HBUV Hubilu Venture Corporation (PK)

Notes to the Consolidated Financial Statements

June 30, 2021

(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, 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 September 30, 2021, the Company had not yet achieved profitable operations, had an accumulated deficit of $1,541,286 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, 2020.

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:

NOTE 4 - PROPERTY ACQUISITIONS - Related Party

On February 1, 2021 we completed our acquisition, through our subsidiary Trilosa Investments, LLC,, the real property located at 4009 Brighton Avenue in Los Angeles (“Brighton”). The property was vacant at time of purchase. The acquisition was for $601,000 (“Purchase Price”). Terms of the acquisition as follows:

(1) A first position note with payment on principal balance of $540,900 issued by the Property Owner, Trilosa, owing to lender, Center Street Lending VIII SPR, LLC, whose terms of payments due are principle and interest, on unpaid principal at the rate of 8.5% per annum. Principal and interest payable in monthly installments of $3,831.38 or more starting on March 1, 2021 and continuing until the January 1, 2022, at which time the entire principal balance together with interest due thereon, shall become due and payable.

(2) A $60,100 second position note owing by Trilosa, whose terms of payments due were interest only, payable on unpaid principal at the rate of 6.60% per annum. Interest only payable in monthly installments of $687.50 or more on the 18^th day of each month beginning on the 18^th day of January 2021 and continuing until the 17^th day of December 2026, at which time the entire principal balance together with interest due thereon, shall become due and payable.

On June 18, 2021, we completed our acquisition, through its subsidiary Zinnia Investments, LLC, the real property located at 3908 Denker Ave, Los Angeles (“Denker”). The property was vacant at the time of purchase. The acquisition was for $668,000 (“Purchase Price”). The terms of the acquisition as follows:

(1) A first position note with interest only for $655,000 owing by Zinnia to Belladonna, 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 $3,275 or more on the 1st day of each month beginning on the 1st day of July 2021 and continuing until the 1st day of June 2025, at which time the entire principal balance together with interest due thereon, shall become due and payable.

On July 22, 2021, we completed our acquisition, through its subsidiary Sunza Investments, LLC, the real property located 4021 Halldale Avenue in Los Angeles (“Halldale”). The property was vacant at the time of purchase. The acquisition was for $650,000 (“Purchase Price”). The terms of the acquisition as follows:

(1) A first position note with payment on principal balance of $585,000 issued by Sunza, owing to lender, Center Street Lending, VIII SPE, LLC, whose terms of payments due are interest only, payable on unpaid principal at the rate of 8.5% per annum. Principal and interest payable in monthly installments of $4,143.75 or more starting on September 1, 2021, and continuing until the 14th day of July 2022, at which time the entire principal balance together with interest due thereon, shall become due and payable. (2) A $145,312 second position note owing by Sunza to Belladonna Lily Investments, Inc. (“Belladonna”), whose terms of payments due were interest only, payable on unpaid principal at the rate of 3.00% per annum. Interest only payable in monthly installments of $363.28 or more on the 15^th day of each month beginning on the 15^th day of August 2021 and continuing until the 30th day of June 2029, at which time the entire principal balance together with interest due thereon, shall become due and payable.

On August 9, 2021, we completed our acquisition, through its subsidiary, Zinnia Investments, LLC, the real property located at 1284 W. 38^th Street in Los Angeles (“38th Street”). The property was vacant at the time of purchase. The acquisition was for $735,000 (“Purchase Price”). The terms of the acquisition as follows:

(1) A first position note with payment on principal balance of $661,500 issued by the Zinnia owing to lender, Center Street Lending, VII SPE, LLC, whose terms of payments due are interest only, payable on unpaid principal at the rate of 8.5% per annum. Principal and interest payable in monthly installments of $4,685.63 or more starting on October 1, 2021, and continuing until the 3^rd day of August 2022, at which time the entire principal balance together with interest due thereon, shall become due and payable. (2) A $110,000 second position note owing by Zinnia to Belladonna, whose terms of payments due were interest only, payable on unpaid principal at the rate of 5.25% per annum. Interest only payable in monthly installments of $481.25 or more on the 9th day of each month beginning on the 9th day of September 2021 and continuing until the 30th day of June 2029 at which time the entire principal balance together with interest due thereon, shall become due and payable.

September 30, 2021, we completed our acquisition, through its subsidiary Boabab Investments LLC, the real property located at 4505 Orchard Avenue in Los Angeles (“Orchard”). The property was vacant at the time of purchase. The acquisition was for $675,000 (“Purchase Price”). The terms of the acquisition as follows:

(1) A first position note with interest only for $675,000 owing by Boabab to Belladonna Lily Investments, Inc. (“Belladonna”), whose terms of payments due were interest only, payable on unpaid principal at the rate of 5.00% per annum. Interest only payable in monthly installments of $2,812.50 or more on the 22nd day of each month beginning on the 22nd day of October 2021 and continuing until the 1st day of October 2029, 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 nine months ended September 30, 2021 and the year ended December 31, 2020 is as follows:

The change in the accumulated depreciation for the nine months ended September 30, 2021 and 2020 is as follows:

The Company’s real estate investments as of September 30, 2021 is summarized as follows:

NOTE 6- PROPERTY INDEBTEDNESS

The Company’s mortgages are summarized as follows:

NOTE 7 – PROMISSORY NOTES PAYABLE-Related Party

SCHEDULE OF DEBT 

As of September 30, 2021, the Company has two promissory notes payable to Esteban Coaloa, outstanding, the total amount owing of $182,056. 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, 2029, and the second with a balance of $89,593 is payable through its wholly owned subsidiary, Zinnia Investments, LLC, bearing an interest rate of 3.50%, maturing on April 20, 2023. The total balance is due on the maturity date of each note.

General loans that are considered due are not property specific and are considered due on demand.

NOTE 8–RELATED PARTY TRANSACTIONS

As of September 30, 2021, the Company’s majority shareholder, has provided advances totaling $474,271 (December 31, 2020: $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 $24,831 which was credited to additional paid-in capital for the nine months ended September 30, 2021.

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 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.

NOTE 10 – CONTINGENCY/LEGAL

As of September 30, 2021, 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.