Hubilu Venture Corp - Quarter Report: 2022 June (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2022
OR
☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File No. 000-55611
Hubilu Venture Corporation
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 47-3342387 | |
(State or other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
| 205 South Beverly Drive, Suite 205 | ||
| Beverly Hills, CA | 90212 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (310) 308-7887
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.
Yes ☒ No ☐
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).
Yes ☒ No ☐
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 ☐ |
| Non-accelerated filer ☐ (Do not check if a smaller reporting company) | 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 ☐ No ☒
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 September 7, 2022, 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
| June 30, 2022 | December 31, 2021 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
Cash | $ | 241,071 | $ | 203,738 | ||||
| Total current assets | 241,071 | 203,738 | ||||||
| Property and equipment: | ||||||||
| Land | 11,800,305 | 9,853,679 | ||||||
| Building and capital improvements | 5,231,251 | 4,402,248 | ||||||
| Property acquisition and financing | 277,224 | |||||||
Less accumulated depreciation | (455,550 | ) | (356,036 | ) | ||||
| Total property and equipment, net | 16,853,230 | 13,899,891 | ||||||
| Security deposits | 6,600 | 6,600 | ||||||
| TOTAL ASSETS | $ | 17,100,901 | $ | 14,110,229 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | 2,373 | |||||
| Accrued interest | 7,835 | |||||||
| Security deposits payable | 261,689 | 199,184 | ||||||
| Promissory notes, related parties | 89,593 | 89,593 | ||||||
| Due to related party | 474,271 | 474,271 | ||||||
Preferred shares | 650,478 | 617,474 | ||||||
| TOTAL CURRENT LIABILITIES | 1,483,866 | 1,382,895 | ||||||
| Mortgages payable | 6,998,777 | 7,839,604 | ||||||
| Notes payable | 9,506,180 | 5,712,247 | ||||||
| TOTAL LIABILITES | 17,988,823 | 14,934,746 | ||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Common stock issued and outstanding on June 30, 2022 (December 31, 2021: ) | 26,237 | 26,237 | ||||||
| Additional paid-in capital | 792,218 | 775,755 | ||||||
| Accumulated Deficit | (1,706,377 | ) | (1,626,509 | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | (887,922 | ) | (824,517 | ) | ||||
| TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT | $ | 17,100,901 | 14,110,229 | |||||
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 June 30, 2022 | Three
months ended June 30, 2021 | Six
months ended June 30, 2022 | Six
months ended June 30, 2021 | |||||||||||||
| Rental Income | $ | 393,802 | $ | 387,954 | $ | 783,740 | $ | 704,683 | ||||||||
| Operating Expenses: | ||||||||||||||||
| General and administration expenses: | ||||||||||||||||
| Salary and benefits | 12,500 | 26,250 | 49,375 | 52,500 | ||||||||||||
Utilities | 18,159 | 18,732 | 32,585 | 32,843 | ||||||||||||
| Professional fees | 6,978 | 20,000 | 42,247 | 40,236 | ||||||||||||
| Property taxes | 43,959 | 41,151 | 105,191 | 57,550 | ||||||||||||
| Other general and administrative expenses | 66,516 | 106,690 | 116,861 | 154,060 | ||||||||||||
| Total general and administrative expenses | 148,112 | 212,823 | 346,259 | 337,189 | ||||||||||||
| Depreciation | 50,287 | 38,800 | 99,514 | 50,839 | ||||||||||||
| Total operating expenses | 198,399 | 251,623 | 445,773 | 388,028 | ||||||||||||
| Net operating income | 195,403 | 136,331 | 337,967 | 316,655 | ||||||||||||
| Other income (expense) | ||||||||||||||||
| Other income | 29,800 | 4,000 | ||||||||||||||
| Interest expense | (227,445 | ) | (155,347 | ) | (447,635 | ) | (288,707 | ) | ||||||||
| Total Other Income (Expense) | (227,445 | ) | (155,347 | ) | (417,835 | ) | (284,707 | ) | ||||||||
| Net income (loss) for the period | $ | (32,042 | ) | $ | (19,016 | ) | $ | (79,868 | ) | $ | 31,948 | |||||
| Net loss attributable to common shareholders | $ | (32,042 | ) | $ | (19,016 | ) | $ | (79,868 | ) | $ | 31,948 | |||||
| Weighted average common shares outstanding- basic | 26,237,125 | 26,237,125 | 26,237,125 | 26,237,125 | ||||||||||||
| Net loss per common share-basic | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | 0.00 | |||||
| Weighted average common shares outstanding- fully diluted | 26,237,125 | 26,237,125 | 26,237,125 | 26,982,721 | ||||||||||||
| Net loss per common share- fully diluted | $ | (0.00 | ) | $ | 0.00 | $ | (0.00 | ) | $ | 0.00 | ||||||
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 June 30, 2021 | ||||||||||||||||||||
| Additional | Total Stockholders’ | |||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Equity | |||||||||||||||||
| Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||
| Balance, March 31, 2021 | 26,237,125 | $ | 26,237 | $ | 750,833 | $ | (1,618,408 | ) | $ | (841,338 | ) | |||||||||
| Imputed interest | - | 8,186 | 8,186 | |||||||||||||||||
| Net loss for the thre months ended June 30, 2021 | - | (19,016 | ) | (19,016 | ) | |||||||||||||||
| Balance, June 30, 2021 | 26,237,125 | $ | 26,237 | $ | 759,019 | $ | (1,637,424 | ) | $ | (852,168 | ) | |||||||||
| For the Three Months Ended June 30, 2022 | ||||||||||||||||||||
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance, March 31, 2022 | 26,237,125 | $ | 26,237 | $ | 784,123 | $ | (1,674,335 | ) | $ | (863,975 | ) | |||||||||
| Imputed interest | - | 8,095 | 8,095 | |||||||||||||||||
| Net loss for the three months ended June 30, 2022 | - | (32,042 | ) | (32,042 | ) | |||||||||||||||
| Balance, June 30, 2022 | 26,237,125 | $ | 26,237 | $ | 792,218 | $ | (1,706,377 | ) | $ | (887,922 | ) | |||||||||
| For the Six Months Ended June 30, 2021 | ||||||||||||||||||||
| Additional | Total Stockholders’ | |||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Equity | |||||||||||||||||
| Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||
| Balance, December 31, 2020 | 26,237,125 | $ | 26,237 | $ | 742,556 | $ | (1,669,372 | ) | $ | (900,579 | ) | |||||||||
| Imputed interest | - | 16,463 | 16,463 | |||||||||||||||||
| Net income for the six months ended June 30, 2021 | - | 31,948 | 31,948 | |||||||||||||||||
| Balance, June 30, 2021 | 26,237,125 | $ | 26,237 | $ | 759,019 | $ | (1,637,424 | ) | $ | (852,168 | ) | |||||||||
| For the Six Months Ended June 30, 2022 | ||||||||||||||||||||
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance, December 31, 2021 | 26,237,125 | $ | 26,237 | $ | 775,755 | $ | (1,626,509 | ) | $ | (824,517 | ) | |||||||||
| Imputed interest | - | 16,463 | 16,463 | |||||||||||||||||
| Net loss for the six months ended June 30, 2022 | - | (79,868 | ) | (79,868 | ) | |||||||||||||||
| Balance, June 30, 2022 | 26,237,125 | $ | 26,237 | $ | 792,218 | $ | (1,706,377 | ) | $ | (887,922 | ) | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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HUBILU VENTURE CORPORATION
Consolidated Statements of Cash Flows
(unaudited)
| For
the six months ended June 30, 2022 | For
the six months ended June 30, 2021 | |||||||
| OPERATING ACTIVITIES | ||||||||
| Net income (loss) | $ | (79,868 | ) | $ | 31,948 | |||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 99,514 | 50,839 | ||||||
| Cumulative preferred stock dividends payable | 33,004 | 16,221 | ||||||
| Imputed interest | 16,463 | 16,463 | ||||||
| Gain on EDIL, forgiveness | (4,000 | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Funds held in escrow and other current assets | 18,030 | |||||||
| Prepaid expenses | (15,635 | ) | ||||||
| Accrued expenses | 7,835 | |||||||
| Accounts payable | (2,373 | ) | (447 | ) | ||||
| Security deposits | 62,505 | 11,640 | ||||||
| Net cash provided by operating activities | 137,080 | 125,059 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Building improvements | (332,460 | ) | (207,792 | ) | ||||
| Cash used in investing activities | (332,460 | ) | (207,792 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Repayments on related party advances | (18,229 | ) | ||||||
| Proceeds received from mortgages payable | 603,100 | 10,682 | ||||||
| Repayments on mortgages payable | (53,603 | ) | ||||||
| Repayments on notes payable | (316,784 | ) | ||||||
| Net cash provided by (used in) financing activities | 232,713 | (7,547 | ) | |||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 37,333 | (90,280 | ) | |||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 203,738 | 144,664 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 241,071 | $ | 54,384 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Interest paid | $ | 423,337 | $ | 285,050 | ||||
| Income taxes paid | $ | 63,707 | $ | 57,550 | ||||
| Non-cash investing and financing transactions: | ||||||||
| Acquisitions of assets financed through debt | $ | 2,720,393 | $ | 1,365,019 | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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HUBILU VENTURE CORPORATION
Notes to the Consolidated Financial Statements
March 31, 2022
(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 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 June 30, 2022, the Company had not yet achieved profitable operations, had an accumulated deficit of $1,706,377 and expects to incur further losses in the development of its business, all of which casts substantial doubt upon the Company’s ability to continue as a going concern and, therefore, that it may be unable to realize its assets and discharge its liabilities in the normal course of business. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. Management intends to focus on raising additional funds either by way of debt or equity issuances in order to continue operations. The Company cannot provide any assurance or guarantee that it will be able to obtain additional financing or generate revenues sufficient to maintain operations.
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 $640,000 (“Purchase Price”). Terms of the acquisition as follows:
(1) A first position note with payment on principal balance of $576,000 issued by the Property Owner, Boabab, owing to lender, Center Street Lending VIII SPR, LLC, whose terms of payments due are principle and interest, on unpaid principal at the rate of 8.5% per annum. Principal and interest payable in monthly installments of $4,080.00 or more starting on February 1, 2022 and continuing until the December 29, 2022 at which time the entire principal balance together with interest due thereon, shall become due and payable.
(2) A $75,000 second position note owing by Boabab, whose terms of payments due were interest only, payable on unpaid principal at the rate of 5.00% per annum. Interest only payable in monthly installments of $312.50 or more on the 5th day of each month beginning on the 5th day of February 2022 and continuing until the 4th day of January 2029, at which time the entire principal balance together with interest due thereon, shall become due and payable.
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 $621,500.00 issued by the Property Owner, Boabab, owing to lender, Visio Financial Services, Inc, whose terms of payments due are principle and interest, on unpaid principal at the rate of 5.225% per annum. Principal and interest payable in monthly installments of $3,422.33 or more starting on May 1, 2022 and continuing until the 1st day of April 2052, at which time the entire principal balance together with interest due thereon, shall become due and payable.
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 $720,000 (“Purchase Price”). The terms of the acquisition as follows:
(1) A first position note with payment on principal balance of $648,000 issued by the Property Owner, Boabab, owing to lender, Center Street Lending VIII SPR, LLC, whose terms of payments due are principle and interest, on unpaid principal at the rate of 8.5% per annum. Principal and interest payable in monthly installment’s of $4,590.00 or more starting on March 1, 2022 and continuing until the January 6, 2023 at which time the entire principal balance together with interest due thereon, shall become due and payable.
| 8 |
(2) A $84,950 second position note owing by Boabab, whose terms of payments due were interest only, payable on unpaid principal at the rate of 5.00% per annum. Interest only payable in monthly installments of $361.38 or more on the 18th day of each month beginning on the 18th day of February 2022 and continuing until the 17th day of January 2029, at which time the entire principal balance together with interest due thereon, shall become due and payable.
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 $605,000 (“Purchase Price”). The terms of the acquisition as follows:
(1) A first position note with payment on principal balance of $484,000 issued by the Property Owner, Trilosa, owing to lender, Visio Financial Services, Inc, whose terms of payments due are principle and interest, on unpaid principal at the rate of 5.225% per annum. Principal and interest payable in monthly installments of $2,665.18 or more starting on May 1, 2022 and continuing until the 1st day of April 2052, at which time the entire principal balance together with interest due thereon, shall become due and payable.
(2) A $158,000 second position note owing by Trilosa, whose terms of payments due were interest only, payable on unpaid principal at the rate of 5.00% per annum. Interest only payable in monthly installments of $658.33 or more on the 2nd day of each month beginning on the 2nd day of April 2022 and continuing until the 1st day of March 2029, at which time the entire principal balance together with interest due thereon, shall become due and payable.
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 $630,500 (“Purchase Price”). The terms of the acquisition as follows:
(1) A first position note with payment on principal balance of $567,450.00 issued by the Property Owner, Mapone, owing to lender, Center Street Lending VIII SPR, LLC, whose terms of payments due are principle and interest, on unpaid principal at the rate of 7.5% per annum. Principal and interest payable in monthly installments of $3,546.56.00 or more starting on May 1, 2022 and continuing until the March 22, 2023 at which time the entire principal balance together with interest due thereon, shall become due and payable.
(2) A $100,000 second position note owing by Mapone, whose terms of payments due were interest only, payable on unpaid principal at the rate of 6.00% per annum. Interest only payable in monthly installments of $500.00 or more on the 1st day of each month beginning on the 1st day of May 2022 and continuing until the 31st day of March 2029, at which time the entire principal balance together with interest due thereon, shall become due and payable.
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NOTE 5- INVESTMENTS IN REAL ESTATE- Related party
The change in the real estate property investments for the six months ended June 30, 2022 and the year ended December 31, 2021 is as follows:
| Six months ended June 30, 2022 | Year ended December 31, 2021 | |||||||
| Balance, beginning of the period | $ | 14,255,927 | $ | 9,585,943 | ||||
| Acquisitions: | 2,720,393 | 4,182,057 | ||||||
| Real estate investment property, at cost | 16,976,320 | 13,768,000 | ||||||
| Capital improvements | 332,460 | 487,927 | ||||||
| Balance, end of the period | $ | 17,308,780 | $ | 14,255,927 | ||||
The change in the accumulated depreciation for the six months ended June 30, 2022 and 2021 is as follows:
| June 30, 2022 | June 30, 2021 | |||||||
| Balance, beginning of the period | $ | 356,036 | $ | 238,383 | ||||
| Depreciation charge for the period | 99,514 | 50,839 | ||||||
| Balance, end of the period | $ | 455,550 | $ | 289,222 |
The Company’s real estate investments as of June 30, 2022 is summarized as follows:
| Initial Cost to the Company | Capital | Accumulated | Encumbrances | Security | Closing | |||||||||||||||||||||||
| Land | Building | Improvements | Depreciation | Encumbrances | Deposits | Costs | ||||||||||||||||||||||
| 3711 South Western Ave | $ | 508,571 | $ | 383,716 | $ | 30,244 | $ | 93,900 | $ | 656,585 | $ | 17,914 | ||||||||||||||||
| 2909 South Catalina | 565,839 | 344,856 | 16,181 | 81,043 | 442,879 | 14,400 | ||||||||||||||||||||||
| 3910 Wisconsin Ave | 337,500 | 150,000 | 88,833 | 27,627 | 696,709 | 1,900 | 28,444 | |||||||||||||||||||||
| 3910 Walton Ave | 318,098 | 191,902 | 9,201 | 29,963 | 544,842 | 11,000 | ||||||||||||||||||||||
| 1557 West 29th | 496,609 | 146,891 | 21,971 | 22,094 | 700,010 | 12,565 | 14,251 | |||||||||||||||||||||
| 1267 West 38th Street | 420,210 | 180,090 | 7,191 | 30,383 | 610,821 | 4,600 | 15,701 | |||||||||||||||||||||
| 1618 West 38th | 508,298 | 127,074 | 14,732 | 11,386 | 638,848 | 8,340 | ||||||||||||||||||||||
| 4016 Dalton Avenue | 424,005 | 106,001 | 39,240 | 13,482 | 614,758 | 4,530 | 27,678 | |||||||||||||||||||||
| 1981 West Estrella Avenue | 651,659 | 162,915 | 68,501 | 20,356 | 906,667 | 12,985 | 21,981 | |||||||||||||||||||||
| 2115 Portland Street | 753,840 | 188,460 | 1,763 | 20,013 | 916,104 | 12,315 | ||||||||||||||||||||||
| 717 West 42nd Place | 376,800 | 94,200 | 9,691 | 471,835 | 1,350 | |||||||||||||||||||||||
| 3906 Denker Street | 428,000 | 107,000 | 60,210 | 7,732 | 589,061 | 13,250 | ||||||||||||||||||||||
| 3408 S Budlong Street | 499,200 | 124,800 | 54,488 | 10,723 | 734,977 | 9,840 | ||||||||||||||||||||||
| 3912 S. Hill Street | 483,750 | 161,250 | 133,150 | 18,338 | 658,888 | 15,300 | ||||||||||||||||||||||
| 4009 Brighton Avenue | 442,700 | 158,300 | 168,983 | 15,950 | 725,622 | 2,500 | 13,040 | |||||||||||||||||||||
| 3908 Denker Avenue | 534,400 | 158,300 | 55,070 | 7,732 | 635,316 | 4,500 | 20,243 | |||||||||||||||||||||
| 4021 Halldale Avenue | 487,500 | 162,500 | 45,188 | 6,680 | 585,000 | 18,000 | 17,995 | |||||||||||||||||||||
| 1284 W. 38th Street | 551,250 | 183,750 | 5,851 | 842,082 | 12,000 | 16,623 | ||||||||||||||||||||||
| 4505 Orchard Avenue | 506,250 | 145,776 | 125,054 | 6,933 | 653,457 | 17,500 | 27,037 | |||||||||||||||||||||
| 3777 Ruthelen Street | 559,200 | 139,800 | 12,652 | 3,557 | 717,208 | 13,900 | 11,019 | |||||||||||||||||||||
| 3791 Normandie Avenue | 480,000 | 160,000 | 2,978 | 770,064 | 12,000 | 27,394 | ||||||||||||||||||||||
| 2029 W. 41st Place | 540,000 | 180,000 | 118,190 | 4,551 | 809,900 | 19,000 | 13,501 | |||||||||||||||||||||
| 4517 Orchard Avenue | 453,750 | 151,250 | 93,953 | 2,623 | 640,882 | 10,000 | 8,853 | |||||||||||||||||||||
| 1733 W. 37th Street | 472,876 | 157,625 | 1,964 | 667,450 | 12,000 | 13,464 | ||||||||||||||||||||||
| $ | 11,800,305 | $ | 4,066,456 | $ | 1,164,795 | $ | 455,550 | $ | 16,229,957 | $ | 261,689 | $ | 277,224 | |||||||||||||||
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NOTE 6- PROPERTY INDEBTEDNESS
The Company’s mortgages are summarized as follows:
| Principal balance | Stated interest rate as at | Maturity date | ||||||||||||||
| 3711 South Western Ave | $ | 656,585 | $ | 656,585 | 5.00 | % | December 1, 2029 | |||||||||
| 2909 South Catalina Street | ||||||||||||||||
| - First Note | 442,879 | 450,063 | 3.10 | % | August 12, 2046 | |||||||||||
| 3910 Walton Ave. | 544,842 | 549,705 | 5.00 | % | August 01, 2049 | |||||||||||
| 3910 Wisconsin Street | 696,709 | 518,250 | 5.225 | % | March 1, 2052 | |||||||||||
| 1557 West 29 Street | ||||||||||||||||
| -First Note | 610,510 | 415,463 | 4.975 | % | June 1, 2051 | |||||||||||
| -Second Note | 89,500 | 200,000 | 5.40 | % | January 1, 2029 | |||||||||||
| 1267 West 38 Street | 610,821 | 617,745 | 4.975 | % | July 1, 2051 | |||||||||||
| 1618 West 38 Street | ||||||||||||||||
| - First Note | 488,848 | 492,454 | 6.30 | % | January 1, 2050 | |||||||||||
| - Second Note | 150,000 | 150,000 | 6.00 | % | December 10, 2023 | |||||||||||
| 4016 Dalton Avenue | 614,758 | 775,478 | 4.975 | % | June 1, 2051 | |||||||||||
| 1981 Estrella Ave | 906,667 | 913,569 | 5.225 | % | June 1, 2051 | |||||||||||
| 717 West 42 Place | ||||||||||||||||
| - First Note | 336,867 | 337,167 | 6.85 | % | October 31, 2025 | |||||||||||
| - Second Note | 134,968 | 134,968 | 6.85 | % | April 30, 2022 | |||||||||||
| 2115 Portland Street | ||||||||||||||||
| - First Note | 596,328 | 600,688 | 6.00 | % | June 1, 2049 | |||||||||||
| -Second Note | 319,776 | 319,776 | 5.00 | % | April 30, 2024 | |||||||||||
| 3906 Denker | ||||||||||||||||
| -First Note | 404,061 | 406,854 | 6.00 | % | March 1, 2025 | |||||||||||
| -Second Note | 185,000 | 185,000 | 6.85 | % | February 14, 2025 | |||||||||||
| 3408 Budlong | ||||||||||||||||
| -First Note | 614,977 | 470,000 | 4.875 | % | December 1, 2051 | |||||||||||
| -Second Note | 120,000 | 242,000 | 5.00 | % | November 1, 2029 | |||||||||||
| 3912 S. Hill Street | ||||||||||||||||
| -First Note | 506,880 | 510,150 | 6.425 | % | December 1, 2050 | |||||||||||
| - Second Note | 152,000 | 152,000 | 6.425 | % | November 1, 2026 | |||||||||||
| 4009 Brighton Avenue | 725,622 | 779,374 | 4.875 | % | November 1, 2051 | |||||||||||
| 3908 Denker Avenue | 635,316 | 640,000 | 4.975 | % | December 1, 2051 | |||||||||||
| 4021 Halldale Avenue | 585,000 | 730,312 | 8.5 | % | July 14, 2022 | |||||||||||
| 1284 W. 38th Street | 4.56 | % | March 1, 2052 | |||||||||||||
| First Note | 654,082 | 661,500 | 4.625 | % | March 1, 2052 | |||||||||||
| -Second Note | 188,000 | 159,000 | 5.250 | % | 2029 | |||||||||||
| 4505 Orchard Avenue | 653,457 | 695,250 | 4.625 | % | March 1, 2052 | |||||||||||
| 3777 Ruthelen Street | 717,208 | 699,000 | 5 | % | October 1, 2029 | |||||||||||
| 3791 S. Normandie Avenue | ||||||||||||||||
| - First Note | 620,064 | 5.225 | % | April 1, 2052 | ||||||||||||
| -Second Note | 150,000 | 5.00 | % | January 4, 2029 | ||||||||||||
| 2029 W. 41st Place | ||||||||||||||||
| -First Note | 648,000 | 8.5 | % | January 6, 2023 | ||||||||||||
| -Second Note | 161,900 | 5.00 | % | January 17, 2029 | ||||||||||||
| 4517 Orchard Avenue | ||||||||||||||||
| -First Note | 482,882 | 5.225 | % | April 1, 2052 | ||||||||||||
| -Second Note | 158,000 | 5.00 | % | March 1, 2029 | ||||||||||||
| 1733 W. 37th Place | ||||||||||||||||
| -First Note | 567,450 | 7.5 | % | March 22, 2023 | ||||||||||||
| -Second Note | 100,000 | 6.00 | % | May 1, 2029 | ||||||||||||
| Hubilu General Loan | 275,000 | 6.00 | % | On Demand | ||||||||||||
| $ | 16,504,957 | $ | 13,551,851 | |||||||||||||
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NOTE 7 – PROMISSORY NOTES PAYABLE-Related Party
| June 30, 2022 | December 31, 2021 | |||||
| $ | 89,593 | $ | 89,593 | |||
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 $554,865 became due. Belladonna Lily Investments, Inc. agreed to pay off the 1st promissory note and the majority of the 2nd promissory note owing to Esteban Coaloa in the amount of $92,463. This note was assigned to Belladonna Lily Investments, Inc. Belladonna Lily Investments, Inc. recorded a new 1st promissory note in the amount of $700,000 which was secured by a deed of trust against the property. After accounting for a prior loan owed to Belladonna Lily investments, Inc in the amount of $12,000 and other closing costs, the balance owing at December 31, 2021 by Akebia Investments, LLC to Belladonna Lily Investments, Inc. was $656,584 and $14,700 was owed unsecured to Esteban Coaloa. The refinance closed on December 30, 2021. Refer to Note 6 - Property Indebtedness for current balance of loans owed against 3711 S. Western Ave, Los Angeles, CA.
NOTE 8–RELATED PARTY TRANSACTIONS
As of June 30, 2022, the Company’s majority shareholder, has provided advances totaling $474,271 (December 31, 2021: $474,271). These advances are unsecured and do not carry a contractual interest rate or repayment terms. In connection with these advances, the Company has recorded an imputed interest charge of $16,463 which was credited to additional paid-in capital for the six months ended June 30, 2022.
On February 25, 2022, 3910 Wisconsin Ave, owned by Sunza Investments, LLC was refinanced. Belladonna Lily Investments, Inc. was paid $440,072 as part of the payoff. The $440,072 also paid off the following unsecured notes owed by Sunza Investments, LLC. (1) A promissory note in 2nd position on 3910 Wisconsin Ave in the amount of $150,000 owing to Belladonna Lily Investments, Inc., was paid off in full. (2) A promissory note in 3rd position on 3910 Wisconsin Ave of $130,000 owing to Belladonna Lily Investments, Inc. was paid off in full. (3) A promissory note in 2nd position on 4021 Halldale Ave of $145,312 owing to Belladonna Lily Investments, Inc, was paid off in full. (4) The balance of $14,760 was used to pay interest owing and points payable on the loans.
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 5% Voting, Cumulative Convertible Series 1 Preferred Stock date of conversion has been extended to the September 30, 2029.
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 – Each share of Preferred Stock, is convertible at the option of the holder, into shares of common stock, at the lesser of $0.50 per share or a ten percent (10%) discount to the average closing bid price of the common stock 5 days prior to the notice of conversion. The Preferred Stock is also subject to certain adjustments for dilution, if any, resulting from future stock issuances, including for any subsequent issuance of common stock at a price per share less than that paid by the holders of the Preferred Stock.
Dividends – The holders of the Preferred Stock in preference to the holders of common stock, are entitled to receive dividends at the rate of 5% per annum, in kind, which shall accrue quarterly. Such dividends are cumulative. No such dividends have been declared to date.
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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 $1.00 (as adjusted, as defined), plus all declared but unpaid dividends.
| # of Shares | Amount | Dividend in Arrears | Total | |||||||||||||
| Balance, December 31, 2020 | 500,400 | $ | 500,400 | $ | 85,864 | $ | 586,264 | |||||||||
| Dividends accrued | 21,210 | 21,210 | ||||||||||||||
| Shares issued | 10,000 | 10,000 | 10,000 | |||||||||||||
| Balance, December 31, 2021 | 510,400 | 510,400 | 107,074 | 617,474 | ||||||||||||
| Dividends accrued | 33,004 | 33,004 | ||||||||||||||
| Balance, June 30, 2022 | 510,400 | $ | 510,400 | $ | 140,078 | $ | 650,478 | |||||||||
NOTE 10 – CONTINGENCY/LEGAL
As of June 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 $29,800 which is made up of money paid by Condon Realty Group to the company for consulting services performed. Condon Realty Group represents Hubilu subsidiaries’ acquisitions during this period.
NOTE 12 – SUBSEQUENT EVENTS
We have evaluated subsequent events from the balance sheet through September 7, 2022 the date at which the financial statements were issued and determined that there were no items that require adjustments to or disclosure in the financial statements.
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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.
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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 six months ended June 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 six months ended June 30, 2022 and 2021, respectively, together with notes thereto, which are included in this Quarterly Report on Form 10-Q.
Three months ended June 30, 2022, compared to the three months ended June 30, 2021
Revenues. Our revenues increased $5,848 to $393,802 for the three months ended June 30, 2022, compared to $387,954 for the comparable period in 2021. The increase is due to additional property acquisitions.
Operating expenses. In total, operating expenses decreased $53,224 to $198,399 for the three months ended June 30, 2022, compared to $251,623 for the comparable period in 2021.
General and administrative expenses decreased $64,711 to $148,112 for the three months ended June 30, 2022, compared to $212,823 for the comparable period in 2021.
Depreciation expense increased $11,487 to $50,287 for the three months ended June 30, 2022, compared to $38,800 for the comparable period in 2021.
Property tax expense increased $2,808 to $43,959 for the three months ended June 30, 2022, compared to $41,151 for the comparable period in 2021. The increase is due to the acquisition of nine new properties.
Salaries and benefits expense decreased $13,750 to $12,500 for the three months ended June 30, 2022, compared to $26,250 for the comparable period in 2021.
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Utilities expense decreased $573 to $18,159 for the three months ended June 30, 2022 compared to $18,732 for the comparable period in 2021. The increase is due to additional property acquisitions.
Net Income (loss). Our net loss increased $13,026 to $32,042 of net loss for the three months ended June 30, 2022, compared to $19,016 of net income for the comparable period in 2021. The increase is attributable to the revenue and expenses discussed above.
Six months ended June 30, 2022 compared to the six months ended June 30, 2021
Revenues. Our revenues increased to $783,740 for the six months ended June 30, 2021 compared to $704,683 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 $57,745 to $445,773 for the six months ended June 30, 2022 compared to $388,028 for the comparable period in 2021.
General and administrative expenses increased $9,070 to $346,259 for the six months ended June 30, 2022 compared to $337,189 for the comparable period in 2021.
Depreciation expense increased $48,675 to $99,514 for the six months ended June 30, 2022 compared to $50,839 for the comparable period in 2021.
Professional fees increased $2,011 to $42,247 for the six months ended June 30, 2022 compared to $40,236 for the comparable period in 2021.
Property tax expense increased $47,641 to $105,191 for the six months ended June 30, 2022 compared to $57,550 for the comparable period in 2021. The increase is due to paying our taxes earlier in the first quarter.
Utilities expense decreased $258 to $32,585 for the six months ended June 30, 2022 compared to $32,843 for the comparable period in 2021. The decrease is due to more tenants paying their own utilities.
Mortgage Interest increased $158,928 to $447,635 for the six months ended June 30, 2022 compared to $288,707 for the comparable period in 2021. The increase is due to the acquisition of nine new properties.
Net loss. Our net loss increased $111,816 to $79,868 for the six months ended June 30, 2022 compared to income of $31,948 for the comparable period in 2021. The increase is attributable to the revenue and expenses discussed above.
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Liquidity and Capital Resources. For the six months ended June 30, 2022, we did not borrow any 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 $17,100,901 as of June 30, 2022, consisting of $16,853,230 in net property assets, $241,071 in cash, and $6,600 in deposits.
Our total liabilities are $17,988,823 as of June 30, 2022.
We were provided $137,080 in operating activities for the six months ended June 30, 2022, consisting of $79,868 in net loss, imputed interest, which was offset by non-cash charges of $99,514 for depreciation and amortization, $33,004 in dividends accrued in preferred shares, a net decrease of $2,373 in accounts payable and $62,505 received for security deposits.
We used $332,460 in investing activities for the six months ended June 30, 2022, which was used for building additions and improvements.
We had $232,713 provided by financing activities for the six months ended June 30, 2022.
The Company had no formal long-term lines or credit or other bank financing arrangements as of June 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 $332,460 on building improvements during the six months ended June 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 six-month period ended June 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 | |
| September 12, 2022 | /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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