HBUV 10-Q
Hubilu Venture Corp (HBUV)
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 January 10, 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
Consolidated Balance Sheets
| September 30, 2022 | December 31, 2021 | |||||||
| (unaudited) | ||||||||
| 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’ DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued interest | ||||||||
| Security deposits payable | ||||||||
| Due to related party, current maturities | ||||||||
| Dividends payable | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| Due to related party | ||||||||
| Preferred shares | ||||||||
| Promissory notes, related parties | ||||||||
| Mortgages payable | ||||||||
| Notes payable | ||||||||
| TOTAL LIABILITES | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Common stock, $ par value, shares authorized, shares issued and outstanding on September 30, 2022 and December 31, 2021, , respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated Deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 3 |
HUBILU VENTURE CORPORATION
Consolidated Statements of Operations
(unaudited)
| Three months ended September 30, 2022 | Three months ended September 30, 2021 | Nine months ended September 30, 2022 | Nine months ended September 30, 2021 | |||||||||||||
| Rental Income | $ | $ | $ | $ | ||||||||||||
| Operating Expenses: | ||||||||||||||||
| General and administration expenses: | ||||||||||||||||
| Salary and benefits | ||||||||||||||||
| Utilities | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Property taxes | ||||||||||||||||
| Other general and administrative expenses | ||||||||||||||||
| Total general and administrative expenses | ||||||||||||||||
| Depreciation | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Net operating income (loss) | ( | ) | ||||||||||||||
| Other income (expense) | ||||||||||||||||
| Other income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total Other Income (Expense) | ( | ) | ( | ) | ( | ) | ||||||||||
| Net income (loss) for the period | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Net income (loss) attributable to common shareholders | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Weighted average common shares outstanding- basic | ||||||||||||||||
| Net loss per common share-basic | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Weighted average common shares outstanding- fully diluted | ||||||||||||||||
| Net loss per common share- fully diluted | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 4 |
HUBILU VENTURE CORPORATION
Consolidated Statement of Changes in Stockholders’ Deficit
(unaudited)
| For the Three Months Ended September 30, 2021 | ||||||||||||||||||||
| Additional | Total Stockholders’ | |||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Equity | |||||||||||||||||
| Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||
| Balance, June 30, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Imputed interest | - | |||||||||||||||||||
| Net loss for the three months ended September 30, 2021 | - | |||||||||||||||||||
| Balance, September 30, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| For the Three Months Ended September 30, 2022 | ||||||||||||||||||||
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance, June 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Imputed interest | - | |||||||||||||||||||
| Net loss for the three months ended September 30, 2022 | - | ( | ) | ( | ) | |||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| For the Nine Months Ended September 30, 2021 | ||||||||||||||||||||
| Additional | Total Stockholders’ | |||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Equity | |||||||||||||||||
| Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Imputed interest | - | |||||||||||||||||||
| Net income for the nine months ended September 30, 2021 | - | |||||||||||||||||||
| Balance, September 30, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| For the Nine Months Ended September 30, 2022 | ||||||||||||||||||||
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Imputed interest | - | |||||||||||||||||||
| Net loss for the nine months ended September 30, 2022 | - | ( | ) | ( | ) | |||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 5 |
HUBILU VENTURE CORPORATION
Consolidated Statements of Cash Flows
(unaudited)
| For the nine months ended September 30, 2022 | For the nine months ended September 30, 2021 | |||||||
| OPERATING ACTIVITIES | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Cumulative preferred stock dividends payable | ||||||||
| Imputed interest | ||||||||
| Gain on EDIL, forgiveness | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Funds held in escrow and other current assets | ||||||||
| Prepaid expenses | ( | ) | ||||||
| Accrued expenses | ||||||||
| Accounts payable | ||||||||
| Security deposits | ||||||||
| Net cash provided by operating activities | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds received from related party advances | ||||||||
| Repayments on related party advances | ( | ) | ||||||
| Proceeds received from mortgages payable | ||||||||
| Repayments on mortgages payable | ( | ) | ( | ) | ||||
| Proceeds received from the sale of preferred stock | ||||||||
| Repayments on notes payable | ( | ) | ||||||
| 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 DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Non-cash investing and financing transactions: | ||||||||
| Acquisitions of assets financed through debt | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 6 |
HUBILU VENTURE CORPORATION
Notes to the Consolidated Financial Statements
September 30, 2022
(unaudited)
NOTE 1 – NATURE OF BUSINESS
Hubilu
Venture Corporation (“the Company”) was incorporated under the laws of the state of
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 Mapone 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, 2022, 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, 2021.
Reclassification
Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no material impact on net earnings, financial position or cash flows.
| 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. |
NOTE 4 - PROPERTY ACQUISITIONS - Related Party
On
January 7, 2022 we completed our acquisition, through our subsidiary Boabab Investments, LLC, the real property located at 3791 S. Normandie
Avenue in Los Angeles (“Boabab”). The property was vacant at time of purchase. The acquisition was for $
(1)
A first position note with payment on principal balance of $
(2)
A $
On
March 2, 2022, we refinanced 3791 S. Normandie Ave in Los Angeles to one note. Terms of the refinance are as follows: (1) A first position
note with payment on principal balance of $
On
January 20, 2022 we completed our acquisition, through its subsidiary Boabab Investments, LLC, the real property located at 2029 W. 41st
Place in Los Angeles (“41st Place”). The property was vacant at the time of purchase. The acquisition was for $
(1)
A first position note with payment on principal balance of $
| 8 |
(2)
A $
On
March 2, 2022, we completed our acquisition, through its subsidiary Trilosa Investments, LLC, the real property located at 4517 Orchard
Avenue in Los Angeles (“Orchard”). The property was vacant at the time of purchase. The acquisition was for $
(1)
A first position note with payment on principal balance of $
(2)
A $
On
March 25, 2022, we completed our acquisition, through its subsidiary Mapone Investments, LLC, the real property located at 1733 W. 37th
Street in Los Angeles (“37th Street”). The property was vacant at the time of purchase. The acquisition was for $
(1)
A first position note with payment on principal balance of $
(2)
A $
| 9 |
NOTE 5- INVESTMENTS IN REAL ESTATE- Related party
The change in the real estate property investments for the nine months ended September 30, 2022 and the year ended December 31, 2021 is as follows:
| Nine months ended September 30, 2022 | Year ended December 31, 2021 | |||||||
| 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, 2022 and 2021 is as follows:
| September 30, 2022 | September 30, 2021 | |||||||
| 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, 2022 is summarized as follows:
| Land | Building | |||||||||||||||||||||||||||
| Initial Cost to the | ||||||||||||||||||||||||||||
| Company | Capital | Accumulated | Security | Closing | ||||||||||||||||||||||||
| Land | Building | Improvements | Depreciation | Encumbrances | Deposits | Costs | ||||||||||||||||||||||
| 3711 South Western Ave | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| 2909 South Catalina | ||||||||||||||||||||||||||||
| 3910 Wisconsin Ave | ||||||||||||||||||||||||||||
| 3910 Walton Ave | ||||||||||||||||||||||||||||
| 1557 West 29th | ||||||||||||||||||||||||||||
| 1267 West 38th Street | ||||||||||||||||||||||||||||
| 1618 West 38th | ||||||||||||||||||||||||||||
| 4016 Dalton Avenue | ||||||||||||||||||||||||||||
| 1981 West Estrella Avenue | ||||||||||||||||||||||||||||
| 2115 Portland Street | ||||||||||||||||||||||||||||
| 717 West 42nd Place | ||||||||||||||||||||||||||||
| 3906 Denker Street | ||||||||||||||||||||||||||||
| 3408 S Budlong Street | ||||||||||||||||||||||||||||
| 3912 S. Hill Street | ||||||||||||||||||||||||||||
| 4009 Brighton Avenue | ||||||||||||||||||||||||||||
| 3908 Denker Avenue | ||||||||||||||||||||||||||||
| 4021 Halldale Avenue | ||||||||||||||||||||||||||||
| 1284 W. 38th Street | ||||||||||||||||||||||||||||
| 4505 Orchard Avenue | ||||||||||||||||||||||||||||
| 3777 Ruthelen Street | ||||||||||||||||||||||||||||
| 3791 Normandie Avenue | ||||||||||||||||||||||||||||
| 2029 W. 41st Place | ||||||||||||||||||||||||||||
| 4517 Orchard Avenue | ||||||||||||||||||||||||||||
| 1733 W. 37th Street | ||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| 10 |
NOTE 6- PROPERTY INDEBTEDNESS
The Company’s mortgages are summarized as follows:
| September 30, 2022 | December 31, 2021 | Stated interest | ||||||||||||
| Principal balance | rate as at | Maturity date | ||||||||||||
| 3711 South Western Ave | $ | $ | % | |||||||||||
| 2909 South Catalina Street | % | |||||||||||||
| 3910 Walton Ave. | % | |||||||||||||
| 3910 Wisconsin Street | % | |||||||||||||
| 1557 West 29 Street | % | |||||||||||||
| 1267 West 38 Street | % | |||||||||||||
| 1618 West 38 Street | ||||||||||||||
| - First Note | % | |||||||||||||
| - Second Note | % | |||||||||||||
| 4016 Dalton Avenue | % | |||||||||||||
| 1981 Estrella Ave | % | |||||||||||||
| 717 West 42 Place | ||||||||||||||
| - First Note | % | |||||||||||||
| - Second Note | % | |||||||||||||
| 2115 Portland Street | ||||||||||||||
| - First Note | % | |||||||||||||
| -Second Note | % | |||||||||||||
| 3906 Denker | ||||||||||||||
| -First Note | % | |||||||||||||
| -Second Note | % | |||||||||||||
| 3408 Budlong | ||||||||||||||
| -First Note | % | |||||||||||||
| -Second Note | % | |||||||||||||
| 3912 S. Hill Street | ||||||||||||||
| -First Note | % | |||||||||||||
| - Second Note | % | |||||||||||||
| 4009 Brighton Avenue | % | |||||||||||||
| 3908 Denker Avenue | % | |||||||||||||
| 4021 Halldale Avenue | % | |||||||||||||
| 1284 W. 38th Street | % | |||||||||||||
| First Note | % | |||||||||||||
| -Second Note | % | |||||||||||||
| 4505 Orchard Avenue | % | |||||||||||||
| 3777 Ruthelen Street | % | |||||||||||||
| 3791 S. Normandie Avenue | ||||||||||||||
| - First Note | % | |||||||||||||
| -Second Note | % | |||||||||||||
| 2029 W. 41st Place | ||||||||||||||
| -First Note | % | |||||||||||||
| -Second Note | % | |||||||||||||
| 4517 Orchard Avenue | ||||||||||||||
| -First Note | % | |||||||||||||
| -Second Note | % | |||||||||||||
| 1733 W. 37th Place | ||||||||||||||
| -First Note | % | |||||||||||||
| -Second Note | % | |||||||||||||
| Hubilu General Loan | % | On Demand | ||||||||||||
| $ | $ | |||||||||||||
| 11 |
NOTE 7 – PROMISSORY NOTES PAYABLE-Related Party
| September 30, 2022 | December 31, 2021 | |||||
| $ | $ | |||||
On
November 1, 2021, a 1st promissory note secured by 3711 S. Western Ave, Los Angeles, CA 90018 and payable to Opus Bank in the amount
of $
NOTE 8–RELATED PARTY TRANSACTIONS
As
of September 30, 2022, the Company’s majority shareholder, has provided advances totaling $
NOTE 9 – 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
| 12 |
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 $
| # of Shares | Amount | Dividend in Arrears | Total | |||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | |||||||||||||
| Dividends accrued | ||||||||||||||||
| Shares issued | ||||||||||||||||
| Balance, December 31, 2021 | ||||||||||||||||
| Dividends accrued | ||||||||||||||||
| Shares issued | 10,000 | |||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | |||||||||||||
NOTE 10 – CONTINGENCY/LEGAL
As of September 30, 2022, 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 11- OTHER INCOME
The
company generated Other Income in the amount of $
NOTE 12- SUBSEQUENT EVENTS
We have evaluated subsequent events from the balance sheet date through January 10, 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.
| 13 |
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.
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.
| 14 |
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, 2022 and 2021, 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, 2022 and 2021, respectively, together with notes thereto, which are included in this Quarterly Report on Form 10-Q.
Three months ended September 30, 2022, compared to the three months ended September 30, 2021
Revenues. Our revenues increased $191,103 to $358,146 for the three months ended September 30, 2022, compared to $167,043 for the comparable period in 2021. The increase is due to additional property acquisitions.
Operating expenses. In total, operating expenses decreased $43,676 to $156,711 for the three months ended September 30, 2022, compared to $200,387 for the comparable period in 2021.
General and administrative expenses decreased $63,246 to $102,664 for the three months ended September 30, 2022, compared to $165,910 for the comparable period in 2021.
Depreciation expense increased $19,570 to $54,047 for the three months ended September 30, 2022, compared to $34,477 for the comparable period in 2021.
Property tax expense increased $18,887 to $ 41,060 for the three months ended September 30, 2022, compared to $22,173 for the comparable period in 2021. The increase is due to the acquisition of nine new properties.
Salaries and benefits expense decreased $20,900 to $15,100 for the three months ended September 30, 2022, compared to $36,000 for the comparable period in 2021.
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Utilities expense decreased $2,976 to $16,080 for the three months ended September 30, 2022 compared to $19,056 for the comparable period in 2021. The decrease is due to more tenants paying their own utilities.
Net Income (loss). Our net loss increased $138,401 to $42,263 of net loss for the three months ended September 30, 2022, compared to $96,138 of net income for the comparable period in 2021. The decrease is attributable to the revenue and expenses discussed above.
Nine months ended September 30, 2022 compared to the nine months ended September 30, 2021
Revenues. Our revenues increased to $1,141,886 for the nine months ended September 30, 2021 compared to $871,726 for the comparable period in 2021. The increase is due to the acquisition of nine new properties.
Operating expenses. Operating expenses include general and administrative expenses, consulting expense, depreciation, professional fees, property taxes, rent, repairs and maintenance, transfer agent and filing fees, and utilities. In total, operating expenses increased $14,069 to $602,484 for the nine months ended September 30, 2022 compared to $588,415 for the comparable period in 2021.
General and administrative expenses decreased $54,176 to $448,923 for the nine months ended September 30, 2022 compared to $503,099 for the comparable period in 2021.
Depreciation expense increased $68,245 to $153,561 for the nine months ended September 30, 2022 compared to $85,316 for the comparable period in 2021.
Professional fees increased $52,621 to $53,016 for the nine months ended September 30, 2022 compared to $395 for the comparable period in 2021.
Property tax expense increased $66,528 to $146,251 for the nine months ended September 30, 2022 compared to $79,723 for the comparable period in 2021. The increase is due to paying our taxes earlier in the first quarter.
Utilities expense decreased $3,234 to $48,665 for the nine months ended September 30, 2022 compared to $51,899 for the comparable period in 2021. The decrease is due to more tenants paying their own utilities.
Mortgage Interest increased $252,658 to $691,333 for the nine months ended September 30, 2022 compared to $438,675 for the comparable period in 2021. The increase is due to the acquisition of nine new properties.
Net loss. Our net loss increased $250,217 to $122,131 for the nine months ended September 30, 2022 compared to income of $128,086 for the comparable period in 2021. The decrease is attributable to the revenue and expenses discussed above.
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Liquidity and Capital Resources. For the nine months ended September 30, 2022, we did not borrow money from our majority shareholder. 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 $16,979,409 as of September 30, 2022, consisting of $16,934,988 in net property assets, $37,821 in cash, and $6,600 in deposits.
Our total liabilities are $17,892,778 as of September 30, 2022.
We were provided $179,551 in operating activities for the nine months ended September 30, 2022, consisting of $122,131 in net loss, imputed interest, which was offset by non-cash charges of $153,561 for depreciation and amortization, $33,004 in dividends accrued in preferred shares, a net decrease of $179 in accounts payable and $63,437 received for security deposits.
We used $449,026 in investing activities for the nine months ended September 30, 2022, which was used for building additions and improvements.
We had $103,558 provided by financing activities for the nine months ended September 30, 2022.
The Company had no formal long-term lines or credit or other bank financing arrangements as of September 30, 2022.
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 spent $449,026 on building improvements during the nine months ended September 30, 2022.
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.
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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, 2022, 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.
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.
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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 | |
| January 10, 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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