10-Q: My City Builders Reports Increased Revenue but Continues to Face Losses in Q2 2025

My City Builders, Inc. reports increased rental revenue for the quarter ended January 31, 2025, but continues to experience net losses and going concern uncertainties.

Summary

• My City Builders, Inc. reported its financial results for the quarter and six months ended January 31, 2025.
• The company is focused on real estate transactions, including low-income housing.
• For the three months ended January 31, 2025, revenue was $29,743 compared to $13,599 in 2024.
• The net loss for the three months ended January 31, 2025, was $78,299 compared to $1,020,466 in 2024.
• For the six months ended January 31, 2025, revenue was $55,271 compared to $19,768 in 2024.
• The net loss for the six months ended January 31, 2025, was $152,784 compared to $1,093,043 in 2024.
• The company has a working capital of $1,392,613 as of January 31, 2025.
• The company's management has plans to raise necessary funding through equity and debt financing arrangements.
• There is substantial doubt about the company's ability to continue as a going concern.
• The company issued 4,290,000 shares of common stock for the settlement of $1,716,000 due to a related party.

Sentiment

Score: 4

Explanation: While revenue increased and losses decreased, the company still faces significant financial challenges, including a going concern uncertainty and ineffective disclosure controls.

Positives

• The company's rental revenue has increased significantly compared to the previous year.
• The company's net loss has decreased significantly compared to the previous year.
• The company has completed the construction of eleven homes and leased eight of them.
• The company has working capital of $1,392,613.

Negatives

• The company is still experiencing net losses.
• There is substantial doubt about the company's ability to continue as a going concern.
• The company has not generated positive cash flows from operating activities.
• The company's disclosure controls were not effective as of January 31, 2025, due to the inadequacy of internal controls over financial reporting and a limited internal audit function.

Risks

• The company's ability to continue as a going concern is uncertain.
• The company's management plans to raise necessary funding through equity and debt financing arrangements, which may be insufficient.
• The company's disclosure controls were not effective as of January 31, 2025, due to the inadequacy of internal controls over financial reporting and a limited internal audit function.
• The company is exposed to customer concentration risk, with a significant portion of rental income derived from a few tenants.

Future Outlook

The company plans to continue its focus on real estate transactions, including the acquisition, development, and sale or rental of low-income housing. Management plans to raise necessary funding through equity and debt financing arrangements.

Industry Context

The company operates in the real estate sector, specifically focusing on low-income housing. This sector is influenced by factors such as interest rates, housing market trends, and government policies related to affordable housing.

Comparison to Industry Standards

• It is difficult to compare My City Builders directly to industry standards due to its unique focus on low-income housing and its relatively small size.
• Larger, more established real estate companies like Lennar or D.R. Horton have significantly greater resources and operate on a much larger scale.
• Companies specializing in affordable housing development, such as The Community Builders or Enterprise Community Partners, are often non-profit organizations with different financial structures and goals.
• Given the limited revenue and ongoing losses, My City Builders' financial performance is currently below industry benchmarks for profitability and financial stability.

Legal Proceedings

• RAC was awarded a judgement from the District Court in Clark County Nevada enabling the company to cancel common shares held in the name of HUI PING LIU.
• RAC filed a complaint for breach of two promissory notes entered into with Fix Pads Holdings, LLC and obtained temporary injunctive relief.
• RAC filed a complaint for appointment of receiver, breach of LLC agreement, and breach of fiduciary duty against Fix Pads Holdings LLC, FixPads Management, LLC and RAC FixPads II, LLC.
• The parties entered into two settlement agreements, which FixPads Holdings LLC and the other defendants agreed to transfer the title of 44 properties to the Company.

Related Party Transactions

• During the six months ended January 31, 2025, and 2024, the Company's shareholders paid operating expenses of $0 and $16,889 on behalf of the Company.
• During the six months ended January 31, 2025, and 2024, the Companys related parties advanced $0 and $157,700 to the Company, and the Company repaid $225,000 and $265,889, respectively.
• During the six months ended January 31, 2025, and 2024, the Companys related parties advanced $835,000 and $300,000 and the Company repaid $0 and $79,922, respectively.
• During the six months January 31, 2025, and 2024, the Companys Board of Directors approved the settlement of $1,716,000 and $2,850,000 due to one related party in exchange of issuance of 4,290,000 shares and 11,400,000 shares of common stock.
• On July 26, 2024, the Companys Interim Chief Executive Officer (ICEO) obtained four loans (totally $498,200) for settlement of loans payable -related party for amounts of $471,500.

Stakeholder Impact

• Shareholders face the risk of dilution due to the issuance of new shares.
• Employees' job security is uncertain due to the company's going concern risk.
• Customers (tenants) may be affected by the company's ability to maintain and improve properties.
• Suppliers and creditors face the risk of non-payment due to the company's financial difficulties.

Next Steps

• The company plans to continue its focus on real estate transactions, including the acquisition, development, and sale or rental of low-income housing.
• The company plans to build seven to eight duplex apartments on the parcel of land purchased during the calendar year of 2025.
• The company plans to build up to thirty single family Garden Homes as a Phase Two construction project once the seven to eight duplex apartments has been completed.

Key Dates