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
nine-months ended September 30, 2019 and 2018, 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 nine months ended September 30, 2019 and 2018, respectively, together with notes thereto, which are
included in this Quarterly Report on Form 10-Q.
Three
months ended September 30, 2019 compared to the three months ended September 30, 2018
Revenues.
Our revenues increased $60,110 to $120,293 for the three months ended September 30, 2019 compared to $60,183 for the comparable
period in 2018. The increase is due to the acquisition of 6 new properties.
Operating
expenses. In total, operating expenses increased $8,854 to $101,613 for the three months ended September 30,
2019 compared to $92,759 for the comparable period in 2018. The increase is primarily due to the Company commencing to pay salaries
and wages.
General
and administrative expenses decreased $7,746 to $4,201 for the three months ended September 30, 2019 compared to
$11,953 for the comparable period in 2018.
Consulting
expenses decreased $12,691 to $7,633 for the three months ended September 30, 2019 compared to $20,324 for the comparable period
in 2018.
Depreciation
expense decreased $10,592 to $13,906 for the three months ended September 30, 2019 compared to $24,498 for the comparable period
in 2018.
Professional
fees decreased $23,111 to $1,360 for the three months ended September 30, 2019 compared to $24,471 for the comparable period in
2018. The decrease is attributable to the timing of the invoices received by the Company’s professional service providers.
Property
tax expense increased $20,969 to $20,206 for the three months ended September 30, 2019 compared to ($763) for the comparable period
in 2018. The decrease is due to paying our taxes earlier in the first quarter.
Repairs
and maintenance expense increased $6,280 to $7,202 for the three months ended September 30, 2019 compared to $922 for the comparable
period in 2018. The increase is due to a new acquisition this quarter.
Transfer Agent and Filing Fees
increased $3,235 to $4,535 for the three months ended September 30, 2019 compared to $1,300 for the comparable period in 2018.
The
Company commenced paying wages and salaries during the three months ended September 30, 2019 and incurred $29,400 for the period
compared to not having paid salaries and wages for the comparable period.
Promissory
Note Interest expense increased $11,434 to $15,518 for the three months ended September 30, 2019 compared to $4,084 for
the comparable period in 2018.
Mortgage
Interest increased $21,327 to $39,115 for the three months ended September 30, 2019 compared to $17,778 for the comparable period
in 2018. The increase is due to the acquisition of 6 new properties.
Net
loss. Our net loss decreased $18,223 to $42,208 for the three months ended September 30, 2019 compared to $60,433
for the comparable period in 2018. The decrease is attributable to the revenue and expenses discussed above.
Nine
months ended September 30, 2019 compared to the nine months ended September 30, 2018
Revenues.
Our revenues increased to $311,792 for the nine months ended September 30, 2019 compared to $156,031 for the comparable
period in 2018. The increase is due to the acquisition of 6 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 decreased
$9,253 to $489,564 for the nine months ended September 30, 2019 compared to $498,817 for the comparable period in
2018. The decrease is due to less consulting services.
General
and administrative expenses increased $9,670 to $36,545 for the nine months ended September 30, 2019 compared to
$26,875 for the comparable period in 2018.
Consulting
expenses decreased $69,772 to $254,500 for the nine months ended September 30, 2019 compared to $324,272 for the comparable period
in 2018. The decrease is attributable to a lesser fair value attributable to common shares issued to consultants during the nine
months ended September 30, 2019 compared to the same period in the prior fiscal year.
Depreciation
expense decreased $23,167 to $36,951 for the nine months ended September 30, 2019 compared to $60,114 for the comparable
period in 2018.
Professional
fees decreased $22,676 to $17,653 for the nine months ended September 30, 2019 compared to $40,329 for the comparable period in
2018.
Property
tax expense increased to $30,313 for the nine months ended September 30, 2019 compared to $9,328 for the comparable period in
2018. The increase is due to paying our taxes earlier in the first quarter.
Rent
expense stayed near stable $21,450 for the nine months ended September 30, 2019 which is a slight increase from $20,699 for the
comparable period in 2018.
Repairs
and maintenance expense increased $6,683 to $11,864 for the nine months ended September 30, 2019 compared to $5,001 for the comparable
period in 2018. The increase is due to a new acquisition last quarter.
Transfer
Agent and Filing Fees increased $3,120 to $5,215 for the nine months ended September 30, 2019 compared to $2,095 for the comparable
period in 2018. The increase is due to more monthly fees paid.
Utilities
expense increased $3,369 to $13,473 for the nine months ended September 30, 2019 compared to $10,104 for the comparable period
in 2018. The increase is due to an additional property acquisition.
Promissory
Note Interest expense decreased $26,310 to $39,213 for the nine months ended September 30, 2019 compared to $12,903 for the comparable
period in 2018.
Mortgage
Interest increased $74,223 to $115,280 for the nine months ended September 30, 2019 compared to $41,057 for the comparable period
in 2018. The increase is due to the acquisition of 6 new properties.
Net
loss. Our net loss decreased $57,073 to $356,030 for the nine months ended September 30, 2019 compared to $413,105
for the comparable period in 2018. The decrease is attributable to the revenue and expenses discussed above.
Liquidity
and Capital Resources. For the nine months ended September 30, 2019, we borrowed $8,845 from our majority shareholder,
which was advanced to us interest free. 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 $4,109,488
as of September 30, 2019, consisting of $4,215,999 in net property assets, $11,206 in cash, $6,600 in deposits
and $1,500 in prepaid expenses.
Our total liabilities are $4,853,774
as of September 30, 2019.
We used $65,799 in operating
activities for the nine months ended September 30, 2019 including $356,030 in net loss which was offset by non-cash charges
of $36,951 for depreciation, $177,300 in stock-based compensation, $18,765 in dividends accrued in preferred
shares, a net increase of $2,591 in accounts payable and $31,315 received for security deposits.
We used $152,472 in investing
activities for the nine months ended September 30, 2019, which was used for building additions and improvements.
We had $227,167 provided
by financing activities for the nine months ended September 30, 2019 including additional mortgage funds of $246,868.
The
Company had no formal long-term lines or credit or other bank financing arrangements as of September 30, 2019.
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 $152,472 on building improvements during the nine months ended September 30, 2019.
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.