigation is subject to inherent uncertainties for which the outcome cannot be predicted. Any adverse result in these or other legal matters could arise and cause harm to the Company’s business. The Company currently is not a party to any claim or litigation, the outcome of which, if determined adversely to the Company, would individually or in the aggregate be reasonably expected to have a material adverse effect on the Company’s business.
NOTE 12 - SUBSEQUENT EVENTS
We have evaluated subsequent events from the balance sheet date through September 30, 2023, the date at which the financial statements were issued, and determined that there were no items that require adjustment to or disclosure in the financial statements.
Forward Looking Statements
This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this report include forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 (collectively, the “Reform Act”). The Reform Act provides a safe harbor for forward-looking statements to encourage companies to provide prospective information about themselves so long as they identify these statements as forward-looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements, other than statements of historical fact that we make in this Quarterly Report on Form 10-Q are forward-looking. The words “anticipates,” “believes,” “expects,” “intends,” “will continue,” “estimates,” “plans,” “projects,” the negative of these terms and similar expressions are intended to identify forward-looking statements. However, the absence of these words does not mean the statement is not forward-looking.
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Forward-looking statements involve risks, uncertainties or other factors which may cause actual results to differ materially from the future results, performance or achievements expressed or implied by the forward-looking statements. These statements are based on our management’s beliefs and assumptions, which in turn are based on currently available information. Certain risks, uncertainties or other important factors are detailed in this Quarterly Report on Form 10-Q and may be detailed from time to time in other reports we file with the Securities and Exchange Commission, including on Forms 8-K and 10-K.Examples of forward looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, our expectations regarding our ability to generate operating cash flows and to fund our working capital and capital expenditure requirements. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our future products, the timing and cost of capital expenditures, competitive conditions and general economic conditions. These assumptions could prove inaccurate. Although we believe that the estimates and projections reflected in the forward-looking statements are reasonable, our expectations may prove to be incorrect. Important factors that could cause actual results to differ materially from the results and events anticipated or implied by such forward-looking statements include:
| ● | the risks of a start-up company; | |
| ● | management’s plans, objectives and budgets for its future operations and future economic performance; | |
| ● | capital budget and future capital requirements; | |
| ● | meeting future capital needs; | |
| ● | our dependence on management and the need to recruit additional personnel; | |
| ● | limited trading for our common stock, if listed or quoted | |
| ● | the level of future expenditures; | |
| ● | impact of recent accounting pronouncements; | |
| ● | the outcome of regulatory and litigation matters; and | |
| ● | the assumptions described in this report underlying such forward-looking statements. Actual results and developments may materially differ from those expressed in or implied by such statements due to a number of factors, including: | |
| ● | those described in the context of such forward-looking statements; | |
| ● | the political, social and economic climate in which we conduct operations; and | |
| ● | the risk factors described in other documents and reports filed with the Securities and Exchange Commission |
We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor may cause actual results to differ materially from those contained in any forward-looking statement. We believe these forward-looking statements are reasonable. However, you should not place undue reliance on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to update publicly any of them in light of new information or future events.
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Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations
The following is management’s discussion and analysis of financial condition and results of operations and is provided as a supplement to the accompanying unaudited financial statements and notes to help provide an understanding of our financial condition, results of operations and cash flows during the periods included in the accompanying unaudited financial statements.
In this Quarterly Report on Form 10-Q, “Company,” “the Company,” “us,” and “our” refer to Hubilu Venture Corporation, a Delaware corporation, unless the context requires otherwise.
We intend the following discussion to assist in the understanding of our financial position and our results of operations for the three and nine months ended September 30, 2023 and 2022, respectively. You should refer to the Financial Statements and related Notes in conjunction with this discussion.
Results of Operations
The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited financial statements for the three and nine months ended September 30, 2023 and 2022, respectively, together with notes thereto, which are included in this Quarterly Report on Form 10-Q.
Three months ended September 30, 2023, compared to the three months ended September 30, 2022
Revenues. Our revenues increased $114,959 to $473,105 for the three months ended September 30, 2023, compared to $358,146 for the comparable period in 2022. The increase is due to higher rents and improved rental collection..
Operating expenses. In total, operating expenses increased $11,723 to $168,434 for the three months ended September 30, 2023, compared to $156,711 for the comparable period in 2022.
General and administrative expenses increased $7,995 to $110,659 for the three months ended September 30, 2023, compared to $102,664 for the comparable period in 2022.
Depreciation expense increased $3,728 to $57,775 for the three months ended September 30, 2023, compared to $54,047 for the comparable period in 2022.
Property tax expense increased $2,692 to $43,752 for the three months ended September 30, 2023, compared to $41,060 for the comparable period in 2022.
Salaries and benefits expense increased $2,100 to $17,200 for the three months ended September 30, 2023, compared to $15,100 for the comparable period in 2022.
Utilities expense decreased $6,077 to $10,003 for the three months ended September 30, 2023, compared to $16,080 for the comparable period in 2022.
Professional fees expense increased $2,707 to $13,476 for the three months ended September 30, 2023, compared to $10,769 for the comparable period in 2022.
Interest expense decreased $1,067 to $242,631 for the three months ended September 30, 2023, compared to $243,698 for the comparable period in 2022. The decrease is due to the principal payments on our outstanding loans.
Net Income (Loss). Our net income increased $104,303 to $62,040 of net income for the three months ended September 30, 2023, compared to $42,263 of net loss for the comparable period in 2022. The increase is attributable to the revenue and expenses discussed above.
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Nine months ended September 30, 2023 compared to the nine months ended September 30, 2022
Revenues. Our revenues increased $166,155 to $1,308,041 for the nine months ended September 30, 2023, compared to $1,141,886 for the comparable period in 2022. The increase is due to higher rents and improved rental collection..
Operating expenses. In total, operating expenses decreased $68,225 to $534,259 for the nine months ended September 30, 2023, compared to $602,484 for the comparable period in 2022.
General and administrative expenses decreased $85,443 to $363,480 for the nine months ended September 30, 2023, compared to $448,923 for the comparable period in 2022.
Depreciation expense increased $17,218 to $170,779 for the nine months ended September 30, 2023, compared to $153,561 for the comparable period in 2022.
Property tax expense decreased $11,138 to $135,113 for the nine months ended September 30, 2023, compared to $146,251 for the comparable period in 2022. The decrease is due to the timing of payments.
Salaries and benefits expense decreased $15,675 to $48,800 for the nine months ended September 30, 2023, compared to $64,475 for the comparable period in 2022.
Utilities expense decreased $12,777 to $35,888 for the nine months ended September 30, 2023, compared to $48,665 for the comparable period in 2022.
Professional fees expense increased $15,016 to $68,032 for the nine months ended September 30, 2023, compared to $53,016 for the comparable period in 2022.
Interest expense, on a net basis, increased $52,297 to $713,830 for the nine months ended September 30, 2023, compared to $661,533 for the comparable period in 2022. Interest income decreased by $29,800, and interest expense increased by $22,497, for the nine months ended September 30, 2023, compared to the comparable period in 2022.
Net Income (Loss). Our net income increased $182,083 to $59,952 of net income for the nine months ended September 30, 2023, compared to $122,131 of net loss for the comparable period in 2022. The increase is attributable to the revenue and expenses discussed above.
Liquidity and Capital Resources. For the nine months ended September 30, 2023, we did not borrow any money from our majority shareholder. Since 2015, Jacaranda Investments, Inc., provided us with $492,500 in related party advances. We have not been advanced any more money since 2018. Jacaranda Investments, Inc. has agreed not to seek repayment of its advances until we are financially able to repay them. In 2021, $18,229 was repaid to Jacaranda Investments, Inc. leaving the balance at $474,271. We intend to seek additional financing for our working capital, in the form of equity or debt, to provide us with the necessary capital to accomplish our plan of operation. There can be no assurance that we will be successful in our efforts to raise additional capital.
Our total assets are $17,172,695, as of September 30, 2023, consisting of $11,800,304 in real estate, building and capital improvements of $5,785,007, $298,704 in acquisition costs, net of $735,426 in depreciation, $17,506 in cash and $6,600 in security deposits.
Our total liabilities are $17,966,091 as of September 30, 2023.
Our total stockholders’ deficit is $793,396 as of September 30, 2023.
Our net cash provided by operations was $334,152 for the nine months ended September 30, 2023.
Our investing activities used a total of $328,553 for the nine months ended September 30, 2023.
We had $80,161 in cash used in financing activities for the nine months ended September 30, 2023.
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We do not now have funds sufficient for pursuing our plan of operation, but we are in the process of trying to increase rents to finance our operations through rental cash flow. If operating difficulties or other factors (many of which are beyond our control) delay our realization of revenues or cash flows from rental income, we may be limited in our ability to pursue our business plan. Moreover, if unexpected expenses arise due to unanticipated pressures or if we decide to expand our business plan beyond its currently anticipated level or otherwise, we will require additional financing to fund our operations, in addition to anticipated cash generated from our operations. Additional financing might not be available on terms favorable to us, or at all. If adequate funds were not available or were not available on acceptable terms, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance our business or otherwise respond to competitive pressures would be significantly limited. In a worst-case scenario, we might not be able to fund our operations or to remain in business, which could result in a total loss of our stockholders’ investment. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders would be reduced, and these newly issued securities might have rights, preferences or privileges senior to those of existing stockholders.
Belladonna Lily Investments, Inc., a Wyoming Corporation is not, and has never been a related party to Hubilu Venture Corporation. Neither Hubilu, nor David Behrend has, nor ever had any ownership interest, nor controlling interest in Belladonna, and David Behrend was not an officer of Belladonna during, or after the reporting period.
The Company had no formal long-term lines or credit or other bank financing arrangements as of September 30, 2023.
The Company has no current plans for the purchase or sale of any plant or equipment.
The Company has no current plans to make any changes in the number of employees.
Impact of Inflation
The Company believes that inflation has had a negligible effect on operations over the past quarter.
Capital Expenditures
The Company expended $328,553 in capital and building improvements during the nine months ended September 30, 2023.
IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS
For information on the impact of recent accounting pronouncements on our business, see note 3 of the Notes to the Consolidated Financial Statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
We conducted an evaluation, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(f) under the Securities Exchange Act of 1934 as amended (the “Exchange Act”)). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the fiscal quarter covered by this quarterly report on Form 10-Q were effective at a reasonable assurance level to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.
(b) Changes in Internal Controls over Financial Reporting
During the nine-month period ended September 30, 2023, there has been no change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
Item 6. Exhibits
| (a) | The following exhibits are filed with this quarterly report on Form 10-Q or are incorporated herein by reference: |
| * | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| HUBILU VENTURE CORPORATION | |
| November 8, 2023 | /s/ David Behrend |
| David Behrend | |
| Chairman and Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Accounting and Financial Officer) |
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Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302 (a) OF THE SARBANES-OXLEY ACT OF 2002
I, David Behrend, Chairman and Chief Executive Officer, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Hubilu Venture Corporation (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements and other financial information included in this quarterly report fairly presents in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within the entity, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal controls over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
| Dated: November 8, 2023 | /s/ David Behrend |
| David Behrend | |
| Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302 (a) OF THE SARBANES-OXLEY ACT OF 2002
I, David Behrend, Chief Financial Officer of Hubilu Venture Corporation, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Hubilu Venture Corporation (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements and other financial information included in this quarterly report fairly presents in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within the entity, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal controls over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
| Dated: November 8, 2023 | /s/ David Behrend |
| David Behrend | |
| Chief Financial Officer | |
| (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Hubilu Venture Corporation (the “Company”) for the period ending September 30, 2023, as filed with the Securities and Exchange Commission on or about the date hereof (“Report”), I, David Behrend, the Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Dated: November 8, 2023 | /s/ David Behrend |
| David Behrend | |
| Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ENACTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Hubilu Venture Corporation (the “Company”) for the period ending September 30, 2023 as filed with the Securities and Exchange Commission on or about the date hereof (“Report”), I, David Behrend, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Dated: November 8, 2023 | /s/ David Behrend |
| David Behrend | |
| Chief Financial Officer | |
| (Principal Financial Officer) |