10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2016
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ___________ to ___________

 

Commission File Number 333-179424

 

CH REAL ESTATE II, INC.

(Exact name of registrant as specified in its charter)

 

Utah	90-1030909
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

 

175 South Main Street, Suite 1500

Salt Lake City, UT 84111

(Address of principal executive offices, including zip code)

(801) 739-8234

(Registrant's telephone number, including area code)

n/a

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

As of August 16, 2016, the issuer had 10,000,000 outstanding shares of common stock, no par value.

CH REAL ESTATE II, INC.

FORM 10-Q

For the Quarterly Period Ended June 30, 2016

INDEX

		Page
PART I – FINANCIAL INFORMATION
Item 1	Financial Statements (unaudited)	3
	Condensed Balance Sheets	3
	Condensed Statements of Operations	4
	Condensed Statements of Cash Flows	5
	Notes to Condensed Financial Statements	6
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3	Quantitative and Qualitative Disclosures About Market Risk	13
Item 4	Controls and Procedures	13
PART II – OTHER INFORMATION
Item 5	Legal Proceedings	14
Item 6	Exhibits	14
Signatures		15

2

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CH Real Estate II, Inc.
Condensed Balance Sheets
	June 30,			December 31,
	2016			2015
	(unaudited)
ASSETS
Current assets
Cash	$	492		$	14,900
Accounts receivable		2,581			-
Loans receivable, net		79,965			124,930
Total current assets		83,038			139,830
Total assets	$	83,038		$	139,830
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses		-			6,000
Deferred Income	$	-		$	665
Payables, related parties		180,352			153,183
Total current liabilities		180,352			159,848
Total liabilities		180,352			159,848
Commitments and contingencies
Shareholders' equity
Common stock, 100,000,000 shares authorized, no par value, 10,000,000 shares issued and outstanding, respectively		82,500			82,500
Accumulated deficit		(179,814	)		(102,518	)
Total shareholders' equity		(97,314	)		(20,018	)
Total liabilities and shareholders' equity	$	83,038		$	139,830

See the accompanying notes to the unaudited financial statements.

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CH Real Estate II, Inc.
Condensed Statements of Operations
	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Interest income		5,345			-			10,666			-
Total revenue		5,345			-			10,666			-
Operating expenses
General and administrative expenses		2,985			283			85,793			7,148
Total operating expenses		2,985			283			85,793			7,148
Income (loss) from operations		2,360			(283	)		(75,127	)		(7,148	)
Other income (expense)
Interest income (expense), net		(1,154	)		(976	)		(2,168	)		(3,224	)
Total other income (expense), net		(1,154	)		(976	)		(2,168	)		(3,224	)
Net income (loss)	$	1,206		$	(1,259	)	$	(77,295	)	$	(10,372	)
Basic and diluted net loss per share		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Weighted average shares outstanding
-basic and diluted		10,000,000			10,000,000			10,000,000			10,000,000

 

See the accompanying notes to the unaudited financial statements.

4

CH Real Estate II, Inc.
Condensed Statements of Cash Flows
	For the Six Months Ended
	June 30,
	2016			2015
	(unaudited)			(unaudited)
Cash flows used in operating activities:
Net income (loss)	$	(77,295	)	$	(10,372	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operations:
Non cash interest expense related party		2,168			3,223
Changes in operating assets and liabilities:
Accounts receivable, net		(2,581	)		357,751
Loans receivable bad debt provision		44,965
Loan receivable, net		-			(75,000	)
Deferred revenue		(665	)		-
Accounts payable and accrued expenses		(6,000	)		-
Net cash provided by (used in) operating activities		(39,408	)		275,602
Cash flows from financing activities:
Advances from related parties		25,000			3,224
Payments to related parties		-			(204,473	)
Net cash provided by (used in) financing activities		25,000			(201,249	)
Net increase (decrease) in cash		(14,408	)		74,353
Cash at beginning of period		14,900			10,583
Cash at end of period	$	492		$	84,936
Supplemental disclosure of cash flow information:
Cash paid for interest	$	-		$	-
Cash paid for taxes	$	100		$	-

See accompanying notes to the unaudited financial statements.

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CH REAL ESTATE II, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 1: The Company

The Company and Nature of Business

CH Real Estate II, Inc. (the "Company") was incorporated in the State of Utah on April 14, 2011, as the successor to operations as CH Real Estate, which was organized in the State of Utah on June 29, 2010. CH Real Estate II, Inc. is a real estate investment and development company.

Investment: The Company purchases Notes and Deeds of Trust from unrelated third parties, so-called hard money loans, secured by the property against which the loans are made. The Company typically receives 15% to 18% return on these investments.

Development: The Company engages in purchasing properties for the purpose of keeping them as rental properties, and/or remodeling them and selling them at a profit.

Extension Income: The Company purchases Notes and Deeds of Trust from unrelated third parties. At times, these third parties request to extend the Notes on these properties. The Company charges an extension fee to extend the note

Basis of Presentation

The condensed interim financial information of the Company as of June 30, 2016 and for the three and six month periods ended June 30, 2016 and 2015 is unaudited, and the balance sheet as of December 31, 2015 is derived from audited financial statements. The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial statements. Accordingly, they omit or condense footnotes and certain other information normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles. In the opinion of management, all adjustments that are necessary for a fair presentation of the financial information for the interim periods reported have been made. All such adjustments are of a normal recurring nature. The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the results that can be expected for the entire year ending December 31, 2016. The unaudited financial statements should be read in conjunction with the Company's annual financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. In particular, the Company's significant accounting policies were presented as Note 2 to the financial statements in that Annual Report.

Going Concern

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. As of June 30, 2016, the Company had an accumulated deficit of $179,814. This condition, in addition to operating losses in prior years, raise substantial doubt about the Company's ability to continue as a going concern.

In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations and the ability to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. The Company intends to continue to serve its customers as remodeler, landlord, and financing provider. There is no assurance that we will be successful in achieving any or all of these objectives.

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Emerging Growth Company

We are an "emerging growth company" under the federal securities laws and will be subject to reduced public company reporting requirements. In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates.

Note 2: Loans Receivable and Interest Income

On October 30, 2015, the Company used $35,000 of its cash funds to purchase a Note and Deed of Trust from DoHardMoney.com. The Note and Deed of Trust related to a residential property in WonderLake, Illinois, and the borrower was obligated to repay the $35,000 in principal, plus fifteen percent (15%) interest per annum, within 150 days. On July 5, 2016 the borrower extended the term of this note to three months by paying an extension fee of $1,929. The prepaid interest of $2,178 on this loan which deposited in December, 2015. The Company earned interest income totaling $892 related to this note during 2015 and $2,595 during the six months ended June 30, 2016.

On December 17, 2015, the Company used $89,930 of its cash funds to purchase a Note and Deed of Trust from DoHardMoney.com. The Note and Deed of Trust related to a residential property in Waxhaw, North Carolina, and the borrower was obligated to repay the $89,930 in principal, plus eighteen percent (18%) interest per annum, within 150 days. As this note is currently in default, the Company reserved $44,965 or 50% of the principal balance of this note as of June 30, 2016. The expense related to this reserve is included in general and administrative expenses on the statement of operations. The prepaid interest of $6,745 on this loan was deposited in January 2016. The Company earned interest income totaling $621 related to this note during 2015 and $8,071 during the six months ended June 30, 2016.

Note 3: Construction in Progress

The Company engages in purchasing properties for the purpose of keeping them as rental properties, and/or remodeling them and selling them at a profit. Construction in progress consists of properties the companies has purchased which our currently being renovated. The Company did not hold, purchase or renovate any properties during the six months ended June 30, 2016.

Note 4: Income Taxes

The current provision reflects current income taxes. As of June 30, 2016, the Company had federal and state net operating loss carryforwards of approximately $179,814. The provision (benefit) for income taxes for the period ended June 30, 2016 was offset by a full valuation allowance. As of December 31, 2015, the Company's net operating loss carryforward was $96,519. The federal and state net operating loss carryforwards will expire at various dates beginning in 2031, if not utilized. The Company's deferred tax assets as of June 30, 2016 and December 31, 2015 were $71,926 and $42,468 respectively. The potential income tax benefit of these losses have been offset by a full valuation allowance

Utilization of the net operating loss carryforwards and credits may be subject to a substantial annual limitation due to ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization.

The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the year ending December 31, 2012 through 2015. The Company recognizes interest and penalties related to income taxes in income tax expense. The Company had incurred no penalties and interest for the periods ended June 30, 2016 and December 31, 2015.

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Note 5: Related Party Transactions

At inception, the Company issued 9,600,000 shares of restricted common stock to the majority shareholder for initial funding, in the amount of $2,500.

The Company does not have employment contracts with its sole officer and director, who is the majority shareholder. The sole officer and director of the Company is involved in other business activities and may, in the future, become involved in additional business opportunities that become available. A conflict may arise in selecting between the Company and other business interests. The Company has not formulated a policy for the resolution of such conflicts.

We depend on our sole officer and director, to provide the Company with the necessary funds to implement our business plan, as necessary. The Company does not have a funding commitment or any written agreement for our future required cash needs.

The majority shareholder has advanced funds, as necessary. These advances are considered temporary in nature and are payable on demand. There is no formal document describing the terms of this arrangement (maturity date and interest rates). As of June 30, 2016 and December 31, 2015, the loan balance was $154,493 and $129,492 respectively. The Company currently is accruing interest on the loan balance at a rate of 3% per annum. The total accrued interest is $25,859and $23,692 as of June 30, 2016 and December 31, 2015, respectively.

The Company does not own or lease property or lease office space. The office space used by the Company was arranged by the sole officer and director of the Company to use at no charge.

The above amount is not necessarily indicative of the amount that would have been incurred had a comparable transaction been entered into with independent parties.

Note 6: Equity

The Company has been authorized to issue 100,000,000 common shares, no par value. Common shares are entitled to one vote per share.

As described above, on June 29, 2010, the Company issued 9,600,000 shares of its common stock to the officer and director of the Company in exchange for $2,500.

In March 2011, the Company received $15,500 in cash for the issuance of 77,500 shares of common stock at $.20 per share for gross proceeds in the amount of $15,500.

In March 2011, the Company issued 322,500 shares to consultants for services rendered. Shares were valued at the then fair market value of $.20 per share, for a total value of $64,500, which was expensed as stock-based compensation.

The Company has no options or warrants issued or outstanding and no preferred shares have been issued.

Note 6: Subsequent Events

On July 5, 2016 the borrower for the residential property in WonderLake, Illinois, extended the term of this note to three months by paying an extension fee of $1,929.

8

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may" "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of such terms, or other comparable terminology. These statements are only predictions. Actual events or results may differ materially from those in the forward-looking statements as a result of various important factors. Although we believe that the expectations reflected in the forward-looking statements are reasonable, they should not be regarded as a representation by CH Real Estate II, Inc., or any other person, that such expectations will be achieved. The business and operations of CH Real Estate II, Inc. are subject to substantial risks, which increase the uncertainty inherent in the forward-looking statements contained in this report.

Results of Operations

Overview of Earnings for the three month periods ended June 30, 2016 and June 30, 2016.

The Company had revenues of $5,345 and $0 for the three month periods ended June 30, 2016 and 2015, respectively. The increase in revenue for the three month periods ended June 30, 2016 compared to the three month period ended June 30, 2015 related to increase interest from the Company's notes receivables. The Company incurred operating expenses of $2,895 and $283 for the three month periods ended June 30, 2016 and 2015, respectively. Operating expenses in 2016 were significantly higher than for the same period in 2015 due primarily to professional fees related to the Company's public filings. The Company had had net interest expense of $1,154 and $976 for the three month periods ended June 30, 2016 and 2015 respectively.

Overview of Earnings for the six month periods ended June 30, 2016 and June 30, 2015.

The Company had revenues of $10,666 and $0 for the six month periods ended June 30, 2016 and 201d, respectively. The increase in revenue for the six months ended 2016 compared to six month period ended June 30, 2015 related to an increase in interest income from the Company's notes receivables. The Company incurred operating expense of $85,793 and $7,148 during the six month periods ended June 30, 2016 and 2015, respectively. The increase in operating expenses in 2016 primarily relates to higher professional fees related to the Company's public filings as well as bad debt expense related to the reserve for the Waxhaw, North Carolina note receivable. The Company had net interest expense of $2,168 and $3,224 for the six month periods ended June 30, 2016 and 2015, respectively.

9

Plan of Operations

Although the Company intends to primarily engage in the purchase, improvement, and disposition of real property, it may also purchase hard money loans with maturity dates of less than a year that are secured by real property and earn above-market interest (in excess of twelve percent (12%) per annum). The Company generally does not perform a formal appraisal of the value of the security, and the Company identifies such Notes via referral from DoHardMoney.com, a company in the business of making hard money loans secured by real estate and managed by an individual that has been our Chief Executive Officer's real estate agent for several years. DoHardMoney.com has their own underwriting standards, with the results reviewed by the Company upon referral of the loan. DoHardMoney.com's underwriting procedure typically includes the following:

· The loan to after-repair-value of property should be around 65%

· Three qualified realtors informally value the property

· Borrower Background Check for criminal record

· Verify down payment source if applicable

· Receive borrower's loan application short form

· Review borrower credit scores and history

· Review borrower's purchase contract for property

· Verify borrower's company information and verification

· Review borrower's submitted contractor bids for property rehabilitation/repair

· Review Title Report and insurance

· Review 24 month chain of title

· Review hazard insurance

The Company does not perform any additional due diligence with respect to loan referrals from DoHardMoney.com other than a review of DoHardMoney.com's underwriting results, and the Company makes its decision to purchase a Note referred by DoHardMoney.com based on that review.

The Company intends to use its cash flows from operations to partially retire liabilities, beginning with outstanding interest on its related party debt and then principal on that debt, as well as to purchase additional properties. As management expects that the Company will make further purchases of real property during the next year, it expects that the Company's current cash funds and cash flow from operations will only fund its operations for the next six months. The Company intends to seek additional capital from its founder and raise additional capital through private equity financing and/or debt financing if possible.

10

During our startup phase of operations, we will seek to initially raise approximately $115,000 in additional capital by offering our common stock to business associates through private sales exempt from registration, and the capital raise thereby will be used to acquire additional properties, depending upon management's analysis of the amount by which the subject properties are determined to be priced below their intrinsic values, and/or retire existing debt with the founder if we are unable to locate any such properties. If appropriate "undervalued" properties are located, we anticipate that we will be able to purchase two such properties using all $115,000 in startup capital. Our ability to do so within the projected 18-month startup phase is wholly dependent upon the real estate market and our identification of properties priced enough below their intrinsic values to justify the expenses associated with purchasing, maintaining, repairing/improving, and selling such properties. If the Company is unable to generate capital to fund operations or raise additional capital through the sale of equity, but it does locate properties that it determines offer an attractive risk-reward ratio, it will be forced to borrow funds from its founder or from outside sources on terms it considers less attractive. The startup phase of our operations will be complete when we have generated $50,000 in net profits from our operations.

During our second phase of operations, or our repayment and growth phase, we will need approximately $250,000 in available cash funds, which will be used first to retire existing debt and then to purchase additional properties as available funds permit. We anticipate generating such funds through our startup operations and through additional equity and/or debt raises. Assuming we have $50,000 in available cash funds generated during our startup phase, and have retired existing debt, we anticipate that we will be able to purchase two additional properties. We hope to earn enough from the disposition of these properties to enable us to hire a full-time real estate investor, who will assist us in locating more properties that meet our investment profile.

Our third and final phase will target debt-free growth and will be funded exclusively through cash flow from existing operations or through one or more public or private equity offerings. During this last phase, we will increase our inventory of properties and staff used to locate, improve and market those properties and will expand into other markets outside of Utah.

During the next twelve months, the Company anticipates that it will incur minimal operating expenses aside from the accounting and EDGAR filing expenses associated with being a public company. At the present time, we have not made any arrangements to raise additional cash. We may seek to obtain the funds we need through a public offering, private placement of securities or loans. Other than as described in this paragraph, we have no other financing plans at this time.

Liquidity and Capital Resources

As of June 30, 2016, the Company had cash and cash equivalents of $492 with which to continue its operations. The cash flows (used in) provided by operations were $(39,408) and $275,602 for the periods ended June 30, 2016 and 2015. The Company's management believes that it is in position to fund its operation for the near term. The Company intends to seek financing via private equity investment and debt financing if necessary. Such equity investment would necessarily require the issuance of additional capital stock. We have not identified any potential lenders other than our founder who has loaned us funds in the past. Additionally, we may secure additional funds, for our growth, through our private placement of common stock. Management plans to increase the number of properties for the purpose of achieving a stream of revenue through rental properties. We believe that this plan will sustain future operational growth.

Completion of our plan of operation is subject to attaining adequate and continued revenue. We cannot assure investors that adequate rents and proceeds from out real estate transactions will be generated. Although we believe we currently are adequately financed, we may require additional financing for sales and marketing objectives to achieve our goal of sustained profit, revenue and growth.

In the event we are not successful in reaching our sustained revenue targets, we anticipate that depending on market conditions and our plan of operations, we could incur operating losses in the future. We base this expectation, in part, on the fact that we may not be able to generate enough gross profit from our property transactions to cover our operating expenses. Consequently, there remains the possibility that the Company may not continue to operate as a going concern in the long term. As described in our market risks, we are subject to many factors. Some of which involve factors outside of management's controls, including interest rates, our ability to attain adequate financing for our property purchases, our ability to hire and retain skills necessary for the repairs of our assets, as well as other factors. Additionally, we benefit from the current market conditions of a high inventory of real estate properties and few buyers, resulting in what we believe is a below normal market price. We do expect market conditions to change, which will affect our profitability as the market becomes more competitive.

We have been funded solely by our majority shareholder for our initial purchase. These funds were necessary for our purchase. We do not have any agreement or written commitment for continued support in our efforts to grow our business plan.

11

Management believes that current revenue generated and recent investment commitment provides the opportunity for the Company to continue as a going concern and fund the strategic plan.

Subsequent Events

On July 5, 2016 the borrower for the residential property in WonderLake, Illinois, extended the term of this note to three months by paying an extension fee of $1,929.

Going Concern

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. As of June 30, 2016, the Company had an accumulated deficit of $179,814. This condition, in addition to operating losses in prior years, raise substantial doubt about the Company's ability to continue as a going concern.

In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations and the ability to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. The Company intends to continue to serve its customers as remodeler, landlord, and financing provider. There is no assurance that we will be successful in achieving any or all of these objectives

Emerging Growth Company

We are an "emerging growth company" under the federal securities laws and will be subject to reduced public company reporting requirements. In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates.

Critical Accounting Policies

Our financial statements are based on the application of accounting principles generally accepted in the United States ("GAAP"). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue, and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use if estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

The Company's significant accounting policies were presented as Note 2 to the consolidated financial statements in our Annual Report. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.

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Off Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company's financial statements upon adoption.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As the Company is a "smaller reporting company," this item is not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit to the Securities and Exchange Commission under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified by the Securities and Exchange Commission's rules and forms, and that information is accumulated and communicated to our management, including our principal executive and principal financial officer (whom we refer to in this periodic report as our Certifying Officer), as appropriate to allow timely decisions regarding required disclosure. The Company's Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the period ended June 30, 2016 covered by this Form 10-Q. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures were not effective as required under Rules 13a-15(e) and 15d-15(e) under the Exchange Act.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred in the first quarter of 2016 that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.

13

PART II – OTHER INFORMATION

ITEM 5. LEGAL PROCEEDING

None.

 

ITEM 6. LEGAL EXHIBITS

  

The following exhibits are filed as a part of this report:

Exhibit	Description
31	Certification of Periodic Financial Reports by Curt Hansen in satisfaction of Section 301 of the Sarbanes-Oxley Act of 2002
32	Certification of Periodic Financial Reports by Curt Hansen in satisfaction of Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. Section 1350

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CH Real Estate II, Inc.
Date: August 17, 2016	By:	/s/ Curt Hansen
		Curt Hansen
		Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: August 17, 2016	By:	/s/ Curt Hansen
		Curt Hansen Chief Executive Officer, Principal Financial Officer Principle Accounting Officer, and Chairman of the Board of Directors
Date: August 17, 2016	By:	/s/ Mike Hansen
		Mike Hansen Member of the Board of Directors

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EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Curt Hansen, President, Chief Executive Officer and Chief Financial Officer of CH REAL ESTATE II, INC., certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of CH REAL ESTATE II, INC.;
2.	Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d- 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure control and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
d)	disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 17, 2016	By:	/s/ Curt Hansen
		Curt Hansen President,
		Chief Executive Officer and Chief Financial Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CH REAL ESTATE II, INC. (the "Company") on Form 10-Q for the quarter ended June 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 17, 2016	By:	/s/ Curt Hansen
		Curt Hansen President,
		Chief Executive Officer and Chief Financial Officer

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 16, 2016
Document And Entity Information [Abstract]
Entity Registrant Name	CH REAL ESTATE II, INC
Entity Central Index Key	0001541719
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding		10,000,000
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2

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Condensed Balance Sheets - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Current assets
Cash	$ 492	$ 14,900
Accounts receivable	2,581
Loans receivable, net	79,965	124,930
Total current assets	83,038	139,830
Total assets	83,038	139,830
Current liabilities
Accounts payable and accrued expenses		6,000
Deferred Income		665
Payables, related parties	180,352	153,183
Total current liabilities	180,352	159,848
Total liabilities	180,352	159,848
Commitments and contingencies
Shareholders' equity
Common stock, 100,000,000 shares authorized, no par value, 10,000,000 shares issued and outstanding, respectively	82,500	82,500
Accumulated deficit	(179,814)	(102,518)
Total shareholders' equity	(97,314)	(20,018)
Total liabilities and shareholders' equity	$ 83,038	$ 139,830

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Condensed Balance Sheets (Parentheticals) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Common stock, shares authorized	100,000,000	100,000,000
Common stock, no par value (in dollars per share)	$ 0	$ 0
Common stock, shares issued	10,000,000	10,000,000
Common stock, shares outstanding	10,000,000	10,000,000

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Condensed Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Interest income	$ 5,345		$ 10,666
Total revenue	5,345		10,666
Operating expenses
General and administrative expenses	2,985	283	85,793	7,148
Total operating expenses	2,985	283	85,793	7,148
Income (loss) from operations	2,360	(283)	(75,127)	(7,148)
Other income (expense)
Interest income (expense), net	(1,154)	(976)	(2,168)	(3,224)
Total other income (expense), net	(1,154)	(976)	(2,168)	(3,224)
Net income (loss)	$ 1,206	$ (1,259)	$ (77,295)	$ (10,372)
Basic and diluted net loss per share (in dollars per share)	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.00)
Weighted average shares outstanding- basic and diluted (in shares)	10,000,000	10,000,000	10,000,000	10,000,000

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Condensed Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows used in operating activities:
Net income (loss)	$ (77,295)	$ (10,372)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operations:
Non cash interest expense related party	2,168	3,223
Changes in operating assets and liabilities:
Accounts receivable, net	(2,581)	357,751
Loans receivable bad debt provision	44,965
Loan receivable, net		(75,000)
Deferred revenue	(665)
Accounts payable and accrued expenses	(6,000)
Net cash provided by (used in) operating activities	(39,408)	275,602
Cash flows from financing activities:
Advances from related parties	25,000	3,224
Payments to related parties		(204,473)
Net cash provided by (used in) financing activities	25,000	(201,249)
Net increase (decrease) in cash	(14,408)	74,353
Cash at beginning of period	14,900	10,583
Cash at end of period	492	84,936
Supplemental disclosure of cash flow information:
Cash paid for interest
Cash paid for taxes	$ 100

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The Company

6 Months Ended

Jun. 30, 2016

Nature Of Business And Basis Of Presentation [Abstract]

The Company

 Note 1: The Company

The Company and Nature of Business

CH Real Estate II, Inc. (the "Company") was incorporated in the State of Utah on April 14, 2011, as the successor to operations as CH Real Estate, which was organized in the State of Utah on June 29, 2010. CH Real Estate II, Inc. is a real estate investment and development company.

Investment: The Company purchases Notes and Deeds of Trust from unrelated third parties, so-called hard money loans, secured by the property against which the loans are made. The Company typically receives 15% to 18% return on these investments.

Development: The Company engages in purchasing properties for the purpose of keeping them as rental properties, and/or remodeling them and selling them at a profit.

Extension Income: The Company purchases Notes and Deeds of Trust from unrelated third parties. At times, these third parties request to extend the Notes on these properties. The Company charges an extension fee to extend the note

Basis of Presentation

The condensed interim financial information of the Company as of June 30, 2016 and for the three and six month periods ended June 30, 2016 and 2015 is unaudited, and the balance sheet as of December 31, 2015 is derived from audited financial statements. The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial statements. Accordingly, they omit or condense footnotes and certain other information normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles. In the opinion of management, all adjustments that are necessary for a fair presentation of the financial information for the interim periods reported have been made. All such adjustments are of a normal recurring nature. The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the results that can be expected for the entire year ending December 31, 2016. The unaudited financial statements should be read in conjunction with the Company's annual financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. In particular, the Company's significant accounting policies were presented as Note 2 to the financial statements in that Annual Report.

Going Concern

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. As of June 30, 2016, the Company had an accumulated deficit of $179,814. This condition, in addition to operating losses in prior years, raise substantial doubt about the Company's ability to continue as a going concern.

In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations and the ability to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. The Company intends to continue to serve its customers as remodeler, landlord, and financing provider. There is no assurance that we will be successful in achieving any or all of these objectives.

Emerging Growth Company

We are an "emerging growth company" under the federal securities laws and will be subject to reduced public company reporting requirements. In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates.

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Loans Receivable and Interest Income

6 Months Ended

Jun. 30, 2016

Loans Receivable And Interest Income Abstract [Abstract]

Loans Receivable and Interest Income

Note 2: Loans Receivable and Interest Income

On October 30, 2015, the Company used $35,000 of its cash funds to purchase a Note and Deed of Trust from DoHardMoney.com. The Note and Deed of Trust related to a residential property in WonderLake, Illinois, and the borrower was obligated to repay the $35,000 in principal, plus fifteen percent (15%) interest per annum, within 150 days. On July 5, 2016 the borrower extended the term of this note to three months by paying an extension fee of $1,929. The prepaid interest of $2,178 on this loan which deposited in December, 2015. The Company earned interest income totaling $892 related to this note during 2015 and $2,595 during the six months ended June 30, 2016.

On December 17, 2015, the Company used $89,930 of its cash funds to purchase a Note and Deed of Trust from DoHardMoney.com. The Note and Deed of Trust related to a residential property in Waxhaw, North Carolina, and the borrower was obligated to repay the $89,930 in principal, plus eighteen percent (18%) interest per annum, within 150 days. As this note is currently in default, the Company reserved $44,965 or 50% of the principal balance of this note as of June 30, 2016. The expense related to this reserve is included in general and administrative expenses on the statement of operations. The prepaid interest of $6,745 on this loan was deposited in January 2016. The Company earned interest income totaling $621 related to this note during 2015 and $8,071 during the six months ended June 30, 2016. 

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Construction in Progress

6 Months Ended

Jun. 30, 2016

Property, Plant and Equipment [Abstract]

Construction in Progress

Note 3: Construction in Progress

The Company engages in purchasing properties for the purpose of keeping them as rental properties, and/or remodeling them and selling them at a profit. Construction in progress consists of properties the companies has purchased which our currently being renovated. The Company did not hold, purchase or renovate any properties during the six months ended June 30, 2016.

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Income Taxes

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Note 4: Income Taxes

The current provision reflects current income taxes. As of June 30, 2016, the Company had federal and state net operating loss carryforwards of approximately $179,814. The provision (benefit) for income taxes for the period ended June 30, 2016 was offset by a full valuation allowance. As of December 31, 2015, the Company's net operating loss carryforward was $96,519. The federal and state net operating loss carryforwards will expire at various dates beginning in 2031, if not utilized. The Company's deferred tax assets as of June 30, 2016 and December 31, 2015 were $71,926 and $42,468 respectively. The potential income tax benefit of these losses have been offset by a full valuation allowance

Utilization of the net operating loss carryforwards and credits may be subject to a substantial annual limitation due to ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization.

The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the year ending December 31, 2012 through 2015. The Company recognizes interest and penalties related to income taxes in income tax expense. The Company had incurred no penalties and interest for the periods ended June 30, 2016 and December 31, 2015.

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Related Party Transactions

6 Months Ended

Jun. 30, 2016

Related Party Transactions [Abstract]

Related Party Transactions

Note 5: Related Party Transactions

At inception, the Company issued 9,600,000 shares of restricted common stock to the majority shareholder for initial funding, in the amount of $2,500.

The Company does not have employment contracts with its sole officer and director, who is the majority shareholder. The sole officer and director of the Company is involved in other business activities and may, in the future, become involved in additional business opportunities that become available. A conflict may arise in selecting between the Company and other business interests. The Company has not formulated a policy for the resolution of such conflicts.

We depend on our sole officer and director, to provide the Company with the necessary funds to implement our business plan, as necessary. The Company does not have a funding commitment or any written agreement for our future required cash needs.

The majority shareholder has advanced funds, as necessary. These advances are considered temporary in nature and are payable on demand. There is no formal document describing the terms of this arrangement (maturity date and interest rates). As of June 30, 2016 and December 31, 2015, the loan balance was $154,493 and $129,492 respectively. The Company currently is accruing interest on the loan balance at a rate of 3% per annum. The total accrued interest is $25,859and $23,692 as of June 30, 2016 and December 31, 2015, respectively.

The Company does not own or lease property or lease office space. The office space used by the Company was arranged by the sole officer and director of the Company to use at no charge.

The above amount is not necessarily indicative of the amount that would have been incurred had a comparable transaction been entered into with independent parties.

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Equity

6 Months Ended

Jun. 30, 2016

Stockholders' Equity Note [Abstract]

Equity

Note 6: Equity

The Company has been authorized to issue 100,000,000 common shares, no par value. Common shares are entitled to one vote per share.

As described above, on June 29, 2010, the Company issued 9,600,000 shares of its common stock to the officer and director of the Company in exchange for $2,500.

In March 2011, the Company received $15,500 in cash for the issuance of 77,500 shares of common stock at $.20 per share for gross proceeds in the amount of $15,500.

In March 2011, the Company issued 322,500 shares to consultants for services rendered. Shares were valued at the then fair market value of $.20 per share, for a total value of $64,500, which was expensed as stock-based compensation.

The Company has no options or warrants issued or outstanding and no preferred shares have been issued.

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Subsequent Events

6 Months Ended

Jun. 30, 2016

Subsequent Events [Abstract]

Subsequent Events

Note 6: Subsequent Events

On July 5, 2016 the borrower for the residential property in WonderLake, Illinois, extended the term of this note to three months by paying an extension fee of $1,929.

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The Company (Detail Textuals) - USD ($)	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Nature Of Business And Basis Of Presentation [Abstract]
Percentage of return on investments	15% to 18%
Accumulated deficit	$ (179,814)	$ (102,518)

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Loans Receivable and Interest Income (Detail Textuals) - Note and Deed of Trust - DoHardMoney.com - USD ($)		1 Months Ended		6 Months Ended	12 Months Ended
	Jul. 05, 2016	Dec. 17, 2015	Oct. 30, 2015	Jun. 30, 2016	Dec. 31, 2015	Jan. 31, 2016
WonderLake, Illinois
Accounts, Notes, Loans and Financing Receivable [Line Items]
Cash funds used to purchase loans receivable			$ 35,000
Receivable principle amount			$ 35,000
Loans receivable interest rate percentage			15.00%
Receivable repayment term			150 days
Prepaid interest					$ 2,178
Interest income earned				$ 2,595	892
Waxhaw, North Carolina
Accounts, Notes, Loans and Financing Receivable [Line Items]
Cash funds used to purchase loans receivable		$ 89,930
Receivable principle amount		$ 89,930
Loans receivable interest rate percentage		18.00%
Receivable repayment term		150 days
Prepaid interest						$ 6,745
Interest income earned				8,071	$ 621
Reserve amount for loan losses				$ 44,965
Reserve percentage of principal for default				50.00%
Subsequent Event | WonderLake, Illinois
Accounts, Notes, Loans and Financing Receivable [Line Items]
Extension fee	$ 1,929

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Income Taxes (Detail Textuals) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Net operating loss carryforward	$ 179,814	$ 96,519
Deferred tax assets	$ 71,926	$ 42,468

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Related Party Transactions (Detail Textuals) - USD ($)	1 Months Ended
	Jun. 29, 2010	Jun. 30, 2016	Dec. 31, 2015
Related Party Transaction [Line Items]
Loan balance		$ 154,493	$ 129,492
Interest rate per annum on loan balance		3.00%
Accrued interest		$ 25,859	$ 23,692
Majority shareholder | Restricted common stock
Related Party Transaction [Line Items]
Number of restricted common stock issued for initial funding (in shares)	9,600,000
Amount of initial funding received by issue of restricted common stock	$ 2,500

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Equity (Detail Textuals) - USD ($)	1 Months Ended		6 Months Ended
	Mar. 31, 2011	Jun. 29, 2010	Jun. 30, 2016	Dec. 31, 2015
Stockholders Equity Note [Line Items]
Common stock, shares authorized			100,000,000	100,000,000
Common stock, no par value (in dollars per share)			$ 0	$ 0
Common stock, voting rights			one vote per share
Common Stock
Stockholders Equity Note [Line Items]
Value of shares issued for cash	$ 15,500
Number of shares issued for cash	77,500
Common shares issued, per share amount (in dollars per share)	$ 0.20
Proceeds from issuance of common stock	$ 15,500
Consultants | Common Stock
Stockholders Equity Note [Line Items]
Number of shares issued for services	322,500
Value of shares issued for services	$ 64,500
Fair market value per share (in dollars per share)	$ 0.20
Officer and director | Restricted common stock
Stockholders Equity Note [Line Items]
Number of shares issued		9,600,000
Value of shares issued		$ 2,500

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Subsequent Events (Detail Textuals)	Jul. 05, 2016 USD ($)
Subsequent Event | ILLINOIS | Note and Deed of Trust | DoHardMoney.com
Subsequent Event [Line Items]
Extension fee	$ 1,929