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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: March 31, 2023

 

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 June 5, 2023 the number of shares outstanding of the issuer’s sole class of common stock, $0.001 par value per share, is 26,237,125.

 

 

 

 

 

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION 3
Item 1. Financial Statements 3
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Changes in Stockholders’ Deficit 5
Consolidated Statements of Cash Flows 6
Notes to the Consolidated Financial Statements 7
Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations 14
Item 3. Quantitative and Qualitative Disclosures about Market Risk 16
Item 4. Controls and Procedures 16
PART II — OTHER INFORMATION 16
Item 1. Legal Proceedings 16
Item 1A. Risk Factors 16
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 16
Item 3. Defaults Upon Senior Securities 17
Item 4. Mine Safety Disclosures 17
Item 5. Other Information 17
Item 6. Exhibits 17
SIGNATURES 18

 

2

 

 

Part I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

HUBILU VENTURE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   March 31,   December 31, 
   2023   2022 
    (Unaudited)       
ASSETS          
           
Current assets:          
Cash  $88,481   $92,068 
Total current assets   88,481    92,068 
           
Property and equipment:          
Land   11,800,304    11,800,304 
Building and capital improvements   5,563,438    5,458,695 
Property acquisition and financing   298,704    296,463 
Less accumulated depreciation   (620,669)   (564,647)
Total property and equipment, net   17,041,777    16,990,815 
           
Security deposits   6,783    6,783 
           
Total assets  $17,137,041   $17,089,666 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)          
           
Current liabilities:          
Advanced rents received  $82,150   $- 
Accrued interest   10,189    9,415 
Security deposits payable   238,549    246,669 
Due to related party, current maturities   474,271    474,271 
Mortgages payable, current maturities   702,417    1,640,175 
Dividends payable   159,912    153,514 
Total current liabilities   1,667,488    2,524,044 
           
Promissory notes, related parties   -    89,593 
Mortgages payable   15,832,524    14,848,206 
Preferred shares payable   520,400    520,400 
           
Total liabilities   18,020,412    17,982,243 
           
Stockholders’ equity (deficit):          
Common stock, $0.001 par value, 100,000,000 shares authorized, 26,237,125 shares issued and outstanding   26,237    26,237 
Additional paid-in capital   834,914    821,981 
Accumulated deficit   (1,744,522)   (1,740,795)
Total stockholders’ equity (deficit)   (883,371)   (892,577)
           
Total liabilities and stockholders’ equity (deficit)  $17,137,041   $17,089,666 

 

See accompanying notes to financial statements.

 

3

 

 

HUBILU VENTURE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

         
   For the Three Months Ended 
   March 31, 
   2023   2022 
         
Rental Income  $408,838   $389,937 
           
Operating expenses:          
General and administrative expenses:          
Salaries and benefits   15,900    36,875 
Utilities   17,400    14,426 
Professional fees   18,800    250 
Property taxes   41,546    61,232 
Other general and administrative expenses   27,695    85,363 
Total general and administrative expenses   121,341    198,146 
Depreciation   56,022    49,227 
Total operating expenses   177,363    247,373 
           
Net operating income   231,475    142,564 
           
Other income (expense):          
Other income   -    29,800 
Interest expense   (235,202)   (220,190)
Total other income (expense)   (235,202)   (190,390)
           
Net loss  $(3,727)  $(47,826)
           
Weighted average common shares outstanding - basic and diluted   26,237,125    26,237,125 
Net loss per common share - basic and diluted  $(0.00)  $(0.00)

 

See accompanying notes to financial statements.

 

4

 

 

HUBILU VENTURE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

 

                     
   For the Three Months Ended March 31, 2023 
           Additional       Total 
   Common Stock   Paid-In   Accumulated   Stockholders’ 
   Shares   Amount   Capital   Deficit   Deficit 
                     
Balance, December 31, 2022   26,237,125   $26,237   $821,981   $(1,740,795)  $(892,577)
                          
Imputed interest   -    -    12,933    -    12,933 
                          
Net loss   -    -    -    (3,727)   (3,727)
                          
Balance, March 31, 2023   26,237,125   $26,237   $834,914   $(1,744,522)  $(883,371)

 

   For the Three Months Ended March 31, 2022 
           Additional       Total 
   Common Stock   Paid-In   Accumulated   Stockholders’ 
   Shares   Amount   Capital   Deficit   Deficit 
                     
Balance, December 31, 2021   26,237,125   $26,237   $775,755   $(1,626,509)  $(824,517)
                          
Imputed interest   -    -    8,368    -    8,368 
                          
Net loss   -    -    -    (47,826)   (47,826)
                          
Balance, March 31, 2022   26,237,125   $26,237   $784,123   $(1,674,335)  $(863,975)

 

See accompanying notes to financial statements.

 

5

 

 

HUBILU VENTURE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

           
   For the Three Months Ended 
   March 31, 
   2023   2022 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss  $(3,727)  $(47,826)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation   56,022    49,227 
Imputed interest   12,933    8,368 
Cumulative preferred stock dividends payable   6,398    30 
Decrease (increase) in current assets:          
Security deposits   -    19,194 
Increase (decrease) in current liabilities:          
Accounts payable   -    3,680 
Advanced rents received   82,150    - 
Accrued expenses   774    - 
Security deposits payable   (8,120)   - 
Net cash used in operating activities   146,430    32,673 
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchase of property and equipment   (106,984)   (216,013)
Net cash used in investing activities   (106,984)   (216,013)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds received from mortgages payable   10,100    102,757 
Repayments on mortgages payable   (53,133)   - 
Net cash provided by (used in) financing activities   (43,033)   102,757 
           
NET CHANGE IN CASH AND CASH EQUIVALENTS   (3,587)   (80,583)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD   92,068    203,738 
CASH AND CASH EQUIVALENTS AT END OF PERIOD  $88,481   $123,155 
           
SUPPLEMENTAL INFORMATION:          
Interest paid  $221,495   $189,293 
Income taxes paid  $-   $63,707 
           
Non-cash investing and financing transactions:          
Acquisitions of assets financed through debt  $-   $2,720,078 

 

See accompanying notes to financial statements.

 

6

 

 

HUBILU VENTURE CORPORATION

Notes to the Consolidated Financial Statements

March 31, 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 March 31, 2023, the Company had not yet achieved profitable operations, had an accumulated deficit of $1,744,522 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, 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.

 

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.

 

7

 

 

NOTE 4 - PROPERTY ACQUISITIONS - Related Party

 

As of March 31, 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 $820,000 issued by the Property Owner, Boabab Investments, LLC, owing to lender, Belladonna Lily Investments, Inc., whose terms of payments due are interest only, on unpaid principal at the rate of 6% per annum. Interest only is payable in monthly installments of $4,100 or more starting on February 1, 2023 and continuing until the 31st day of December 2029, at which time the entire principal balance together with interest due thereon, shall become due and payable.

 

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.

 

NOTE 5 - INVESTMENTS IN REAL ESTATE- Related party

 

The change in the real estate property investments for the three months ended March 31, 2023 and the year ended December 31, 2022 is as follows:

 

   Three months ended
March 31, 2023		   Year ended
December 31, 2023		 
         
Balance, beginning of the period  $17,555,462   $14,255,927 
Acquisitions:   -    2,739,632 
Real estate investment property, at cost   17,555,462    16,995,559 
Capital improvements   106,984    559,903 
Balance, end of the period  $17,662,446   $17,555,462 

 

The change in the accumulated depreciation for the nine months ended March 31, 2023 and 2022 is as follows:

 

   March 31, 2023   March 31, 2022  
Balance, beginning of the period  $564,647   $ 356,036  
Depreciation charge for the period   56,022     49,227  
Balance, end of the period  $620,669   $ 405,263  

 

8

 

 

The Company’s real estate investments as of March 31, 2023 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  $508,571   $383,716   $56,313   $105,406   $643,585   $15,004    - 
2909 South Catalina   565,839    344,856    17,381    91,237    523,590    14,400    - 
3910 Wisconsin Ave   337,500    150,000    88,833    37,297    688,514    16,000    28,444 
3910 Walton Ave   318,098    191,902    104,411    37,494    536,798    11,000    - 
1557 West 29th   496,609    146,891    24,286    26,124    602,388    4,900    14,251 
1267 West 38th Street    420,210    180,090    21,611    31,270    603,624    11,000    15,701 
1618 West 38th   508,298    127,074    14,732    15,900    632,851    12,000    - 
4016 Dalton Avenue   424,005    106,001    53,540    18,922    607,515    4,530    27,678 
1981 West Estrella Avenue   651,659    162,915    72,501    26,165    895,510    -    21,981 
2115 Portland Street   753,840    188,460    5,063    21,510    909,315    8,125    - 
717 West 42nd Place    376,800    94,200    -    21,102    471,035    1,350    - 
3906 Denker Street   428,000    107,000    60,210    16,046    584,710    8,500    - 
3408 S Budlong Street   499,200    124,800    55,298    15,078    726,902    9,840    - 
3912 S. Hill Street   483,750    161,250    144,475    26,027    653,256    -    - 
4009 Brighton Avenue   442,700    158,300    173,503    15,292    717,152    2,500    13,040 
3908 Denker Avenue   534,400    158,300    99,289    13,062    628,069    4,500    20,243 
4021 Halldale Avenue   487,500    162,500    45,188    10,382    761,554    18,000    37,234 
1284 W. 38th Street    551,250    183,750    -    11,179    833,868    12,000    16,623 
4505 Orchard Avenue   506,250    145,776    179,118    16,397    645,649    18,000    27,037 
3777 Ruthelen Street   559,200    139,800    26,057    10,030    708,135    13,900    11,019 
3791 Normandie Avenue   480,000    160,000    7,000    11,846    763,448    12,000    27,394 
2029 W. 41st Place    540,000    180,000    135,605    22,904    820,000    19,000    15,742 
4517 Orchard Avenue   453,750    151,250    100,401    13,570    635,023    10,000    8,853 
1733 W. 37th Street    472,875    157,625    12,167    6,429    667,450    12,000    13,464 
   $  11,800,304   $  4,066,456   $1,496,982   $620,669   $16,259,941   $  238,549   $  298,704 

 

9

 

 

NOTE 6 – ADVANCED RENTS RECEIVED

 

The Company received $82,150 of rents in advance as of March 31, 2023. There was no rental income received in advance as of December 31, 2022.

 

NOTE 7 - PROPERTY INDEBTEDNESS

 

The Company’s mortgages are summarized as follows:

  

   Principal balance        
   March 31, 2023   December 31, 2022   Interest rate   Maturity date
3711 South Western Ave  $643,585   $643,585    5.00%  December 1, 2029
2909 South Catalina Street   433,997    436,939    3.10%  August 12, 2046
-Second Note   89,593    -    6.00%  June 20, 2029
3910 Walton Ave.   536,798    539,547    5.00%  August 01, 2049
3910 Wisconsin Street   688,515    691,349    5.225%  March 1, 2052
1557 West 29 Street   602,388    605,129    4.975%  June 1, 2051
1267 West 38 Street   603,624    606,053    4.95%  June 1, 2051
4016 Dalton Avenue   607,515    609,959    4.975%  June 1, 2051
1618 West 38 Street                  
- First Note   482,851    484,883    6.30%  January 1, 2050
- Second Note   150,000    150,000    6.00%  December 10, 2023
1981 Estrella Ave   895,510    899,278    5.225%  June 1, 2051
717 West 42 Place                  
- First Note   336,067    336,267    6.85%  October 31, 2025
- Second Note   134,968    134,968    6.85%  April 30, 2029
2115 Portland Street                  
- First Note   589,539    591,836    6.00%  June 1, 2049
-Second Note   319,776    319,776    5.00%  April 30, 2024
3906 Denker                  
-First Note   399,709    401,181    6.00%  March 1, 2050
-Second Note   185,000    185,000    6.85%  February 14, 2025
3408 Budlong                  
-First Note   606,902    609,626    4.875%  December 1, 2051
-Second Note   120,000    120,000    5.00%  November 1, 2029
3912 S. Hill Street                  
-First Note   501,255    503,094    6.425%  December 1, 2050
- Second Note   152,000    152,000    6.425%  November 1, 2026
4009 Brighton Avenue   717,152    720,010    4.875%  November 1, 2051
3908 Denker Avenue   628,069    630,515    4.975%  December 1, 2051
4021 Halldale Avenue   

761,555

    

766,071 

    

6.75 

% 

October 1, 2052 

1284 W. 38th Street                  
-First Note   645,868    648,605    4.625%  March 1, 2052
-Second Note   188,000    188,000    5.25%  June 20, 2029
4505 Orchard Avenue   645,649    648,282    5.00%  October 1, 2029
3777 Ruthelen Street   708,135    711,326    4.625%  March 1, 2052
3791 S. Normandie Avenue                  
- First Note   613,448    615,682    5.225%  April 1, 2052
-Second Note   150,000    150,000    5.00%  January 4, 2029
2029 W. 41st Place   820,000    809,900    6.00%  December 31, 2029
4517 Orchard Avenue                  
-First Note   477,023    479,070    5.225%  April 1, 2052
-Second Note   158,000    158,000    5.00%  March 1, 2029
1733 W. 37th Place                  
-First Note   567,450    567,450    7.5%  June 22, 2023
-Second Note   100,000    100,000    6.00%  May 1, 2029
                   
Hubilu General Loan   275,000    275,000    6.00%  On Demand
                   
   $16,534,941   $16,488,381         
Less: current maturities   702,417    1,640,175         
Mortgages payable  $15,832,524   $14,848,206         

  

10

 

 

NOTE 8 – PROMISSORY NOTES PAYABLE-Related Party

 

Esteban Coaloa, who was owed $89,593 as part of the purchase of 2909 S. Catalina Street, Los Angeles, CA, passed away in 2017. Effectively, Mr. Coaloa is no longer an officer of the Company, therefore the loan is now payable to his family trust and is no longer a related party transaction. The promissory notes, related parties balance as of December 31, 2022 was $89,593, which was reclassified and added to the mortgages payable amount during the first quarter of 2023. As of March 31, 2023, there were no other promissory notes held by related parties.

 

NOTE 9 –RELATED PARTY TRANSACTIONS

 

As of March 31, 2023, Jacaranda Investments, Inc., has provided advances totaling $474,271 (December 31, 2022: $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 $12,933 and which was credited to additional paid-in capital for the three months ended March 31, 2023. See additional related party transactions in Note 4 and 5.

 

NOTE 10 – SERIES 1 CONVERTIBLE PREFERRED SHARES

 

On September 8, 2016, the Company authorized and designated 2,000,000 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.

 

11

 

 

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, 2022   520,400   $520,400   $153,514   $673,914 
Dividends accrued   -    -    6,398    6,398 
Balance, March 31, 2023   520,400   $520,400   $159,912   $680,312 

 

NOTE 11 – CONTINGENCY/LEGAL

 

As of March 31, 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 March 31, 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.

 

12

 

 

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.

 

13

 

 

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 months ended March 31, 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 March 31, 2023 and 2022, respectively, together with notes thereto, which are included in this Quarterly Report on Form 10-Q.

 

Three months ended March 31, 2023, compared to the three months ended March 31, 2022

 

Revenues. Our revenues increased $18,901 to $408,838 for the three months ended March 31, 2023, compared to $389,937 for the comparable period in 2022. The increase is due to additional property acquisitions.

 

Operating expenses. In total, operating expenses decreased $70,010 to $177,363 for the three months ended March 31, 2023, compared to $247,373 for the comparable period in 2022.

 

General and administrative expenses decreased $76,805 to $121,341 for the three months ended March 31, 2023, compared to $198,146 for the comparable period in 2022.

 

Depreciation expense increased $6,795 to $56,022 for the three months ended March 31, 2023, compared to $49,277 for the comparable period in 2022.

 

Property tax expense decreased $19,686 to $41,546 for the three months ended March 31, 2023, compared to $61,232 for the comparable period in 2022. The decrease is due to the timing of payments.

 

Salaries and benefits expense decreased $20,975 to $15,900 for the three months ended March 31, 2023, compared to $36,875 for the comparable period in 2022.

 

Utilities expense increased $2,974 to $17,400 for the three months ended March 31, 2023, compared to $14,426 for the comparable period in 2022. The increase is due to the acquisition of additional properties in this period.

 

14

 

 

Professional fees expense increased $18,550 to $18,800 for the three months ended March 31, 2023, compared to $250 for the comparable period in 2022.

 

Interest expense increased $15,012 to $235,202 for the three months ended March 31, 2023, compared to $220,190, for the comparable period in 2022. The increase is due to the acquisition of more properties.

 

Net Loss. Our net loss decreased $44,099 to $3,727 of net loss for the three months ended March 31, 2023, compared to $47,826 of net loss for the comparable period in 2022. The decrease is attributable to the revenue and expenses discussed above.

 

Liquidity and Capital Resources. For the three months ended March 31, 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 $17,137,041 as of March 31, 2023, consisting of $11,800,304 in real estate, building and capital improvements of $5,563,438, $298,704 in property acquisition and financing, net of $620,669 in depreciation, $88,481in cash and $6,783 in security deposits.

 

Our total liabilities are $18,020,412 as of March 31, 2023.

 

Our total stockholders’ deficit is $883,371 as of March 31, 2023.

 

Our net cash provided by operations was $146,430 for the three months ended March 31, 2023.

 

Our investing activities used a total of $106,984 for the three months ended March 31, 2023.

 

We had $43,033 in cash used in financing activities for the three months ended March 31, 2023.

 

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 March 31, 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.

 

15

 

 

Impact of Inflation

 

The Company believes that inflation has had a negligible effect on operations over the past quarter.

 

Capital Expenditures

 

The Company expended $106,984 in capital and building improvements during the three months ended March 31, 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 three-month period ended March 31, 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.

 

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.

 

16

 

 

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:

 

Exhibit    
Number   Description
     
31.1   Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*.
     
31.2   Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*.
     
32.1   Certification of the Chief Executive Officer pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*.
     
32.2   Certification of the Chief Financial Officer pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*.
     
101.INS   Inline XBRL Instance Document
     
101.SCH   Inline XBRL Taxonomy Extension Schema Document
     
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document
     
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

* Filed herewith.

 

17

 

 

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
   
June 8, 2023 /s/ David Behrend
  David Behrend
  Chairman and Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Accounting and Financial Officer)

 

18

 

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