SUNVESTA, INC. - FORM 10-Q

Attached files

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EXCEL - IDEA: XBRL DOCUMENT - SUNVESTA, INC.	Financial_Report.xls
EX-32 - CERTIFICATION - SUNVESTA, INC.	exhibit32.htm
EX-31 - CERTIFICATION - SUNVESTA, INC.	exhibit31.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012.

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission file number: 000-28731

SUNVESTA, INC.

(Exact name of registrant as specified in its charter)

Florida

98-0211356

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

Seestrasse 97, Oberrieden, Switzerland CH-8942

(Address of principal executive offices) (Zip Code)

011 41 43 388 40 60

(Registrant’s telephone number, including area code)

n/a

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or

15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that

the registrant was required to file such reports), and (2) has been subject to such filing requirements for the

past 90 days. Yes o No þ

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web

site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation

S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant

was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated

filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and

“smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange

Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest

practicable date. The number of shares outstanding of the issuer’s common stock, $0.01 par value (the only

class of voting stock), at April 17, 2013, was 75,041,603.

TABLE OF CONTENTS

PART 1- FINANCIAL INFORMATION

Item1.

Financial Statements:

Consolidated Balance Sheets as of June 30, 2012 (Unaudited) and December 31,

2011

Unaudited Consolidated Statements of Operations and Comprehensive Loss for the

three and six months ended June 30, 2012 and June 30 and cumulative amounts

Unaudited Consolidated Statements of Stockholders’ Equity (Deficit)

Unaudited Consolidated Statements of Cash Flows for the six months ended June

30, 2012 and June 30, 2011 and cumulative amounts

Notes to Unaudited Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of

Operations

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Item 4.

Controls and Procedures

PART II-OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Item 5.

Item 6.

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

As used herein, the terms “Company,” “we,” “our,” and “us” refer to SunVesta, Inc., a Florida

corporation, and its predecessors and subsidiaries, unless otherwise indicated. In the opinion of

management, the accompanying unaudited, consolidated financial statements included in this Form 10-Q

reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of

the results of operations for the periods presented. The results of operations for the periods presented are

not necessarily indicative of the results to be expected for the full year.

SUNVESTA, INC.

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

June 30, 2012

December 31, 2011

Assets

(Unaudited)

Current assets

Cash and cash equivalents

217,863

505,500

Short term investments

75,000

Other assets

37,454

7,775

Receivables from related parties

848,925

443,499

Total current assets

1,104,243

1,031,774

Non-current assets

Property and equipment - net

13,435,782

11,390,280

Debt issuance cost - net

1,970,399

1,511,759

Down payment for property and equipment

7,070,013

3,100,057

Other

238,410

241,500

Receivables from related parties

1,267,193

Total non-current assets

23,981,796

16,243,596

Total assets

25,086,039

17,275,370

Liabilities and stockholders' equity (deficit)

Current liabilities

Accounts payable

1,466,108

1,401,137

Accrued expenses

3,367,877

2,421,864

Notes payable to related parties

2,376,880

94,315

Total current liabilities

7,210,865

3,917,316

Non-current liabilities

EUR-Bond

10,439,340

9,598,537

CHF-Bond

6,104,491

3,818,898

Notes payable to related parties

7,694,563

3,192,848

Pension liabilities

59,672

50,341

Total non-current liabilities

24,298,065

16,660,624

Total liabilities

31,508,930

20,577,940

Stockholders' equity (deficit)

Preferred stock, $0.01 par value;

50,000,000 share authorized

no shares issued and outstanding

Common stock, $0.01 par value;

200,000,000 share authorized;

54,092,186 shares issued and outstanding

540,922

Additional paid-in capital

18,728,391

Accumulated other comprehensive loss

377,559

(37,877)

Retained earnings prior to development stage

1,602

Deficit accumulated during the development stage

(26,047,611)

(22,511,853)

Treasury stock, 157,220 and 157,220 shares

(23,755)

Total stockholders' equity (deficit)

(6,422,892)

(3,302,570)

Total liabilities and stockholders' equity (deficit)

25,086,039

17,275,370

The accompanying notes are an integral part of these consolidated financial statements.

SUNVESTA, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Three months

Six months

Cumulative*

ended June 30,

Amounts

2012

(unaudited)

2011

2012

2011

(unaudited & restated)

(unaudited)

(unaudited &

(unaudited)

restated)

Revenues

Revenues, net

Cost of revenues

Gross profit

Operating income / - expenses

General and administrative expenses

(1,483,795)

(1,923,282)

(2,455,423)

(2,361,300)

(19,197,665)

Sales and marketing

(111,470)

(117,454)

(480,872)

Impairment on property and equipment

(1,311,000)

Total operating income / - expenses

(1,483,795)

(2,034,752)

(2,455,423)

(2,478,754 )

(20,989,537)

Loss from operations

(1,434,795)

(2,034,752)

(2,455,423)

(2,478,754)

(20,989,537)

Other income / - expenses

Loss on disposals of assets

(3,258)

Loss on sale of investments

(1,137,158)

Loss on extinguishment of debt

(1,806,758)

Interest income

4,030

7,089

73,970

Interest expense

(349,758)

(50,940)

(630,753)

(84,566)

(1,594,599)

Amortization of debt issuance cost and commissions

(268,747)

(120,572)

(498,035)

(120,572)

(873,405)

Exchange differences

37,615

(265,071)

167,887

(265,071)

337,123

Other income / - expenses

(441)

13,612

(86,146)

Total other income / - expenses

(577,302)

(436,583)

(940,200)

(470,209)

(4,917,939)

Loss before income taxes

(2,601,097)

(2,471,335)

(3,395,622)

(2,948,963)

(25,097,475)

Income taxes

(140,136)

Net loss

(2,201,233)

(2,471,335)

(3,535,758)

(2,948,963)

(26,047,611)

Comprehensive loss:

Foreign currency translation

1,218,211

312,274

415,436

229,200

398,559

Comprehensive loss

(983,022)

(2,159,061)

(3,120,322)

(2,719,763)

(25,649,052)

Loss per common share

Basic and diluted

(0.04)

(0.05)

(0.07)

(0.05)

Weighted average common shares

Basic and diluted

54,092,186

54,092,186

54,092,186

The accompanying notes are an integral part of these consolidated financial statements.

SUNVESTA, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

January 1, 2005 (Date of Inception) to June 30, 2012

Common

Additional Paid

Accumulated Other

Prior Earnings

Deficit Accumulated

Treasury Stock

Total

Stock

in Capital

Comprehensive

During Development

Stockholders’

Income (Loss)

Stage

Equity (Deficit)

January 1, 2005

210,000 $

281,521 $

128 $

1,602 $

- $

493,251

Net loss

(807,118)

Translation adjustments

23,149

December 31, 2005

210,000

281,521

23,277

1,602

(807,118)

(290,718)

Net loss

(3,575,713)

Translation adjustments

(163,151)

December 31, 2006

210,000

281,521

(139,874)

1,602

(4,382,831)

(4,029,582)

Net loss

(2,912,578)

Translation adjustments

35,580

Acquisition of OpenLimit, Inc.

14,000

(63,080)

(49,080)

Issuance of stock for debt

64,312

10,742,025

10,806,337

December 31, 2007

288,312

10,960,466

(104,294)

1,602

(7,295,409)

3,850,677

Net loss

(1,188,377)

(1,188,377

Translation adjustments

(367,601)

Issuance of stock for compensation

417

61,852

62,269

Issuance of stock for debt

18,182

2,709,091

2,727,273

December 31, 2008

306,911

13,731,409

(471,895)

1,602

(8,483,786)

5,084,241

Net loss

(2,471,845)

Translation adjustments

401,460

Issuance of stock for compensation

600

44,400

45,000

Issuance of stock for cash

10,000

290,000

300,000

Issuance of stock for debt

77,259

3,785,668

3,862,927

Purchase of treasury stock

(12,200)

December 31, 2009

394,770

17,851,477

(70,435))

1,602

(10,955,631)

(12,200)

7,209,583

Net loss

(1,173,292)

Translation adjustments

10,983

Issuance of stock for debt

146,152

876,914

1,023,066

Purchase of treasury stock

(11,555)

December 31, 2010

540,922

18,728,391

(59,452)

1,602

(12,128,923)

(23,755)

7,058,785

Net loss

(10,382,930)

Translation adjustments

21,575

December 31, 2011

540,922 $

18,728,391 $

(37,877) $

1,602 $

(22,511,853) $

(23,755)

(3,302,570)

Net loss

(3,535,758)

Translation adjustments

415,436

June 30, 2012

540,922 $

18,728,391 $

377,559 $

1,602 $

26,047,611 $

(23,755)

(6,422,892)

The accompanying notes are an integral part of these consolidated financial statements.

SUNVESTA, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

January 1 to

Cumulative *

June 30, 2012

June 30, 2011

Amounts

(Unaudited)

(Unaudited &

(Unaudited)

Restated)

Cash flows from operating activities

Net loss

(3,535,758)

(2,948,963)

(26,047,611)

Adjustments to reconcile net loss to net cash

Depreciation and amortization

22,443

16,749

311,178

Amortization of debt issuance cost and commissions

498,035

120,572

881,004

Unrealized exchange differences

(167,887)

265,701

(337,123)

Impairment of property and equipment

1,311,000

Other income / expenses

(60,701)

Stock compensation expense

107,269

Loss on securities acquired as deposit on stock

1,008,324

Loss on disposal of assets

3,258

Loss on extinguishment of debt

1,806,758

Increase in pension fund commitments

9,331

44,474

59,672

- Increase / decrease in:

Other current assets

(29,679)

(7,047)

(38,283)

Accounts payable

64,972

(178,361)

2,001,925

Accrued expenses

946,012

399,835

3,770,607

Net cash used in operating activities

(2,253,232)

(2,287,670)

(15,222,623)

Cash flows from investing activities

Proceeds from securities available-for-sale

1,740,381

Short term investments

75,000

Other receivables related parties

(1,593,773)

(427,018)

(2,037,272)

Purchase of property and equipment

(2,067,945)

(592,018)

(15,268,725)

Down payments on purchase of investment

(3,969,955)

(689,000)

(7,070,012)

Other non-current assets

(50,914)

(241,500)

Net cash used in investing activities

(7,556,673)

(1,758,950)

(22,877,128)

Cash flows from financing activities

Net proceeds from deposit on stock

3,664,417

Proceeds from stock issuance

300,000

Proceeds from notes payable related parties

6,981,853

21,131,145

Repayment of notes payable related parties

(771,837)

(778,243)

Advances from third parties

700,000

Note payable

(551,155)

(714,819)

Proceeds from bond issuance, net of commissions

3,286,050

6,053,640

17,623,344

Payment for debt issuance costs

(801,671)

499,747

(2,991,962)

Purchase of treasury stock

(23,755)

Net cash provided by financing activities

9,466,232

4,230,901

38,910,127

Effect of exchange rate changes

56,036

(47,428)

(593,068)

Net increase / - decrease in cash

(287,637)

136,853

217,308

Cash, beginning of period

505,500

44,018

555

Cash, end of period

217,863

180,871

217,863

Additional information

Interest paid

84,000

Income taxes paid

* Cumulative: January 1, 2005 (date of inception) to June 30, 2012

The accompanying notes are an integral part of these consolidated financial statements.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2012

1. CORPORATE INFORMATION

On August 27, 2007, SunVesta Inc. (SunVesta) acquired SunVesta Holding AG (SunVesta AG)

(collectively the Company). SunVesta AG has three wholly-owned subsidiaries: SunVesta Projects and

Management AG, a Swiss company; Rich Land Investments Limitada, a Costa Rican company (Rich

Land); and SunVesta Costa Rica Limitada, a Costa Rican company.

In January 2005 (date of inception of development stage), the Company changed its business focus to the

development of holiday resorts and investments in the hospitality and related industry. The Company has

not materialized any revenues yet and is therefore a “development stage company”.

These consolidated financial statements are prepared in US Dollars (US $) on the basis of generally

accepted accounting principles in the United States of America (US GAAP).

The accompanying unaudited consolidated financial statements have been prepared by management in

accordance with the instructions in Form 10-Q and, therefore, do not include all information and

footnotes required by generally accepted accounting principles and should, therefore, be read in

conjunction with the Company’s Form 10-K, for the year ended December 31, 2011, filed with the

Securities and Exchange Commission. These statements do include all normal recurring adjustments

which the Company believes necessary for a fair presentation of the statements. The interim results of

operations are not necessarily indicative of the results to be expected for the full year ended December 31,

2012.

Except as indicated in the notes below, there have been no other material changes in the information

disclosed in the notes to the financial statements included in the Company’s Form 10-K for the year

ended December 31, 2011, filed with the Securities and Exchange Commission. Therefore, those

footnotes are included herein by reference.

2. SIGNIFICANT ACCOUNTING POLICIES

New accounting standards - adopted

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update

("ASU") 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value

Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, which results in a consistent

definition of fair value and common requirements for measurement of and disclosure about fair value

between accounting principles generally accepted in the United States and IFRS. ASU 2011-04 is

effective for interim and annual periods beginning after December 15, 2011. The adoption of this standard

had no effect on our results of operation or our financial position. See Note 16 for additional information.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2012

2. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

New accounting standards - not yet adopted

In February 2013, the FASB released ASU 2013-02 —Other Comprehensive Income (Topic 220). The

amendments in this Update supersede and replace the presentation requirements for reclassifications out

of accumulated other comprehensive income in ASUs 2011-05 (issued in June 2011) and 2011-12 (issued

in December 2011) for all public and private organizations. The amendments would require an entity to

provide additional information about reclassifications out of accumulated other comprehensive income.

This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2012-

240—Comprehensive Income (Topic 220) which has been deleted. The amendments do not change the

current requirements for reporting net income or other comprehensive income in financial statements.

However, the amendments require an entity to provide information about the amounts reclassified out of

accumulated other comprehensive income by component. In addition, an entity is required to present,

either on the face of the statement where net income is presented or in the notes, significant amounts

reclassified out of accumulated other comprehensive income by the respective line items of net income

but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its

entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be

reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures

required under U.S. GAAP that provide additional detail about those amounts. For public entities, the

amendments are effective prospectively for reporting periods beginning after December 15, 2012. The

adoption of this ASU is not expected to materially impact the Company’s consolidated financial

statements.

In December 2011, the FASB released ASU 2011−11, Balance Sheet (Topic 210): Disclosures about

Offsetting Assets and Liabilities. ASU 2011−11 requires companies to provide new disclosures about

offsetting and related arrangements for financial instruments and derivatives. The provisions of ASU

2011−11 are effective for annual reporting periods beginning on or after January 1, 2013, and are required

to be applied retrospectively. When adopted, ASU 2011−11 is not expected to materially impact the

Company's consolidated financial statements.

In December 2011, the FASB released ASU 2011−10, Property, Plant and Equipment (Topic 360):

Derecognition of in Substance Real Estate—a Scope Clarification (a consensus of the FASB Emerging

Issues Task Force). ASU 2011−10 clarifies when a parent (reporting entity) ceases to have a controlling

financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s

nonrecourse debt, the reporting entity should apply the guidance for Real Estate Sale (Subtopic 360−20).

The provisions of ASU 2011−10 are effective for public companies for fiscal years and interim periods

within those years, beginning on or after June 15, 2012. When adopted, ASU 2011−10 is not expected to

materially impact the Company's consolidated financial statements.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2012

3. GOING CONCERN

The Company is currently working on building the “Paradisus Papagayo Bay Resort & Luxury Villas”

project in the Papagayo Gulf Tourism Project area of Guanacaste, Costa Rica.

The project is expected to open in the fourth quarter of 2014. Until the completion of the project, the

following expenditures are estimated to be incurred:

Gross project cost

195,000,000

Less: Proceeds from sale of villas

- 24,000,000

Net project cost

171,000,000

Overhead expenses

21,000,000

Less: Recuperated in gross project cost

-12,000,000

Total, excluding other potential projects

180,000,000

60 % of “Net project cost” is going to be financed by traditional mortgage loans, for which promising

negotiations have been initiated. The remaining 40 % of “Net project cost”, as well as “non-recuperated

overhead expenses” and the cost of potential “other projects” are going to be financed by the main

shareholders or lenders of the project, i.e. Zypam Ltd., shareholder, Mr. Hans Rigendinger, shareholder

and board member of SunVesta Holding AG, Mr.Max Rössler, majority shareholder of Aires

International Investment, Inc. (“Aires”) (also refer to Note 7), Mr Josef Mettler, shareholder, director and

Chief Executive Officer.

Subsequent to June 30, 2012, the shareholders referenced above signed a Guaranty Agreement (refer to

Note 18). Based on this guaranty agreement, management therefore believes that available funds are

sufficient to finance cash flows for the twelve months subsequent to June 30, 2012 and the filing date

tough future anticipated cash outflows for investing activities will continue to depend on the availability

of financing and can be adjusted as necessary.

4. PROPERTY & EQUIPMENT

June 30, 2012

December 31, 2011

Land

7,000,000

IT equipment

185,846

Other equipment and furniture

77,319

29,979

Leasehold improvements

66,617

Construction in progress

6,426,876

4,382,809

Gross

13,756,657

11,688,712

Less: Accumulated depreciation

(320,875)

(298,432)

Net

13,435,782

11,390,280

Depreciation expense for the six months periods ended June 30, 2012 and 2011 amounted

to $22,443 and $16,749 respectively.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2012

5. CONSTRUCTION IN PROCESS

The Company possesses a concession for a piece of land (~84’000 m2), i.e. a right to build a hotel and

apartments in the “Papagayo Gulf Tourism Project”, Guanacaste, Costa Rica, which was acquired for $7

million and recorded as land in property and equipment.

The concession is a right to use the property for a specific purpose over a term of 20 years, which term

thereafter can be renewed at no further cost, if the Company is up to date with its obligations as stipulated

by the Costa Rican government and if no significant change in government policies takes place. The

current concession expires in June 2022.

The construction in process amount that was spent as of June 30, 2012 is attributed primarily to

architectural and project work related to the hotel and apartments.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2012

6. RECEIVABLES AND NOTES PAYABLE TO RELATED PARTIES

Receivables

Payables

June 30,

December 31,

June 30,

December 31,

2012

2011

2012

2011

01-R Hans Rigendinger

53,212

01-P Hans Rigendinger

606,901

Josef Mettler

577,015

185,759

Turan Turkay

188,452

128,539

Adrian Oehler

31,406

31,928

Zypam Ltd

934,701

39,118

Sportiva

63,152

36,872

Aires International

7,694,563

3,194,842

4f capital AG

352,798

Dr. Max Rössler

1,738,573

Total excluding

interest

2,116,118

443,499

10,071,443

3,266,770

Accrued interest

240,447

62,387

Total

2,116,118

443,499

10,311,890

3,287,163

of which non-current

1,267,193

7,694,563

3,192,848

Of the receivables due from Zypam Ltd. (according to 05 above $934,701 as per June 30, 2012)

$20,306 were classified as current as per June 30, 2010.

Related party

Capacity

Interest

Repayment

Security

Rate

Terms

01-R

Hans Rigendinger

Shareholder and chairman of the

board of SunVesta Holding AG

0.00%

None

01-P

Hans Rigendinger

Shareholder and chairman of the

board of SunVesta Holding AG

3.00%

12.31.2012

None

Josef Mettler

Shareholder, chief executive officer,

chief financial officer and director

3.00%

12.31.2012

None

Turan Tokay

Shareholder

3.00%

12.31.2012

None

Adrian Oehler

Shareholder and director of SunVesta

Holding AG

0.00%

None

Shareholder and company owned by

Zypam Ltd

the Company's director and chief

3.00%

None

executive officer

Sportiva

Company owned by the Company's

director and chief executive officer

3.00%

12.31.2012

None

Aires International

*** see hereinafter Note 7 ***

4f capital AG

Entity owned by the Company's

director and chief executive officer

3.00%

None

Dr. Max Rössler

Director of SunVesta Holding AG

*** see hereinafter Note 7 and Note

18 ***

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2012

7. NOTES PAYABLE TO RELATED PARTIES

Loan agreement with Aires International Investments, Inc.

On July 27, 2011 the Company signed a loan agreement with Aires, a company owned by a board

member of SunVesta AG which has been amended and superseded by an amendment on May 11, 2012

respectively June 21, 2012 and which includes the following major conditions:

The lender grants Company a terminable, interest bearing and non-secured loan in the maximum amount

of CHF 12,000,000.

The conversion right granted in the original contract to convert the balance of the line of credit into 10%

ownership interest in Rich Land was cancelled.

Once the entire amount of CHF 10,000,000 has been drawn down, Aires has now the right to convert its

entire loan of CHF 10,000,000 into a 20% holding of the capital of the Company (instead of Rich Land).

In principle, the loan will become due on September 30, 2015 being the latest date in time when Aires can

exercise its conversion option.

CHF 10,000,000 of this line of credit is subordinated in favor of other creditors.

The interest rate is 7.25% and interest is due on September 30 of each year.

As the above mentioned conversion option is contingent upon payment of the entire amount of

CHF 10 million and this contingency was not resolved as of June 30, 2012, the loan was valued at fair

value, which equals face value.

The Company and Aires are currently negotiating a revised conversion option to replace the one stated

above. The major contemplated change is that Aires will convert its receivable into preferred shares of

shares of the Company with a fixed interest payment with the option to convert into shares of the

Company’s common stock at a discount to market within a limited time frame. The parties are yet to

come to an agreement.

As of the date of the filing of this report the Company has borrowed CHF 16.24 million (approximately

$17.30 million) from the Aires line of credit.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2012

7. NOTES PAYABLE TO RELATED PARTIES CONTINUED

Loan Dr. Max Rössler

During the three month period ended June 30, 2012, Dr. Max Rössler (board member of SunVesta

Holding AG) gave a short term loan of $1,736,320 that is repayable on December 17, 2012 or if the

Company does not comply with the contract within five working days. On this short term loan the

Company is not required to pay any interest and can repay the loan either in cash or with the delivery of

10,000 shares of Intershop Holding AG, a publicly traded company in Switzerland, regardless of actual

trading value on the date of delivery. The Company therefore might recognize a gain if the loan is repaid

in Intershop Holding AG shares and the trading price of the shares is less than the amount due. Based on

the trading price for Intershop Holding AG shares on June 30, 2012, the Company would have recognized

a gain, which is immaterial. The Company has not recorded such gain and the fair value of the loan

approximates the carrying value of the loan.

8. RELATED PARTY TRANSACTIONS

Receivables from related parties

All the shareholders listed under Note 6 have – directly or indirectly - invested significant amounts of

money in the Company. As a result, some of them incurred short term cash needs, which the Company

satisfied by short term advances. Subsequent as of June 30, 2012, all material receivables from related

parties have been settled (refer to Note 18).

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2012

9. NON-CURRENT LIABILITIES

SunVesta Holding AG has bonds outstanding with the following major conditions.

Description

EUR (€) bond

CHF bond

Issuer:

SunVesta Holding AG

Type of securities:

Bond in accordance with

Swiss law

Approval by SunVesta

May 12, 2010

June 3, 2011

Holding AG Board of Directors

Volume:

Up to € 25,000,000

Up to CHF 15,000,000

Units:

€1,000

CHF 50,000

Offering period:

11/10/2010 – 04/30/2011

09/01/2011 – 02/28/2012

Due date:

November 30, 2013

August 31, 2015

Issuance price:

100 %

100%

Issuance day::

December 1, 2010

September 1, 2011

Interest rate:

8.25% p.a.

7.25% p.a.

Interest due dates:

November 30 of each year,

August 31 of each year,

the first time November 30, 2011 the first time August 31, 2012

Applicable law:

Swiss

The nominal amounts have changed as follows:

EUR-Bond

CHF Bond

EUR-Bond

CHF Bond

2012

2011

Balances January 1

9,598,537

3,818,898

265,273

Cash inflows

921,884

2,431,471

9,883,151

4,188,870

Foreign currency adjustments

61,132

161,002

(360,179)

(91,382)

Sub-total (Fair value)

10,581,550

6,411,371

9,788,236

4,097,488

Commissions paid to

bondholders

(248,195)

(363,082)

(248,195)

(295,778)

Amortization of such

commissions

105,986

56,202

58,487

17,188

Balance June 30, 2012 and

December 31, 2011, respectively

(Carrying value)

10,439,340

6,104,491

9,598,537

3,818,898

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2012

10. PENSION PLAN

The Company maintains a pension plan covering all employees in Switzerland; it is considered a defined

benefit plan and accounted in accordance with ASC 715 ("compensation - retirement benefits"). This

model allocates pension costs over the service period of employees in the plan. The underlying principle

is that employees render services rateably over this period, and therefore, the income statement effects of

pensions should follow a similar pattern. ASC 715 requires recognition of the funded status, or difference

between the fair value of plan assets and the projected benefit obligations of the pension plan on the

balance sheet, with a corresponding adjustment to accumulated other comprehensive income. If the

projected benefit obligation exceeds the fair value of plan assets, then that difference or unfunded status

represents the pension liability.

The Company records a net periodic pension cost in the statement of operations. The liabilities and annual

income or expense of the pension plan is determined using methodologies that involve several actuarial

assumptions, the most significant of which are the discount rate and the long-term rate of asset return

(based on the market-related value of assets). The fair values of plan assets are determined based on

prevailing market prices.

Actuarial valuation

Net periodic pension cost has been included in the Company’s results as follows:

Three

Six months ended

Three months

Six months

months

June 30, 2012

ended June 30,

ended

2011

June 30,

2012

Pension expense

Current service

25,384

cost

50,767

50,766

Past service cost

Interest cost

772

1,543

772

1,543

Expected return

(692)

on assets

(1,384)

Employee

(10,164)

contributions

(20,328)

Net periodic

pension cost

15,300

30,598

15,300

30,597

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2012

10. PENSION PLAN CONTINUED

During the six months periods ended June 30, 2012 and June 30, 2011 the Company made cash

contributions of $20,000 and $20,000, respectively, to its defined benefit pension plan.

During the three months period ended June 30, 2012 and June 30, 2011 the Company made cash

contributions of $10,000 and $10,000, respectively, to its defined benefit pension plan.

All of the assets are held under the collective contract by the plan’s re-insurer Company and are invested

in a mix of Swiss and international bond and equity securities within the limits prescribed by the Swiss

Pension Law.

The expected future cash flows to be paid by the Company in respect of employer contributions to the

pension plan for the year ended December 31, 2012 are $20,000.

11. AGREEMENT TO PURCHASE NEIGHBORING PIECE OF LAND

In 2010 SunVesta Holding AG concluded a sale and purchase agreement with a company called DIA S.A.

(“DIA”), being domiciled in San José, Costa Rica. The scope is the acquisition of a neighboring piece of

land with approximately 120,000 m2 having direct beach access through acquisition of 100% of the

shares of Altos del Risco S.A. shares of DIA. The total purchase consideration is $12.7 million. Upon

payment of the entire amount, ownership will be transferred to the Company. As at June 30, 2012 and

December 31, 2011, $5.9 million and $3.1 million has been paid, respectively. The sixth addendum dated

November 12, 2012, stipulates that:

$8.7 million has already been paid

$4.0 million has still to be paid

The current contractual situation does not call for any penalties in case of delays of payments.

The purchase of the neighboring piece of land was officially concluded in the 1^st Quarter 2013.

12. FUTURE LEASE COMMITMENTS

Since January 1, 2010 the Company has sub-rental agreements for its Swiss offices with a related party

called “Sportiva”. The annual sub-rental expense is approximately $110,000. The sub-rental agreement is

concluded for an undetermined period of time, however, there is a verbal agreement to maintain the

agreement at least until December 31, 2013.

Subsequent to the period, on December 1, 2012 the Company entered into a new lease agreement for the

premises for its Swiss office with an unrelated entity. The annual rental expense amounts to

approximately $130,000 on a fixed term expiring on December 31, 2017.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2012

13. TAX CONTINGENCIES

Based on failures to file certain tax return for the years ended 2008, 2009 and 2010 the Company was

advised on April 2, 2012 by the Internal Revenue Service (IRS) of aggregate penalties amounting to

$140,000. Despite of an ongoing appeal process the Company changed its assessment during the three

months period ended June 30, 2012 and determined that it is more likely than not that it will have to pay

the penalty. Therefore the Company recorded $140,000 within the actual quarter as a tax expense.

14. MANGEMENT AGREEMENT WITH MELIA HOTELS & RESORTS

In March 2011, the Company concluded an agreement with Sol Meliá, S.A (“Sol Meliá”) for the

management of the planned resort in Guanacaste, Costa Rica. This agreement includes a clause saying

that if SunVesta were not able to conclude the purchase of the property described in Note 11 by

November 30, 2011, then a penalty of $1 million would become due to Sol Meliá, S.A. Therefore the

Company recorded a liability in the full amount as of December 31, 2011, with the corresponding expense

recorded in general and administrative expense in the year ended December 31, 2011.

On March 3, 2012, the deadline to pay the penalty of $1 million was extended by Sol Meliá, S.A. to June

30, 2012. On June 30, 2012, neither the whole penalty nor a part of the penalty have been paid. Therefore,

the the deadline to pay the penalty of $1 million was extended on June 30, 2012, up to August 31, 2012.

Regarding current situation subsequent to June 30, 2012 refer to Note 18.

15. INTENTION TO PURCHASE TWO ADDITIONAL CONCESSION PROPERTIES AT POLO

PAPAGAYO, GUANACASTE

On April 20, 2012, the Company entered into an agreement to purchase two additional concession

properties located at Polo Papagayo, Guanacaste, with a total surface of approximately 230,000 square

meters for a price of $22,895,806, whereof fifty percent is to be paid in cash and the other fifty percent in

ten percent equity of La Punta (the concession properties in Polo Papagayo) and five percent in equity of

Paradisus Papagayo Bay Resort & Luxury Villas (the hotel currently under construction), both located in

Costa Rica. The payment schedule is as follows:

$0.5 million is required as a cash payment by May 16, 2012

$5.0 million is required as a cash payment by August 31, 2012

$5.698 million is required as a cash payment by January 31, 2013

Equity is required to be transferred upon final payment

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2012

15. INTENTION TO PURCHASE TWO ADDITIONAL CONCESSION PROPERTIES AT POLO

PAPAGAYO, GUANACASTE CONTINUED

If the Company elects not to proceed with the purchase, the purchaser is in default and will lose its funds

on deposit.

On November 13, 2012 the above agreement was amended to decrease the total purchase price to $17.2

million with no equity payment. The terms and conditions of the cash payment are yet to be defined.

Furthermore, all payments by the Company to date and in the future are refundable.

Subsequent to signing the agreements, the Company paid down-payments on the purchase of the

properties of approximately $1,400,000 ($1,170,000 was paid as of June 30, 2012).

16. FAIR VALUE MEASUREMENT

The guidance on fair value measurements defines fair value as the exchange price that would be received

for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for

the asset or liability in an orderly transaction between market participants. This guidance also specifies a

fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable

inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs

(lowest level) reflect internally developed market assumptions. In accordance with this guidance, fair

value measurements are classified under the following hierarchy:

Level 1 — Quoted prices for identical instruments in active markets.

Level 2 — Quoted prices for similar instruments in active markets; quoted prices for

identical

similar instruments in markets that are not active; and model-derived

valuations

which

all

significant inputs or significant value drivers are observable in active markets.

Level 3 — Model-derived valuations in which one or more significant inputs or significant value-drivers

are unobservable.

When available, we use quoted market prices to determine fair value, and we classify such measurements

within Level 1. In some cases where market prices are not available, we make use of observable market

based inputs to calculate fair value, in which case the measurements are classified within Level 2. If

quoted or observable market prices are not available, fair value is based upon internally developed models

that use, where possible, current market-based parameters such as interest rates, yield curves and currency

rates. These measurements are classified within Level 3.

Fair value measurements are classified according to the lowest level input or value-driver that is

significant to the valuation. A measurement may therefore be classified within Level 3 even though there

may be significant inputs that are readily observable.

Fair value measurement includes the consideration of nonperformance risk. Nonperformance risk refers to

the risk that an obligation (either by a counterparty or us) will not be fulfilled. For

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2012

16.

FAIR VALUE MEASUREMENT - CONTINUED

financial assets traded in an active market (Level 1), the nonperformance risk is included in the market

price. For certain other financial assets and liabilities (Level 2 and 3), our fair value calculations have

been adjusted accordingly.

As of June 30, 2012 and December 31, 2011, respectively, there are no financial assets or liabilities

measured on a recurring basis at fair value.

In addition to the methods and assumptions we use to record the fair value of financial instruments as

discussed above, we used the following methods and assumptions to estimate the fair value of our

financial instruments.

Cash and cash equivalents – carrying amount approximated fair value.

Short term investments – carrying amount approximated fair value.

Receivables from related parties (current) – carrying amount approximated fair value due to the short

term nature of the receivables.

Receivables related parties (non current) – The fair values of the receivables due from related parties (non

current) is classified as level 3 fair values. The fair values of the notes were determined by discounting

cash flow projections discounted at the respective interest rates for similar transactions of 3.00%. Hence,

the carrying value approximate fair value.

Accounts Payable – carrying amount approximated fair value.

EUR-bond – The fair values of the bonds payable are classified as level 3 fair values. The fair values of

the bonds have been determined by discounting cash flow projections discounted at the respective interest

rates of 8.25% for EUR bonds, which represents the current market rate based on the creditworhiness of

the Company. Hence, the carrying values approximate fair value.

CHF-bond – The fair values of the bonds payable are classified as level 3 fair values. The fair values of

the bonds have been determined by discounting cash flow projections discounted at the respective interest

rates of 7.25% for CHF bonds , which represents the current market rate based on the creditworhiness of

the Company. Hence, the carrying values approximate fair value.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2012

16. FAIR VALUE MEASUREMENT - CONTINUED

Notes payable to related parties (current) – Rigendinger – carrying amount approximated fair value due to

the short term nature of the note payable.

Notes payable to related parties (current) – other – carrying amount approximated fair value due to the

short term nature of the note payable.

Notes payable to related parties – Aires – The fair values of the notes payable to Aires International

Investments Inc. is classified as level 3 fair values. The fair values of the notes were determined by

discounting cash flow projections discounted at the respective interest rates of 7.25%, which represents

the current market rate based on the creditworhiness of the Company. Hence, the carrying value

approximate fair value.

Notes payable to related parties – Dr. M. Rössler (current) - carrying amount approximated fair value due

to the short term nature of the notes payable and the fair value of the underlying publicly trades shares

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2012

16.

FAIR VALUE MEASUREMENT – CONTINUED

The fair value of our financial instruments is presented in the table below:

June 30, 2012

December 31, 2011

Carrying

Fair Value

Amount

Fair Value

Amount

Fair Value

Levels

Reference

Cash and cash

equivalents

217,863

505,500

None

Short term

investments

75,000

None

Receivables from

related parties

849,925

443,499

Note 6

(current)

Receivables related

parties (non-

1,267,193

current)

Note 6

Accounts

Payable

1,466,108

1,401,137

None

Notes payable to

related parties –

31,406

31,928

other (current)

Note 6

Notes payable to

related parties – Dr.

1,738,573

M. Rössler

Note

6,7,18

(current)

Notes payable to

related parties –

606,901

Rigendinger

Note 6,

(current)

EUR-bond

10,439,340

9,598,537

Note 9

CHF-bond

6,104,491

3,818,898

Note 9

Notes payable to

related parties –

7,694,563

Note

Aires (non-current)

6,7,18

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2012

17. RESTATEMENT

During the three month period ended September 30, 2011 the Company reversed a previous interest

of $217,750 due to the fact that the Company initially intended to pay interest expense starting from

the EUR bond offering date (Dec 1, 2010) as opposed to the bond issuance dates. However, during

the three month period ended September 30, 2011, the Company’s board of directors changed its

policy and reversed the interest accrued for the period from the bond offering date to the respective

bond issuance dates. The Company decided to record this change in policy retrospectively as an error

since there was no contractual obligation to pay interest from the bond issuance date.

Management has concluded that the impact of the error is not material to the previously filed

quarterly reports for the three and six months ended June 30, 2011 and therefore has not filed any

amendments to this quarter. The table below summarizes the impact of the restatement, which has

been reflected in this quarterly report.

Quarter ended June 30

2011

As reported

As restated

Interest expense

(268,690) $

(50,940)

Total other income / -expenses

(654,333) $

(436,583)

Loss before income taxes

(2,689,085) $

(2,471,335)

Net loss

(2,689,085) $

(2,471,335)

Comprehensive loss

(2,376,811) $

(2,159,061)

Basic and diluted loss per share $

(0.05) $

(0.05)

Six months ended June 30

2011

As reported

As restated

Interest expense

(302,316) $

(84,566)

Total other income / -expenses

(687,959) $

(470,209)

Loss before income taxes

(3,166,713) $

(2,948,963)

Net loss

(3,166,713) $

(2,948,963)

Comprehensive loss

(2,937,513) $

(2,719,763)

Basic and diluted loss per share $

(0.06) $

(0.05)

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2012

18. SUBSEQUENT EVENTS

General

The Company has evaluated subsequent events after the date balance sheet date through the issuance

of the financial statements for appropriate disclosure. With the exception of what is stated hereafter,

the Company is not aware of such events, which would require adjustments to or disclosure in the

consolidated financial statements.

Advisory Services Agreements

In order to raise the necessary funds for the completion of the project, various advisory service

agreements have been concluded, both in Europe as well as Central America. In addition, a European

rating agency has been engaged in order to receive a rating. While the basic cost for the advisory

services are not significant, the actual funding will be accompanied by costs (finders’ fees).

Guaranty Agreement

On July 16, 2012, certain principal shareholders of the Company or principal lenders to the project

entered into a guaranty agreement in favor of SunVesta AG. The purpose of the guarantee is to ensure

that until such time as financing is secured for the entire project that they will act as a guarantor to

creditors to the extent of the project’s ongoing capital requirements. The guaranty agreement requires

that within 30 days of receiving a demand notice, the guarantors are required to pay to SunVesta AG

that amount required for ongoing capital requirements, until such time as financing of the project is

secured. The guaranty may not be terminated until such time as SunVesta AG has secured financing

for the completion of the project.

Hotel Project Atlanta

During the 3^rd Quarter 2012 the Company entered into an purchase agreement for a hotel and

entertainment complex in Atlanta, Georgia (United States of America).

The entire purchase amount of $26 million for the assets has no firm financing commitment.

Additionally, approximately an additional $18 million for renovations would need to be invested in the

hotel and entertainment complex. The Company is in negotations with various parties to finalize a

financing package for this project and is confident that it will be able to procure such financing.

Nonwithstanding of all other factors the Company may terminate this agreement within a due dilligence

period, if it is not satisfied with the property after a examination of the assets.

The agreement includes a non-refundable deposit of $250,000.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2012

18. SUBSEQUENT EVENTS - CONTINUED

Opening Date – “Paradisius Papagayo Bay Resort & Luxury Villas”

During the 3^rd Quarter 2012 the Company postponed the opening date for Papagayo Gulf Tourism Project

of Costa Rica, which is now scheduled for winter 2014.

EUR Bond Offering

The Company initiated a EUR bond offering on December 1, 2010 of up to EUR 25,000,000 in units of

EUR 1,000 that bear 8.25 % interest per annum payable each November 30 over the term of the bonds

due November 30, 2013.

A cumulative amount of EUR 9.45 million ($12.36 million) has been realized by the Company from the

initial date up to April 4, 2013.

CHF Bond Offering

The Company initiated a CHF bond offering on September 1, 2011 of up to CHF 15,000,000 in units of

CHF 50,000 that bear 7.25 % interest per annum payable each August 31 over the term of the bonds due

August 31, 2015.

A cumulative amount of CHF 5.6 million ($5.9 million) has been realized by the Company from the

initial date up to April 4, 2013.

Management Agreement with Melia Hotels & Resorts – (current)

On February 5, 2013, the Company extended the deadline to complete the purchase of the property

described in Note 11, pursuant to the terms of the management agreement with Sol Meliá, to March 15,

2013 and concluded the purchase of the property on March 9, 2013.

Since the Company concluded the purchase of the property described within the extension period the

penalty otherwise payable to Sol Meliá and the corresponding allowance will be eliminated as of March

9, 2013. Therefore, the Company will recognize a book entry gain related to this transaction in the 1^st

Quarter 2013.

Related Party Transactions – receivables from related parties

As described in Note 6 and Note 8 the Company had as of June 30, 2012 various receivables from related

parties. All these balances have been repaid as per December 31, 2012 and therefore the Company has no

longer any receivables from related parties as per end of the financial year 2012.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2012

18. SUBSEQUENT EVENTS - CONTINUED

Notes payable to related parties – Rigendinger – (current)

As described in Note 6 the Company owed to Mr. Hans Rigendinger, who was appointed chief operating

officer as of February 4, 2013, an amount of $606,901 as of June 30, 2012. A debt settlement agreement,

effective December 31, 2012, settled the outstanding balance of $717,977 as of December 31, 2012 due

to Mr. Rigendinger, as described hereinafter.

The Company issued 17,949,417 of its common stock ($0.01 par value) at a conversion price of $0.04 to

Mr. Rigendinger for the purposes of this debt settlement agreement.

Loans Dr. Max Rössler – (current)

As described in Note 7, the Company has various loans from Dr. Max Roesler that have not been repaid

as originally stipulated on or before December 17, 2012. Therefore the Company agreed with Mr.

Rössler, on February 5, 2013, that all of these short term loans will be repayable on May 30, 2013.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other

parts of this quarterly report contain forward-looking statements that involve risks and uncertainties.

Forward-looking statements can be identified by words such as “anticipates,” “expects,” “believes,”

“plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future

performance and our actual results may differ significantly from the results discussed in the forward-

looking statements. Factors that might cause such differences include but are not limited to those

discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future

Results and Financial Condition below. The following discussion should be read in conjunction with our

financial statements and notes hereto included in this report. All information presented herein is based on

our three and six month periods ended June 30, 2012 and June 30, 2011. Our fiscal year end is December

31.

Discussion and Analysis

Business Overview

We are in the process of developing high-end luxury hotels and resorts in emerging tourist destinations.

We are initially concentrating on offering luxury hotel products located in attractive, top-class coastal

vacation destinations in countries such as Costa Rica, Vietnam, and Turkey that are fast emerging as

popular tourist destinations. Country specific conditions are taken into account when properties are

considered for development. General considerations as to where to develop properties include the stability

of local political conditions, geologically useful cultivability, and the types of destinations that attract a

five-star clientele. Each potential investment is first compared against a validation checklist and then, if

warranted, subjected to a substantial due diligence process. Since location is the key to the success of any

tourist based luxury real estate project, each development will be carefully considered during the

eligibility process.

Initial Development

Our initial real estate development, to be constructed on 20.5 hectares of prime land located in

Guanacaste Province, Costa Rica, is the Paradisus Papagayo Bay Resort & Luxury Villas, a five star

luxury hotel scheduled to open in November 2014 subject to requisite financing.

Specifications

Paradisus Papagayo Bay Resort & Luxury Villas’ initial specifications are to be as follows:

Eco-luxury all-inclusive resort;

381- keys

Direct beach access;

Five restaurants and five bars;

Yhi Spa and Health Club;

Paradisus’ adults-only “Royal Service” level of accommodations;

Paradisus’ “Family Concierge” program; and

19,000 square feet of meeting facilities with the business traveler in mind.

Royal Service

Our Royal Service will include an extensive range of services such as butler service, private pools for

each Garden Villa and/or a Jacuzzi in every suite.

The Royal Service area will include:

112 Junior Suites Grand Deluxe

(53-60* square meters)

3 Junior Suites Grand Deluxe for Handicapped Guests

(53* square meters)

6 Grand Master Suites

(82* square meters)

1 Grand Presidential Suite (4 bedrooms)

(145* square meters)

20 one or two bedroom Garden Villas

(91 – 117* square meters)

Room size does not include balconies and terraces.

All ground floor suites will have direct access to swim-up pools. Each of the suites and villas will have a

full view of the sea. Royal Service guests will furthermore have access to restaurants, bars, lounges,

fitness equipment, spas and outside massage areas.

Family Concierge

The Family Concierge will be the family orientated part of the Paradisus Papagayo Bay Resort & Luxury

Villas. The accommodations will be designed to satisfy the needs of the modern family.

166 Junior Suites Deluxe

(47* square meters)

34 Suites Deluxe

(87* square meters)

34 Suites Premium

(93* square meters)

6 Handicapped Junior Suites Deluxe

(47* square meters)

1 Presidential Suite

(189* square meters)

Room size does not include balconies and terraces.

All ground floor suites will have direct access to swim-up pools. Each of the suites will have a full view

of the sea. Family Concierge guests will furthermore have access to restaurants, bars, and lounges. The

intended Onyx Night Club and the Gabi Club will be located near the beach.

The Paradisus Papagayo Bay Resort & Luxury Villa’s will feature other highlights including:

Over 65 private, swim up and resort pools including the world’s second largest Infinity Pool all

within idyllic landscaped grounds.

A wedding chapel with a stunning ocean view.

Rain forest walkways that permit guests to experience the flora and fauna of the rain forest.

A multipurpose convention hall with over 2,000 square metres of space that can be utilized as a whole

or divided to create smaller meeting rooms.

A full service spa committed to providing for the wellbeing of our guests. The spa will be located

with a 180 degree sea view within approximately 1,000 square metres that will include 12 large

treatment rooms, a hairdresser, relaxation areas, pools, saunas and steam rooms.

The 20 private villas will be located within the Royal Service area of the resort. The present intention

being that these villas will be sold to individuals who will then let them back to the resort when not

occupied by the owners.

Management

Overall project development is lead by Josef Mettler, our chief executive officer, Charles Fessel, project

director Paradisus Papagayo Bay Resort & Luxury Villas, Hans Rigendinger, chairman of the board

SunVesta AG and Ernst Rosenberger, the Company’s corporate controller. The lead architect is

Ossenbach, Pendones & Bonilla, one of Costa Rica’s largest architectural offices with over 45 architects

and designers. Civil engineering services are provided by DEHC Engineers and structural engineering

services by IEAC. Landscape architects are TPA and interior designers are lead by Concreta Srl.

Resort management is to be provided by Meliá Hotel International, S.A. (“Sol Meliá”). “Paradisus” is Sol

Meliá’s five star all-inclusive luxury hotel brand that is well recognized in the hospitality industry around

the world. Sol Meliá was founded in 1956 in Palma de Mallorca, Spain and is today one of the world’s

largest resort hotel chains, as well as Spain’s leading hotel chain for business or leisure. The company

currently offers more than 300 hotels in 26 countries over four continents under its Gran Sol Meliá, Sol

Meliá, ME by Sol Meliá, Innside by Sol Meliá, Tryp, Sol, Sol Meliá Vacation Club, and Paradisus

brands. The Paradisus brand represents all-inclusive luxury resorts with hotels in Mexico and the

Dominican Republic, including:

Paradisus Palma Real (Dominican Republic):

o 496 oversized suites; and

o numerous pools and whirlpools, five tennis courts, casino, beach, golf, meeting space,

five restaurants, two buffets, nine bars, etc.

The Reserve at Palma Real (Dominican Republic):

o 184 rooms “Residential Concierge Suites”; and

o Private beach, swimming pools, 7800 sq ft “Kids Zone”, 24,000 sq. ft. Yhi Spa, three

restaurants, two buffets, two bars, etc.

Paradisus Punta Cana (Dominican Republic):

o 884 oversized suites (500 - 1000+ sq ft); and

o seven pools, four tennis courts, casino, beach, “Kids Zone”, Yhi Spa and fitness, meeting

rooms, 12 restaurants, eight bars, etc.

The Reserve at Punta Cana (Dominican Republic):

o 132 residential suites; and

o pools (with partially underwater pool beds, water features, etc), private beach, spa,

cabanas, etc.

La Esmeralda at Playa del Carmen (Mexico opening November 2011)

o 512 suites including 56 swim-up suites; and

o spas, meeting spaces, 11 restaurants, 10 bars, etc. (partially shared with La Perla at Playa

del Carmen).

La Perla at Playa del Carmen (Mexico opening November 2011)

o 394 suites including 60 swim-up suites;

o Paradisus’ adults-only “Royal Service” level of accommodations; and

o spas, meeting spaces, 11 restaurants, 10 bars, etc. (partially shared with La Esmeralda at

Playa del Carmen).

Our Paradisus Papagayo Bay Resort & Luxury Villas development is intended to replace Paradisus

Resorts’ former Paradisus Playa Conchal in Guanacaste, Costa Rica which property was operated by Sol

Meliá until April 30, 2011. Our project is part of Meliá’s master expansion plan, which includes the

opening of two resorts in Playa del Carmen, Mexico in November of 2011. Sol Meliá aims to solidify

Paradisus Resorts as a leader in the luxury all-inclusive market segment with the new properties in Playa

del Carman and our own Paradisus Papagayo Bay Resort & Luxury Villas project.

Additional Concession Properties

On April 20, 2012, SunVesta AG entered into an agreement with Meridian IBG to purchase two

additional concession properties. The additional concession properties have a total surface of

approximately 230,000 square metres purchased for a total of $22,895,806, on terms whereby fifty

percent was to be paid in cash and the other fifty percent with the transfer of a ten percent equity interest

in La Punta (the concession properties in Polo Papagayo on which the project will be located) and a five

percent equity interest in Paradisus Papagayo Bay Resort & Luxury Villas. The payment schedule was as

follows:

$0.5 million is required as a cash payment by May 16, 2012

$5.0 million is required as a cash payment by August 31, 2012

$5.698 million is required as a cash payment by January 31, 2013

Equity is required to be transferred upon final payment

Subsequent to the period of this report, on November 13, 2012, the purchase agreement for additional

concession properties in Polo Papagayo was amended to decrease the total cash purchase price to $17.2

million and to delete the equity component for both La Punta and the Paradisus Papagayo Bay Resort &

Luxury Villas. New terms and conditions for the payment of the new purchase price are yet to be defined.

SunVesta AG has paid down-payments on the purchase of the additional concession properties of

$1,170,000 as of June 30, 2012 and approximately $1,400,000 as of the date of this report.

Hotel and Entertainment Complex (Atlanta, Georgia, U.S.A)

Subsequent to the period of this report, during the third quarter 2012, the Company entered into an

agreement to purchase a hotel and entertainment complex in Atlanta, Georgia, U.S.A. The entire purchase

amount of $26 million for the assets has no firm financing commitment. Additionally, approximately an

additional $18 million for renovations would need to be invested in the hotel and entertainment complex.

The Company is in negotiations with various parties to finalize a financing package for this project and is

confident that it will be able to procure such financing. Nonwithstanding all other factors, the Company

may terminate this agreement, within a due dilligence period, if it is not satisfied with the property after

an examination of the assets. The agreement includes a non-refundable deposit of $250,000.

Finance

The anticipated completion of the Paradisus Papagayo Bay Resort & Luxury Villas in November of 2014

will require a total investment of approximately $180 million of which approximately $19 million has

been expended as of June 30, 2012. We expect to realize a minimum of $20 million in new funding over

the next twelve months to progress the development and an additional $141,000,000 in funding by the

time the development is completed. New funding over the next twelve months is expected to be raised

from debt financing through bonds, a fixed line of credit and, as necessary, the guaranty agreement in

place as described in the going concern paragraph.

SunVesta AG, our wholly owned subsidiary, is in the process of issuing fixed-income Euro denominated

bonds up to an aggregate amount of € 25,000,000 and fixed income CHF denominated bonds up to an

aggregate amount of CHF 15,000,000 to fund the initial development of the Paradisus Papagayo Bay

Resort & Luxury Villas project.

The Euro bonds are unsecured, have a three year term, bear interest at 8.25% per annum payable each

November 30 over the term due November 30, 2013. SunVesta AG raised $9,598,537 in the twelve

months ended December 31, 2011 and $840,803 in the six months ended June 30, 2012, for a total of

approximately $12,360,000 as of the filing date of this report, in connection with the Euro bond offering.

The CHF bonds are unsecured, have a three year term, bear interest at 7.25% per annum payable each

August 31 over the term due August 31, 2015. SunVesta AG raised $3,818,898 in the twelve months

ended December 31, 2011 and $2,285,593 in the six months ended June 30, 2012, for a total of

approximately $5,900,000 as of the filing date of this report in connection with the CHF bond offering.

SunVesta AG entered into a line of credit agreement with Aires International Investment, Inc. (“Aires”)

on July 27, 2011 allowing it to borrow up to CHF 6,000,000 by February 29, 2012. The line of credit

bears interest at 7.25% and was secured by 10% of the stock of Rich Land. Interest payments are due

September 30 of each year with the line of credit maturing on September 30, 2015. Prior to maturity, if

the maximum credit limit was borrowed, Aires had the option to convert the balance of the line of credit

into a 10% ownership interest in Rich Land.

On May 11, 2012, the parties to the Aires line of credit agreement executed an addendum to the existing

line of credit agreement that includes the following clauses:

The line of credit amount was increased by CHF 4,000,000 to a total amount of CHF 10,000,000. The

additional CHF 4,000,000 to be paid in installments through the end of July 2012.

Should the entire amount of CHF 10,000,000 be drawn down, Aires will have the right to convert the

entire line of credit of CHF 10,000,000 into a 20% holding of the capital of the Company.

The conversion right granted in the original contract to convert the balance of the line of credit into a 10%

ownership interest in Rich Land was cancelled.

The entire amount of CHF 10,000,000 is subordinated in favor of other creditors.

On June 21, 2012, pursuant to a letter agreement, Aires agreed to increase the line of credit by CHF

2,000,000 to a total amount of CHF 12,000,000.

SunVesta AG and Aires are currently in the process of negotiating a revised conversion option to replace

the existing option to convert CHF 10,000,000 into a 20% holding in the capital of the Company. The

major contemplated change is that Aires will convert its receivable at the time of conversion into 20% of

the preferred shares of the Company, at a price and with preferential rights yet to be determined. The

parties are yet to reach an agreement.

As of December 31, 2011 SunVesta AG had borrowed CHF 3,000,000 ($3,195,000) from the Aires line

of credit, and as of June 30, 2012 SunVesta AG had borrowed CHF 7,350,000 ($7,694,700) for a total of

approximately CHF 16.24 million ($17,300,000) as of the filing date of this report.

During the three month period ended June 30, 2012, Dr. Max Rössler (board member of SunVesta AG)

gave a short term loan non-interest bearing loan of $1,736,320 that is repayable on December 17, 2012

either in cash or with the delivery of 10,000 shares of Intershop Holding AG, a publicly traded company

in Switzerland, regardless of actual trading value on the date of delivery.

The Company expects that the remaining amounts required to complete the Paradisus Papagayo Bay

Resort & Luxury Villas will be secured in the form of a construction loan, equity placements and, as

necessary, the guaranty agreement.

Timeline

Our expected timeline for developing the Paradisus Papagayo Bay Resort & Luxury Villas is as follows:

Complete revisions of architectural plans which will incorporate Meliá requirements in the 1^st

quarter of 2013;

Receive traditional construction loan in the 2^nd quarter of 2013;

Receive final building permits in 2^nd quarter of 2013;

Begin construction in the 2^nd quarter of 2013; and

Complete construction work in the 4^th quarter of 2014.

Results of Operations

During the six months ended June 30, 2012, our operations were focused on (i) funding the terms of an

agreement with DIA S.A. to purchase an additional 12 hectares contiguous with our existing property that

will provide the project with direct private beach access; (ii) deliberations with local authorities to obtain

building permits for the development of the property; (iii) discussions with prospective project

development partners; (iv) pursuing additional debt or equity financing arrangements including a bond

offering through SunVesta Holding AG in Europe, increasing a line of credit with Aires and entering into

a related party loan; and (v) entering into an agreement with Meridian IBG to purchase two additional

concession properties in the vicinity of the Paradisus Papagayo Bay Resort & Luxury Villas under

development.

The Company has been funded since inception from debt or equity placements and by shareholders or

partners in the form of loans. All of the capital raised to date has been allocated to the development of the

Costa Rican property including the purchase of the land and general and administrative costs.

Comprehensive Losses

For the period from the date of inception of development stage on January 1, 2005, until June 30, 2012,

the Company had incurred comprehensive losses of $25,649,052.

Comprehensive losses for the three months ended June 30, 2012 decreased to $983,022 as compared to

$2,159,061 for the three months ended June 30, 2011. The decrease in comprehensive losses over the

comparative periods can be attributed to the gain on foreign currency translation of $1,218,211 as

compared to a gain of $312,274, which gain is due to volatility between Swiss Francs and US Dollars, the

related foreign currency translation difference on intercompany loans that is classified as a permanent

investment and the translation of the financial condition and results of operations of our foreign

subsidiaries. Other contributing factors to the decrease in comprehensive losses over the comparative

three month periods ended June 30, 2012 and June 30, 2011, respectively, included decreases in general

and administrative expenses to $1,483,795 from $1,923,282, of which significant components were a

decrease in finder’s fees of approximately $410,000, associated with the management agreement with Sol

Meliá, and other expenses which decreased approximately $30,000, in addition to the decrease in sales

and marketing expenses to zero from $111,470, a gain of $37,615 on currency exchange differences from

a loss of $265,071, and the realization of interest income of $4,030, offset by an increase in interest

expenses to $349,758 from $50,940, due to bond and credit line debt obligations, the increase in

amortization of debt issuance costs and commissions to $268,747 from $120,572, due to amounts

associated with the bond issuances, other expenses of $441 from zero and an increase in income taxes of

$140,136 due to potential penalties for the late filing of tax returns with the Internal Revenue Service.

Comprehensive losses for the six months ended June 30, 2012 increased to $3,120,322 from $2,719,763

for the six months ended June 30, 2011. The increase in comprehensive losses over the comparative six

month periods can be primarily attributed to the increase in interest expense to $630,753 from $84,566,

due to bond and credit line debt obligations. Other contributing factors to the increase in comprehensive

losses over the comparative six month periods ending June 30, 2012 and June 30, 2011, respectively,

include increases in general and administrative expenses to $2,455,423 from $2,361,300, of which

significant components were an increase in investor relations expenses incurred in connection with the

bond offerings of approximately $161,000, other expenses which increased approximately $162,000,

offset by a decrease in finder’s fees of approximately $230,000, associated with the management

agreement with Sol Meliá, in addition to increases in the amortization of debt issuance costs and

commissions to $498,035 from $120,572, due to amounts associated with the bond issuances and an

increase in income taxes of $140,136 due to potential penalties for the late filing of tax returns with the

Internal Revenue Service , offset by decreases in sales and marketing expenses to zero from $117,454,

interest income of $7,089, a gain of $167,887 on currency exchange differences from a loss of $265,071,

other income of $13,612 and foreign currency translation which increased to $415,436 from $299,200,

which gain is due to volatility between Swiss Francs and US Dollars, the related foreign currency

translation difference on intercompany loans that is classified as a permanent investment and the

translation of the financial condition and results of operations of our foreign subsidiaries.

We did not generate revenue during this period and we expect to continue to incur losses through the year

ended December 31, 2012.

Income Tax Expense (Benefit)

The Company has a prospective income tax benefit resulting from a net operating loss carry-forward and

startup costs that will offset future operating profits.

Capital Expenditures

The Company expended a significant amount on capital expenditures for the period from January 1, 2005

to June 30, 2012, in connection with the purchase of land that includes a hotel concession in Costa Rica

and expects to incur future cash outflows on capital expenditure as discussed in the "Liquidity and Capital

Resources" and the "Going Concern" paragraphs below.

Liquidity and Capital Resources

The Company has been in the development stage since inception and has experienced significant changes

in liquidity, capital resources, and stockholders’ equity.

As of June 30, 2012, we had a working capital deficit of $6,106,622. We had current assets of $1,104,243

and total assets of $25,086,039. Our current assets consisted of $217,863 in cash, $37,454 in other assets

and $848,925 in receivables from related parties. Our total assets consisted of current assets and property

and equipment of $13,435,782, net debt issuance costs of $1,970,399, down payments for property and

equipment of $7,070,013, other assets of $238,410 and receivables from related parties of $1,267,193. We

had current liabilities of $7,210,865 and total liabilities of $31,508,930. Our current liabilities consisted of

$1,466,108 in accounts payable, $3,367,877 in accrued expenses, and $2,376,880 in notes payable to

related parties. Our total liabilities consisted of current liabilities and EUR bond debt of $10,439,340,

CHF bond debt of $6,104,491, note payable to related parties of $7,694,563 and pension liabilities of

$59,672. Total stockholders’ deficit in the Company was $6,422,892 at June 30, 2012.

For the period from January 1, 2005 to June 30, 2012, net cash used in operating activities was

$15,222,623. Net cash used in operating activities for the six months ended June 30, 2012, was

$2,253,232 as compared to $2,287,670 for the six months ended June 30, 2011. Net cash used in

operating activities in the current six month period ended June 30, 2012, can be attributed primarily to

general and administrative expenses, that include but are not limited to, personnel costs, accounting fees,

consulting expenses, finder’s fees and professional fees such as for auditing purposes and legal

consultation, offset by an increase in accounts payable and accrued expenses. Net cash used in operating

activities in the prior six month period ended June 30, 2012, can also be primarily attributed to general

and administrative expenses, offset by changes in net working capital.

We expect to use net cash in operating activities until such time as net losses transition to net income

which transition is not anticipated until we complete the Paradisus Papagayo Bay Resort & Luxury Villas

project.

For the period from January 1, 2005 to June 30, 2012, net cash used in investing activities was

$22,877,128. Net cash used in investing activities for the six months ended June 30, 2012, was

$7,556,673 as compared to $1,758,950 for the six months ended June 30, 2011. Net cash used in investing

activities in the current six month period can be attributed to receivables from related parties, the purchase

of property and equipment, down payments for property and other non-current assets, offset by the receipt

of short term investments. Net cash used in investing activities in the prior six month period ended June

30, 2011, can be attributed to receivables from related parties, the purchase of property and equipment,

down payments for property and other non-current assets.

We expect to use net cash in investing activities in future periods while we develop the Paradisus

Papagayo Bay Resort & Luxury Villas.

For the period January 1, 2005 to June 30, 2012, net cash provided by financing activities was

$38,910,127. Net cash provided by financing activities for the six months ended June 30, 2012, was

$9,466,232 as compared to $4,230,901 for the six months ended June 30, 2011. Net cash provided by

financing activities in the current six month period ended June 30, 2012, can be attributed to notes

payable to related parties and proceeds from SunVesta AG’s bond issuance, offset by the payment of debt

issuance costs. Net cash provided by financing activities in the prior six month period ended June 30,

2011, can be attributed to proceeds from SunVesta AG’s bond issuance net of commissions and

realization of debt issuance costs, offset by repayment of notes payable to related parties and notes

payable.

We expect net cash provided by financing activities in future periods from SunVesta AG’s bond offering,

the credit line with Aires, equity placements, related party loans and, as necessary the guaranty

agreement.

Management believes that our cash on hand in addition to, the line of credit, short term related party

loans and the guaranty agreement in place as described in the going concern paragraph below are

sufficient for us to conduct operations over the next twelve months. Current debt financing efforts consist

of bond offerings in progress, short term related party loans and a credit line commitment agreed with

Aires that permits us to draw capital as necessary to meet ongoing operational requirements. The

Company has, as of the date of this filing, realized $18,260,000 through its Euro and CHF bond offerings

and drawn down approximately $17,300,000 against the line of credit with Aires.

We have a line of credit in place with Aires against which SunVesta Holding AG has borrowed CHF

3,000,000 ($3,195,000) as of December 31, 2011, and CHF 7,300,000 ($7,694,563) as of June 30, 2012

and CHF 16,240,000 ($17,300,000) as of the filing date of this report. The amount borrowed to date is in

excess of that anticipated by the line of credit agreement and the Aires debt facility is exhausted as of the

filing date of this report. Otherwise, we had no lines of credit or other bank financing arrangements as of

June 30, 2012.

We have commitments to DIA, S.A (“DIA”) and other third parties as of June 30, 2012, in connection

with the purchase of property parcels made part of the development and certain commitments to the Costa

Rican government for water and development rights as well as certain commitments for the planning and

construction of the resort project. As of the date of this report our commitment to DIA has been met.

As of the date of this filing, the Company had the following cancellable commitments which are not

included in the required financing of $180 million to complete the Papagayo Gulf Tourism Project.

The Company entered into an agreement to purchase two additional concession properties located at

Polo Papagayo, Guanacaste, with a total surface of approximately 230,000 square meters for a price

of $17.2 million. The terms and conditions of the cash payment are yet to be defined. Furthermore, all

payments by the Company to date and in the future are refundable.

The Company entered into an agreement to purchase a hotel and entertainment complex in Atlanta,

Georgia (United States of America). The entire purchase amount of $26 million for the assets has no

firm financing commitment. Additionally, approximately an additional $18 million for renovations

would need to be invested in the hotel and entertainment complex. The Company is in negotiations

with various parties to finalize a financing package for this project and is confident that it will be able

to procure such financing. Notwithstanding all other factors, the Company may terminate this

agreement, within a due diligence period, if it is not satisfied with the property after an examination

of the assets. The agreement includes a non-refundable deposit of $250,000.

We maintain a defined benefit plan that covers all of our Swiss employees though we have no contractual

commitment with our sole officer and director.

We have no current plans for significant purchases or sales of plant or equipment, except in connection

with the planned construction of the Paradisus Papagayo Bay Resort & Luxury Villas as discussed above.

We have no current plans to make any changes in the number of our employees.

Future Financings

We will continue to rely on debt or equity sales of our shares of common stock to fund our business

operations. Unfortunately, there is no assurance that we will be able to secure the financing requisite to

fund our business.

Off-Balance Sheet Arrangements

As of June 30, 2012, we had no significant off-balance sheet arrangements that have or are reasonably

likely to have a current or future effect on our financial condition, changes in financial condition,

revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are

material to stockholders.

Going Concern

The Company intends to build a hotel in the Papagayo Gulf Tourism Project area of Guanacaste, Costa

Rica. The total net investment is estimated to be approximately $180 million.

The project is expected to open in the fourth quarter of 2014. Until the completion of the project, the

following expenditures are estimated to be incurred:

$1,000

a. Gross project cost

195,000

b. Less: Proceeds from sale of villas

-24,000

c. Net project cost

171,000

d. Overhead expenses

21,000

e. Less: Recuperated in gross project cost

-12,000

f Total, excluding other potential projects

180,000

Sixty percent (60%) of net project cost is expected to be financed by traditional mortgage loans, for which

negotiations have been initiated. The remaining forty percent (40%) of net project cost, as well as non-

recuperated overhead expenses and the cost of prospective “other projects” are expected to be financed by

the primary promoters of the project, i.e.:

Zypam Ltd.

Mr. Hans Rigendinger

Mr. Max Rössler

Mr. Josef Mettler

Based on the guaranty agreement, management therefore believes that available funds are sufficient to

finance cash flows for the next twelve months though future anticipated cash outflows for investing

activities will continue to depend on the availability of financing and can be adjusted as necessary.

Subsequent to period end, certain principal shareholders of the Company or principal lenders to the

project entered into a guaranty agreement in favor of SunVesta Holding AG. The purpose of the

guarantee is to ensure that until such time as financing is secured for the entire project that they will act as

a guarantor to creditors to the extent of the project’s ongoing capital requirements. The guaranty

agreement requires that within 30 days of receiving a demand notice, the guarantors are required to pay to

SunVesta AG that amount required for ongoing capital requirements, until such time as financing of the

project is secured. The guaranty may not be terminated until such time as SunVesta Holding AG has

secured financing for the completion of the project.

Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition

The statements contained in the section titled Management’s Discussion and Analysis of Financial

Condition and Results of Operations and elsewhere in this current report, with the exception of historical

facts, are forward-looking statements. We are ineligible to rely on the safe-harbor provision of the Private

Litigation Reform Act of 1995 for forward looking statements made in this current report. Forward-

looking statements reflect our current expectations and beliefs regarding our future results of operations,

performance, and achievements. These statements are subject to risks and uncertainties and are based

upon assumptions and beliefs that may or may not materialize. These statements include, but are not

limited to, statements concerning:

our anticipated financial performance and business plan;

the sufficiency of existing capital resources;

our ability to raise additional capital to fund cash requirements for future operations;

uncertainties related to our future business prospects;

our ability to generate revenues to fund future operations;

the volatility of the stock market; and

general economic conditions.

We wish to caution readers that our operating results are subject to various risks and uncertainties that

could cause our actual results to differ materially from those discussed or anticipated. We also wish to

advise readers not to place any undue reliance on the forward-looking statements contained in this report,

which reflect our beliefs and expectations only as of the date of this report. We assume no obligation to

update or revise these forward-looking statements to reflect new events or circumstances or any changes

in our beliefs or expectations, other than as required by law.

Recent Accounting Pronouncements

Please see Note 2 to the accompanying consolidated financial statements for recent accounting

pronouncements.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this quarterly report, an evaluation was carried out by the

Company’s management, with the participation of the chief executive officer and chief financial officer,

of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e)

under the Securities Exchange Act of 1934 (“Exchange Act”)). Disclosure controls and procedures are

designed to ensure that information required to be disclosed in reports filed or submitted under the

Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the

Commission’s rules and forms, and that such information is accumulated and communicated to

management, including the chief executive officer and chief financial officer, to allow timely decisions

regarding required disclosures.

Based on that evaluation, the Company’s management concluded that due to a lack of independent

oversight, failure to segregate duties, insufficient accounting resources and lack of US GAAP knowledge,

as of the end of the period covered by this report, that the Company’s disclosure controls and procedures

were ineffective in recording, processing, summarizing, and reporting information required to be

disclosed, within the time periods specified in the Commission’s rules and forms, and such information

was not accumulated and communicated to management, including the chief executive officer and the

chief financial officer, to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

During the period ended June 30, 2012, there has been no change in internal control over financial

reporting that has materially affected, or is reasonably likely to materially affect our internal control over

financial reporting.

PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

None.

ITEM 1A.

RISK FACTORS

Not required of smaller reporting companies.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.

DEFAULTS ON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS

Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page

39 of this Form 10-Q, and are incorporated herein by this reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this

report to be signed on its behalf by the undersigned, thereunto duly authorized.

SunVesta, Inc.

Date

/s/ Josef Mettler

April 17, 2013

Josef Mettler

Chief Executive Officer, Chief Financial Officer,

Principal Accounting Officer and Director

/s/ Hans Rigendinger

April 17, 2013

Hans Rigendinger

Chief Operating Officer and Director

INDEX TO EXHIBITS

Exhibit

Description

3.1.1*

Articles of Incorporation (incorporated by reference from the Form 10-SB filed with the Commission on

December 31, 1999).

3.1.2*

Amended Articles of Incorporation (incorporated by reference from the Form 10-KSB filed with the

Commission on April 9, 2003).

3.1.3*

Amended Articles of Incorporation (incorporated by reference from the Form 10-QSB filed with the

Commission on November 17, 2003).

3.1.4*

Amended Articles of Incorporation (incorporated by reference from the Form 8-K filed with the Commission

on September 27, 2007).

3.2.1*

Bylaws (incorporated by reference from the Form 10-SB filed with the Commission on December 31, 1999).

3.2.2*

Amended Bylaws (incorporated by reference from the Form 10-QSB filed with the Commission on

November 17, 2003).

10.1*

Securities Exchange Agreement and Plan of Exchange dated June 18, 2007 between the Company and

SunVesta AG (formerly ZAG Holdings AG) (incorporated by reference from the Form 8-K filed with the

Commission on June 21, 2007).

10.2*

Purchase and Sale Agreement between ZAG Holding AG and Trust Rich Land Investments, Mauricio Rivera

Lang dated May 1, 2006 for the acquisition of Rich Land Investments Limitada.

10.3*

Debt Settlement Agreement dated September 29, 2008 with Zypam Ltd. (incorporated by reference from the

Form 10-Q filed with the Commission on November 13, 2008).

10.4*

Debt Settlement Agreement dated April 21, 2009 between the Company and Zypam, Ltd. (incorporated by

reference from the Form 8-K filed with the Commission on April 30, 2009).

10.5*

Debt Settlement Agreement dated March 1, 2010 between the Company and Zypam, Ltd. (incorporated by

reference from the Form 8-K filed with the Commission on March 10, 2010).

10.6*

Debt Settlement Agreement dated March 1, 2010 between the Company and Hans Rigendinger (incorporated

by reference from the Form 8-K filed with the Commission on March 10, 2010).

10.7*

Employment Agreement dated January 1, 2001 between the SunVesta Projects & Management AG and Josef

Mettler (incorporated by reference from the Form 10-K filed with the Commission on February 14, 2013).

10.8*

Guaranty Agreement dated July 16, 2012 between SunVesta Holding AG, Josef Mettler, Hans Rigendinger

and Max Rössler (incorporated by reference from the Form 10-K filed with the Commission on February 14,

2013).

10.9*

Employment Agreement dated January 1, 2013 between the Company and Hans Rigendinger (incorporated

by reference to the Form 8-K filed with the Commission on February 4, 2013.

10.10*

Debt Settlement between the Company and Hans Rigendinger dated December 31, 2012 (incorporated by

reference from the Form 10-Q filed with the Commission on April 18, 2013).

14*

Code of Ethics adopted March 1, 2004 (incorporated by reference from the 10-KSB filed with the

Commission on April 14, 2004).

21*

Subsidiaries of the Company (incorporated by reference from the Form 10-K filed with the Commission on

February 14, 2013).

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14 of the

Securities and Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley

Act of 2002 (attached).

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350

as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (attached).

101. INS

XBRL Instance Document^†

101. PRE

XBRL Taxonomy Extension Presentation Linkbase^†

101. LAB

XBRL Taxonomy Extension Label Linkbase^†

101. DEF

XBRL Taxonomy Extension Label Linkbase^†

101. CAL

XBRL Taxonomy Extension Label Linkbase^†

101. SCH

XBRL Taxonomy Extension Schema^†

Incorporated by reference to previous filings of the Company.

^†

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.

Attached files

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