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, 2021 and 2020, 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, 2021 and 2020, respectively, together with notes thereto, which are included
in this Quarterly Report on Form 10-Q.
Three
months ended June 30, 2021 compared to the three months ended June 30, 2020
Revenues.
Our revenues increased $171,783 to $387,954 for the three months ended June 30, 2021 compared to $216,171
for the comparable period in 2020. The increase is due to the acquisition of four new properties.
Operating
expenses. In total, operating expenses increased $140,226 to $241,623 for the three months ended June 30, 2021
compared to $101,397 for the comparable period in 2020.
General
and administrative expenses increased $94,636 to $107,139 for the three months ended June 30, 2021 compared to $12,503
for the comparable period in 2020.
Depreciation
expense increased $15,978 to $38,800 for the three months ended June 30, 2021 compared to $22,822 for the comparable
period in 2020.
Rent expense increased $3,900 to $3,900
for the three months ended June 30, 2021 compared to $0 for the comparable period in 2020. The increase is due to not paying rent
in the months of April, May and June and instead used our security deposit.
Property
tax expense increased $23,681 to $41,151 for the three months ended June 30, 2021 compared to $17,470 for the comparable
period in 2020. The increase is due to the acquisition of four new properties.
Repairs
and maintenance expense decreased $4,998 to $489 for the three months ended June 30, 2021 compared to $5,487 for
the comparable period in 2020. The decrease is due to the properties being in good condition and require less maintenance.
Taxes and licenses expense increased $5,162 to
$5,162 for the three months ended June 30, 2021 compared to $0 for the comparable period in 2020. The increase is due timing of filing
dates.
Wages and benefits expense decreased $6,499 to
$26,250 for the three months ended June 30, 2021 compared to $32,749 for the comparable period in 2020. The decrease is due to additional
money being paid to assist employees during Covid shutdown. Salaries and wages are back to normal.
Transfer agent and filing fees expense decreased $300 to $0 for the three months ended June 30, 2021 compared
to $300 for the comparable period in 2020. The decrease is due to less filings during this period.
Promissory
Note Interest expense decreased $22,437 to $0 for the three months ended June 30, 2021 compared to $22,437 for the comparable
period in 2020.
Mortgage
Interest increased $71,526 to $155,347 for the three months ended June 30, 2021 compared to $83,821, for the comparable
period in 2020. The increase is due to the acquisition of four new properties.
Net
loss. Our net loss increased $12,727 to $19,016 for the three months ended June 30, 2021 compared to $6,289
for the comparable period in 2020. The increase is attributable to the revenue and expenses discussed above.
Six
months ended June 30, 2021 compared to the six months ended June 30, 2020
Revenues.
Our revenues increased to $704,683 for the six months ended June 30, 2020 compared to $372,301 for the comparable period in 2020.
The increase is due to the acquisition of four 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 increased $90,030
to $371,807 for the six months ended June 30, 2021 compared to $281,777 for the comparable period in 2020. The increase
is due to the acquisition of four new properties.
General
and administrative expenses increased $73,755 to $162,042 for the six months ended June 30, 2021 compared to $88,287 for
the comparable period in 2019.
Depreciation
expense increased $5,168 to $50,839 for the six months ended June 30, 2021 compared to $45,671 for the comparable period
in 2020.
Professional
fees decreased $388 to $236 for the six months ended June 30, 2021 compared to $624 for the comparable period in 2020.
Property
tax expense increased $25,588 to $57,550 for the six months ended June 30, 2021 compared to $31,962 for the comparable
period in 2020. The increase is due to paying our taxes earlier in the first quarter.
Rent
expense increased $450 to $7,800 for the six months ended June 30, 2021 compared to $7,350 for the comparable period
in 2020 The increase is due to downsizing our office space.
Repairs
and maintenance expense decreased $11,974 to $1,999 for the six months ended June 30, 2021 compared to $13,973 for the
comparable period in 2020. The decrease is due to the properties being in good condition and require less maintenance.
Transfer
Agent and Filing Fees decreased $1,101 to $0 for the six months ended June 30, 2021 compared to $1,101 for the comparable
period in 2020. The decrease is due to additional monthly fees paid.
Utilities
expense increased $12,311 to $32,843 for the six months ended June 30, 2021 compared to $20,532 for the comparable period
in 2020. The increase is due to additional property acquisitions.
Promissory
Note Interest expense decreased $62,909 to $0 for the six months ended June 30, 2021 compared to $62,909 for the
comparable period in 2020.
Mortgage
Interest increased $151,004 to $288,707 for the six months ended June 30, 2021 compared to $139,703 for the comparable
period in 2020. The increase is due to the acquisition of four new properties.
Net
loss. Our net loss decreased $161,315 to income $31,948 for the six months ended June 30, 2021 compared to a loss
of $129,367 for the comparable period in 2020. The decrease is attributable to the revenue and expenses discussed above.
Liquidity
and Capital Resources. For the six months ended June 30, 2021, 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 $10,950,016 as of June 30, 2021, consisting of $10,869,532 in net property assets, $54,384 in cash,
$6,600 in deposits and $19,500 in prepaid expenses.
Our
total liabilities are $11,802,184 as of June 30, 2021.
We
were provided $125,059 in operating activities for the six months ended June 30, 2021 including $31,948 in net income,
imputed interest and gain, which was offset by non-cash charges of $50,839 for depreciation and amortization, $16,221 in
dividends accrued in preferred shares, a net decrease of $447 in accounts payable and $11,640 received for security deposits.
We
used $207,792 in investing activities for the six months ended June 30, 2021, which was used for building additions and improvements.
We
had $7,547 used in financing activities for the six months ended June 30, 2021.
The
Company had no formal long-term lines or credit or other bank financing arrangements as of June 30, 2021.
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 $207,792 on building improvements during the six months ended June 30, 2021.
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.