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ITEM 2.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Overview
The Company seeks opportunities to profit
from the purchase of individual homes or individual residential lots for purposes of renovation or construction and resale. The
Company has completed renovation of two homes - one located at 3506 Main Lodge Road, Coconut Grove, FL, and the other located at
3437 N. Moorings Way, Coconut Grove, FL. The Company has started construction of a new home on its vacant lot located at 2535 Shelter
Avenue, Miami Beach, FL 33140. In addition to its real estate activities, the Company may consider acquisitions or investments
in other industries.
At June 30, 2017, the Company had an accumulated
deficit of approximately $39.7 million. The Company’s losses have resulted principally from costs incurred in connection
with its prior biomedical research and development activities, its current real estate activities and from general and administrative
costs associated with the Company’s operations. These costs have exceeded the Company’s revenues and interest income.
The Company expects to generate revenues in the future only if it is able to profit from its real estate operations.
Results of Operations
Three Months Ended June 30, 2017 and 2016.
Revenues
There were no revenues for the three months
ended June 30, 2017 nor for the three months ended June 30, 2016.
Costs and Expenses
General and administrative expenses increased
to $125,165 for the three months ending June 30, 2017 from $94,661 for the same period in 2016. Professional fees increased by
$16,804 due to the change in accountants and filings with the SEC relating thereto. Shareholder relations increased by $12,795
due to the annual meeting of stockholders on May 24, 2017. There were additional net increases of $905.
Results of Operations (Continued)
Real estate expenses for the three months
ended June 30, 2017 were $68,687, including real estate taxes, insurance and selling expense relating to the cost of staging the
property(ies) with furniture totaling $38,437 on the completed renovated properties and $7,025 of legal expenses for litigation
in connection with the fraudulent transfer of one of the Company’s properties. The balance of $23,225 is for maintenance
and utilities of the properties owned. Real estate expenses for the three months ended June 30, 2016 were $40,048, including real
estate taxes, insurance, and selling expenses of $25,606 on completed renovated properties and $14,442 for maintenance and utilities
for the properties.
For the three months ended June 30, 2017
and 2016, the Company recognized equity in earnings of $162 and $163, respectively, in its investment in Laurel Partners Limited
Partnership.
Interest Income
Interest income for the three months ended
June 30, 2017 was $7,865 compared to interest income of $4,601 for the same period in 2016. This increase is attributable primarily
to an increase in interest rates.
Net (Loss)
Net (loss) for the three months ended June
30, 2017 was $187,491 compared to a net loss of $131,611 for the same period in 2016. The increase in loss is attributable to an
increase in general and administrative expenses of $30,504, an increase in real estate expenses of $28,639, and a decrease of $1
in equity in earnings in other venture offset by an increase of $3,264 in interest income.
Six Months Ended June 30, 2017 and 2016.
Revenues
There were no revenues for the six months
ended June 30, 2017 nor for the six months ended June 30, 2016.
Costs and Expenses
General and administrative expenses decreased
to $270,743 for the six months ended June 30, 2017 from $283,870 for the same period in 2016. Professional fees decreased by $6,090
due to the elimination of outside bookkeeping services and a decrease in legal expense. Storage fees and shredding decreased by
$8,366 due to the Company no longer leasing storage space or shredding old files. Shareholder relations increased by $1,500 due
to the annual meeting of stockholders on May 24, 2017. There were additional net decreases of $171.
Real estate expenses for the six months
ended June 30, 2017 were $147,333, including real estate taxes, insurance, and selling expense totaling $87,012 on the completed
renovated properties and $16,512 of legal expenses in connection with the fraudulent transfer of one of the Company’s properties.
The balance of $43,809 is for maintenance and utilities for properties owned. Real estate expenses for the six months ended June
30, 2016 were $57,787, including real estate taxes, insurance, and selling expenses of $32,189 on completed renovated properties.
The balance of $25,598 is for maintenance and utilities for the properties owned.
For the six months ended June 30, 2017
and 2016, the Company recognized equity in earnings of $428 and $233, respectively, in its investment in Laurel Partners Limited
Partnership.
Interest Income
Interest income for the six months ended
June 30, 2017 was $14,112, compared to interest income of $8,500 for the same period in 2016. This increase is attributable primarily
to an increase in interest rates.
Net (Loss)
Net (loss) for the six months ended June
30, 2017 was $406,869 compared to a net loss of $336,257 for the same period in 2016. The increase in net loss can be attributed
to an increase in real estate expenses of $89,546 offset by a decrease in general and administrative expenses of $13,127, an increase
in interest income of $5,612 and an increase of $195 in equity in earnings in other venture.
Liquidity and Capital Resources
At June 30, 2017, the Company held cash
and cash equivalents of $4.4 million.
Depending on the availability of transactions
acceptable to the Company in connection with its real estate activities, all or a portion of the Company’s available cash
may be utilized, and the Company may seek debt or additional equity financing. The Company’s capital requirements may vary
as a result of a number of factors, including the transactions, if any, arising from the Company’s efforts to acquire, renovate,
construct and sell residential properties. There can be no assurance that the Company will raise sufficient capital on a timely
basis or on satisfactory terms or at all to meet such capital requirements.