UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[X] quarterly REPORT under SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: March 31, 2020

 

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 [X] 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 [X] 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 [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

Yes [  ] No [X]

 

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 October 20, 2020 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 Statement of Stockholders’ Deficit 5
Consolidated Statement 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 13
Item 3. Quantitative and Qualitative Disclosures about Market Risk 15
Item 4. Controls and Procedures 15
PART II — OTHER INFORMATION 15
Item 1. Legal Proceedings 15
Item 1A. Risk Factors 15
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Mine Safety Disclosures 15
Item 5. Other Information 15
Item 6. Exhibits 16
SIGNATURES 17

 

2

 

 

Part I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

HUBILU VENTURE CORPORATION

Consolidated Balance Sheets

 

   March 31, 2020   December 31, 2019 
   (unaudited)     
ASSETS          
Real Estate, at cost          
Land  $5,789,429   $5,361,429 
Building and capital improvements   2,363,293    2,163,626 
    8,152,722    7,525,055 
Accumulated Depreciation   (161,206)   (138,356)
    7,991,516    7,386,699 
Cash   47,644    145,593 
Funds held in escrow   -    3,205 
Deposits   6,600    6,600 
Prepaid expenses   -    8,746 
           
TOTAL ASSETS  $8,045,760   $7,550,843 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
LIABILITIES          
Property indebtedness, related party  $7,568,274   $7,000,810 
Accounts payable   376    3,973 
Security deposits   99,539    60,285 
Promissory notes payable- related party   182,055    182,055 
Preferred shares   573,822    567,567 
Due to related party   492,500    492,500 
           
TOTAL LIABILITIES   8,916,566    8,307,190 
           
STOCKHOLDERS’ DEFICIT          
Common Stock Authorized 100,000,000 common shares, $0.001 par, 26,237,125 issued and outstanding on March 31, 2020 (December 31, 2019: 26,237,125)   26,238    26,238 
Additional paid-in capital, common stock   716,606    707,987 
Accumulated Deficit   (1,613,650)   (1,490,572)
TOTAL STOCKHOLDERS’ DEFICIT   (870,806)   (756,347)
TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT  $8,045,760    7,550,843 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

3

 

 

HUBILU VENTURE CORPORATION

Consolidated Statements of Operations

(unaudited)

 

   Three months
ended
March 31, 2020
   Three months
ended
March 31, 2019
 
         
Rental Income  $156,130   $82,750 
           
Expenses          
           
General & administrative   116,737    18,723 
Consulting   -    196,600 
Depreciation   22,849    10,514 
Professional fees   -    6,075 
Property taxes   14,492    4,823 
Rent expense   7,350    6,900 
Repairs and maintenance   8,486    2,027 
Transfer agent and filing fees   -    200 
Utilities   10,466    4,449 
Total Operating Expenses   180,380    250,311 
           
Loss before other income (expense)   (24,250)   (167,561)
           
OTHER INCOME (EXPENSE)          
Consulting income   10,400    - 
Dividends accrued for preferred shares   (6,255)   (6,255)
Promissory Note interest   (49,091)   (3,965)
Mortgage interest   (53,882)   (39,287)
Total Other Income (Expense)   (98,828)   (49,507)
Net loss for the period  $(123,078)  $(217,068)
Basic and diluted loss per share  $(0.00)  $(0.01)
Weighted average shares outstanding   26,237,125    25,875,788 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

4

 

 

HUBILU VENTURE CORPORATION

Consolidated Statement of Stockholders’ Deficit

(unaudited)

 

   Common Stock   Additional Paid-In   Accumulated   Stockholders’ 
   Shares   Amount   Capital   Deficit   Deficit 
Balance, December 31, 2018   25,730,500   $25,731   $298,719   $(913,315)  $(588,865)
Shares issued for services rendered   506,625    507    374,793    -    375,300 
Imputed Interest             34,475         34,475 
Net loss   -    -    -    (577,257)   (577,257)
Balance, December 31, 2019   26,237,125   $26,238   $707,987   $(1,490,572)  $(756,347)
Imputed Interest   -    -    8,619    -    8,619 
Net loss   -    -    -    (123,078)   (123,078)
Balance, March 31, 2020   26,237,125   $26,238   $716,606   $(1,613,650)  $(870,806)

 

The accompanying notes are an integral part of these consolidated financial statements.

 

5

 

 

HUBILU VENTURE CORPORATION

Consolidated Statements of Cash Flows

(unaudited)

 

   For the three
months ended
March 31, 2020
   For the three
months ended
March 31, 2019
 
OPERATING ACTIVITIES          
Net loss  $(123,078)  $(217,068)
Adjustments to reconcile net loss to net cash (used for) operations:          
Depreciation and amortization   22,849    10,514 
Cumulative preferred stock dividends payable   6,255    6,255 
Imputed interest   8,619    - 
Stock-based compensation   -    177,300 
Changes in operating assets and liabilities:          
Prepaid expenses   8,746    - 
Accounts Payable   (3,597)   222 
Security deposits   39,254    10,235 
Net cash used in operating activities   (40,952)   (12,542)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Building improvements   (92,667)   (49,588)
           
CASH USED IN INVESTING ACTIVITIES   (92,667)   (49,588)
           
NET CASH FLOWS FROM FINANCING ACTIVITIES          
           
Advance from related party   -    11,145 
Property indebtedness, net   32,465   56,831 
Net cash provided by financing activities   32,465   67,976 
           
NET (DECREASE) INCREASE IN CASH   (101,154)   5,846 
Cash, beginning of the period   148,798    2,310 
           
Cash, end of the period  $47,644   $8,156 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION          
Interest paid  $102,973   $- 
Income taxes paid   -    - 
SUPPLEMENTAL DISCLON CASH TRANSACTIONS          
Acquisitions of assets financed through debt  $535,000   $- 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

6

 

 

HUBILU VENTURE CORPORATION

Notes to the Consolidated Financial Statements

March 31, 2020

(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, and Boabab 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, 2020, the Company had not yet achieved profitable operations, had an accumulated deficit of $1,613,650 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 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 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, 2019.

 

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.

 

New Accounting Pronouncements

 

In February 2016, the Financial Accounting Standards Board, or FASB, established Topic 842, Leases, by issuing Accounting Standards Update (“ASU”) No. 2016-02, which requires lessors to classify leases as a sales-type, direct financing, or operating lease and requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The Company adopted the new standard effective January 1, 2019 and elected the effective date method for the transition. The Company elected the following practical expedients:

 

  Transition method practical expedient – permits the Company to use the effective date as the date of initial application. Upon adoption, the Company did not have a cumulative-effect adjustment to the opening balance of retained earnings. Financial information and disclosures for periods before January 1, 2019 were not updated.
  Short-term lease practical expedient – permits the Company not to recognize leases with a term equal to or less than 12 months.

 

Lessor Accounting

 

The accounting for lessors under the new standard remained relatively unchanged with a few targeted updates impacting the Company, which included: (i) narrower definition of initial direct costs that requires certain costs to be expensed rather than capitalized, and (ii) provisions for uncollectible rents to be recorded as a reduction in revenue rather than as bad debt expense.

 

Lessee Accounting

 

The new standard requires lessees to recognize a right-of-use asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating at inception, with classification affecting the pattern and recording of expenses in the statement of operations. There was no impact on the Company’s financial statements on the adoption of Topic 842 given that its office lease does not exceed 12 months in duration.

 

8
 

 

NOTE 4- PROPERTY ACQUISITIONS - Related Party

 

On February 22, 2020 we completed our acquisition, through our subsidiary Trilosa Investments, LLC,, the real property located at 3906 Denker Avenue in Los Angeles (“Denker”). The property was vacant at time of purchase. The acquisition was for $535,000 (“Purchase Price”). Terms of the acquisition as follows:

 

(1) A first position note with payment on principal balance of $416,000 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 6% per annum. Principal and interest payable in monthly installments of $2,494.13 or more starting on April 1, 2020 and continuing until the 1st day of March 2050, at which time the entire principal balance together with interest due thereon, shall become due and payable.

 

The initial fixed interest rate will change to an adjustable interest rate on the 1st day of March 2025, and the adjustable interest rate may change on that day every 12th month thereafter. The date on which the initial fixed interest rate changes to an adjustable interest rate, and each date on which my adjustable interest rate could change. (2) A $140,000 second position note owing by Trilosa, 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 $700.00 or more on the 15th day of each month beginning on the 15th day of March 2020 and continuing until the 14th day of February 2025, at which time the entire principal balance together with interest due thereon, shall become due and payable.

 

NOTE 5- INVESTMENTS IN REAL ESTATE- Related party

 

The change in the real estate property investments for the three months ended March 31, 2020 and the year ended December 31, 2019 is as follows:

 

   Three months
ended
March 31, 2020
  Year
ended
December 31, 2019
       
Balance, beginning of the period  $7,525,055   $3,463,528 
Acquisitions:   535,000    3,993,553 
    8,060,055    7,457,081 
Capital improvements   92,667    67,974 
Balance, end of the period  $8,152,722   $7,525,055 

 

The change in the accumulated depreciation for the three months ended March 31, 2020 and 2019 is as follows:

 

   March 31, 2020   March 31, 2019 
Balance, beginning of the period  $138,357   $88,867 
Depreciation charge for the period   22,849    10,514 
Balance, end of the period  $161,206   $99,381 

 

The Company’s real estate investments as of March 31, 2020 is summarized as follows:

 

   Initial Cost to the Company   Capital   Accumulated       Security 
   Land   Building   Improvements   Depreciation   Encumbrances   Deposits 
3711 South Western Ave  $508,571   $383,716   $-   $61,345   $664,367   $12,404 
2909 South Catalina   565,839    344,856    -    53,923    561,828    14,200 
3910 Wisconsin Ave   337,500    150,000    31,486    11,395    487,571    12,650 
3910 Walton Ave   318,098    191,902    -    13,564    693,055     11,000 
1557 West 29th   496,609    146,891    -    7,775    643,500    9,175 
1267 West 38th Street   420,210    180,090    3,490    5,099    600,000    8,105 
1618 West 38th   508,298    127,074    14,732    1,401    653,050    6,230 
4016 Dalton Avenue   424,005    106,001    20,547    1,306    569,336    4,630 
1981 West Estrella Avenue   651,659    162,915    20,255    1,819    875,000    7,100 
2115 Portland Street   753,840    188,460    -    1,713    934,756    12,695 
717 West 42nd Place   376,800    94,200    2,157    892    472,135    1,350 
3906 Denker Street   428,000    107,000    -    973    568,000    - 
   $5,789,429   $2,183,105   $92,667   $161,206   $

7,410,950

   $99,539 

 

9
 

 

NOTE 6- PROPERTY INDEBTEDNESS - RELATED PARTY

 

The Company’s mortgages are summarized as follows:

 

       Stated interest    
   Principal balance   rate as at    
   March 31, 2020   December 31, 2019   March 31, 2020   Maturity date
3711 South Western Avenue  $571,904   $574,600    3.95%   August 1, 2021
2909 South Catalina Street   472,235    474,924    3.50%   July 25, 2021
3910 Walton Ave.              %   
 -First Note   565,145    567,243    6.00%  April 30, 2020
 -Second Note   125,811    309,734     6.00% 

July 25, 2021

3910 Wisconsin Street                  
- First Note   246,400    247,571    4.375%   October 1, 2036
- Second Note   155,000    150,000    9.00%   September 27, 2020
- Third Note   90,000    235,425    9.00%   April 30, 2022
1557 West 29th Street                   
- First Note   443,500    443,500    6.85%   November 1, 2025
-Second Note   200,000    200,000    6.85%   October 30, 2022
-Unsecured Note   

51,000

    

30,000

    -   -
1267 West 38th Street                   
-First Note   415,000    415,000    5.50%   March 19,2023
- Second Note   185,000    185,000    6.00%   March 19, 2023
4016 Dalton Avenue                  
-First Note   419,336    420,000    7.2%   January 1, 2025
-Second Note   150,000    -    6.00%   December 10, 2023
1618 West 38th Street                   
 -First Note   503,050    504,000    6.3%   January 1, 2050
 -Second Note   150,000    -    6.00%   December 10, 2023
1981 Estrella Avenue                  
-First Note   610,000    600,000    5.00%   November 30, 2023
-Second Note   240,000    265,000    5.00%  November 30, 2023
717 West 42nd Place                   
-First Note   337,167    337,167    6.85%   October 31, 2025
-Second Note   134,968    134,968    6.85%   April 30, 2022
2115 Portland Avenue                  
-First Note   614,980    616,899    6.00%  May 31, 2024
-Second Note   319,778    319,778    5.00%   April 30, 2024
3906 Denker                  
-First Note   416,000    -    6.00%   March 1, 2050
-Second Note   152,000    -    6.00%   February 14, 2025
   $7,568,274   $

7,000,810

         

  

10
 

 

NOTE 7 – PROMISSORY NOTES PAYABLE -RELATED PARTY

 

March 31, 2020   December 31, 2019 
        
$182,055   $182,055 

 

As of March 31, 2020, the Company has two promissory notes payable to Esteban Coaloa, outstanding, the total amount owing of $182,055. The first is payable through its wholly owned subsidiary, Akebia Investments, LLC, in the amount of $92,463, bearing an interest rate of 3.95%, maturing on August 1, 2021, and the second is payable through its wholly owned subsidiary, Zinnia Investments, LLC, bearing an interest rate of 3.50%, maturing on July 25, 2021. The total balance is due on the maturity date of each note. Under the terms of the acquisition of the Akebia property at 3711 South Western Avenue, the Company’s consideration for the acquisition included a promissory note (“Akebia Note”).

 

NOTE 8–RELATED PARTY TRANSACTIONS

 

As of March 31, 2020, the Company’s majority shareholder, has provided advances totaling $492,500 (December 31, 2019: $492,500). 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 $8,619 which was credited to additional paid-in capital for the three months ended March 31, 2020. See additional related party transactions in note 6 and note 7.

 

NOTE 9 – 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, if and when declared by the Board of Directors, 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.

 

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, 2018   500,400   $500,400   $42,147   $542,547 
Dividends accrued   -    -    25,020    25,020 
                     
Balance, December 31, 2019   500,400    500,400    67,167    567,567 
Dividends accrued             6,255    6,255 
Balance, March 31, 2020   500,400   $500,400   $73,422   $573,822 

 

NOTE 10 – SUBSEQUENT EVENTS

 

On July 14, 2020, the Company acquired, through its wholly owned subsidiary Trilosa Investments, LLC, its real property asset located at 3408 S. Budlong Street, Los Angeles.

 

On September 11, 2020 Kapok Investments, LLC, of which the company is 100% member, entered into an agreement to acquire its real property asset located at 3912 Hill Street, Los Angeles. Purchase to close in Q4, 2020.

 

Effective May 26, 2020, Maurice Simone, Vice President and Secretary, has resigned from his position at the company.

 

11
 

 

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-months ended March 31, 2020 and 2019, 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 months ended March 31, 2020 and 2019, respectively, together with notes thereto, which are included in this Quarterly Report on Form 10-Q.

 

Three months ended March 31, 2020 compared to the three months ended March 31, 2019

 

Revenues. Our revenues increased $73,380 to $156,130 for the three months ended March 31, 2020 compared to $82,750 for the comparable period in 2019. The increase is due to the acquisition of 6 new properties.

 

Operating expenses. In total, operating expenses decreased $69,931to $180,380 for the three months ended March 31, 2020 compared to $250,311 for the comparable period in 2019. The decrease is primarily due to the Company paying less in salaries and wages.

 

General and administrative expenses increased $98,014 to $116,737 for the three months ended March 31, 2020 compared to $18,723 for the comparable period in 2019.

 

Consulting expenses decreased $196,600 to $0 for the three months ended March 31, 2020 compared to $196,600 for the comparable period in 2019. The decrease is due to adding salaries and wages and less consulting.

 

Depreciation expense increased $12,335 to $22,849 for the three months ended March 31, 2020 compared to $10,514 for the comparable period in 2019. The increase is due to acquiring more properties.

 

Professional fees decreased $6,075 to $0 for the three months ended March 31, 2020 compared to $6,075 for the comparable period in 2019. The decrease is attributable to the timing of the invoices received by the Company’s professional service providers.

 

Property tax expense increased $9,669 to $14,492 for the three months ended March 31, 2020 compared to $4,823 for the comparable period in 2019. The increase is due to additional property acquisitions.

 

Repairs and maintenance expense increased $6,459 to $8,486 for the three months ended March 31, 2020 compared to $2,027 for the comparable period in 2019. The increase is due to 6 acquisitions last quarter.

 

Transfer Agent and Filing Fees decreased $200 to $0 for the three months ended March 31, 2020 compared to $200 for the comparable period in 2019. The decrease is due to less filings this quarter.

 

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Promissory Note Interest expense increased $45,126 to $49,091 for the three months ended March 30, 2020 compared to $3,965 for the comparable period in 2020.

 

Mortgage Interest increased $14,595 to $53,882 for the three months ended March 31, 2020 compared to $39,287 for the comparable period in 2019. The increase is due to the acquisition of 6 new properties.

 

Net loss. Our net loss decreased $93,990 to $123,078 for the three months ended March 31, 2020 compared to $217,068 for the comparable period in 2019. The decrease is attributable to the revenue and expenses discussed above.

 

Liquidity and Capital Resources. For the three months ended March 31, 2020, 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 $8,045,760 as of March 31, 2020, consisting of $7,991,516 in net property assets, $47,644 in cash, $6,600 in deposits and $0 in prepaid expenses.

 

Our total liabilities are $8,916,566 as of March 31, 2020.

 

We used $40,952 in operating activities for the three months ended March 31, 2020 including $123,078 in net loss which was offset by non-cash charges of $22,849 for depreciation and amortization, $6,255 in dividends accrued in preferred shares, a net increase of $3,597 in accounts payable and $39,254 received for security deposits.

 

We used $92,667 in investing activities for the three months ended March 31, 2020, which was used for building additions and improvements.

 

We had $32,465 provided by financing activities for the three months ended March 31, 2020.

 

The Company had no formal long-term lines or credit or other bank financing arrangements as of March 31, 2020.

 

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 $92,667 on building improvements during the three months ended March 31, 2020.

 

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 not 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, 2020, 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:

 

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*.
     
*   Filed herewith.

 

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SignatureS

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  HUBILU VENTURE CORPORATION
   
November 12, 2020 /s/ David Behrend
  David Behrend
  Chairman and Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Accounting and Financial Officer)

 

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Exhibit 31.1

 

CERTIFICATION PURSUANT TO SECTION 302 (a) OF THE SARBANES-OXLEY ACT OF 2002

 

I, David Behrend, Chairman and Chief Executive Officer, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Hubilu Venture Corporation (the “registrant”);

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

 

3. Based on my knowledge, the financial statements and other financial information included in this quarterly report fairly presents in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within the entity, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal controls over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

 

Dated: November 12, 2020 /s/ David Behrend
  David Behrend
  Chief Executive Officer
  (Principal Executive Officer)

 

 

 

Exhibit 31.2

 

CERTIFICATION PURSUANT TO SECTION 302 (a) OF THE SARBANES-OXLEY ACT OF 2002

 

I, David Behrend, Chief Financial Officer of Hubilu Venture Corporation, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Hubilu Venture Corporation (the “registrant”);

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

 

3. Based on my knowledge, the financial statements and other financial information included in this quarterly report fairly presents in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within the entity, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal controls over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

 

Dated: November 12, 2020 /s/ David Behrend
  David Behrend
  Chief Financial Officer
  (Principal Financial Officer)

 

 

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report on Form 10-Q of Hubilu Venture Corporation (the “Company”) for the period ending March 31, 2020, as filed with the Securities and Exchange Commission on or about the date hereof (“Report”), I, David Behrend, the Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: November 12, 2020 /s/ David Behrend
  David Behrend
  Chief Executive Officer
  (Principal Executive Officer)

 

 

 

Exhibit 32.2

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ENACTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report on Form 10-Q of Hubilu Venture Corporation (the “Company”) for the period ending March 31, 2020 as filed with the Securities and Exchange Commission on or about the date hereof (“Report”), I, David Behrend, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: November 12, 2020 /s/ David Behrend
  David Behrend
  Chief Financial Officer
  (Principal Financial Officer)