Item
2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations
The
following is management’s discussion and analysis of financial condition and results of operations and is provided as a
supplement to the accompanying unaudited financial statements and notes to help provide an understanding of our financial condition,
results of operations and cash flows during the periods included in the accompanying unaudited financial statements.
In
this Quarterly Report on Form 10-Q, “Company,” “the Company,” “us,” and “our”
refer to Hubilu Venture Corporation, a Delaware corporation, unless the context requires otherwise.
We intend the following discussion to assist
in the understanding of our financial position and our results of operations for the three and six months ended June 30, 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 and six months ended June 30, 2020 and 2019, respectively, together with notes thereto, which are included
in this Quarterly Report on Form 10-Q.
Three
months ended June 30, 2020 compared to the three months ended June 30, 2019
Revenues. Our revenues increased to
$216,171 for the three months ended June 30, 2020 compared to $108,749 for the comparable period in 2019. The increase
is due to the acquisition of 7 new properties.
Operating expenses. In total, operating
expenses decreased $36,243 to $101,397 for the three months ended June 30, 2020 compared to $137,640 for the comparable
period in 2019. The decrease is primarily due to the Company paying one less salary.
General and administrative expenses decreased
$1,118 to $12,503 for the three months ended June 30, 2020 compared to $13,621 for the comparable period
in 2019.
Consulting expenses decreased $50,267 to $0
for the three months ended June 30, 2020 compared to $50,267 for the comparable period in 2019.
Depreciation expense increased $10,291
to $22,822 for the three months ended June 30, 2020 compared to $12,531 for the comparable period in 2019. The increase
is due to acquiring more properties
Professional
fees decreased $10,218 to $0 for the three months ended June 30, 2020 compared to $10,218 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 $12,186 to $17,470 for the three months ended June 30, 2020 compared to $5,284 for the comparable
period in 2019. The increase is due to paying our taxes earlier in the first quarter.
Repairs
and maintenance expense increased $2,852 to $5,487 for the three months ended June 30, 2020 compared to $2,635 for the comparable
period in 2019. The increase is due to a new acquisition last quarter.
Promissory Note Interest expense increased
$2,707 to $22,437 for the three months ended June 30, 2020 compared to $19,730 for the comparable period in 2019.
Mortgage
Interest increased $46,943 to $83,821 for the three months ended June 30, 2020 compared to $36,878 for the comparable period in
2019. The increase is due to the acquisition of 7 new properties.
Net loss. Our net loss decreased $90,465
to $6,289 for the three months ended June 30, 2020 compared to $96,754 for the comparable period in 2019. The decrease
is attributable to the revenue and expenses discussed above.
Six
months ended June 30, 2020 compared to the six months ended June 30, 2019
Revenues.
Our revenues increased to $372,301 for the six months ended June 30, 2020 compared to $191,499 for the comparable period in 2019.
The increase is due to the acquisition of 7 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 $106,174 to $281,777
for the six months ended June 30, 2020 compared to $387,951 for the comparable period in 2019. The decrease is due to less
consulting services.
General and administrative expenses increased
$55,943 to $88,287 for the six months ended June 30, 2020 compared to $32,344 for the comparable period in 2019.
Consulting
expenses decreased $246,867 to $0 for the six months ended June 30, 2020 compared to $246,867 for the comparable period in 2019.
The decrease is attributable to a lesser fair value attributable to common shares issued to consultants during the six months
ended June 30, 2019 compared to the same period in the prior fiscal year.
Depreciation expense increased $22,626
to $45,671 for the six months ended June 30, 2020 compared to $23,045 for the comparable period in 2019.
Professional
fees decreased $15,669 to $624 for the six months ended June 30, 2020 compared to $16,293 for the comparable period in
2019.
Property
tax expense increased $21,855 to $31,962 for the six months ended June 30, 2020 compared to $10,107 for the comparable period
in 2019. The increase is due to paying our taxes earlier in the first quarter.
Rent
expense decreased $6,750 to $7,350 for the six months ended June 30, 2020 compared to $14,100 for the comparable period in 2019.
The decrease is due to downsizing our office space.
Repairs
and maintenance expense increased $9,311 to $13,973 for the six months ended June 30, 2020 compared to $4,662 for the comparable
period in 2019. The increase is due to a new acquisition last quarter.
Transfer
Agent and Filing Fees increased $421 to $1,101 for the six months ended June 30, 2020 compared to $680 for the comparable period
in 2019. The increase is due to additional monthly fees paid.
Utilities
expense increased $12,879 to $20,532 for the six months ended June 30, 2020 compared to $7,653 for the comparable period in 2019.
The increase is due to additional property acquisitions.
Promissory
Note Interest expense increased $37,173 to $60,868 for the six months ended June 30, 2020 compared to $23,695 for the comparable
period in 2019.
Mortgage Interest increased $63,579
to $139,744 for the six months ended June 30, 2020 compared to $76,165 for the comparable period in 2019. The increase
is due to the acquisition of 7 new properties.
Net
loss. Our net loss decreased $184,455 to $129,367 for the six months ended June 30, 2020 compared to $313,822
for the comparable period in 2019. The decrease is attributable to the revenue and expenses discussed above.
Liquidity
and Capital Resources. For the six months ended June 30, 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 $8,111,370 as
of June 30, 2020, consisting of $8,056,093 in net property assets, $48,677 in cash and $6,600 in deposits.
Our total liabilities are $8,979,847
as of June 30, 2020.
We used $24,308 in operating activities for
the six months ended June 30, 2020 including $129,367 in net loss which was offset by non-cash charges of $45,671
and depreciation, $12,442 in dividends accrued in preferred shares, a net increase of $4,845 in accounts payable,
imputed interest of $17,327 and $61,529 received for security deposits.
We used $180,065 in investing activities
for the six months ended June 30, 2020, which was used for building additions and improvements.
We had $58,841 provided by financing
activities for the six months ended June 30, 2020.
The
Company had no formal long-term lines or credit or other bank financing arrangements as of June 30, 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 $180,065 on building improvements during the six months ended June 30, 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.