Notes
to the Consolidated Financial Statements
March
31, 2022
(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 Mapone 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 June 30, 2022, the Company
had not yet achieved profitable operations, had an accumulated deficit of $1,706,377 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, 2021.
Reclassification
Certain
prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no material impact
on net earnings, financial position or cash flows.
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. |
NOTE
4 - PROPERTY ACQUISITIONS - Related Party
On
January 7, 2022 we completed our acquisition, through our subsidiary Boabab Investments, LLC, the real property located at 3791 S. Normandie
Avenue in Los Angeles (“Boabab”). The property was vacant at time of purchase. The acquisition was for $640,000 (“Purchase
Price”). Terms of the acquisition as follows:
(1)
A first position note with payment on principal balance of $576,000 issued by the Property Owner, Boabab, 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 $4,080.00 or more starting on February 1, 2022 and continuing until the December 29,
2022 at which time the entire principal balance together with interest due thereon, shall become due and payable.
(2)
A $75,000 second position note owing by Boabab, 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 $312.50 or more on the 5th day of each month beginning on the 5th
day of February 2022 and continuing until the 4th day of January 2029, at which time the entire principal balance together
with interest due thereon, shall become due and payable.
On
March 2, 2022, we refinanced 3791 S. Normandie Ave in Los Angeles to one note. Terms of the refinance are as follows: (1) A first position
note with payment on principal balance of $621,500.00 issued by the Property Owner, Boabab, owing to lender, Visio Financial Services,
Inc, whose terms of payments due are principle and interest, on unpaid principal at the rate of 5.225% per annum. Principal and interest
payable in monthly installments of $3,422.33 or more starting on May 1, 2022 and continuing until the 1st day of April 2052,
at which time the entire principal balance together with interest due thereon, shall become due and payable.
On
January 20, 2022 we completed our acquisition, through its subsidiary Boabab Investments, LLC, the real property located at 2029 W. 41st
Place in Los Angeles (“41st Place”). The property was vacant at the time of purchase. The acquisition was for $720,000
(“Purchase Price”). The terms of the acquisition as follows:
(1)
A first position note with payment on principal balance of $648,000 issued by the Property Owner, Boabab, 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 installment’s of $4,590.00 or more starting on March 1, 2022 and continuing until the January 6,
2023 at which time the entire principal balance together with interest due thereon, shall become due and payable.
(2)
A $84,950 second position note owing by Boabab, 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 $361.38 or more on the 18th day of each month beginning on the 18th
day of February 2022 and continuing until the 17th day of January 2029, at which time the entire principal balance together
with interest due thereon, shall become due and payable.
On
March 2, 2022, we completed our acquisition, through its subsidiary Trilosa Investments, LLC, the real property located at 4517 Orchard
Avenue in Los Angeles (“Orchard”). The property was vacant at the time of purchase. The acquisition was for $605,000 (“Purchase
Price”). The terms of the acquisition as follows:
(1)
A first position note with payment on principal balance of $484,000 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 5.225% per annum. Principal
and interest payable in monthly installments of $2,665.18 or more starting on May 1, 2022 and continuing until the 1st day
of April 2052, at which time the entire principal balance together with interest due thereon, shall become due and payable.
(2)
A $158,000 second position note owing by Trilosa, 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 $658.33 or more on the 2nd day of each month beginning on the
2nd day of April 2022 and continuing until the 1st day of March 2029, at which time the entire principal balance together with interest
due thereon, shall become due and payable.
On
March 25, 2022, we completed our acquisition, through its subsidiary Mapone Investments, LLC, the real property located at 1733 W. 37th
Street in Los Angeles (“37th Street”). The property was vacant at the time of purchase. The acquisition was for $630,500
(“Purchase Price”). The terms of the acquisition as follows:
(1)
A first position note with payment on principal balance of $567,450.00 issued by the Property Owner, Mapone, 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 7.5% per annum.
Principal and interest payable in monthly installments of $3,546.56.00 or more starting on May 1, 2022 and continuing until the March
22, 2023 at which time the entire principal balance together with interest due thereon, shall become due and payable.
(2)
A $100,000 second position note owing by Mapone, 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 $500.00 or more on the 1st day of each month beginning on the 1st
day of May 2022 and continuing until the 31st day of March 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 six months ended June 30, 2022 and the year ended December 31, 2021 is as follows:
SUMMARY
OF CHANGES IN REAL ESTATE PROPERTY INVESTMENTS
| | |
|
Six months
ended
June 30, 2022 | | |
|
Year
ended
December 31, 2021 | |
| | |
| | |
| |
| Balance,
beginning of the period | |
$ | 14,255,927 | | |
$ | 9,585,943 | |
| Acquisitions: | |
| 2,720,393 | | |
| 4,182,057 | |
| Real
estate investment property, at cost | |
| 16,976,320 | | |
| 13,768,000 | |
| Capital
improvements | |
| 332,460 | | |
| 487,927 | |
| Balance,
end of the period | |
$ | 17,308,780 | | |
$ | 14,255,927 | |
The
change in the accumulated depreciation for the six months ended June 30, 2022 and 2021 is as follows:
SUMMARY
OF CHANGES IN ACCUMULATED DEPRECIATION
| | |
|
June 30, 2022 | | |
|
June 30, 2021 | |
| Balance,
beginning of the period | |
$ | 356,036 | | |
$ | 238,383 | |
| Depreciation
charge for the period | |
| 99,514 | | |
| 50,839 | |
| Balance,
end of the period | |
$ | 455,550 | | |
$ | 289,222 | |
The
Company’s real estate investments as of June 30, 2022 is summarized as follows:
SCHEDULE OF REAL ESTATE INVESTMENT
| | |
Land | | |
Building | | |
- | | |
- | | |
- | | |
- | | |
- | |
| | |
Initial
Cost to the Company | | |
Capital | | |
Accumulated | | |
Encumbrances | | |
Security | | |
Closing | |
| | |
Land | | |
Building | | |
Improvements | | |
Depreciation | | |
Encumbrances | | |
Deposits | | |
Costs | |
| 3711
South Western Ave | |
$ | 508,571 | | |
$ | 383,716 | | |
$ | 30,244 | | |
$ | 93,900 | | |
$ | 656,585 | | |
$ | 17,914 | | |
| - | |
| 2909
South Catalina | |
| 565,839 | | |
| 344,856 | | |
| 16,181 | | |
| 81,043 | | |
| 442,879 | | |
| 14,400 | | |
| - | |
| 3910
Wisconsin Ave | |
| 337,500 | | |
| 150,000 | | |
| 88,833 | | |
| 27,627 | | |
| 696,709 | | |
| 1,900 | | |
| 28,444 | |
| 3910
Walton Ave | |
| 318,098 | | |
| 191,902 | | |
| 9,201 | | |
| 29,963 | | |
| 544,842 | | |
| 11,000 | | |
| - | |
| 1557 West 29th | |
| 496,609 | | |
| 146,891 | | |
| 21,971 | | |
| 22,094 | | |
| 700,010 | | |
| 12,565 | | |
| 14,251 | |
| 1267
West 38th Street | |
| 420,210 | | |
| 180,090 | | |
| 7,191 | | |
| 30,383 | | |
| 610,821 | | |
| 4,600 | | |
| 15,701 | |
| 1618 West 38th | |
| 508,298 | | |
| 127,074 | | |
| 14,732 | | |
| 11,386 | | |
| 638,848 | | |
| 8,340 | | |
| - | |
| 4016
Dalton Avenue | |
| 424,005 | | |
| 106,001 | | |
| 39,240 | | |
| 13,482 | | |
| 614,758 | | |
| 4,530 | | |
| 27,678 | |
| 1981
West Estrella Avenue | |
| 651,659 | | |
| 162,915 | | |
| 68,501 | | |
| 20,356 | | |
| 906,667 | | |
| 12,985 | | |
| 21,981 | |
| 2115
Portland Street | |
| 753,840 | | |
| 188,460 | | |
| 1,763 | | |
| 20,013 | | |
| 916,104 | | |
| 12,315 | | |
| - | |
| 717
West 42nd Place | |
| 376,800 | | |
| 94,200 | | |
| - | | |
| 9,691 | | |
| 471,835 | | |
| 1,350 | | |
| - | |
| 3906
Denker Street | |
| 428,000 | | |
| 107,000 | | |
| 60,210 | | |
| 7,732 | | |
| 589,061 | | |
| 13,250 | | |
| - | |
| 3408
S Budlong Street | |
| 499,200 | | |
| 124,800 | | |
| 54,488 | | |
| 10,723 | | |
| 734,977 | | |
| 9,840 | | |
| - | |
| 3912
S. Hill Street | |
| 483,750 | | |
| 161,250 | | |
| 133,150 | | |
| 18,338 | | |
| 658,888 | | |
| 15,300 | | |
| - | |
| 4009
Brighton Avenue | |
| 442,700 | | |
| 158,300 | | |
| 168,983 | | |
| 15,950 | | |
| 725,622 | | |
| 2,500 | | |
| 13,040 | |
| 3908
Denker Avenue | |
| 534,400 | | |
| 158,300 | | |
| 55,070 | | |
| 7,732 | | |
| 635,316 | | |
| 4,500 | | |
| 20,243 | |
| 4021
Halldale Avenue | |
| 487,500 | | |
| 162,500 | | |
| 45,188 | | |
| 6,680 | | |
| 585,000 | | |
| 18,000 | | |
| 17,995 | |
| 1284
W. 38th Street | |
| 551,250 | | |
| 183,750 | | |
| - | | |
| 5,851 | | |
| 842,082 | | |
| 12,000 | | |
| 16,623 | |
| 4505
Orchard Avenue | |
| 506,250 | | |
| 145,776 | | |
| 125,054 | | |
| 6,933 | | |
| 653,457 | | |
| 17,500 | | |
| 27,037 | |
| 3777
Ruthelen Street | |
| 559,200 | | |
| 139,800 | | |
| 12,652 | | |
| 3,557 | | |
| 717,208 | | |
| 13,900 | | |
| 11,019 | |
| 3791
Normandie Avenue | |
| 480,000 | | |
| 160,000 | | |
| - | | |
| 2,978 | | |
| 770,064 | | |
| 12,000 | | |
| 27,394 | |
| 2029
W. 41st Place | |
| 540,000 | | |
| 180,000 | | |
| 118,190 | | |
| 4,551 | | |
| 809,900 | | |
| 19,000 | | |
| 13,501 | |
| 4517
Orchard Avenue | |
| 453,750 | | |
| 151,250 | | |
| 93,953 | | |
| 2,623 | | |
| 640,882 | | |
| 10,000 | | |
| 8,853 | |
| 1733
W. 37th Street | |
| 472,876 | | |
| 157,625 | | |
| - | | |
| 1,964 | | |
| 667,450 | | |
| 12,000 | | |
| 13,464 | |
| | |
$ | 11,800,305 | | |
$ | 4,066,456 | | |
$ | 1,164,795 | | |
$ | 455,550 | | |
$ | 16,229,957 | | |
$ | 261,689 | | |
$ | 277,224 | |
NOTE
6- PROPERTY INDEBTEDNESS
The
Company’s mortgages are summarized as follows:
SCHEDULE
OF MORTGAGES PAYABLE
| | |
| | | |
| | | |
| Stated interest rate | | |
| Maturity
date | |
| | |
June
30, 2022 | | |
December
31,
2021 | | |
| | |
| |
| | |
Principal balance | | |
Stated interest rate as at | | |
Maturity date | |
| | |
| | | |
| | | |
| | | |
| | |
| 3711
South Western Ave | |
$ | 656,585 | | |
$ | 656,585 | | |
| 5.00 | % | |
| December 1, 2029 | |
| 2909
South Catalina Street | |
| | | |
| | | |
| | | |
| | |
| -
First Note | |
| 442,879 | | |
| 450,063 | | |
| 3.10 | % | |
| August
12, 2046 | |
| 3910
Walton Ave. | |
| 544,842 | | |
| 549,705 | | |
| 5.00 | % | |
| August
01, 2049 | |
| 3910
Wisconsin Street | |
| 696,709 | | |
| 518,250 | | |
| 5.225 | % | |
| March
1, 2052 | |
| 1557
West 29 Street | |
| | | |
| | | |
| | | |
| | |
| -First
Note | |
| 610,510 | | |
| 415,463 | | |
| 4.975 | % | |
| June
1, 2051 | |
| -Second
Note | |
| 89,500 | | |
| 200,000 | | |
| 5.40 | % | |
| January
1, 2029 | |
| 1267
West 38 Street | |
| 610,821 | | |
| 617,745 | | |
| 4.975 | % | |
| July
1, 2051 | |
| 1618
West 38 Street | |
| | | |
| | | |
| | | |
| | |
| -
First Note | |
| 488,848 | | |
| 492,454 | | |
| 6.30 | % | |
| January
1, 2050 | |
| -
Second Note | |
| 150,000 | | |
| 150,000 | | |
| 6.00 | % | |
| December
10, 2023 | |
| 4016
Dalton Avenue | |
| 614,758 | | |
| 775,478 | | |
| 4.975 | % | |
| June
1, 2051 | |
| 1981
Estrella Ave | |
| 906,667 | | |
| 913,569 | | |
| 5.225 | % | |
| June
1, 2051 | |
| 717
West 42 Place | |
| | | |
| | | |
| | | |
| | |
| -
First Note | |
| 336,867 | | |
| 337,167 | | |
| 6.85 | % | |
| October
31, 2025 | |
| -
Second Note | |
| 134,968 | | |
| 134,968 | | |
| 6.85 | % | |
| April
30, 2022 | |
| 2115
Portland Street | |
| | | |
| | | |
| | | |
| | |
| -
First Note | |
| 596,328 | | |
| 600,688 | | |
| 6.00 | % | |
| June
1, 2049 | |
| -Second
Note | |
| 319,776 | | |
| 319,776 | | |
| 5.00 | % | |
| April
30, 2024 | |
| 3906 Denker | |
| | | |
| | | |
| | | |
| | |
| -First
Note | |
| 404,061 | | |
| 406,854 | | |
| 6.00 | % | |
| March
1, 2025 | |
| -Second
Note | |
| 185,000 | | |
| 185,000 | | |
| 6.85 | % | |
| February
14, 2025 | |
| 3408 Budlong | |
| | | |
| | | |
| | | |
| | |
| -First
Note | |
| 614,977 | | |
| 470,000 | | |
| 4.875 | % | |
| December
1, 2051 | |
| -Second
Note | |
| 120,000 | | |
| 242,000 | | |
| 5.00 | % | |
| November
1, 2029 | |
| 3912
S. Hill Street | |
| | | |
| | | |
| | | |
| | |
| -First
Note | |
| 506,880 | | |
| 510,150 | | |
| 6.425 | % | |
| December
1, 2050 | |
| -
Second Note | |
| 152,000 | | |
| 152,000 | | |
| 6.425 | % | |
| November
1, 2026 | |
| 4009
Brighton Avenue | |
| 725,622 | | |
| 779,374 | | |
| 4.875 | % | |
| November
1, 2051 | |
| | |
| | | |
| | | |
| | | |
| | |
| 3908
Denker Avenue | |
| 635,316 | | |
| 640,000 | | |
| 4.975 | % | |
| December
1, 2051 | |
| 4021
Halldale Avenue | |
| 585,000 | | |
| 730,312 | | |
| 8.5 | % | |
| July
14, 2022 | |
| 1284
W. 38th Street | |
| | | |
| | | |
| 4.56 | % | |
| March
1, 2052 | |
| First Note | |
| 654,082 | | |
| 661,500 | | |
| 4.625 | % | |
| March 1, 2052 | |
| -Second Note | |
| 188,000 | | |
| 159,000 | | |
| 5.250 | % | |
| 2029 | |
| 4505
Orchard Avenue | |
| 653,457 | | |
| 695,250 | | |
| 4.625 | % | |
| March
1, 2052 | |
| 3777
Ruthelen Street | |
| 717,208 | | |
| 699,000 | | |
| 5 | % | |
| October
1, 2029 | |
| 3791
S. Normandie Avenue | |
| | | |
| | | |
| | | |
| | |
| -
First Note | |
| 620,064 | | |
| - | | |
| 5.225 | % | |
| April
1, 2052 | |
| -Second
Note | |
| 150,000 | | |
| - | | |
| 5.00 | % | |
| January
4, 2029 | |
| 2029
W. 41st Place | |
| | | |
| | | |
| | | |
| | |
| -First
Note | |
| 648,000 | | |
| - | | |
| 8.5 | % | |
| January
6, 2023 | |
| -Second
Note | |
| 161,900 | | |
| - | | |
| 5.00 | % | |
| January
17, 2029 | |
| 4517
Orchard Avenue | |
| | | |
| | | |
| | | |
| | |
| -First
Note | |
| 482,882 | | |
| - | | |
| 5.225 | % | |
| April
1, 2052 | |
| -Second
Note | |
| 158,000 | | |
| - | | |
| 5.00 | % | |
| March
1, 2029 | |
| 1733
W. 37th Place | |
| | | |
| | | |
| | | |
| | |
| -First
Note | |
| 567,450 | | |
| - | | |
| 7.5 | % | |
| March
22, 2023 | |
| -Second
Note | |
| 100,000 | | |
| - | | |
| 6.00 | % | |
| May
1, 2029 | |
| Hubilu General Loan | |
| 275,000 | | |
| - | | |
| 6.00 | % | |
| On Demand | |
| | |
$ | 16,504,957 | | |
$ | 13,551,851 | | |
| | | |
| | |
NOTE
7 – PROMISSORY NOTES PAYABLE-Related Party
SCHEDULE OF PROMISSORY NOTE
| June
30, 2022 | | |
December
31, 2021 | |
| | | | |
| | |
| $ | 89,593 | | |
$ | 89,593 | |
On
November 1, 2021, a 1st promissory note secured by 3711 S. Western Ave, Los Angeles, CA 90018 and payable to Opus Bank in the amount
of $554,865 became due. Belladonna Lily Investments, Inc. agreed to pay off the 1st promissory note and the majority of the 2nd promissory
note owing to Esteban Coaloa in the amount of $92,463. This note was assigned to Belladonna Lily Investments, Inc. Belladonna Lily Investments,
Inc. recorded a new 1st promissory note in the amount of $700,000 which was secured by a deed of trust against the property. After accounting
for a prior loan owed to Belladonna Lily investments, Inc in the amount of $12,000 and other closing costs, the balance owing at December
31, 2021 by Akebia Investments, LLC to Belladonna Lily Investments, Inc. was $656,584 and $14,700 was owed unsecured to Esteban Coaloa.
The refinance closed on December 30, 2021. Refer to Note 6 - Property Indebtedness for current balance of loans owed against 3711 S.
Western Ave, Los Angeles, CA.
NOTE
8–RELATED PARTY TRANSACTIONS
As
of June 30, 2022, the Company’s majority shareholder, has provided advances totaling $474,271 (December 31, 2021: $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 $16,463 which was credited
to additional paid-in capital for the six months ended June 30, 2022.
On
February 25, 2022, 3910 Wisconsin Ave, owned by Sunza Investments, LLC was refinanced. Belladonna Lily Investments, Inc. was paid $440,072
as part of the payoff. The $440,072 also paid off the following unsecured notes owed by Sunza Investments, LLC. (1) A promissory note
in 2nd position on 3910 Wisconsin Ave in the amount of $150,000 owing to Belladonna Lily Investments, Inc., was paid off in full. (2)
A promissory note in 3rd position on 3910 Wisconsin Ave of $130,000 owing to Belladonna Lily Investments, Inc. was paid off in full.
(3) A promissory note in 2nd position on 4021 Halldale Ave of $145,312 owing to Belladonna Lily Investments, Inc, was paid off in full.
(4) The balance of $14,760 was used to pay interest owing and points payable on the loans.
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.
SCHEDULE OF ISSUANCE OF CONVERTIBLE
PREFERRED SHARES SETTLEMENT OBLIGATION
| | |
#
of Shares | | |
Amount | | |
Dividend
in Arrears | | |
Total | |
| | |
| | |
| | |
| | |
| |
| Balance,
December 31, 2020 | |
| 500,400 | | |
$ | 500,400 | | |
$ | 85,864 | | |
$ | 586,264 | |
| Dividends
accrued | |
| - | | |
| - | | |
| 21,210 | | |
| 21,210 | |
| Shares
issued | |
| 10,000 | | |
| 10,000 | | |
| - | | |
| 10,000 | |
| | |
| | | |
| | | |
| | | |
| | |
| Balance,
December 31, 2021 | |
| 510,400 | | |
| 510,400 | | |
| 107,074 | | |
| 617,474 | |
| Dividends
accrued | |
| - | | |
| - | | |
| 33,004 | | |
| 33,004 | |
| Balance,
June 30, 2022 | |
| 510,400 | | |
$ | 510,400 | | |
$ | 140,078 | | |
$ | 650,478 | |
NOTE
10 – CONTINGENCY/LEGAL
As
of June 30, 2022, 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 11- OTHER INCOME
The company generated Other Income in the
amount of $29,800 which
is made up of money paid by Condon Realty Group to the company for consulting services performed. Condon Realty Group represents Hubilu subsidiaries’
acquisitions during this period.
NOTE 12 – SUBSEQUENT EVENTS
We
have evaluated subsequent events from the balance sheet through September 7, 2022 the date at which the financial statements were issued
and determined that there were no items that require adjustments to or disclosure in the financial statements.
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.