HUBILU VENTURE CORPORATION This Annual Report on Form 10-K contains forward-looking statements. Our actual
results could differ materially from those set forth because of general economic
conditions and changes in the assumptions used in making such forward-looking
statements. The following discussion and analysis of our financial condition and
results of operations should be read together with the audited consolidated
financial statements and accompanying notes and the other financial information
appearing elsewhere in this Report. The analysis set forth below is provided
pursuant to applicable
The following is management's discussion and analysis of financial condition and results of operations and is provided as a supplement to the accompanying 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 financial statements.
In this Annual Report on Form 10-K, "Company," "the Company," "us," and "our"
refer to
We intend the following discussion to assist in the understanding of our
financial position as of
Results of Operations General
We are a startup enterprise that commenced operations on
1. Formation of the Company;
2. Development of our business plan;
3. Evaluating various target real estate professionals and investors to market
our services;
4. Research on marketing channels/strategies for our services;
5. Secured our website domain www.hubilu.com and beginning the development of
our initial online website; and
6. Research on services and the pricing of our services.
Commencing in
We intend to provide services to target investors and professionals with the mission to assist them in investment and property evaluation strategies and provide hands-on support to reduce evaluation time and resources and increase the speed for them to determine whether to proceed with a real estate lease or investment. Besides general property evaluation services, we intend to offer services to assist the principals with property development ideas and investment structure.
Our goal is to assist investors by providing them with the property
opportunities, analysis and guidance to enhance their ability to purchase or
lease real estate. We are not real estate brokers and do not intend to offer
brokerage services. We intend to initially target businesses in
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As of
Management believes that if subsequent private placements are successful, we will generate sales revenue within the following twelve months thereof. However, additional equity financing may not be available to us on acceptable terms or at all, and thus we could fail to satisfy our future cash requirements.
If we are unsuccessful in raising the additional proceeds through a private placement offering, we will then have to seek additional funds through debt financing, which would be highly difficult for a new development stage company with nominal assets to secure. Therefore, we are highly dependent upon the success of a future private placement offering and failure thereof would result in our having to seek capital from other resources such as debt financing, which may not even be available to us. However, if such financing were available, because we are a startup company with no operations to date, we would likely have to pay additional costs associated with high-risk loans and be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such debt financing and determine whether the business could sustain operations and growth and manage the debt load. If we cannot raise additional proceeds via a private placement of our common stock or secure debt financing, we would be required to cease business operations. As a result, investors in our common stock would lose all of their investment.
We have no current plans, preliminary or otherwise, to merge with any other entity although we may consider such plans in the future.
At the present time, we intend to seek various investors to obtain additional equity financing. There can be no assurance that we will be successful in obtaining additional capital from these negotiations. If are unable to raise additional capital, we will either suspend marketing operations until we do raise the cash or cease operations entirely. Other than as described in this paragraph and the preceding paragraphs, we have no other financing plans.
Management does not plan to hire additional employees at this time. Our officers and directors, as well as independent contractors, will be responsible for providing consulting services.
Critical Accounting Policy and Estimates. Our Management's Discussion and
Analysis of Financial Condition and Results of Operations section discusses our
financial statements, which have been prepared in accordance with accounting
principles generally accepted in
The following discussion of our financial condition and results of operations
should be read in conjunction with our audited financial statements for the year
ended
For the Year Ended
Revenues. Our rental revenues increased
Operating expenses. Operating expenses increased
General and administrative expenses increased
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Depreciation increased
Professional fees increased
Property taxes increased
Utilities decreased
Net Loss. Our net loss increased by a net amount of
Liquidity and Capital Resources. Since 2015,
Our total assets are
Our total liabilities are
Our total stockholders' deficit is
Our net cash provided by operations was
Our investing activities used a total of
We had
We do not now have funds sufficient for pursuing our plan of operation, but we are in the process of trying to increase rents to finance our operations through rental cash flow. If operating difficulties or other factors (many of which are beyond our control) delay our realization of revenues or cash flows from rental income, we may be limited in our ability to pursue our business plan. Moreover, if unexpected expenses arise due to unanticipated pressures or if we decide to expand our business plan beyond its currently anticipated level or otherwise, we will require additional financing to fund our operations, in addition to anticipated cash generated from our operations. Additional financing might not be available on terms favorable to us, or at all. If adequate funds were not available or were not available on acceptable terms, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance our business or otherwise respond to competitive pressures would be significantly limited. In a worst-case scenario, we might not be able to fund our operations or to remain in business, which could result in a total loss of our stockholders' investment. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders would be reduced, and these newly issued securities might have rights, preferences or privileges senior to those of existing stockholders.
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The Company had no formal long-term lines or credit or other bank financing
arrangements as of
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.
Concentrations
Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of rental income. Sales to nine customers
accounted for 75% of consolidated sales for the year ended
Income Tax Expense (Benefit)
The Company has a prospective income tax benefit resulting from a net operating loss carry forward that may offset any future operating profit.
Impact of Inflation
The Company believes that inflation has had a negligible effect on operations over the past quarter.
Capital Expenditures
The Company expended
Plan of Operation
We were incorporated in the
Our business strategy is to market our website (www.hubilu.com) whereby potential real estate users and investors will be able to review our consulting services and engage us. We will develop our presence on various e-commerce sites focused on the real estate, consulting and advisory industries as well as on mainstream sites such as Facebook, Twitter, and LinkedIn. We are also focusing on expanding our referral network by targeting other advisors such as lawyers, accountants, insurance agents, financial planners and other service professionals.
The number of companies which we will be able to provide services to will depend upon the success of our marketing efforts through our website and our referral network.
Our business is advising and consulting with real estate users and investors by providing consulting services to support to their leasing or acquisition strategies. We intend to advise them on their capital formation, consulting with jurisdictional issues, property taxes, zoning, corporate structure, administrative functions, such as bookkeeping, accounting, regulatory compliance and reporting, valuation and other administrative tasks that real estate users and investors may not be familiar with or desire to operate internally.
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We intend to work collaboratively with real estate users and investors, as well as their existing advisors, to assist them in the proper structure around proposed leases, development or acquisitions. We believe that by providing guidance and support to our potential clients and assisting them in structuring their leases, developments or acquisitions we believe we will enable them to achieve increased returns. We intend to partner and work with professional and technical advisors that have knowledge and expertise in real estate investors. To the extent that our potential clients request our assistance in seeking capital or accessing the capital markets, we intend to introduce them to the appropriate advisors who have the requisite expertise in the various areas that may require such expertise.
Our founder has access to strategic relationships with real estate investors, financial firms, investment bankers, brokers, individual and institutional investors as well as accountants and attorneys. Our founder has invested his capital in the real estate markets and has experience with real estate investing and management. We believe that a properly structured real estate transaction eases the ability to attract the equity capital from investors thereby allowing the necessary capital to develop or acquire the properties.
Our business is focused on acquiring vacant residential income properties that we rehabilitate and rent at student housing market values while simultaneously consulting and advising with real estate investors, professionals, and companies, We believe that this model of student housing acquisitions and consulting with investors will generate positive cash flow in growing the company, which will increase the evaluation of our stock, creating value for our investors and also obtaining client loyalty. The following are key elements of our strategy:
? Acquisition process has a strategic methodology when acquiring and calculating
cost in not only purchasing but in rehab and the value in renting out to
students near the
We may conduct limited research and development of additional services to offer. Further we do not expect significant changes in the number of employees. Upon completion of our public offering, our specific goal is to offer consulting services to real estate users and investors. Our plan of operations is as follows:
Expand and Enhance Our Website
Time Frame: 1st to 3rd months.
Material costs:
We intend to further develop and enhance our website at www.hubilu.com. Our sole
director and president,
Negotiate agreements with potential referral sources and clients
Time Frame: 3rd to 6th. No material costs.
Now that our website is operational, we have contacted and started negotiations
with potential clients and referral sources. In
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In the future, when/if we have available resources, operating history and experience, we plan to contact larger referrals sources that have more established clients. However, we anticipate encountering many market barriers in becoming a service provider to clients of large established professionals. Our competitors have gained customer loyalty and brand identification through their long-standing advertising and customer service efforts. This creates a barrier to market entry by forcing us to spend time and money to differentiate our product in the marketplace and overcome these loyalties. The large established service providers may require capital investments in personnel. Considering our lack of operating history and experience in being a real estate consulting firm, we may never become a consultant to large established clients.
Ongoing Marketing Campaign
Time Frame: 6th - 12th months.
Material costs:$10,000 .
We intend to use marketing strategies, such as social media, networking and
organic marketing to acquire potential customers and potential investors. We
believe that we should begin to see results from our marketing campaign within
120 days from its initiation. We also will use Internet promotion tools on real
estate and consulting websites, as well as on Facebook and Twitter, to advertise
our services. We intend to spend
Even if we can obtain sufficient number of consulting agreements, or purchase enough assets at the end of the twelve-month period, there is no guarantee that we will be able to attract, and more importantly retain, enough customers to justify our expenditures. If we are unable to generate a significant amount of revenue and to successfully protect ourselves against those risks, then it would materially affect our financial condition and our business could be harmed.
Independent Contractors Time Frame: 6th-12th months. Material costs:$50,000 .
We believe our officers have good knowledge and broad connections in the real estate consulting industry to introduce our services, including find new potential clients, set up agreements with customers and referral sources to engage our consulting services. We currently anticipate that the negotiation of additional agreements with potential customers will be ongoing during the life of our operations.
We believe our website is state-of-the-art and we developed it to use as part of our sales efforts. During the next 12 months, we will implement our marketing campaign to assist officers in sales and marketing. There is no assurance that we will generate any revenue in the next 12 months or ever generate any future revenue.
Estimated Expenses for the Next Twelve Months
The following provides an overview of our estimated expenses to fund our plan of operation for the next twelve months. These expenses, which we estimate to be as follows:
Description Expenses SEC reporting and compliance$ 5,000 Website expansion 1,000 Marketing and advertising 10,000 Advances to independent contractors 50,000 Salaries 70,000 Legal and accounting 65,000$ 201,000 28
We anticipate that the minimum additional capital necessary to fund our planned
operations in this case for the 12-month period will be approximately
If we can successfully complete the above goals within the estimated timeframes set forth and can raise proceeds additional proceeds that may be needed to secure additional personnel and marketing funds, those funds would be allocated as follows:
Our management may hire full or part- time employees or independent contractors over the next six (6) months; however, at the present, the services provided by our officers and director appears sufficient now. We believe that our operations are currently on a small scale that is manageable by these two individuals and can be supplemented by engaging independent contractors. Our management's responsibilities are mainly administrative at this early stage. While we believe that the addition of employees is not required over the next six (6) months, the professionals we plan to utilize may be independent contractors. We do not intend to enter any employment agreements with any of these professionals. Thus, these persons are not intended to be employees of our company.
Our management does not expect to incur any material research costs in the next twelve months; we currently do not own any plants or equipment that we would seek to sell soon; we do not have any off-balance sheet arrangements; and we have not paid for expenses on behalf of our officer or directors. Additionally, we believe that this fact shall not materially change.
Off-Balance Sheet Arrangements
None.
Recent Accounting Pronouncement
In
? Transition method practical expedient - permits the Company to use the
effective date as the date of initial application. Upon adoption, the Company
did not have a cumulative-effect adjustment to the opening balance of retained
earnings. Financial information and disclosures for periods before
2019 were not updated. ? Short-term lease practical expedient - permits the Company not to recognize
leases with a term equal to or less than 12 months.
Lessor Accounting
The accounting for lessors under the new standard remained relatively unchanged with a few targeted updates impacting the Company, which included: (i) narrower definition of initial direct costs that requires certain costs to be expensed rather than capitalized, and (ii) provisions for uncollectible rents to be recorded as a reduction in revenue rather than as bad debt expense.
Lessee Accounting
The new standard requires lessees to recognize a right-of-use asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating at inception, with classification affecting the pattern and recording of expenses in the statement of operations. There was no impact on the Company's financial statements on the adoption of Topic 842 given that its office lease does not exceed 12 months in duration.
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