ROYAL INVEST INTERNATIONAL CORP. - FORM 10-Q

Attached files

file	filename
EX-32.1 - 906 CEO CERTIFICATION - ROYAL INVEST INTERNATIONAL CORP.	f10q210_x321-riic.htm
EX-32.2 - 906 CFO CERTIFICATION - ROYAL INVEST INTERNATIONAL CORP.	f10q210_x322-riic.htm
EX-31.2 - 302 CFO CERTIFICATION - ROYAL INVEST INTERNATIONAL CORP.	f10q210_x312-riic.htm
EX-31.1 - 302 CEO CERTIFICATION - ROYAL INVEST INTERNATIONAL CORP.	f10q210_x311-riic.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarter year ended June 30, 2010

Commission file number 000-27097

ROYAL INVEST INTERNATIONAL CORP.

(Exact name of registrant as specified in its charter)

Delaware		98-0215778
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Two Corporate Drive, Suite 234
Shelton, Connecticut, USA		06484
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number including area code (203) 222-9333

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 is a large accelerated filer, an accelerated filer, a non-accelerated filer, or small reporting company. See the definition of "large accelerated filer," "accelerated filer" and "small 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

As of August 23, 2009, there were 150,208,861 shares of common stock of the registrant issued and outstanding.

ROYAL INVEST INTERNATIONAL CORP.

FORM 10-Q

TABLE OF CONTENT

Item #	Description	Page Numbers

	PART I		4

ITEM 1	FINANCIAL STATEMENTS		4

ITEM 2	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		22

ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		34

ITEM 4	CONTROLS AND PROCEDURES		34

ITEM 4T	CONTROLS AND PROCEDURES		34

	PART II		35

ITEM 1	LEGAL PROCEEDINGS		35

ITEM 1A	RISK FACTORS		35

ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		38

ITEM 3	DEFAULTS UPON SENIOR SECURITIES		39

ITEM 4	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		39

ITEM 5	OTHER INFORMATION		39

ITEM 6	EXHIBITS		40

	SIGNATURES		42

EXHIBIT31.1	SECTION 302 CERTIFICATION OF CHIEF EXECUTIVE OFFICER

EXHIBIT 31.2	SECTION 302 CERTIFICATION OF CHIEF FINANCIAL OFFICER

EXHIBIT 32.1	SECTION 906 CERTIFICATION OF CHIEF EXECUTIVE OFFICER

EXHIBIT 32.2	SECTION 906 CERTIFICATION OF CHIEF FINANCIAL OFFICER

INFORMATION REGARDING FORWARD-LOOKING DISCLOSURE

This quarterly report on Form 10-Q contains forward-looking statements. Statements in this report that are not historical facts, including statements about management’s beliefs and expectations, constitute forward-looking statements. These statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined under Item 1A, Risk Factors, in our most recent annual report on Form 10-K, and any updated risk factors we include in our quarterly reports on Form 10-Q and other filings with the SEC. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.

Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following:


	•	risks arising from material weaknesses in our internal control over financial reporting, including material weaknesses in our control environment;

	•	our ability to attract new clients and retain existing clients;

	•	our ability to retain and attract key employees;

	•	risks associated with assumptions we make in connection with our critical accounting estimates;

	•	potential adverse effects if we are required to recognize impairment charges or other adverse accounting-related developments;

	•	potential downgrades in the credit ratings of our securities;

	•	risks associated with the effects of global, national and regional economic and political conditions, including fluctuations in economic growth rates, interest rates and currency exchange rates; and

	•	developments from changes in the regulatory and legal environment for advertising and marketing and communications services companies around the world.

Investors should carefully consider these factors and the additional risk factors outlined in more detail under Item 1A, Risk Factors, in our 2009 Annual Report on Form 10-K and other filings with the SEC.

PART I

ITEM 1 FINANCIAL STATEMENTS

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES

FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009

CONTENTS

______________________________________________________________________________________

Consolidated Balance Sheets as of June 30, 2010 (Unaudited) and December 31, 2009

Page 6

Consolidated Statements of Operations for the three months and six months ended June 30, 2010 and 2009 (Unaudited)

Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the six months ended June 30, 2010 (Unaudited) and for the year ended December 31, 2009

Consolidated Statements of Cash Flows for the six months ended June 30, 2010 and 2009 (Unaudited)

Notes to Consolidated Financial Statements (Unaudited)

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	June 30		December 31,
	2010		2009
		(Unaudited)
ASSETS

Rental Property
Land	$	20,984,298	$	24,636,955
Buildings		58,097,221		71,605,830
Improvements		1,975,671		2,298,069
Equipment		836,346		320,493
		81,893,536		98,861,347
Less - accumulated depreciation		(5,680,389)		(5,621,426)
Net Investment in Rental Property		76,213,147		93,239,921


Cash and Cash Equivalents		839,939		454,854
Current Rents Receivable, Net of Allowance for Doubtful Accounts of $ 230,731
as of June 30, 2010 and $251,544 as of December 31, 2009, respectively		1,355,132		1,446,172
Prepaid Expenses and Other Current Assets		1,322,009		229,699
Deferred Financing Costs, Net		1,554,099		2,088,497
Net VAT Receivable		25,851		36,008
Total Assets	$	81,310,177	$	97,495,151


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

LIABILITIES
Mortgages Payable	$	100,009,787	$	117,451,873
Accounts Payable		2,611,145		4,097,371
Accrued Expenses and Other Liabilities		15,870		18,633
Accrued Interest		10,047,003		8,201,549
Accrued Interest - Related Parties		1,071,429		946,232
Income Taxes Payable		260,211		274,369
Loans Payable - Related Parties		1,496,801		1,758,059
Notes Payable - Related Parties		5,605,007		6,580,648
Convertible Notes		364,352		378,165
Rents Received in Advance		940,043		539,047
Tenants Security Deposits Payable		71,275		53,227
Deferred Income Taxes		662,839		1,092,920
Liability on Interest Rate Swap Agreement		10,502,509		9,219,470
Total Liabilities		133,658,271		150,611,563

Commitments and Contingencies		-		-

STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, $0.001 par value, 1,000,000 shares authorized; 1,000 shares issued and outstanding		1		1
Common Stock, $0.001 par value; 300,000,000 shares authorized; 150,208,861 shares issued and outstanding		150,209		150,209
Additional Paid-In Capital		22,282,703		22,282,703
Accumulated Other Comprehensive Loss		(5,426,339)		(11,006,002)
Accumulated Deficit		(69,922,918)		(65,111,573)
Total RIIC Stockholders' Equity (Deficit)		(52,916,344)		(53,684,662)
Non-controlling Interests, Preferred Stock of Subsidiaries		568,250		568,250
Total Stockholders' Equity (Deficit)		(52,348,094)		(53,116,412)

Total Liablities and Stockholders' Equity (Deficit)	$	81,310,177	$	97,495,151



See notes to consolidated financial statements

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


	FOR THE THREE MONTHS ENDED							FOR THE SIX MONTHS ENDED
	JUNE 30,							JUNE 30,
	2010				2009			2010			2009
REVENUES
Base Rents		$	1,502,874		$	2,400,548		$	3,458,591		$	4,800,148
Other Income			467,018			452,977			1,108,930			1,066,225
Total Revenues			1,969,892			2,853,525			4,567,521			5,866,373

EXPENSES
Operating Services			619,391			606,225			1,352,422			1,535,501
Real Estate Taxes			51,620			43,447			96,847			83,197
General and Administrative			748,982			615,126			1,186,746			1,455,539
Depreciation			441,076			697,663			903,873			1,367,222
Total Expenses			1,861,069			1,962,461			3,539,888			4,441,459

OPERATING INCOME			108,823			891,064			1,027,633			1,424,914

OTHER INCOME (EXPENSES)
Interest Expense			(1,839,934	)		(1,878,597	)		(3,753,909	)		(3,675,179	)
Amortization - Deferred Financing Costs			(117,414	)		(125,410	)		(244,963	)		(245,817	)
Loss From Property Damage			(2,103,466	)		-			(2,103,466	)		-
Currency Gain (Loss)			122			(1	)		122			(85	)
Net Other Income (Expenses)			(4,060,692	)		(2,004,008	)		(6,102,216	)		(3,921,081	)

Loss Before Income Taxes			(3,951,869	)		(1,112,944	)		(5,074,583	)		(2,496,167	)

Provision for Income Taxes (Benefit)			(251,092	)		46,972			(263,238	)		94,037

NET LOSS		$	(3,700,777	)	$	(1,159,916	)	$	(4,811,345	)	$	(2,590,204	)

Net Loss Per Common Share:
Basic and diluted		$	(0.02	)	$	(0.01	)	$	(0.03	)	$	(0.02	)

Weighted Average Common
Shares Outstanding:
Basic and diluted			150,208,861			150,208,861			150,208,861			150,208,861



See notes to consolidated financial statements

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

JUNE 30, 2010



																		Non-controlling
									Accumulated							Total		Interests
								Aditional	Other							RIIC		Preferred		Total
	Preferred Stock			Common Stock				Paid-In	Comprehensive				Accumulated			Stockholders'		Stock of		Stockholders'
	Shares		Amount	Shares	Amount			Capital	Income (Loss)				Deficit			Equity (Deficit)		Subsidiaries		Equity (Deficit)

Balance at December 31, 2008 (Restated)	1,000	$	1	150,208,861	$	150,209	$	22,282,703	$	(6,322,009	)	$	(21,141,391	)	$	(5,030,487	)	$	568,250	$	(4,462,237	)

Components of Comprehensive Loss:

Foreign Currency Translation										(1,413,471	)					(1,413,471	)				(1,413,471	)
Cash Flow Hedge										(3,270,522	)					(3,270,522	)				(3,270,522	)

Net Loss for the Year Ended December 31, 2009													(43,970,182	)		(43,970,182	)				(43,970,182	)

Total Comprehensive Loss																(48,654,175	)				(48,654,175	)

Balance at December 31, 2009	1,000		1	150,208,861		150,209		22,282,703		(11,006,002	)		(65,111,573	)		(53,684,662	)		568,250		(53,116,412	)

Components of Comprehensive Loss:

Foreign Currency Translation										6,862,702						6,862,702					6,862,702
Cash Flow Hedge										(1,283,039	)					(1,283,039	)				(1,283,039	)

Net Loss for the Six Months Ended June 30 2010 (Unaudited)													(4,811,345	)		(4,811,345	)				(4,811,345	)

Total Comprehensive Income (Unaudited)																768,318					768,318

Balance at June 30, 2010 (Unaudited)	1,000	$	1	150,208,861	$	150,209	$	22,282,703	$	(5,426,339	)	$	(69,922,918	)	$	(52,916,344	)	$	568,250	$	(52,348,094	)



See notes to consolidated financial statements.

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	FOR THE SIX MONTHS ENDED
	JUNE 30,
	2010				2009

CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss		$	(4,811,345	)	$	(2,590,204	)

Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation			903,873			1,367,222
Amortization - Deferred Financing Costs			244,963			245,817
Provision for Doubtful Accounts			17,962			102,673
Loss from Property Damage			2,103,466			-
Deferred Income Tax			(430,081	)		(53,118	)
Currency (Gain) Loss			(122	)		85

Changes in operating assets and liabilities
(Increase) Decrease in:
Current Rents Receivable			(152,420	)		(660,468	)
Net VAT Receivable			5,252			-
Prepaid Expenses and Other Current Assets			(30,166	)		(177,707	)
Deposits			-			(1,481	)
Increase (Decrease) in:
Accounts Payable			(957,746	)		(658,351	)
Net VAT Payable			-			78,919
Accrued Expenses and Other Liabilities			(79,830	)		(1,381	)
Accrued Interest			3,336,605			2,581,277
Accrued Interest - Related Parties			289,350			290,461
Income Taxes Payable			28,904			127,861
Rents Received in Advance			524,145			1,042,111
Tenants Security Deposits Payable			28,271			-
Net cash provided by operating activities			1,021,081			1,693,716


CASH FLOWS FROM INVESTING ACTIVITIES
Property Acquired			(633,969	)		(74,032	)
Net cash provided by (used in) investing activities			(633,969	)		(74,032	)

CASH FLOWS FROM FINANCING ACTIVITIES
Payments on Mortgages Payable			(31,343	)		(187,500	)
Payments on Convertible Notes			-			(49,688	)
Proceeds from Loans Payable - Related Parties			(664	)		521,197
Payments on Loans Payable - Related Parties			-			(567,368	)
Payments on Loans Payable - Other			-			(76,265	)
Net cash used in financing activities			(32,007	)		(359,624	)

Net increase in cash and cash equivalents			355,105			1,260,060

Adjustment for change in exchange rate			29,980			69,767

Cash and cash equivalents, beginning of period			454,854			278,817

Cash and cash equivalents, end of period		$	839,939		$	1,608,644




See notes to consolidated financial statements

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	FOR THE SIX MONTHS ENDED
	JUNE 30,
	2010		2009


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

CASH PAID FOR
Interest	$	68,818	$	803,440
Taxes	$	65,750	$	19,294



NON-CASH INVESTING AND FINANCING ACTIVITIES:
Liability on Interest Rate Swap Agreement	$	2,139,030	$	1,969,588


See notes to consolidated financial statements

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED)

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Organization

Royal Invest International Corp., a Delaware corporation, together with its subsidiaries (collectively, the “Company”), owns, operates and manages real estate, in Europe. At June 30, 2010 and December 31, 2009, the Company owned 18 properties. The properties aggregate approximately 88,077 square meters (approximately 948,053 square feet), which are comprised of office buildings and business centers. The properties are located in Germany and the Netherlands.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements as of June 30, 2010, and for the six months ended June 30, 2010 and 2009 have been prepared in accordance with generally accepted accounting principles and in accordance with the instructions for Form 10-Q and Item 210.8-03 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statement presentation. In the opinion of management, the financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the consolidated financial position as of June 30, 2010, the consolidated results of operations for the three and six months ended June 30, 2010 and 2009 and consolidated cash flows for the six months ended June 30, 2010 and 2009. The results of operations for the six months ended June 30, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto of the Company and management’s discussion and analysis of financial condition and results of operations included in the Company’s annual report on Form 10-K for the year ended December 31, 2009.

Restatement

As of December 31, 2008, the Company restated its consolidated balance sheet to reflect a derivative liability resulting from a cash flow hedge as disclosed in Note 6. The Company entered into an interest rate swap that at that time effectively converted the interest rate on the mortgage with the Bank of Scotland from Euribor + 1.32% to a fixed rate of 4.65%. Consequently, as of June 30, 2009 and December 31, 2008, the Company has recorded a liability on interest rate swap agreement of US $7,918,536 (€ 6,486,350) and US $5,948,948 (€ 4,220,010), respectively, which increased comprehensive loss for the six months ended June 30, 2009 and the year ended December 31, 2008 to US $4,701,033 and US $22,901,812, respectively, and accumulated other comprehensive loss as of June 30, 2009 and December 31, 2008 to US $8,432,838 and US $6,322,009, respectively. The restatement had no affect on net loss or net loss per common share for the six months ended June 30, 2009 or the year ended December 31, 2008 or any previous period.

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED)

NOTE 2 – GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred a net loss of $4,811,345 for the six months ended June 30, 2010, has an accumulated deficit of $69,922,918 at June 30, 2010, is in default of one of its mortgages payable and related debt covenants at June 30, 2010, and there are existing uncertain conditions which the Company faces relative to its obtaining financing and capital in the equity markets. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company is presently working to raise additional capital to meet its working capital needs and is restructuring operating costs to be more in line with revenues. There can be no assurances, however, that it will be successful in its efforts to raise capital or to reduce operating costs to a level where it will attain profitability.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Other accounting policies are set forth in Note 3 of the audited consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2009.

Principals of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Foreign Currency Translation

The Company considers the EURO (“€”) to be its functional currency. Assets and liabilities were translated into US dollars (“US$”) as of June 30, 2010 and December 31, 2009 at the period end exchange rates of € 1.00 to US $1.2208 and € 1.00 to US $1.4333, respectively. Statement of Operations amounts for the six months ended June 30, 2010 and 2009 were translated using the average rates during the periods of € 1.00 to US $1.33054 and € 1.00 to US $1.33517, respectively.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED)

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Rental Property

Rental properties are stated at cost less accumulated depreciation. Costs directly related to the acquisition of rental properties are capitalized. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives.

Properties are depreciated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows:

Buildings	25-50 years
Improvements	5-35 years
Equipment	5-10 years

Upon acquisition of rental property, the Company estimates the fair value of acquired tangible assets, consisting of land, building and improvements. The Company allocates the purchase price to the assets acquired and liabilities assumed based on their relative fair values.

On a periodic basis, management assesses whether there are any indicators that the value of the Company’s real estate properties held for use may be impaired. A property’s value is impaired only if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property. To the extent impairment has incurred, the loss shall be measured as the excess of the carrying amount of the property over the fair value. The Company’s estimates of aggregate future cash flows expected to be generated by each property are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and costs to operate each property. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analyses may not be achieved. At December 31, 2009, as a result of the global economy and its effect on real estate, management assessed that there were factors that may impair the value of the Company’s real estate properties. Based on calculations using the above assumptions, management estimated that the carrying amount of rental properties exceeded fair value at December 31, 2009 and a charge to operations of US $38,038,014 (€ 27,274,628) was recorded.

In June 2010, a rental property in Germany owned by one of the Company’s subsidiaries was partially damaged by a fire. Tenants remain in the undamaged section of the property. The Company has recorded a loss of US $2,103,466 (€ 1,580,912) in June 2010 which represents the estimated damages to the property, net of estimated insurance recovery.

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED)

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income and Other Taxes

Royal Invest Europe B.V. (“RIE”), a Dutch corporation and a subsidiary of the Company, presently owns nine real estate properties located in the Netherlands. Since RIE is a Dutch corporation, it is subject to the Dutch tax laws and therefore needs to do income tax declarations in the Netherlands.

Royal Invest Germany Properties 1 BV (“RIGP1”) (formerly Rico Staete B.V.), a Dutch corporation and one of the subsidiaries of the Company presently owns one real estate property located in Germany. The rental income is originating from a German tenant in Germany and therefore is subject to German tax laws. RIGP1 declares and pays the income tax according to German tax rules. Since RIGP1 is a Dutch corporation, it is also subject to Dutch tax laws and therefore also needs to do income tax declarations in the Netherlands. The difference between the German and the Dutch income tax is payable in the Netherlands.

Alfang B.V. trading as Royal Invest Dutch Properties 1 B.V. (“RIDP1”), a Dutch corporation and one of the subsidiaries of the Company presently owns five real estate properties located in the Netherlands. Since RIDP1 B.V. is a Dutch corporation, it is subject to the Dutch tax laws and therefore needs to do income tax declarations in the Netherlands.

AmogB B.V. trading as Royal Invest Dutch Properties 2 B.V. (“RIDP2”), a Dutch corporation and one of the subsidiaries of the Company presently owns three real estate properties located in the Netherlands. Since RIDP2 B.V. is a Dutch corporation, it is subject to the Dutch tax laws and therefore needs to do income tax declarations in the Netherlands.

The Company and its subsidiaries file standalone U.S. federal and state and foreign corporate income tax returns. The Company does not believe it has any uncertain tax positions through the six months ending June 30, 2010. The Company is subject to U.S. federal and state income tax examinations by tax authorities for all tax periods. The Company recognizes interest and penalties accrued related to unrecognized tax benefits, if any, in its income tax provision. The Company had no interest or penalties accrued at June 30, 2010 or December 31, 2009.

Earnings (Loss) Per Share

The Company presents both basic and diluted earnings (loss) per share (“EPS”). Basic EPS excludes dilution and is computed by dividing net income available to common shareholders by the weighted average number of shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, where such exercise or conversion would result in a lower EPS amount.

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED)

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Derivative Instruments

The Company measures derivative instruments, including certain derivative instruments embedded in other contracts, at fair value and records them as an asset or liability, depending on the Company’s rights or obligations under the applicable derivative contract. For derivatives designated and qualifying as fair value hedges, the changes in the fair value of both the derivative instrument and the hedged item are recorded in earnings. For derivatives designated as cash flow hedges, the effective portions of the derivative are reported in other comprehensive income and are subsequently reclassified into earnings when the hedged item affects earnings. Changes in fair value of derivative instruments not designated as hedging and ineffective portions of hedges are recognized in earnings in the affected period.

New authoritative accounting guidance under FASB ASC Topic 815, “Derivatives and Hedging”, which became effective January 1, 2009, amends prior guidance to amend and expand the disclosure requirements for derivatives and hedging activities to provide greater transparency about (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedge items are accounted for under ASC Topic 815, and (iii) how derivative instruments and related hedged items affect an entity’s financial position, results of operations and cash flows. To meet those objectives, the new authoritative accounting guidance requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. The new authoritative accounting guidance did not have a significant impact on the Company’s financial statements.

Fair Value

The Company measures certain financial and non-financial assets and liabilities in accordance with ASC Topic No. 820 “Fair Value Measurements and Disclosures”. The pronouncement clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value (see Note 6).

Reclassifications

Certain 2009 revenue and expense items have been reclassified to conform to the June 30, 2010 presentation.

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED)

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board ("FASB") issued, and the Company adopted, Accounting Standards Codification (“ASC”) Update No. 2010-05 “Escrowed Share Arrangements and the Presumption of Compensation” (“ASCU No. 2010-05”). ASCU No. 2010-05 codifies the SEC staff’s views on escrowed share arrangements which historically has been that the release of such shares to certain shareholders based on performance criteria is presumed to be compensatory. When evaluating whether the presumption of compensation has been overcome, the substance of the arrangement should be considered, including whether the transaction was entered into for a reason unrelated to employment, such as to facilitate a financing transaction. In general, in financing transactions the escrowed shares should be reflected as a discount in the allocation of proceeds. In debt financings the discounts are to be amortized using the effective interest method, while discounts on equity financings are not generally amortized. As it relates to future financings, the adoption of this update may have a material effect on the Company’s consolidated financial statements.

In January 2010, the FASB issued ASC Update No. 2010-06 “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements” which updated guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. This update requires new disclosures on significant transfers of assets and liabilities between Level 1 and Level 2 of the fair value hierarchy (including the reasons for these transfers) and the reasons for any transfers in or out of Level 3. This update also requires a reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. In addition to these new disclosure requirements, this update clarifies certain existing disclosure requirements. For example, this update clarifies that reporting entities are required to provide fair value measurement disclosures for each class of assets and liabilities rather than each major category of assets and liabilities. This update also clarifies the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. This update will become effective for the Company with the interim and annual reporting period beginning January 1, 2010, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will become effective for the Company with the interim and annual reporting period beginning January 1, 2011. The Company will not be required to provide the amended disclosures for any previous periods presented for comparative purposes. Other than requiring additional disclosures, adoption of this update will not have a material effect on the Company's consolidated financial statements.

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED)

NOTE 4 – NOTES PAYABLE - RELATED PARTIES AND CONVERTIBLE PROMISSORY NOTES

In December 2007, the Company issued 8% convertible promissory notes to ECM Participations B.V. (“ECM”) (formerly, ECM Hoff Holding B.V) and Muermans Vast Goed Roemond B.V. in the amounts of € 1,091,257 (US $1,564,098) and € 3,500,000 (US $5,016,550), respectively, as part of the consideration for the purchase price of properties acquired. The notes are due December 31, 2010, but were convertible at any time into shares of common stock, along with any accrued and unpaid interest, at a conversion price of $1.60 per share, unless the price of common stock on the date of conversion is $1.60 or less. If the price of common stock on the date of conversion is $1.60 or less, than the conversion price will be the average price of the common stock over the 90 days prior to the conversion date reduced by 25%.

Effective on June 30, 2008, the Company and note holders modified the terms of the promissory notes where as the conversion features on the notes were waived in consideration for the company agreeing to pay the note holders a premium on the original notes. Such premium is calculated based on 21% of the original note principal plus interest accrued through June 30, 2008. The modifications are accounted for as a debt extinguishment with the modified terms representing new notes. The premiums amounted to € 238,534 (US $376,820) and € 765,053 (US $1,208,708), respectively (see Note 10). The Company recognized a net loss on the modification of € 896,799 (US $1,416,852) at June 30, 2008, based on the fair value of the notes after the modification compared to the carrying value of the notes under the original terms (which included the derivative liability). As a result of the modification, the Company no longer had a derivative liability as of June 30, 2008.

On March 25, 2010, a Deed of Assignment (“Assignment”) was signed by the Company, ECM Participations B.V. and Penny International B.V. (“Penny”) following the outcome of the consequences of the pledge agreement signed by ECM for its funding. Consequently, all amounts previously owed by the Company to ECM, including accrued interest up to March 31, 2010, were assigned to Penny. The Managing Director of RIE and RIDS is also the statutory director of Penny. The Assignment includes, as of March 31, 2010, the above note payable of € 1,091,257 (US $1,468,286) and related accrued interest of € 151,173 (US $203,403) (see Note 10).

As of June 30, 2010, the above notes, which total € 4,591,257 (US $5,605,007), are outstanding.

On October 9, 2007, the board of directors approved the issuance of a 6% approximately US $143,000 (€ 100,000) convertible promissory note which can be converted prior to October 9, 2010 at the option of the holder into shares of common stock at a fixed conversion price of $1.25 per share. During 2009, approximately US $50,000 (€ 35,000) was paid on the note. The balance outstanding at June 30, 2010 is US $79,352 (€ 65,000).

During the period March 1, 2005 to July 31, 2005, the Company issued convertible promissory notes aggregating US $589,000. The notes are unsecured and bear interest at a rate of 10% per annum. The principal and interest was due June 27, 2006. On November 16, 2005, a majority of holders of the outstanding notes opted to convert the principal and interest on their notes into common shares of the Company at US $0.75 per share. The Company converted US $542,067 of notes plus interest into 849,176 shares of common stock. The outstanding notes of approximately US $65,000 are currently in default.

During the period January 1, 2006 to June 30, 2006, the Company issued additional convertible promissory notes aggregating US $220,000. The notes are unsecured and bear interest at a rate of 10% per quarter. The principal and interest is due 90 days after the issuance of the notes, but automatically renews and continues to accrue interest. The notes are convertible into shares of common stock of the company at US $0.75 per share. These notes are currently in default.

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED)

NOTE 5 – MORTGAGES PAYABLE

The Company has mortgages which are collateralized by most of the Company’s rental properties. As of June 30, 2010 and December 31, 2009 all of the Company’s properties, with a net book value of approximately US $76 million and US $93 million, respectively, are encumbered by the Company’s mortgages. Payments on mortgages are generally due in quarterly installments of principal and interest, or interest only.

The Company’s properties are primarily mortgaged through a € 100,000,000 financing agreement with the Bank of Scotland. The terms call for a pay down based on a percentage of the outstanding amount utilized (1.25% in year 1; 1.50% in years 2 & 3; 2.0% in years 4, 5 & 6) with maturity at 6 years from the initial drawdown which was December 27, 2007. Interest is due quarterly at Euribor + 1.32%. The agreement contains customary financial covenants which the Company is not in compliance with as of June 30, 2010 and December 31, 2009. In the fourth quarter of 2009, the Company borrowed approximately US $530,000 (€ 380,000) on the mortgage for amounts due under an interest rate swap agreement. The amount outstanding at June 30, 2010 and December 31, 2009 is US $96,383,765 (€ 79,324,022) and US $113,695,121 (€ 79,324,022), respectively. The remaining amount of the facility of approximately € 20,676,000 can be used for financing other properties (85% LTV/LTC). The mortgage is currently in default and as of June 30, 2010 approximately US $9,929,620 (€ 8,133,699) of interest, interest swap, late payment penalty and redemption due is in arrears.

The Company has an additional mortgage payable to SNS Bank. The amount outstanding on this mortgage at June 30, 2010 and December 31, 2009 is US $3,171,022 (€ 2,597,495) and US $3,756,752 (€ 2,621,051), respectively. The SNS Bank Mortgage is payable in monthly installments of $22,335. The mortgage bears a variable interest rate (monthly Euribor + 2%). The mortgage is collateralized by the land and buildings. The balloon payment due at maturity was not paid, however, the maturity date is extended each month upon the monthly payment of an extension fee. The Company continues to make monthly payments. The Company is currently in negotiations with SNS Bank to refinance the mortgage.

At December 31, 2009, minimum future principal payments over the next five years and in the aggregate are as follows:

Year	Amount to be paid		Total Percentage
	Yearly		To be paid Yearly *
2010	$	7,656,968		1.50	%
2011		2,141,644		2.00	%
2012		2,284,419		2.00	%
2013		2,284,419		2.00	%
2014		103,084,423		89.75	%
Thereafter		--		--	%

Total	$	117,451,873		97.25	%

* Bank of Scotland Facility

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED)

NOTE 6 – CASH FLOW HEDGE

The Company holds derivative financial instruments for the purpose of hedging the risks of certain identifiable and anticipated transactions. In general, the types of risks hedged are those relating to the variability of future earnings and cash flows caused by changes in interest rates. In hedging the transactions the Company, in the normal course of business, entered into an interest rate swap that effectively converted the interest rate on the total mortgage loan (€ 79,000,000) with the Bank of Scotland from Euribor + 1.32% to a fixed rate of 4.365% (4.65% through April 15, 2009 on € 65,000,000).

Following is an analysis of the changes in the net unrealized loss on cash flow hedges included in accumulated other comprehensive income:

	June 30,			December 31,
	2010				2009
	(Unaudited)
Balance, beginning of period	$	(9,219,470	)		$	(5,948,948	)
Net unrealized loss for the period		(1,283,039	)			(3,270,522	)

Balance, end of period	$	(10,502,509	)		$	(9,219,470	)

Effective January 1, 2008, the company adopted FASB ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”), formerly SFAS 157, “Fair Value Measurements”. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1 – inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement dates.

Level 2 – inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other then quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3 – inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED)

NOTE 6 – CASH FLOW HEDGE (CONTINUED)

The following tables present the assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value.

			Fair Value Measurements at Reporting Date Using
			Quoted
			Prices
			In Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	June 30,		Assets		Inputs		Inputs
	2010 (Unaudited)		(Level 1)		(Level 2)		(Level 3)

Assets	$	--	$	--	$	--	$	--

Total assets	$	--	$	--	$	--	$	--

Liabilities
Derivative
instruments	$	10,502,509	$	--	$	10,502,509	$	--

	$	10,502,509	$	--	$	10,502,509	$	--

			Fair Value Measurements at Reporting Date Using
			Quoted
			Prices
			In Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
	2009		(Level 1)		(Level 2)		(Level 3)

Assets	$	--	$	--	$	--	$	--

Total assets	$	--	$	--	$	--	$	--

Liabilities
Derivative
instruments	$	9,219,470	$	--	$	9,219,470	$	--

	$	9,219,470	$	--	$	9,219,470	$	--

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED)

NOTE 7 - TENANT LEASES

At June 30, 2010 and December 31, 2009, the Properties are leased to tenants under various operating leases expiring through 2022. The leases provide for annual base rents and the pass-through of charges for electrical usage. On an ongoing basis lease contracts are renegotiated and extended.

At December 31, 2009 future minimum rentals to be received under non-cancelable operating leases over the next five years and in the aggregate are as follows:

Year	Amount
2010	$	5,798,630
2011		3,632,861
2012		3,196,267
2013		2,202,788
2014		1,283,230
Thereafter		1,334,252

Total	$	17,448,028

NOTE 8 – INCOME TAXES

Income tax (benefit) expense consisted of the following:

	For the Three Months Ended					For the Six Months Ended
	June 30,					June 30,
	2010			2009		2010			2009
	(Unaudited)			(Unaudited)		(Unaudited)			(Unaudited)
Current:
United States	$	--			--	$	--		$
Foreign		71,823			3,604		166,843			147,155
		71,823			3,604		166,843			147,155

Deferred:
United States		--			--		--			--
Foreign		(322,915	)		43,368		(430,081	)		(53,118	)
		(322,915	)		43,368		(430,081	)		(53,118	)

Totals	$	(251,092	)	$	46,972	$	(263,238	)	$	94,037

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED)

NOTE 8 – INCOME TAXES (CONTINUED)

Pre-tax income (loss) consisted of the following:

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

United States	$	(19,991	)	$	(61,497	)	$	(13,806	)	$	(282,885	)
Foreign		(3,931,878	)		(1,051,447	)		(5,060,777	)		(2,213,282	)

	$	(3,951,869	)	$	(1,112,944	)	$	(5,074,583	)	$	(2,496,167	)

The income tax expense differs from the amount computed by applying the United States statutory corporate income tax rate as follows:

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
United States Statutory Corporate
Income Tax Rate		(34.0	)%		(34.0	)%		(34.0	)%		(34.0	)%
Permanent Differences		--			--			--			--
Change in Valuation Allowance on
Deferred Tax Assets		34.0	%		34.0	%		34.0	%		34.0	%
Effect of Foreign Earnings, Net of
Allowable Credits		(6.4	)%		4.2	%		(5.2	)%		3.8	%
Income Tax		(6.4	)%		4.2	%		(5.2	)%		3.8	%

The components of deferred tax assets (liabilities) at June 30, 2010 and December 31, 2009 are as follows:

	June 30, 2010 (Unaudited)			December 31, 2009

Deferred Tax Assets (Liabilities) – Long Term
Net Operating Losses	$	783,000		$	779,000
Property		(662,839	)		(1,092,920	)

Valuation Allowance		(783,000	)		(779,000	)

Net Deferred Tax Liability	$	(662,839	)	$	(1,092,920	)

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED)

NOTE 8 – INCOME TAXES (CONTINUED)

The Company has established a full valuation allowance on its deferred tax asset because of a lack of sufficient positive evidence to support its realization. The valuation allowance increased by approximately US $4,000 and US $40,000 in the six months ended June 30, 2010 and the year ended December 31, 2009, respectively.

As of December 31, 2009, there are approximately $2.3 million in US net operating loss carryforwards expiring through 2029. Section 382 of the Internal Revenue Code limits the utilization of these losses when there is a change in ownership, as defined in the code. As a result of stock issued for acquisitions and properties purchased, the utilization of net operating loss carryforwards are limited.

In the past, RIGP1, RIDP1 and RIDP2, wholly-owned subsidiaries of the Company, sold certain properties at a profit. Dutch tax law allows Real Estate Investment Trusts to postpone the payment of income tax resulting from the sale of properties by setting up a replacement reserve to purchase another property within a certain time. A portion of the original profit is not allowed to be postponed. The postponed income tax payable is shown as deferred tax in the balance sheet.

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED)

NOTE 9 – STOCKHOLDERS’ EQUITY

The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.001 and 300,000,000 shares of common stock, par value $0.001 per share. At June 30, 2010 and December 31, 2009 there were 1,000 shares of preferred stock and 150,208,861 common shares issued and outstanding. The preferred shareholders have the right to appoint one member to the Board of Directors and the right to request the Board of Directors to call for a shareholders’ meeting. The preferred shares were issued in conjunction with the MTMN B.V. property acquisition.

NOTE 10 – RELATED PARTY TRANSACTIONS

At June 30, 2010 and December 31, 2009, the Company had loans payable to related parties of US $1,496,801 and US $1,758,059, respectively, of which US $1,161,865 and US $1,364,106, respectively, was payable to two note holders, primarily due to the premiums incurred on the debt modification dated June 30, 2008 (see Note 4). The US $1,161,865 and US $1,364,106 at June 30, 2010 and December 31, 2009, respectively, is payable on demand and bears interest at 8%.

At March 31, 2010, pursuant to the Assignment signed by the Company, ECM Participations B.V. and Penny International B.V., above loans payable in the amount of € 490,372 (US $659,305) and related accrued interest of € 68,405 (US $91,971) were assigned by ECM to Penny (see Note 4).

Loans totaling US $275,602 and US $318,995 at June 30, 2010 and December 31, 2009, respectively, are unsecured and bear a variable interest rate (Eurobor + 2%).

Loans totaling US $59,334 and US $74,958 at June 30, 2010 and December 31, 2009, respectively, are unsecured and are non-interest bearing.

Effective October 22, 2008, the shareholders approved the appointment of Mr. Lambert Kassing as the new Managing Director of RIE and RIDS. Mr. Kassing is to provide management services to the Company, as defined in the agreement with Sterk Trading BvbA, for compensation of €15,000 (approximately US $22,000) per month, commencing October 22, 2008, for an indefinite period (with a minimum term of one year), subject to one month written notice by either party. The Company incurred approximately US $120,000 and US $120,000 in expense under this agreement during the six months ended June 30, 2010 and 2009, respectively.

On October 22, 2008, the Company entered into a new Legal Services Agreement with SEC ATTORNEYS LLC in which Jerry Gruenbaum, the CEO of the Company is the Managing Member. Under said Legal Services Agreement, the Company agreed to pay SEC ATTORNEYS LLC €12,500 (approximately US $18,000) per month for one year and thereafter for an indefinite period subject to one month written notice by either party to provide legal service to the Company and to provide a CEO and CFO for the Company. The new agreement became effective December 1, 2008. The Company incurred approximately US $100,000 and US $96,000 in expense under this agreement in the six months ended June 30, 2010 and 2009, respectively. There is approximately US $400,000 and US $403,000 payable as of June 30, 2010 and December 31, 2009, respectively.

On May 25, 2007 the Company entered into a Consulting Agreement with ECM Participations B.V. [formerly ECM Hoff Holding B.V.] in which the then Managing Director of the Company's subsidiary Royal Invest Europe B.V. is a shareholder, to secure financing for the Company and to fund its planned acquisitions. ECM was to be paid up to a 2% finders fee for securing funding from a bank, and up to 8% finder's fee for securing funding from investors for the Company. The Company incurred a fee of approximately € 1,594,000 (US $2,352,000) upon the successful completion of funding with the Bank of Scotland. Effective May 20, 2008, the Company and ECM mutually agreed to cancel the Consulting Agreement as it relates to future funding arrangements. Commissions earned prior to the effective date of the cancellation agreement are due and payable to ECM. At June 30, 2010 and December 31, 2009, € 157,322 (US $192,059) and € 157,322 (US $225,442) is outstanding, respectively. At March 31, 2010, pursuant to the Assignment signed by the Company, ECM Participations B.V. and Penny International B.V. (see Note 4), this amount was assigned by ECM to Penny.

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED)

NOTE 11 – NON-CONTROLLING INTEREST

The Company’s subsidiary, Royal Invest Europe B.V., has non-cumulative preference shares outstanding valued at € 166,500 (US $234,715) which are owned by minority shareholders. The shareholders are entitled to 6% of the nominal value of these shares annually (approximately US $13,000) payable from the profits of RIE. No amount is payable if RIE’s operations result in a loss.

The Company’s subsidiary, Alfang B.V., has non-cumulative preference shares outstanding valued at € 224,000 (US $315,773) which are owned by minority shareholders. The shareholders are entitled to 6% of the nominal value of these shares annually (approximately US $18,000) payable from the profits of Alfang B.V. No amount is payable if Alfang B.V.’s operations result in a loss.

The Company’s subsidiary, AmogB B.V., has non-cumulative preference shares outstanding valued at € 12,600 (US $17,762) which are owned by minority shareholders. The shareholders are entitled to 6% of the nominal value of these shares annually (approximately US $1,000) payable from the profits of AmogB B.V. No amount is payable if AmogB B.V.’s operations result in a loss.

NOTE 12 - COMMITTMENTS AND CONTINGENCIES

On or about June 19, 2007 the Company signed a Contract with Bloemers Onroerend Goed B.V. (“Bloemers”) to purchase a commercial warehouse and office building known as J.C.Beetslaan 153 at 2131 AL Hoofddorp, the Netherlands for € 6,500,000 (US $9,163,000), € 6,000,000 (US $8,458,000) in cash and € 500,000 (US $704,850) in Company common stock. In addition the Company will pay any real estate transfer tax and notary transfer expenses. This binding contract required the property to be transferred by October 1, 2007. While awaiting new equity funding, the transfer has been postponed until December 1, 2008. In connection with the postponement of the acquisition to December 1, 2008, the Company has agreed to make a deposit of € 500,000 (US $704,850) which will be forfeited if the closing does not take place and to pay a fee of 7% of the € 6,000,000 (US $8,458,000) financing on a monthly basis less applicable rental income received. In addition the Company has agreed to reimburse Bloemers for the interest incurred on the property loans and certain other operating costs until the deal is closed. As at December 31, 2008, the Company paid € 446,688 (US $629,696) of the deposit and incurred an expense of € 487,684 (US $717,549) for the fee, of which € 454,825 (US $641,167) has been paid. Additionally, during 2008, the Company has paid € 293,016 (US $431,126) in interest and accrued € 300,000 (US $441,402) in other operating costs. In the fourth quarter of 2008, due to the current economic climate, the Company charged the deposit to operations and at December 31, 2008, there was a balance due for the fee and deposit of €86,171 (US $121,475). On December 16, 2009, the Company and Bloemers entered into an agreement, whereas the Company agreed to pay Bloemers € 1,150,000 (US $1,648,295) as final settlement for cancellation of the contract as follows:

On December 31, 2009 - € 100,000 (approximately US $143,000)

On or before January 22, 2010 - € 350,000 (approximately US $502,000)

On or before February 22, 2010 - € 50,000 (approximately US $72,000)

On or before March 22, 2010 - € 50,000 (approximately US $72,000)

On or before April 22, 2010 - € 50,000 (approximately US $72,000)

On or before May 22, 2010 - € 50,000 (approximately US $72,000)

On or before June 22, 2010 - € 50,000 (approximately US $72,000)

On or before July 22, 2010 - € 200,000 (approximately US $287,000)

On or before August 22, 2010 - € 50,000 (approximately US $72,000)

On or before September 22, 2010 - € 50,000 (approximately US $72,000)

On or before October 22, 2010 - € 50,000 (approximately US $72,000)

On or before November 22, 2010 - € 50,000 (approximately US $72,000)

On or before December 22, 2010 - € 50,000 (approximately US $72,000)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED)

NOTE 12 - COMMITTMENTS AND CONTINGENCIES (CONTINUED)

If the Company makes these payments timely, Bloemers will release the Company from any and all liabilities that have arisen from the purchase agreement dated July 19, 2007. If any payment is not made on or before its due date, an amount of € 650,000 (approximately US $932,000) will be immediately due and payable plus any remaining payments due under the settlement agreement. Additionally, Bloemers will be entitled to the original amounts under the purchase agreement less any amounts already paid plus any additional costs. As of June 30, 2010, the Company has made the required payments and a total of US $549,360 (€ 450,000) is due. In the six months ended June 30, 2009, the Company paid US $280,385 (€ 210,000) in interest and US $90,661 (€ 67,902) in operating costs, respectively. No interest or operating costs were paid in the six months ended June 30, 2010.

On June 14, 2007 the Company signed a Contract with Stedekroon B.V. to acquire two commercial properties, one is a 8,713 square meters (approx. 93,688 square feet) office building in Amersfoort, the Netherlands which has an annual rental income of €417,590 (approximately US $614,000) with Norit N.V. a subsidiary of a publicly traded tenant that has a lease contract until December 20, 2016 and the other, is a 4,402 square meters (approx. 47,333 square feet) office building with a shopping strip in Emmen, the Netherlands which has an annual rental income from four tenants, including from the national government of the Netherlands which pays €438,634 (approximately US $645,000) and the other tenants pay a total of €93,510 , €22,231 and €30,945 (approximately US $138,000, US $33,000 and US $46,000, respectively) for a total of €585,320 (approximately US $862,000), for a combined rental income of €1,002,910 (approximately US $1,476,000). The properties are being purchased for €13,750,000 (approximately US $20,797,000) for cash. The Contract has been approved by the Board of Directors. In addition the Company will pay any real estate transfer tax and notary transfer expenses. Negotiations are currently taking place with the current owner concerning rent increases and contract renewals in conjunction with extensive upgrades requested by the national government of the Netherlands (requiring approximately € 2,500,000 or US $3,524,250 in additional investment). On May 26, 2008, the Company signed a definitive and binding Purchase Agreement with Stedekroon, B.V. Due to the current economic climate the Company could not obtain adequate financing and the Purchase Agreement was terminated. As provided in the Purchase Agreement, the Company incurred a penalty of 10% of the purchase price, €1,375,000 (US $2,023,093), in the fourth quarter of 2008. At December 31, 2008, €250,000 (US $352,425) has been paid and €1,150,000 (US $1,621,155), including €25,000 (US $35,243) of interest was accrued for this amount.

On April 24, 2009, the Company, through its wholly-owned subsidiary RIE, and Stedekroon BV mutually agreed to the following:

On April 25, 2009 RIE will pay Stedekroon BV € 60,000 (approximately US $79,000)

On or before July 15, 2009, RIE will pay Stedekroon BV € 60,000 (approximately US $79,000)

On or before October 15, 2009, RIE will pay Stedekroon BV € 60,000 (approximately US $79,000)

On or before December 15, 2009, RIE will pay Stedekroon BV € 120,000 (approximately US $158,000)

As of December 31, 2009, the Company has made the required payments to Stedekroon BV and as a result € 625,000 (approximately US $872,000), which had been previously accrued and expensed, was reversed and resulted in a reduction of general and administrative expenses.

ROYAL INVEST INTERNATIONAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED)

NOTE 12 - COMMITTMENTS AND CONTINGENCIES (CONTINUED)

On September 7, 2007, the Company entered into a binding Memorandum of Agreement to acquire all of the issued and outstanding shares of Glacier Gazdasagi Tanacsado es Szolgaltato Korlatolt Felelossegu Tarsagag (“Glacier”) for €15,000,000 (approximately US $21,000,000 excluding transfer costs which are to be paid by the Company. The purchase price is to be paid as follows: notes payable in the amount of €12,000,000 (approximately US $17,000,000) and cash and shares of the Company's common stock in the amount of €3,000,000 (approximately US $4,000,000). The amount of Company common stock issued in the purchase is limited to €1,500,000 (approximately US $2,000,000) with a 24 month lock-up period and will be based on $1.25 per share. Glacier owns five (5) commercial rental properties in Budapest, Hungary. The Company is in negotiation to cancel the agreement and expects that the counterparty will agree without being charged with any penalties.

On April 8, 2010, ECM Hoff Holding BV sold its 63,306,320 shares to 5 separate unaffiliated individuals or entities under its obligations from a pledge agreement due to its funding. This sale may be challenged in a Dutch court by an individual who has brought a legal claim against ECM and a claim to these shares and therefore our transfer agent has not made a determination as to when and if it will recognize the legal transfer of the shares held by ECM Hoff.

NOTE 13 – SUBSEQUENT EVENTS

In August 2010, the Company entered into a purchase agreement with an unrelated party and sold 120 shares (of the 130 shares owned by the Company and outstanding as of that date) of RIGP1 at a purchase price of €1.00. The Company will retain ownership of the remaining 10 shares of RIGP1. RIGP1 had an excess of liabilities over assets of approximately US $513,000 (approximately € 420,000) as of June 30, 2010. The Company estimates that it will realize a gain on the sale of approximately US $660,000 (approximately € 495,000).

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements in Item 1 and the cautionary statements below.

Executive Summary

We were incorporated in the State of Delaware as part of a reorganization on May 2, 2005. In January 2007 we changed our name to Royal Invest International Corp. (“Royal Invest”) and we trade on the OTC under the stock symbol “RIIC”. We were originally organized on October 30, 1980, under the laws of the State of Florida as C.N.W. Corp.

On July 19, 2007 through our subsidiary Royal Invest Europe B.V. we acquired the shares of Rico Staete B.V. which owns a commercial real estate property located at Tackenweide 48, in Emmerich, Germany, consists of approximately 9.005 m2 rentable floor surface business accommodation as well as 1.478 m2 rentable floor surface office space. In December 18, 2007 we acquired a new subsidiary called Thereafter, Royal Invest Europe B.V., our subsidiary transfered Royal Invest Germany Properties 1 B.V.,a subsidiary of Royal Invest Europe B.V. to our subsidiary Vastgoed Beleggings Mij. Bunnik I B.V. With the addition of Vastgoed Beleggings Mij. Bunnik I B.V., we have a total of three subsidiaries in the Netherlands, including Royal Invest Europe B.V., and Royal Invest Development and Services B.V. Vastgoed Beleggings Mij. Bunnik I B.V. has filed with the Chamber of Commerce at The Hague allowing it to use the trade name Royal Invest Europe 2.

On December 27, 2007 through our subsidiary Royal Invest Europe B.V., we acquired a 2,680 m2 (approximately 28,817 square feet) commercial office building known as Sloterweg 22 in Badhoevedorp, the Netherlands, we acquired a 5,150 m2 (approximately 55,434 square feet) commercial office building known as Emmakade 59-60 in Leeuwarden, the Netherlands, we acquired 6 properties in the Netherlands, located at Mijlweg 7, in Vianen, the Netherlands; Berenkoog 53, in Alkmaar, the Netherlands; Keulsekade 21, in Utrecht, the Netherlands; Edisonweg 9, in Woerden, the Netherlands; De Schans 1802, in Lelystad, the Netherlands; and Franciscusweg 8-10, in Hilversum, the Netherlands, we acquired an 18,338 m2 (approximately 197,183 square feet) commercial office building known as Schepersmaat 4, 9405 TA Assen, the Netherlands, we acquired the shares of Alfang B.V.of Eindhoven, the Netherlands which owns a series of mortgaged commercial properties located at Parallelweg 29 in Beverwijk, The Netherlands; Kriuisweg 855, 857, 859 in Hoofddorp, The Netherlands; Schinkelwaard 20 in Alkmaar , The Netherlands; Willemstraat 47, 67, 69 in Hengelo, The Netherlands; Zuidermolenweg 7 in Amsterdam, The Netherlands; and Produktieweg 119 in Wormerveer, The Netherlands and we acquired the shares of AmogB B.V. which owns a portfolio of mortgaged commercial properties in the Netherlands.

Business and Investment Objectives and Operating Strategies

Since our formation, our business and investment objectives have been to:

· obtain capital gain on the sale of any properties;

· make new investments in properties or joint ventures, including by, directly or indirectly, developing new properties; and

· preserve and protect the shareholders’ capital.

Our board of directors in their sole discretion, may change these investment objectives as it deems appropriate and in our best interests. Prior to changing any of the investment objectives, the board of directors will consider, among other factors, expectations, changing market trends, management expertise and ability and the relative risks and rewards associated with any change.

We intend to reach our business and investment objectives through our acquisition and operating strategies. Our acquisition and operating strategies are to:

· focus on Continental European and Great Britain markets;

●maintain a portfolio which is diversified by property type and to some degree by geographical location;

· achieve and maintain high occupancy and increase rental rates through: (1) efficient leasing strategies, and (2) providing quality maintenance and services to tenants;

· control operating expenses through operating efficiencies and economies of scale;

· attract and retain high quality tenants;

· invest in properties that we believe offer significant growth opportunity; and

· emphasize regular repair and capital improvement programs to enhance the properties’ competitive advantages in their respective markets.

Competition

We compete with other entities to locate suitable properties for acquisition, to locate purchasers for our properties and to locate tenants to rent space at each of our properties. Although our business is competitive, it is not seasonal. While the markets in which we compete are highly fragmented with no dominant competitors, we face substantial competition. This competition is generally for the retention of existing tenants at lease expiration or for new tenants when vacancies occur. There are numerous other similar types of properties located in close proximity to each of our properties. We maintain the suitability and competitiveness of our properties primarily on the basis of effective rents, amenities and services provided to tenants. The amount of leasable space available in any market could have a material adverse effect on our ability to rent space and on the rents charged. Competition to acquire existing properties from institutional investors and other publicly traded real estate limited partnerships and real estate investment trusts has increased substantially in the past several years. In many of our markets, institutional investors, owners and developers of properties compete vigorously to acquire, develop and lease space. Many of these competitors have substantially more resources than we do.

Critical Accounting Policies

General

A critical accounting policy is one that would materially affect our operations or financial condition, and requires management to make estimates or judgments in certain circumstances. These judgments often result from the need to make estimates about the effect of matters that are inherently uncertain. Critical accounting policies discussed in this section are not to be confused with accounting principles and methods disclosed in accordance with U.S. generally accepted accounting principles (‘‘GAAP’’). GAAP requires information in financial statements about accounting principles, methods used and disclosures pertaining to significant estimates. The following disclosure discusses judgments known to management pertaining to trends, events or uncertainties known which were taken into consideration upon the application of those policies and the likelihood that materially different amounts would be reported upon taking into consideration different conditions and assumptions.

Impairment and Valuation

Statement of Financial Accounting Standards Board ("FASB") ASC ("Accounting Standards Codification") Topic 360 "Impairment or Disposal of Long-Lived Assets,’’ specifies circumstances in which certain long-lived assets must be reviewed for impairment. If this review indicates that the carrying amount of an asset exceeds the sum of its expected future cash flows, the asset’s carrying value must be written down to fair value. In determining the value of an investment property and whether the investment property is impaired, management considers several factors such as projected rental and vacancy rates, property operating expenses, capital expenditures, interest rates and recent appraisals when available. The capitalization rate used to determine property valuation is based on among others, the market in which the investment property is located, length of leases, tenant financial strength, the economy in general, demographics, environment, property location, visibility, age and physical condition. All of these factors are considered by management in determining the value of any particular investment property. The value of any particular investment property is sensitive to the actual results of any of these factors, either individually or taken as a whole. If the actual results differ from management’s judgment, the valuation could be negatively or positively affected.

The mergers was accounted for using the purchase method of accounting in accordance with FASB ASC Topic 805 ‘‘Business Combinations.’’ Royal Invest Europe BV was treated as the purchasing entity. For the merger, the portion of the assets and liabilities acquired from unaffiliated third parties was adjusted to reflect its fair market value. That portion owned by affiliates of the Company was reflected at historical cost.

In accordance with FASB ASC Topic 805, we allocate the purchase price of each acquired investment property among land, buildings and improvements, other intangibles, including acquired above market leases, acquired below market leases and acquired in place lease origination cost which is the market cost avoidance of executing the acquired leases. Allocation of the purchase price is an area that requires complex judgments and significant estimates. We use information contained in third-party appraisals as the primary basis for allocating the purchase price between land and buildings. A pro rata portion of the purchase price is allocated to the value of avoiding a lease-up period for acquired in-place leases. The value of in-place leases is amortized to expense over the remaining initial term of the respective leases. A portion of the purchase price is allocated to the estimated lease origination cost based on estimated lease execution costs for similar leases and considered various factors including geographic location and size of leased space. We then evaluate acquired leases based upon current market rates at the acquisition date and various other factors including geographic location, size and the location of leased space within the property, tenant profile and the credit risk of the tenant in determining whether the acquired lease is above or below market. After acquired leases are determined to be at, above or below market, we allocate a pro rata portion of the purchase price to any acquired above or below market lease based upon the present value of the difference between the contractual lease rate and the estimated market rate. We also consider an allocation of purchase price to in-place leases that have a customer relationship intangible value. The characteristics we consider in allocating these values include the nature and extent of existing business relationships with the tenant, growth prospects for developing new business with the tenant and the tenant’s credit quality and expectations of lease renewals. We did not have any tenants with whom we have identified a developed relationship that we believe had any intangible value.

Recognition of Rental Income

Under GAAP, we are required to recognize rental income based on the effective monthly rent for each lease. The effective monthly rent is equal to the average monthly rent during the term of the lease, not the stated rent for any particular month. The process, known as ‘‘straight-lining’’ or ‘‘stepping’’ rent generally has the effect of increasing rental revenues during the early phases of a lease and decreasing rental revenues in the latter phases of a lease. If rental income calculated on a straight-line basis exceeds the cash rent due under the lease, the difference is recorded as an increase in deferred rent receivable and included as a component of accounts receivable on the relevant balance sheet. If the cash rent due under the lease exceeds rental income calculated on a straight-line basis, the difference is recorded as a decrease in deferred rent receivable and is recorded as a decrease of accounts receivable on the relevant balance sheet. We defer recognition of contingent rental income, such as percentage or excess rent, until the specified target that triggers the contingent rental income is achieved. We periodically review the collectability of outstanding receivables. Allowances are generally taken for tenants with outstanding balances due for a period greater than ninety days and tenants with outstanding balances due for a period less than ninety days but that we believe are potentially uncollectible.

Recognition of Lease Termination Income

We recognize lease termination income upon receipt of the income. We accrue lease termination income if there is a signed termination agreement, all of the conditions of the agreement have been met and the tenant is no longer occupying the property.

Cost Capitalization and Depreciation Policies

We review all expenditures and capitalize any item exceeding $2,500 deemed to be an upgrade or a tenant improvement with an expected useful life greater than one year. Land, buildings and amenities are stated at cost. Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets. Buildings and improvements have estimated useful lives between 25-50 years, land improvements have estimated useful lives of 10 years and amenities have estimated useful lives of 5 years. Acquired above and below market leases are amortized on a straight-line basis over the life of the related leases as an adjustment to rental income. Acquired in place lease origination cost is amortized over the life of the lease as a component of amortization expense.

Liquidity and Capital Resources

Our most liquid asset is our cash. Operating income generated by the properties will be the primary source from which we generate cash. Our main uses of cash will relate to capital expenditures, required payments of mortgages and notes payable, distributions and property taxes.

Cash Flow from Operating Activities

Net cash provided by operating activities decreased from $1,693,716 for the six months ended June 30, 2009 to 1,021,081 for the six months ended June 30, 2010. The decrease is primarily the result of an increase in the net loss from $(2,590,204) for the six months ended June 30, 2009 to $(4,811,345) for the six months ended June 30, 2010 and the increase in the loss from property damage from $0 for the six months ended June 30, 2009 to $2,103,466 for the six months ended June 30, 2010.

Cash Flow from Investing Activities

Net cash provided by investing activities decreased from $(74,032) for the six months ended March 31, 2009 to $(633,969) for the six months ended June 30, 2010. The increase is the result of an increase in payments for property from $74,032 for the six months ended June 30, 2009 to $633,969 for the six months ended June 30, 2010,

Cash Flow from Financing Activities

Net cash used in financing activities decreased from $(359,624) for the six months ended June 30, 2010 to ($32,007) for the six months ended March 31, 2010. The decrease is primarily the result of a decrease from proceeds from loans payable - related party from $521,197 for the six months ended June 30, 2009 to ($664) for the six months ended June 30, 2010 , and an increase in payments on loans to related parties from ($567,368) for the six months ended June 30, 2009 to $0 for the six months ended June 30, 2010.

Future Liquidity

Our future liquidity depends significantly on our properties’ occupancy remaining at a level which allows us to make debt payments and have adequate working capital, currently and in the future. If occupancy were to fall below that level and remain at or below that level for a significant period of time, our ability to make payments due under our debt agreements and to continue paying daily operational costs would be greatly impaired. In the next twelve months, we intend to operate the properties in a similar manner to their operation in recent years. Cash reserves, which consist of unrestricted cash as shown on our balance sheet, were $839,939 on June 30, 2010.

Property Transactions

Acquisitions

During the quarter ended June 30, 2010, we had no property acquisitions.

Dispositions

During the quarter ended June 30, 2010, we had no property disposition.

RESULTS OF OPERATIONS

QUARTER ENDED JUNE 30, 2010 AS COMPARED TO JUNE 30, 2009

This section includes our actual results of operations for the quarter ended June 30, 2010 and 2009. As of June 30, 2010, we owned wholly 18 commercial properties. We generate substantially all of our operating income from property operations.

	FOR THE THREE MONTHS ENDED							FOR THE SIX MONTHS ENDED
	JUNE 30,							JUNE 30,
	2010				2009			2010			2009
Revenues		$	1,969,892		$	2,853,525		$	4,567,521		$	5,866,373

Operating Services			619,391			606,225			1,352,422			1,535,501
Real Estate Taxes			51,620			43,447			96,847			83,197
General and Administrative			748,982			615,126			1,186,746			1,455,539
Depreciation			441,076			697,663			903,873			1,367,222

Operating Income			108,823			891,064			1,027,633			1,424,914

Net Other Expenses			(4,060,692	)		(2,004,008	)		(6,102,216	)		(3,921,081	)

Loss Before Income Taxes			(3,951,869	)		(1,112,944	)		(5,074,583	)		(2,496,167	)
Provision for Income Taxes (Benefit)			(251,092	)		46,972			(263,238	)		94,037
Net Loss		$	(3,700,777	)	$	(1,159,916	)	$	(4,811,345	)	$	(2,590,204	)

Our net loss for the two quarters ended June 30, 2010 and 2009 was $(3,700,777) and $(1,159,916), respectively. Revenues decreased from $2,853,525 for the quarter ended June 30, 2010 to $1,969,892 for the quarter ended June 30, 2010.

Rental Income and Tenant Reimbursements

Rental income from continuing operations for the quarter ended June 30, 2010 and 2009 were $1,502,874 and $2,400,548, respectively.

General and Administrative Expenses

General and administrative expenses from continuing operations for the quarter ended June 30, 2010 and 2009 were $748,982 and $615,126, respectively.

Property Taxes

Property taxes from continuing operations for the quarter ended June 30, 2010 and 2009 were $51,620 and $43,447, respectively.

Depreciation

Depreciation expense from continuing operations for the quarter ended June 30, 2010 and 2009 were $441,076 and $697,663, respectively.

Interest Expense

Interest expense from continuing operations for the quarter ended June 30, 2010 and 2009 were $1,839,934 and $1,878,597, respectively.

Contractual Obligations and Commercial Commitments

At December 31, 2009, minimum future principal payments over the next five years and in the aggregate are as follows:

Year	Amount to be paid		Total Percentage
	Yearly		To be paid Yearly *
2010	$	7,656,968		1.50	%
2011		2,141,644		2.00	%
2012		2,284,419		2.00	%
2013		2,284,419		2.00	%
2014		103,084,423		89.75	%
Thereafter		--		--	%

Total	$	117,451,873		97.25	%

* Bank of Scotland Facility

At December 31, 2009, the Properties are leased to tenants under operating leases with various expiring dates through 2022. The lease provides for annual base rents and the pass-through of charges for electrical usage.

At December 31, 2009, minimum future principal payments over the next five years and in the aggregate are as follows:

Year	Amount

2010	$	5,798,630
2011		3,632,861
2012		3,196,267
2013		2,202,788
2014		1,283,230
Thereafter		1,334,252

Total	$	17,448,028

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our primary market risk exposure with regard to financial instruments is expected to be our exposure to changes in interest rates. We refinanced substantially all of our debt acquired at the time of our merger with instruments, which bear a variable interest set quarterly at Euribor +1,32%. A minimum of 65% of the facility is subject to a hedging contract; 20% is capped, and the remaining 15% is subject to market conditions.

ITEM 4 CONTROLS AND PROCEDURES

Disclosure Controls and Procedures - As of June 30, 2010, we, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of June 30, 2010.

Management’s Report on Internal Control Over Financial Reporting - Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control system is designed to provide reasonable assurance regarding the preparation and fair presentation of published financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that compliance with the policies or procedures may deteriorate or be circumvented.

Management assessed the effectiveness of our internal control over financial reporting as of June 30, 2010. In making this assessment, management used the criteria established in Internal Controls-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. Based on management’s assessment and the criteria established by COSO, management believes that we maintained effective internal control over financial reporting as of June 30, 2010.

Changes in Internal Control Over Financial Reporting- There has been no change in our internal control over financial reporting during the quarter ended June 30, 2010, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 4T CONTROLS AND PROCEDURES

This quarterly report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this quarterly report.

PART II

ITEM 1. LEGAL PROCEEDINGS

In the normal course of our business, we and/or our subsidiaries are named as defendants in suits filed in various state and federal courts. We believe that none of the litigation matters in which we, or any of our subsidiaries, are involved would have a material adverse effect on our consolidated financial condition or operations.

On August 7, 2008 a judgement was awarded to Jeff and Deborah Hilger in the amount of $22,408 for a unpaid Promissory Note including costs and fees. The judgement has not been paid to date. There is no other past, pending or, to the Company’s knowledge, threatened litigation or administrative action which has or is expected by the Company’s management to have a material effect upon our Company’s business, financial condition or operations, including any litigation or action involving our Company’s officers, directors, or other key personnel.

ITEM 1A RISK FACTORS

Factors That May Affect Our Future Results

Cautionary Statements under the Private Securities Litigation Reform Act of 1995.

Certain information included in this report or in other materials we have filed or will file with the Securities and Exchange Commission (the “SEC”) (as well as information included in oral statements or other written statements made or to be made by us) contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They contain words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “may,” “can,” “could,” “might” and other words or phrases of similar meaning in connection with any discussion of future operating or financial performance. Such statements include information relating to anticipated operating results, financial resources, changes in revenues, changes in profitability, interest expense, growth and expansion, anticipated income to be realized from our investments in unconsolidated entities, the ability to acquire land, the ability to gain approvals and to open new communities, the ability to sell properties, the ability to secure materials and subcontractors, the ability to produce the liquidity and capital necessary to expand and take advantage of opportunities in the future, and stock market valuations. From time to time, forward-looking statements also are included in our other periodic reports on Forms 10-Q and 8-K, in press releases, in presentations, on our website and in other material released to the public.

Any or all of the forward-looking statements included in this report and in any other reports or public statements made by us may turn out to be inaccurate. This can occur as a result of incorrect assumptions or as a consequence of known or unknown risks and uncertainties. Many factors mentioned in this report or in other reports or public statements made by us, such as government regulation and the competitive environment, will be important in determining our future performance. Consequently, actual results may differ materially from those that might be anticipated from our forward-looking statements.

We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in our subsequent reports on Forms 10-K, 10-Q and 8-K should be consulted. The following cautionary discussion of risks, uncertainties and possible inaccurate assumptions relevant to our business includes factors we believe could cause our actual results to differ materially from expected and historical results. Other factors beyond those listed below, including factors unknown to us and factors known to us, which we have not determined to be material, could also adversely affect us. This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995, and all of our forward-looking statements are expressly qualified in their entirety by the cautionary statements contained or referenced in this section.

Our cash flows and results of operations could be adversely affected if legal claims are brought against us and are not resolved in our favor.

Claims have been brought against us in legal proceedings, which have not had, and are not expected to have, a material adverse effect on our business or financial condition. Should claims be filed in the future, it is possible that our cash flows and results of operations could be affected, from time to time, by the negative outcome of one or more of such matters.

We may suffer losses at our properties that are not fully covered by insurance.

We carry comprehensive liability, fire, extended coverage, terrorism and rental loss insurance covering all of our properties. We believe the policy specifications and insured limits are appropriate given the relative risk of loss, the cost of the coverage and industry practice. None of the entities carry insurance for generally uninsured losses such as losses from riots, war, acts of God or mold. Some of the policies, like those covering losses due to terrorism and floods, are insured subject to limitations involving large deductibles or co-payments and policy limits, which may not be sufficient to cover losses. If we experience a loss which is uninsured or which exceeds policy limits, we could lose the capital invested in the damaged property as well as the anticipated future cash flows from that property. In addition, if the damaged property is subject to recourse indebtedness, we would continue to be liable for the indebtedness, even if it was irreparably damaged.

Future terrorist attacks in Europe could harm the demand for and the value of our properties.

Future terrorist attacks in Europe, such as the attacks that occurred in London and Madrid, and other acts of terrorism or war could harm the demand for, and the value of, our properties. A decrease in demand could make it difficult for us to renew or re-lease our properties at lease rates equal to, or above, historical rates. Terrorist attacks also could directly impact the value of our properties through damage, destruction, loss, or increased security costs, and the availability of insurance for these acts may be limited or costly. To the extent that our tenants are impacted by future attacks, their ability to honor obligations under their existing leases with us could be adversely affected.

The value of our properties are subject to risks associated with real estate assets and with the real estate industry in general.

We depend on our ability to generate revenues in excess of expenses, scheduled principal payments on debt and capital expenditure requirements. Events and conditions generally applicable to owners and operators of real property that are beyond our control that could impact the value of our properties include:

· local oversupply, increased competition or reduction in demand for office, business centers or multifamily properties;

· inability to collect rent from tenants;

· vacancies or our inability to rent space on favorable terms;

· increased operating costs, including insurance premiums, utilities and real estate taxes;

· costs of complying with changes in governmental regulations;

· the relative illiquidity of real estate investments;

· changing market demographics; and

· inability to acquire and finance properties on favorable terms.

In addition, periods of economic slowdown or recession, rising interest rates subject to a cap limitations or declining demand for real estate, or the public perception that any of these events may occur, could result in a general decline in rents or in increased defaults under existing leases, which could adversely affect our financial condition, results of operations, cash flow, and ability to satisfy our debt service obligations.

We face significant competition, which may decrease the occupancy and rental rates of our properties.

We compete with several developers, owners and operators of commercial real estate, many of which own properties similar to ours. Our competitors may be willing to make space available at lower prices than the space in our properties. If our competitors offer space at rental rates below current market rates, we may lose potential tenants and be pressured to reduce our rental rates to retain an existing tenant when its lease expires. As a result, our financial condition, results of operations, cash flow, and ability to satisfy our debt service obligations could be adversely affected.

Our debt level could expose us to the risk of default under our debt obligations.

Payments of principal and interest on borrowings could leave us with insufficient cash resources to operate our properties. Our level of debt could have significant adverse consequences, including:

· cash flow may be insufficient to meet required principal and interest payments;

· we may be unable to borrow additional funds as needed or on favorable terms;

· we may be unable to refinance our indebtedness at maturity or the terms may be less favorable than the terms of our original indebtedness;

· we may be forced to dispose of one or more of our properties, possibly on disadvantageous terms;

· we may default on our obligations and the lenders or mortgagees may foreclose on the properties securing their loans or receiving an assignment of rents and leases;

· we may violate restrictive covenants in our loan documents, which would entitle the lenders to accelerate our debt obligations; and

· default under any one of the mortgage loans with cross default provisions could result in a default on other indebtedness.

If any one of these events were to occur, our financial condition, results of operations, cash flow, our ability to satisfy our debt service obligations could be adversely affected.

We could incur significant costs related to government regulation and private litigation over environmental matters.

Under various laws, ordinances and regulations relating to the protection of the environment, a current or previous owner or operator of real estate may be held liable for contamination resulting from the presence or discharge of hazardous or toxic substances at that property, and may be required to investigate and clean up any contamination at, or emanating from, that property. These laws often impose liability, which may be joint and several, without regard to whether the owner or operator knew of, or was responsible for, the presence of the contaminants. The presence of contamination, or the failure to remediate contamination, may adversely affect the owner’s ability to sell, lease or develop the real estate or to borrow using the real estate as collateral. In addition, the owner or operator of a site may be subject to claims by third parties based on personal injury, property damage or other costs, including costs associated with investigating or cleaning up the environmental contamination present at, or emanating from, a site.

These environmental laws also govern the presence, maintenance and removal of asbestos containing building materials, or “ACBM.” These laws require that ACBM be properly managed and maintained, and may impose fines and penalties on building owners or operators who fail to comply with these requirements. These laws may also allow third parties to seek recovery from owners or operators for personal injury associated with exposure to asbestos fibers. Some of our properties could contain ACBM.

Some of the properties in our portfolio contain or could have contained, or are adjacent to or near other properties that have contained or currently contain underground storage tanks used to store petroleum products or other hazardous or toxic substances. These operations create a potential for the release of petroleum products or other hazardous or toxic substances.

Recent news accounts suggest that there is an increasing amount of litigation over claims that mold or other airborne contaminants have damaged buildings or caused poor health. Mold and certain other airborne contaminants occur naturally and are present in some quantity in virtually every structure. A plaintiff could successfully establish that mold or another airborne contaminant at one of our properties causes or exacerbates certain health conditions. We generally have no insurance coverage for the cost of repairing or replacing elements of a building or its contents that are affected by mold or other environmental conditions, or for defending against this type of lawsuit.

We may incur significant costs complying with other regulations.

Our properties are subject to various regulatory requirements, such as fire and life safety requirements. If we fail to comply with these various requirements, we may be fined or have to pay private damage awards. We believe that our properties materially comply with all applicable regulatory requirements. These requirements could change in the future requiring us to make significant unanticipated expenditures that could adversely impact our financial condition, results of operations, cash flow, the value of the Units, our ability to satisfy our debt service obligations and to pay distributions.

We may invest in joint ventures, which add another layer of risk to our business.

We may acquire properties through joint ventures, which could subject us to certain risks, which may not otherwise be present, if we made the investments directly. These risks include:

· the potential that our joint venture partner may not perform;

· the joint venture partner may have economic or business interests or goals that are inconsistent with or adverse to our interests or goals;

· the joint venture partner may take actions contrary to our requests or instructions or contrary to our objectives or policies;

· the joint venture partner might become bankrupt or fail to fund its share of required capital contributions;

· we and the joint venture partner may not be able to agree on matters relating to the property; and

· we may become liable for the actions of our third-party joint venture partners.

Any disputes that may arise between joint venture partners and us may result in litigation or arbitration that would increase our expenses and prevent us from focusing our time and effort on the business of the joint venture.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The Company has not sold any equity securities during the quarter ended June 30, 2010. Information with respect to previously reported sales prior to January 1, 2010 may be found in the Company’s prior filings.

ITEM 3 DEFAULT UPON SENIOR SECURITIES

During the period March 1, 2005 to July 31, 2005, the Company issued convertible promissory notes aggregating $589,000. The notes are unsecured and bear interest at a rate of 10% per annum. The principal and interest was due June 27, 2006. On November 16, 2005, a majority of holders of the outstanding notes opted to convert the principal and interest on their notes into common shares of the Company at $0.75 per share. The Company converted $542,067 of notes plus interest into 849,176 shares of common stock. The outstanding notes of approximately $65,000 are currently in default.

During the period January 1, 2006 to March 31, 2006, the Company issued additional convertible promissory notes aggregating $220,000. The notes are unsecured and bear interest at a rate of 10% per quarter. The principal and interest is due 90 days after the issuance of the notes, but automatically renews and continues to accrue interest. The notes are convertible into shares of common stock of the company at $0.75 per share. These notes are currently in default.

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the second quarter of the year ended June 30, 2010.

ITEM 5 OTHER INFORMATION

None.

ITEM 6 EXHIBITS

Exhibit No. Document Description

3.1

Certificate of Incorporation of C.N.W. Corp. as filed with the Florida Secretary of State on October 30, 1980, incorporated by reference to the Company’s Registration Statement on Form 10SB12G filed with the Securities and Exchange Commission on August 20, 1999.

3.2

Amended Certificate of Incorporation of C.N.W. Corp. to change name to C.N.W. of Orlando, Inc., increased its capitalization from 1,000 common shares to 50,000,000 common shares and changed its par value from $1.00 to $0.001 as filed with the Florida Secretary of State on July 21, 1998, incorporated by reference to the Company’s Registration Statement on Form 10SB12G filed with the Securities and Exchange Commission on August 20, 1999.

3.3

Amended Certificate of Incorporation of C.N.W. of Orlando, Inc. to change name to GlobalNetCare, Inc. as filed with the Florida Secretary of State on December 28, 1998, incorporated by reference to the Company’s Registration Statement on Form 10SB12G filed with the Securities and Exchange Commission on August 20, 1999.

3.4

Amended Certificate of Incorporation of GlobalNetCare, Inc. to change name to BusinessWay International Corp., and increased its authorized capital to 300,000,000 common shares as filed with the Florida Secretary of State on January 31, 2001, incorporated by reference to the Company’s Form DEF 14C filed with the Securities and Exchange Commission on February 14, 2001.

3.5

Amended Certificate of Incorporation of BusinessWay International Corp. to change name to ICBS International Corp. and added restrictions on newly issued shares as filed with the Florida Secretary of State on September 29, 2004, incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 29, 2004.

3.6

Amended Certificate of Incorporation of ICBS International Corp. to remove the restrictions on newly issued shares that were added on September 29, 2005 as filed with the Florida Secretary of State on February 14, 2005, incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 14, 2005

3.7

Certificate of Incorporation of Wah King Invest Corp., authorizing 300,000,000 common shares and 1,000,000 blank check preferred shares as filed with the Delaware Secretary of Sate on May 2, 2005, incorporated by reference to the Registrant's Form DEC 14C, as filed with the Securities and Exchange Commission on May 20, 2005.

3.8

Articles of Merger of ICBS International Corp., a Florida corporation into Wah King Invest Corp, a Delaware corporation as filed with the Florida Secretary of State on May 9, 2005, incorporated by reference to the Registrant's Form DEC 14C, as filed with the Securities and Exchange Commission on May 20, 2005.

3.9

Certificate of Merger of ICBS International Corp., a Florida corporation into Wah King Invest Corp, a Delaware corporation as filed with the Delaware Secretary of State on May 9, 2005, incorporated by reference to the Registrant's Form DEC 14C, as filed with the Securities and Exchange Commission on May 20, 2005.

3.10

Amended Certificate of Incorporation of Wah King Invest Corp. to change name tp Royal Invest International Corp. as filed with the Delaware Secreatry of State on Janmuary 26, 2007, iincorporated by reference to the Registrant's Current Report on Form 8-K, as filed with the Securities and Exchange Commission on June 7, 2007

10.1

Agreement to purchase Vastgoed Beleggings Mij. Bunnik I B.V., dated December 18, 2007, incorporated by reference to the Registrant's Curent Report on Form 8-K, as filed with the Securities and Exchange Commission on January 14, 2008.

10.2

Transfer of Royal Invest Germany Properties 1 B.V.,by Royal Invest Europe B.V. to Vastgoed Beleggings Mij. Bunnik I B.V. dated December 18, 2007, incorporated by reference to the Registrant's Curent Report on Form 8-K, as filed with the Securities and Exchange Commission on January 14, 2008.

10.3

Bank of Scotland Term Sheet € 100.000.000 dated November 23, 2007, incorporated by reference to the Registrant's Current Report on Form 8-K, as filed with the Securities and Exchange Commission on November 23, 2007.

10.4

Contract for Sloterweg 22 in Badhoevedorp, The Netherlands incorporated by refernce to the Registrant's Current Report on Form 8-K, as filed with the Securities and Exchange Commission on June 12, 2007.

10.5

Deed of Transfer for Sloterweg 22 in Badhoevedorp, The Netherlands dated December 27, 2007, incorporated by reference to the Registrant's Curent Report on Form 8-K, as filed with the Securities and Exchange Commission on January 14, 2008.

10.6

Contract for MTMN BV et al dated May 25, 2007, incorporated by reference to the Registrant’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on May 25, 2007.

10.7

Deed of Transfer for MTMN BV et al dated December 27, 2007, incorporated by reference to the Registrant's Curent Report on Form 8-K, as filed with the Securities and Exchange Commission on January 14, 2008.

10.8

Contract for Schepersmaat 4, 9405 TA Assen , The Netherlands, incorporated by reference to the Registrant’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on July 12, 2007.

10.9

Management Agreement with Statenconsult B.V. dated May 25, 2007 for the services of David Havenaar as Managing Director of the Registrant's subsidiary Royal Invest Europe B.V. incorporated by reference to the Registrant's Current Report on Form 8-K, as filed with the Securities and Exchange Commission on August 13, 2007.

10.10

Legal Service Agreement with Sec Attorneys, LLC dated May 25, 2007 incorporated by reference to the Registrant's Current Report on Form 8-K, as filed with the Securities and Exchange Commission on August 13, 2008.

10.11

Deed of Transfer for Schepersmaat 4, 9405 TA Assen , The Netherlands dated December 27, 2007, incorporated by reference to the Registrant's Curent Report on Form 8-K, as filed with the Securities and Exchange Commission on January 14, 2008.

10.12

Contract for Alfang B.V. dated July 25, 2007, incorporated by reference to the Registrant’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on August 15, 2007.

10.13

Deed of Sale for Alfang B.V. dated December 27, 2007, incorporated by reference to the Registrant's Curent Report on Form 8-K, as filed with the Securities and Exchange Commission on January 14, 2008.

10.14

Deed of Sale and Transfer of AmogB B.V. dated December 27, 2007, incorporated by reference to the Registrant's Curent Report on Form 8-K, as filed with the Securities and Exchange Commission on January 14, 2008.

10.15

Convertible 8% Note with Muermans Vast Goed Roermond B.V for €3.500.000 dated December 21, 2007, incorporated by reference to the Registrant's Curent Report on Form 8-K, as filed with the Securities and Exchange Commission on January 14, 2008.

10.16

€100.000.000 Term Loan Agreement with Bank of Scotland dated December 21, 2007, incorporated by reference to the Registrant's Curent Report on Form 8-K, as filed with the Securities and Exchange Commission on January 14, 2008.

10.17

Convertible 8% Note with ECM Hoff Holding B.V. for €1.091.257 dated December 21, 2007, incorporated by reference to the Registrant's Curent Report on Form 8-K, as filed with the Securities and Exchange Commission on January 14, 2008.

10.18

Mortgage Deed with Bank of Scotland dated December 27, 2007, incorporated by reference to the Registrant's Curent Report on Form 8-K, as filed with the Securities and Exchange Commission on January 14, 2008.

10.19

Mortgage Deed with Bank of Scotland for Alfong B.V. dated December 27, 2007, incorporated by reference to the Registrant's Curent Report on Form 8-K, as filed with the Securities and Exchange Commission on January 14, 2008.

10.20

Mortgage Deed with Bank of Scotland for AmogB B.V. dated December 27, 2007, incorporated by reference to the Registrant's Curent Report on Form 8-K, as filed with the Securities and Exchange Commission on January 14, 2008.

21.1

Subsidiaries of the Company, incorporated by reference to the Registrant's Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on April 15, 2008.

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.

32.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

32.2

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

Reports on Form 8-K:

None.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

		ROYAL INVEST INTERNATIONAL CORP.
		(Registrant)


Date: August 23, 2010		By: /s/ JERRY GRUENBAUM
		Jerry Gruenbaum
		Chief Executive Officer and

Date: August 23, 2010		By: /s/ NATHAN LAPKIN
		Nathan Lapkin
		President and Chief Financial Officer
		and Director

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

SIGNATURE	NAME	TITLE	DATE

/s/Jerry Gruenbaum	Jerry Gruenbaum	CEO & Chairman	August 23, 2010
		of the Board

/s/Nathan Lapkin	Nathan Lapkin	President, CFO,	August 23, 2010
		& Director

ROYAL INVEST INTERNATIONAL CORP. - FORM 10-Q - August 23, 2010

Attached files

ROYAL INVEST INTERNATIONAL CORP. Reports