SUNVESTA, INC. - FORM 10-Q - August 19, 2015

Attached files

file	filename
EX-32 - SUNVESTA CERTIFICATION - SUNVESTA, INC.	exhibit32.htm
EX-14 - SUNVESTA CODE ETHICS - SUNVESTA, INC.	exhibit14.htm
EX-31 - SUNVESTA CERTIFICATION - SUNVESTA, INC.	exhibit31.htm
EX-10.12 - SUNVESTA AGREEMENT - SUNVESTA, INC.	exhibit1012.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

for the quarterly period ended June 30, 2015.

o 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 þ No o

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 August 19, 2015, was 95,941,603.

TABLE OF CONTENTS

PART 1- FINANCIAL INFORMATION

Item1.

Financial Statements:

Consolidated Balance Sheets as of June 30, 2015 (unaudited) and December 31,

2014

Unaudited Consolidated Statements of Comprehensive Loss (unaudited) for the

three and six months ended June 30, 2015 and June 30, 2014

Unaudited Consolidated Statements of Stockholders’ Equity (unaudited) for the

six months ended June 30, 2015

Unaudited Consolidated Statements of Cash Flows (unaudited) for the six months

ended June 30, 2015 and June 30, 2014

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

Other Information

Exhibits

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.

CONSOLIDATED BALANCE SHEETS

June 30, 2015

December 31, 2014

(Unaudited)

Assets

Current assets

Cash and cash equivalents

708,828

14,347

Receivable from related parties

23,933

27,163

Other assets

422,183

289,156

Total current assets

1,154,944

330,666

Non-current assets

Property and equipment - net

55,631,164

51,201,352

Deposits related to construction work

817,410

820,565

Debt issuance costs - net

895,750

2,006,849

Down payment for property and equipment

2,669,816

2,369,816

Restricted cash

1,692,549

1,684,934

Total non-current assets

61,706,689

58,083,516

Total assets

62,861,633

58,414,182

Liabilities and stockholders' deficit

Current liabilities

Bank liabilities

153,375

Accounts payable

5,521,040

6,181,057

Accrued expenses

9,080,204

5,444,514

Note payable

2,167,396

3,023,759

Notes payable to related parties

1,302,236

1,162,100

CHF-Bond

35,947,733

25,511,898

Total current liabilities

54,018,609

41,476,703

Non-current liabilities

EUR-Bond

8,589,905

9,057,986

Notes payable to related parties

32,631,771

30,299,312

Other long term debts

56,413

74,837

Pension liabilities

144,509

136,433

Total non-current liabilities

41,422,598

39,568,568

Total liabilities

95,441,207

81,045,271

Stockholders' deficit

Preferred stock, $0.01 par value; 50,000,000 shares

Common stock, $0.01 par value; 200,000,000 shares

authorized; 83,541,603 shares issued and

outstanding

835,416

Additional paid-in capital

23,222,628

22,942,486

Accumulated other comprehensive income / (loss)

(1,219,573)

1,265,590

Accumulated deficit

(55,418,045)

(47,674,581)

Total stockholders' deficit

(32,579,574)

(22,631,089)

Total liabilities and stockholders' deficit

62,861,633

58,414,182

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

SUNVESTA, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three months ended June 30,

Six months ended June 30,

2015

2014

2015

2014

(Unaudited)

Revenues

Revenues, net

Cost of revenues

Gross profit

Operating expenses

General and administrative

expenses

(1,369,582)

(1,371,362)

(3,226,049)

(3,423,354)

Total operating expenses

(1,369,582)

(1,371,362)

(3,226,049)

(3,423,354)

Loss from operations

$ (1,369,582)

(1,371,362)

(3,226,049)

(3,423,354)

Other income / - expenses

Interest income

11,699

6,988

18,483

6,990

Interest expense

(1,309,308)

(840,851)

(2,638,219)

(1,395,477)

Amortization of debt issuance

costs

(695,579)

(251,515)

(1,141,783)

(325,313)

Exchange differences

(1,168,861)

(245,229)

(705,420)

(402,386)

Other income / - expenses

(23,685)

(19,726)

(49,326)

(78,250)

Total other income / - expenses

$ (3,185,734)

(1,350,333)

(4,516,265)

(2,194,436)

Loss before income taxes

$ (4,555,316)

(2,721,695)

(7,742,314)

(5,617,790)

Income Taxes

(1,152)

Net loss

$ (4,555,316)

(2,721,695)

(7,743,464)

(5,617,790)

Comprehensive income /(loss)

Foreign currency translation

(1,434,959)

153,809

(2,485,163)

(51,003)

Comprehensive income / (loss)

$ (5,990,275)

(2,567,886)

(10,228,627)

(5,668,793)

Loss per common share

Basic and diluted

(0.05)

(0.03)

(0.08)

(0.06)

Weighted average common shares

Basic and diluted

92,941,603

87,041,603

92,775,305

86,646,575

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

SUNVESTA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

Common

Additional

Accumulated

Total

Stock

Paid in

Other

deficit

Stockholders’

Capital

Comprehensive

Equity

Income (Loss)

(Deficit)

December 31, 2014

835,416 $

22,942,486 $

1,265,590 $

(47,674,581) $

(22,631,089)

Net loss

(7,743,464)

Translation adjustments

(2,485,163)

Stock based compensation

280,142

expense

June 30, 2015

835,416 $

23,222,628 $

(1,219,573) $

(55,418,045) $

(32,579,574)

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

SUNVESTA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

January 1 to

January 1 to June

June 30, 2015

30, 2014

Unaudited

Cash flows from operating activities

Net loss

(7,743,464)

(5,617,790)

Adjustments to reconcile net loss to net cash

Depreciation and amortization

33,921

28,580

Amortization of debt issuance cost and commissions

1,025,915

325,313

Unrealized exchange differences

494,736

(88,072)

Stock compensation expense

280,142

765,495

Increase in pension fund commitments

660

- Increase / decrease in:

Other current assets

(115,260)

(407,786)

Accounts payable

(898,510)

(710,521)

Accrued expenses

3,115,782

2,561,402

Net cash used in operating activities

(3,806,738)

(3,142,719)

Cash flows from investing activities

Other receivables from related parties

3,988

(966,455)

Receivables from related parties

(1,507,128)

Purchase of property and equipment

(2,883,516)

(3,965,275)

Deposits related to construction

3,311

(106,744)

Down payments for property and equipment

(307,841)

Restricted cash

Net cash used in investing activities

(4,691,170)

(5,038,474)

Cash flows from financing activities

Decrease in bank liabilities

(153,375)

Proceeds from notes payable related parties

1,344,348

1,567,271

Repayment of notes payable related parties

(1,618,935)

Note payable and other long term debts

1,609,678

Proceeds from bond issuance, net of commissions

8,865,020

15,095,202

Repayment of bonds

(5,729,712)

Payment for debt issuance costs

(689,953)

(2,939,537)

Changes in note payable

(174,760)

Purchase/Sale of treasury stock

10,300

Net cash provided by financing activities

9,191,280

7,994,267

Effect of exchange rate changes

1,109

(81,183)

Net increase / - decrease in cash

694,481

(268,109)

Cash and cash equivalents, beginning of period

14,347

629,673

Cash and cash equivalents, end of period

708,828

361,564

Additional information

Capitalized interest and debt issuance costs for construction (non-cash)

1,574,000

1,376,999

Repayment of Specogna Holding AG loan by Aires

707,428

Interest paid

163,523

Assumption of receivables from Josef Mettler by AIRES (non-cash)

1,507,128

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

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

CORPORATE INFORMATION

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

AG”) (collectively “the Company”). SunVesta AG holds five wholly-owned subsidiaries:

SunVesta Projects and Management AG, a Swiss company; Rich Land Investments Limitada,

a Costa Rican company (“Rich Land”); SunVesta Costa Rica Limitada, a Costa Rican company

(“SVCR”), Altos del Risco SA, a Costa Rican company (“AdR”) and SunVesta Holding Espana

SL.

In January 2005, the Company changed its business focus to the development of holiday resorts

and investments in hospitality and related industries. The Company has presently one major

project in Costa Rica. Planning for this project has been fully completed and all permits have

been granted, including the permit required under “Article 21” in connection with access to the

beachfront associated with the project. Excavation work began in March 2013 and site work

continues. The Company is still in process of completing the financing of the project and has

not realized revenue to date. Since the financing of the Costa Rican project is not complete, the

Company’s activities are subject to significant risks and uncertainties.

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

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

The accompanying unaudited interim 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, 2014, 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, 2015.

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, 2014, filed with the Securities and Exchange

Commission.

SIGNIFICANT ACCOUNTING POLICIES

New accounting standard updates

In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting

Standards Updates (ASU) 2014-15 requiring an entity’s management to evaluate whether there

are conditions or events, considered in aggregate, that raise substantial doubt about entity’s

ability to continue as a going concern within one year after the date that the financial statements

are issued (or within one year after the date that the financial statements are available to be

issued when applicable). The amendments to (ASU) 2014-15 are effective for the annual period

ending after December 15, 2016, and for annual periods and interim periods thereafter. Early

application is permitted. The Company is in the process of evaluating the prospective impact

of (ASU) 2014-15 will have on its balance sheet.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

SIGNIFICANT ACCOUNTING POLICIES - Continued

In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards

Updates (ASU) 2015-03 which requires that debt issuance costs be reported in the balance sheet

as a direct deduction from the face amount of the related liability, consistent with the

presentation of debt discounts. Prior to the amendments, debt issuance costs were presented as

a deferred charge (i.e., an asset) on the balance sheet. The ASU provides examples illustrating

the balance sheet presentation of notes net of their related discounts and debt issuance costs.

Further, the amendments require the amortization of debt issuance costs to be reported as

interest expense. Similarly, debt issuance costs and any discount or premium are considered in

the aggregate when determining the effective interest rate on the debt. The amendments to

(ASU) 2015-03 are effective for the annual period ending after December 15, 2015, and for

annual periods and interim periods thereafter. The amendments must be applied retrospectively.

Early application is permitted. The Company expects this ASU to change the presentation of

its debt issuance costs.

GOING CONCERN

The Company is currently working on building a hotel in the Papagayo Gulf Tourism Project

area of Guanacaste, Costa Rica. The project is expected to open in the third quarter of 2017.

Until the completion of the project, the following expenditures are estimated to be incurred:

a. Gross project cost

208,000,000

b. Less: Proceeds from sale of villas

(25,000,000)

c. Net project cost

183,000,000

d. Overhead expenses

27,000,000

e. Subtotal

210,000,000

Less: Recuperated in gross project cost

(12,000,000)

g. Total, excluding other potential projects

198,000,000

Sixty percent (60%) of the net project cost is intended to be financed through the issuance of

secured bonds, for which negotiations have been initiated. The remaining forty percent (40%)

of the net project cost, as well as non-recuperated overhead expenses are intended to be financed

by the main shareholders or lenders of the project in the event that alternative means of

financing the remainder of the project are not available, i.e. Zypam Ltd., shareholder and related

entity to Mr. Josef Mettler, Mr. Hans Rigendinger, shareholder, Company Director and Chief

Operating Officer, Dr. Max Rӧssler, controlling shareholder of Aires International Investment,

Inc. and Company Director, Mr. Josef Mettler, shareholder, Company Director, Chief

Executive Officer and Chief Financial Officer.

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

requested funds are made available by the guarantors to the Company. The guaranty may not

be terminated until such time as SunVesta AG has secured financing for the completion of the

project. Based on this guaranty agreement, management believes that available funds are

sufficient to finance cash flows for the twelve months subsequent to June 30, 2015 and the

filing date, though future anticipated cash outflows for investing activities will continue to

depend on the availability of financing.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

CASH AND CASH EQUIVALENTS

Cash and cash equivalents are available to the Company without any restriction or limitation

on withdrawal and/or use of these funds. The Company’s cash equivalents are placed with

financial institutions that maintain high credit ratings. The carrying amounts of these assets

approximate their fair value.

Cash & cash

USD ($)

EURO

CHF

CRC

Total

equivalents

June 30, 2015

December 31, 2014

original currency

17,773

10,733 633,834,

84,135

in $

17,773

11,908 678,992

155

708,828

14,347

USD ($) =

US Dollar

EURO =

Euro

CHF

Swiss Francs

CRC

Costa Rican Colón

RESTRICTED CASH

As of June 30, 2015, the Company has the following restricted cash positions:

June 30,

December 31,

Restricted Cash

2015

2014

Credit Suisse in favor of

BVK Personalvorsorge des Cantons Zurich

136,887

129,272

HSBC in favor of

Costa Rican Tourism Board

370,000

Banco Nacional de Costa Rica in favor of the

Costa Rican Environmental Agency – SETENA

622,312

Banco National de Costa Rica in favor of the Costa

Rican Tourism Board

563,350

Gross

1,692,549

1,684,934

Restricted cash positions in favor of Costa Rican Tourism Board and Costa Rican

Environmental Agency – SETANA are related to the hotel project in Costa Rica and therefore

their release is not expected before finalization of the corresponding project. Due to this fact

these restricted cash positions have been classified as long term.

The restricted cash position in favor of BVK Personalvorsorge des Cantons Zurich is a rental

deposit related to a long-term lease contract for office space. Due to this fact, this restricted

cash position is also classified as long term.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

PROPERTY & EQUIPMENT

June 30, 2015

December 31, 2014

Land

19,700,000

IT Equipment

185,846

Other equipment and furniture

283,776

277,557

Leasehold improvements

66,617

Vehicles

139,000

Construction in-process

35,733,075

31,275,559

Gross

56,108,314

51,644,579

Less accumulated depreciation

(477,148)

(443,227)

Net

55,631,166

51,201,352

Depreciation expenses for the period ended

June 30, 2015 and 2014

33,921

14,194

Property and equipment is comprised primarily of land held in Costa Rica that is currently being

developed for hotels and capitalized project costs in connection with the Papagayo Gulf

Tourism project. The land amounts to $19.7 million comprised of $7 million related to the

concession held by Rich Land (~84,000 m2) and $12.7 million held by AdR (~120,000 m2).

The Rich Land concession is a right to use the property for a specific period of time of initially

20 years from the date of grant, which thereafter can be renewed at no further cost, if the

landholder is up to date with its obligations and if there is no significant change in government

policies. The current concession expires in June 2022.

The AdR concession is also a right to use the property for a specific period of time of initially

30 years from the date of grant, which thereafter can be renewed at no further cost, if the

landholder is up to date with its obligations and if there is no significant change in government

policies. The current concession expires in November 2036.

On July 14, 2015 the Consejo del Polo de DesarrolloTuristico Papagayo at ICT (Council of

Papagayo Tourism Development Project), unanimously has approved the extension of both

concessions until 2052.

The construction in process through December 31, 2014 and June 30, 2015, is represented

primarily by architectural work related to the hotel and apartments as well as site work on the

respective properties.

Deposit related to construction work

During the quarter ended June 30, 2015, most of the main earthmoving groundwork has been

completed for which work the Company has paid several deposits to contractors. These deposits

will be offset against invoices for such groundwork. As of June 30, 2015 and December 31,

2014, the Company has deposits of $817,410 and $820,565 respectively, which have not yet

been set off.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

DOWN PAYMENTS FOR PROPERTY & EQUIPMENT

June 30, 2015

December 31, 2014

La Punta (adjacent concession) and close concession $

2,669,816

2,369,816

Gross

2,669,816

2,369,816

Total (net)

2,669,816

2,369,816

Agreement to purchase neighboring pieces of land

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

concession properties located at Polo Papagayo, Guanacaste, Costa Rica with a total surface of

approximately 230,000 square meters for $22,895,806, whereof fifty percent was to be paid in

cash and the other fifty percent through a combination of a 10 percent equity share in La Punta

(one of the concession properties in Polo Papagayo) and a five percent in equity of Paradisus

Papagayo Bay Resort & Luxury Villas (currently under development). 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

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

to $17.2 million with no equity shares. The terms and conditions of the cash payment were to

be defined. Furthermore, all payments by the Company to date and in the future were to be

refundable in the event the Company did not complete the purchase. During the second quarter

of 2013, the Company entered into a new agreement for the purchase of the two additional

concession properties. The original contract as described above was cancelled and replaced by

a new contract, which included the following clauses:

The total purchase price is $17,500,000 of which $1,369,816 has been paid as of date of the new agreement

and therefore $16,130,184 remained outstanding as per date of the new agreement.

Since the original seller of these two additional concession properties at Polo Papagayo, Guanacaste owed a

third party $8,000,000 the Company was to pay $8,000,000 of the purchase price directly to this third party

instead of the original seller. The remaining $8,130,184 was to be paid directly to the original seller of the

concession properties.

The payment schedule for these two additional concession properties at Polo Papagayo Guanacaste was as

is detailed hereinafter:

Third Party

$300,000 on May 4, 2013 which was paid on May 3, 2013 and is non-refundable

$1,000,000 on June 30, 2013, which is refundable and $700,000 of this $1,000,000 was paid on October 29,

2013. The remaining $300,000 has not been paid as of the date of this report.

$1,000,000 on July 31, 2013, which is refundable and has not been paid as of the date of this report.

$1,000,000 on August 31, 2013 which is refundable and has not been paid as of the date of this report.

$1,500,000 on September 30, 2013, which is refundable and has not been paid as of the date of this report.

$1,500,000 on October 31, 2013, which is refundable and has not been paid as of the date of this report.

$1,700,000 on November 30, 2013, which is refundable and has not been paid as of the date of this report.

$8,000,000 in total to Third Party

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

DOWN PAYMENTS FOR PROPERTY & EQUIPMENT - Continued

Original Seller

$1,000,000 on January 31, 2014 which has not been paid as of the date of this report and is non-refundable.

$1,000,000 on February 28, 2014 which has not been paid as of the date of this report and is non-

refundable.

$1,000,000 on March 31, 2014 which has not been paid as of the date of this report and is non-refundable.

$1,000,000 on April 30, 2014 which has not been paid as of the date of this report and is non-refundable.

$1,000,000 on May 31, 2014 which has not been paid as of the date of this report and is non-refundable.

$1,000,000 on June 30, 2014 which has not been paid as of the date of this report and is non-refundable.

$1,000,000 on July 31, 2014 which has not been paid as of the date of this report and is non-refundable.

$1,130,184 on August 31, 2014 which has not been paid as of the date of this report and is non-refundable.

$8,130,184 in total to Original Seller

The Company had paid down-payments on the purchase of these properties of $2,669,816 as

of June 30, 2015, of which $300,000 was paid in refundable payments during the six months

period ended June 30, 2015. The Company is in discussions with the Original Seller regarding

an extension of the agreement. Should the Company not be successful in obtaining a time

extension for the payment of the purchase price or amendment to the purchase agreement, it

will have to write-off $300,000 of that purchase price already paid.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

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 process for similar instruments in active markets, quoted prices for identical or similar

instruments in markets that are not active; and model-derived valuations in which 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, the Company uses quoted market prices to determine fair value, and classify

such measurements within Level 1. In some cases where market prices are not available, the

Company makes 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 counterparty or the Company) will not be

fulfilled. For 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),

the Company’s fair value calculations have been adjusted accordingly.

As of June 30, 2015 and December 31, 2014, respectively, there are no financial assets or

liabilities measured on a recurring basis at fair value.

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

discussed above, the Company used the following methods and assumptions to estimate the fair

value of our financial instruments:

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

FAIR VALUE MEASUREMENT - Continued

—

Cash and cash equivalents – carrying amount approximated fair value.

—

Restricted cash – carrying amount approximated fair value.

—

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

the receivables.

—

Accounts Payable – carrying amount approximated fair value.

—

Note payable – carrying amount approximated fair value due to the short term nature of the note payable.

—

Bank liabilities - carrying amount approximated fair value due to the short term nature of bank liabilities.

—

Notes payable to related parties - Dr. M. Rӧssler (current) –The fair value was calculated based on the underlying

publically traded shares. However, the Company records the loan at nominal value. The Company does not have

sufficient cash to repurchase the shares as of balance sheet date and hence repay the loans in shares.

—

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

of the notes payable.

—

EUR– bond (old) – carrying amount approximated fair value due to its short term nature

—

EUR- bonds – 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

EUR bonds, which represents the current market rate based on the creditworthiness of the Company. Hence, the

carrying values approximate fair value.

—

CHF-bonds – 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 creditworthiness of the Company. Hence, the

carrying values approximate fair value.

—

Notes payable to related parties – Aires (non-current) – The fair values of the notes payable to Aires International

Investments Inc. are classified as level 3. 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 creditworthiness of the Company. Hence, the carrying value approximates fair value.

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

June 30, 2015

December 31, 2014

Carrying

Fair Value Carrying

Fair Value

Amount

Reference

Levels

Cash and cash equivalents

708,828

14,347

Note 4

Restricted cash

1,692,549

1,684,934

Note 5

Receivables from related

parties – other (current)

23,933

27,163

Note 9

Accounts Payable

5,521,040

6,181,057

Bank liabilities

153,375

Note11

Note payable

2,167,396

3,023,759

Note 17

Notes payable to related

parties – Dr. M. Rӧssler

850,770

803,223

765,890

Note 9

(current)

Notes payable to related

parties – Rigendinger

2,027

1,914

Note 9

(current)

Notes payable to related

parties – other (current)

449,439

356,963

Note 9

EUR-bonds

8,589,905

9,057,986

Note 12

CHF-bonds

35,947,733

25,511,898

Note 12

Notes payable to related

parties – Aires (non-

32,631,771

32,631,771 30,299,312

30,299,312

Note 9

current)

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

RECEIVABLES FROM AND PAYABLES TO RELATED PARTIES

The advances from (to) related parties are composed as follows:

Receivables

Payables

June 30, 2015

December 31,

June 30, 2015

December 31,

2014

1 Hans Rigendinger

2,027

1,914

2 Aires International

32,631,771

30,299,312

3 Dr. Max Rӧssler

850,770

803,223

4 Akyinyi Interior and

Exterior Decoration

230,000

170,000

5 Global Care AG

219,439

186,963

6 Geoffrey Long

23,933

27,163

Total excluding interest

23,933

27,163

33,934,007

31,461,412

Accrued interest

5,396,199

3,818,494

Total

23,933

27,163

39,330,206

35,279,906

of which non-current

32,631,771

30,299,312

Related party

Capacity

Interest Repayment

Rate

Terms

Security

1 Hans Rigendinger Shareholder, COO and Company board member

none

2 Aires International

*** see hereinafter ***

3 Dr. Max Rӧssler

*** see hereinafter ***

4 Akyinyi Interior

and Exterior

Company owned by the wife of Josef Mettler

none

Decoration

5 Global Care AG

Company owned by Dr. Max Rössler

none

6 Geoffrey Long

Head of Accounting “The Americas”

none

Loan agreement Aires International Investment Inc.

As of June 30, 2015, the Company owes Aires International Inc. the following:

Borrower

Debt instrument

Amount in CHF

Amount in

Annual

Repayment date

denominated in

USD

interest

CHF

rate

SunVesta Inc.

Promissory note

10,143,053

10,855,746

7.25 %

Dec 31, 2017

SunVesta Inc.

Promissory note

10,000,000

10,702,627

7.25 %

Dec 31, 2017

SunVesta Inc.

Promissory note

10,000,000

10,702,627

7.25 %

Dec 31, 2017

SunVesta Holding

Loan agreement

346,374

370,771

7.25 %

Dec 31, 2017

Total

32,631,771

The notes may be repaid in whole or in part.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

RECEIVABLES FROM AND PAYABLES TO RELATED PARTIES - Continued

Loans Dr. Max Rӧssler

As of June 30, 2015 the Company owes Dr. Max Rössler the following:

Debt instrument Securities

Amount in

Amount in Annual interest Repayment date

CHF

USD

rate

Securities

10,000 shares

427,048

457,127

May 30, 2016

lending

Schindler

Holding

Securities

700 shares Zug

367,741

393,643

May 30, 2016

lending

Estates Holding

Total

794,789

850,770

May 30, 2016

The Company is not required to pay any interest and can repay the loans either in cash

or with the delivery of the respective shares.

Loan Global Care AG

During 2014, Global Care AG loaned the Company $191,849 (CHF 185,000), which amount

was repayable on October 31, 2014. The loan includes a fixed interest payment of $20,740

(CHF 20,000). As of the date of this report, both amounts are overdue. According to the

agreement, there are no penalties for late payment.

Receivable from Josef Mettler

On June 30, 2015, Aires International Investments, Inc. absorbed the Company’s receivables

from Mr. Mettler in the amount of $ 1,507,128 (CHF 1,419,412) by crediting the amount due

to the Company against the amount due from the Company to Aires. There are no outstanding

receivables from Mr. Mettler as of June 30, 2015.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

10.

RELATED PARTY TRANSACTIONS

Commissions paid or payable to related parties

During the three month periods ended June 30, 2015, and June 30, 2014, the Company paid

commissions to 4f capital ag in the amount of $803 and $42,500, respectively, for services

related to financing the Company. During the six months periods ended June 30, 2015, and June

30, 2014, the Company paid commissions to 4f capital ag in the amount of $29,984 and

$103,000, respectively These costs have been capitalized to debt issuance costs. 4f capital ag is

a company owned and directed by Mr. Mettler (Board Member and CEO of the Company) that

receives a commission of 1.5% for new funds that the Company receives based on consulting

services rendered by 4f capital ag.

Hans Rigendinger

In 2013, the Company borrowed $600,000 at 3% interest from Hans Rigendinger. The amount

due to Mr. Rigendinger for this loan at June 30, 2015 was $2,027.

Mr. Rigendinger also held bonds denominated in Euros and Swiss Francs valued at

approximately $3,853,000 as of June 30, 2015 and December 31, 2014.

Service fees paid or payable to Akyinyi Interior and Exterior Decoration

During the three months periods ended June 30, 2015, and June 30, 2014, the Company paid or

accrued fees to Akyinyi Interior and Exterior Decoration, which is a company owned by Mr.

Mettler’s wife, for services related to interior design plans for the Papagayo Gulf Tourism

project in the amounts of approximately $30,000 and $30,000 respectively. During the six

months periods ended June 30, 2015, and June 30, 2014, the Company paid or accrued fees to

Akyinyi Interior and Exterior Decoration in the amounts of approximately $60,000 and $60,000

respectively. These costs have been capitalized to property and equipment.

Consulting Fees paid or payable to Cambridge Limited Corp.

During the three months periods ended June 30, 2015, and June 30, 2014, the Company paid

fees to Cambridge Limited Corporation, which is a company owned by Mr. Mettler’s father-in-

law. These fees related to accounting and consulting services rendered in Costa Rica for the

Company in the amount of $43,500 and $43,500 respectively. During the six months periods

ended June 30, 2015, and June 30, 2014, the Company paid fees to Cambridge Limited

Corporation in the amount of $87,000 and $87,000 respectively.

11.

BANK LIABLITIES

There is no bank liability at June 30, 2015. The bank liability at December 31, 2014, represented

a temporary, secured overdraft facility, bearing an interest rate of 8.9%.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

12.

BONDS

Description

EUR (€) bond old (repaid)

CHF bond I

Issuer:

SunVesta Holding AG

Type of securities:

Bond in accordance with Swiss law

Approval by SunVesta AG BOD:

May 12, 2010

June 3, 2011

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

Description

EUR (€) bond new I

CHF bond II (parallel)

Issuer:

SunVesta Holding AG

Type of securities:

Bond in accordance with Swiss law

Approval by SunVesta AG BOD:

October 31, 2013

May 19, 2014

Volume:

Up to €15,000,000

CHF 15,000,000

Units:

€10,000

CHF 10,000

Offering period:

11/07/2013 – 03/31/2014

05/01/2014 – 06/30/2014

Due date:

December 2, 2016

August 31, 2015

Issuance price:

100%

100 %

Issuance day::

December 2, 2013

September 01, 2013 (retroactive)

Interest rate:

7.25% p.a.

7.25 % p.a.

Interest due dates:

December 2, 2013

August 31

Applicable law:

Swiss

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

12.

BONDS - continued

Description

EUR (€) bond new II (parallel)

Issuer:

SunVesta Holding AG

Type of securities:

Bond in accordance with Swiss law

Approval by SunVesta AG BOD:

May 19, 2014

Volume:

Up to EUR 15,000,000

Units:

EUR 10,000

Offering period:

05/01/14 – 06/30/14

Due date:

December 02, 2016

Issuance price:

100 %

Issuance day::

December 02, 2013 (retroactive)

Interest rate:

7.25 % p.a.

Interest due dates:

December 02

Applicable law:

Swiss

The nominal amounts have changed as follows:

CHF Bond

CHF BOND I

2015

2014

Balances January 1

10,802,722

8,558,443

Cash inflows

5,542,245

Cash outflows

Foreign currency adjustments

837,727

(953,513)

Reclassifications to CHF Bond II

(2,147,983)

Sub-total

11,640,449

10,999,192

Discounts (commissions paid to bondholders)

(670,764)

Accumulated amortization of discounts

600,638

474,294

Unamortized discounts

(70,126)

(196,470)

Balances June 30 and December 31(Carrying

value)

11,570,323

10,802,722

The reclassification was made from CHF bond I to CHF bond II. As CHF bond II has identical

terms as CHF bond I, this reclassification is neither an extinguishment nor a modification.

As per date of this report the Company has realized a cumulative amount of CHF 10.85 million

($11.12 million) related to CHF Bond I.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

12.

BONDS - continued

EUR-Bond

(new)

2015

2014

Balances January 1

7,342,995

6,757,065

Cash inflows

281,752

1,562,402

Cash outflows

Foreign currency adjustments

(601,127)

(963,896)

Sub-total

7,023,620

7,355,572

Discounts (commissions paid to bondholders)

(23,753)

(17,305)

Amortization of discounts

8,315

4,729

Unamortized discounts

(15,438)

(12,576)

Balances June 30 and December 31(Carrying

value)

7,008,182

7,342,995

As per date of this report the Company has realized a cumulative amount of EUR 6.30 million

($7.02 million) related to the EURO Bond I.

EUR-Bond

EURO BOND I

old

2015

2014

Balances January 1

5,786,248

Cash inflows

Cash outflows

(5,729,712)

Foreign currency adjustments

(56,536)

Sub-total

Discounts (commissions paid to bondholders)

(248,195)

Amortization of discounts

248,195

Unamortized discounts

Balances June 30 and December 31(Carrying

value)

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

12.

BONDS - Continued

CHF Bond II

CHF BOND II

2015

2014

Balances January 1

14,709,176

Cash inflows

8,583,267

12,912,402

Cash outflows

Foreign currency adjustments

1,575,334

243,843

Reclassifications from CHF Bond I

2,147,983

Sub-total

24,867,777

15,304,228

Discounts (commissions paid to bondholders)

(1,434,679)

(1,041,917)

Accumulated amortization of discounts

944,312

446,864

Unamortized discounts

(490,367)

(595,052)

Balances June 30 and December 31(Carrying

value)

24,377,410

14,709,176

As per date of this report the Company has realized a cumulative amount of

CHF 25.04 million ($25.66 million) related to CHF Bond II.

EUR-Bond

EURO BOND NEW II

new II

2015

2014

Balances January 1

1,714,991

Cash inflows

1,960,226

Cash outflows

Foreign currency adjustments

(96,789)

(198,968)

Sub-total

1,618,205

1,761,258

Discounts (commissions paid to bondholders)

(59,740)

Amortization of discounts

23,256

13,473

Unamortized discounts

(36,484)

(46,266)

Balances June 30 and December 31(Carrying

value)

1,581,721

1,714,991

As per date of this report the Company has realized a cumulative amount of EUR 1.44 million

($1.61 million) related to the EURO Bond new II.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

13.

PENSION PLAN

The Company maintains a pension plan covering all employees in Switzerland. The plan is

considered a defined benefit plan and accounted for 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 ratably 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 recorded in the net loss. 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 comprehensive loss. 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 months

Six months

Three months

Six months

Pension expense

ended

ended June 30,

ended

June 30, 2015

2014

June 30, 2014

Current service cost

14,648

29,296

14,147

28,294

Net actuarial (gain) loss recognized

(169)

(338)

Interest cost

1,348

2,696

1,494

2,987

Expected return on assets

(1,659)

(3,318)

(1,550)

(3,100)

Employee contributions

(5,963)

(11,926)

(5,918)

(11,836)

Net periodic pension cost

8,374

16,748

8,004

16,007

During the three month periods ended June 30, 2015 and June 30, 2014 the Company made

cash contributions of $6,104 and $5,915, 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, 2015 are $11,926.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

14.

STOCK COMPENSATION

The Company has included share based compensation based on the Company’s SunVesta Inc.

Stock Option Plan 2013 (“the Plan”) as part of the total remuneration in certain new

employment and Board of Director’s contracts. The Company is authorized up to 50,000,000

shares under the Plan.

The purpose of the Plan is to advance the interests of the Company by encouraging its

employees to remain associated with the Company and assist the Company in building value.

Such share based remuneration includes either shares or options to acquire shares of the

Company’s common stock.

For all employees, fair value is estimated at the grant date. Compensation costs for unvested

shares are expensed over the requisite service period on a straight-line basis.

Share Grants – Mr. Hans Rigendinger

On January 1, 2013, the Company granted to Hans Rigendinger 3,500,000 common shares,

valued at $0.08 which was the share price and fair value of the shares on the grant date. These

shares were granted as a signing bonus with the Company. Additionally, the Company granted

2,500,000 common shares as a retention award due on each anniversary of his signing with the

Company. The employment contract was initially for three years with an additional bilateral

option for an additional two years. Therefore, the Company could be required to issue up to

12,500,000 common shares through January 1, 2018. The 5,000,000 retention common shares

vested were issued subsequent to the reporting date.

Share Grants – Dr. Max Rössler

On July 3, 2013 the Company granted to Dr. Max Rössler 3,000,000 common shares, valued at

$0.07 which was the share price and fair value of the shares on the grant date. These were issued

in connection with his appointment to the Board of Directors. These shares were officially

issued on October 15, 2013.

Share Grants – Mr. Josef Mettler

On July 4, 2013, the Company granted 5,000,000 common shares to Josef Mettler, valued at

$0.07, which was the share price and fair value of the shares on the grant date. These shares

were issued in connection with his employment agreement.. Additionally the Company granted

3,000,000 common shares as a retention award for each completed year of employment (e.g. as

per July 4, 2014 and July 4, 2015). The employment contract is for an initial term of three years

with an additional bilateral option for another two, two-year periods, but a maximum of

December 31, 2020. Therefore, in total the Company could be requested to issue up to

21,000,000 common shares through December 31, 2020 related to the retention bonus. The

6,000,000 retention common shares vested were issued subsequent to the reporting date.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

14.

STOCK COMPENSATION - Continued

Share Grants – Mr. José María Figueres Olsen

On March 10, 2014, the Company authorized the issuance of 500,000 common shares, valued

at $0.10 which was the share price and therefore the fair value on grant date, to José María

Figueres Olsen in connection with his appointment to the Board of Directors. Additionally, on

March 10, 2014, the Company agreed to a retention award of 200,000 common shares for each

fully completed year of service. The 700,000 shares were issued subsequent to the reporting

date.

Share Grants – Mr. Howard M. Glicken

On March 10, 2014, the Company authorized the issuance of 500,000 common shares, valued

at $0.10, which was the share price and therefore the fair value on grant date, to Howard M.

Glicken in connection with his appointment to the Board of Directors. Additionally, on March

10, 2014, the Company agreed to a retention award of 200,000 common shares for each fully

completed year of service. The 700,000 shares were issued subsequent to the reporting date.

Based on these contracts the Company has included the following stock-based compensation

in the Company’s results:

Stock-based compensation

Three months

Six months

Three months

Six months

(shares)

ended June 30,

2015

2014

Shares granted

46,400,000 shares 46,400,000 shares 46,400,000 shares 46,400,000 shares

Fair Value respectively

$0.0744

market price on grant date

Total maximal expenses

$3,450,000

(2013-2020)

Shares vested

20,900,000 shares 20,900,000 shares 15,000,000 shares 15,000,000 shares

Unvested shares

25,900,000 shares 25,900,000 shares 31,400,000 shares 31,400,000 shares

A total of 9,400,000 retention common shares vested were not issued as of June 30, 2015.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

14.

STOCK COMPENSATION – Continued

As of December 31, 2015, the Company expects to record compensation expense in the future

up to $1,550,000 as follows:

Year ending December 31,

Stock-based

Through

compensation

December 31,

(shares)

2015

2016

2017

2018

2019

2020

Unrecognized

compensation

205,000

410,000

210,000

105,000

expense

Stock Options – Mr. Hans Rigendinger

The Company granted to Hans Rigendinger, in connection with his employment contract,

10,000,000 options on January 1, 2013. Each option entitles Mr. Rigendinger to buy one

Company share at a strike price of $0.05. These options will be vested in two identical

installments (installment A and B) of 5,000,000 options.

Installment A is contingent on obtaining a financing arrangement for the Paradisus Papagayo

Bay Resort & Luxury Villas project. As of the grant date, the fair value was $300,000. As of

July 4, 2013, the Company assessed that this financing arrangement with the specific

counterparty will not be completed. Therefore the Company assessed the probability of

completion to be zero and recognized no expense. On July 4, 2013, the Company authorized a

revised stock option agreement. This removed the requirement for financing with a specific

counterparty and updated for any counterparty. As of date of the revised stock option

agreement, the fair value was $246,000. Installment A was modified on July 4, 2013, since the

initial performance condition was improbable to be met. Since the modification changed the

expectation that the options will ultimately vest and no expense had been recognized for the

original award, the fair value of the modified award has been expensed on a straight line basis

over the expected vesting period.

For installment B, it is required that Meliá Hotels International (“Melía”) assume management

responsibilities for the Paradisus Papagayo Bay Resort & Luxury Villas on the opening date.

As of the grant date, the fair value was $340,000 and the Company had estimated that Meliá

would assume responsibility as of July 1, 2015. As of March 6, 2014, the Company assessed

the probability that this performance condition wiould be met at 100%, but the actual date on

which this performance condition is expected to be achieved has been postponed. As of April

14, 2015, the estimated opening date was postponed to the third quarter 2017. The Company

still assesses that the probability that this performance condition will be met at 100% as of the

new opening date. Hence, the remaining fair value of the award will be expensed on a straight-

line basis over the recalculated expected remaining vesting-period.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

14.

STOCK COMPENSATION – Continued

Stock Options – Dr. Max Rӧssler

The Company granted to Dr. Max Rӧssler, in connection with his appointment to the Board of

Directors, 10,000,000 options on July 3, 2013. Each option entitles Dr. Rӧssler to buy one

Company share at a strike price of $0.05. These options will be vested in two identical

installments (installment A and B) of 5,000,000 options.

For installment A (5,000,000 options), it is required to complete a financing arrangement for

the Paradisus Papagayo Bay Resort & Luxury Villas project. As of grant date, the fair value

was $249,835. The Company expensed the total fair value on a straight-line basis over the

expected vesting period.

For installment B (5,000,000 options), it is required that Meliá assumes management

responsibilities for Paradisus Papagayo Bay Resort & Luxury Villas on the opening date. As of

the grant date the fair value was $258,210 and the Company had estimated that Meliá would

assume responsibility as of July 1, 2015. As of March 6, 2014 the Company assessed the

probability that this performance condition wiould be met at 100%, but the actual date on which

this performance condition is expected to be achieved was postponed. As of April 14, 2015 the

estimated opening date was postponed to the third quarter 2017. The Company still assesses

the probability that this performance condition will be met at 100% as of the new opening date.

Hence, the remaining fair value of the award will be expensed on a straight-line basis over the

recalculated expected remaining vesting-period.

Stock Options – Mr. Josef Mettler

The Company granted to Josef Mettler, in connection with his employment contract,

12,000,000 options on July 4, 2013. Each option entitles Mr. Mettler to buy one share at a strike

price of $0.05. These options have three different performance conditions.

For installment A (3,000,000 options), it is required to complete a bridge financing

arrangement. As of grant date the fair value was $149,000. The Company expensed the total

fair value on a straight-line basis over the expected vesting period.

For installment B (4,000,000 options), it is required to complete a financing arrangement (main

financing arrangement for Paradisus Papagayo Bay Resort & Luxury Villas). As of grant date

the fair value was $200,000. The Company has expensed the total fair value on a straight-line

basis over the expected vesting period.

For installment C (5,000,000 options), it is required that Meliá assumes management

responsibilities for Paradisus Papagayo Bay Resort & Luxury Villas on the opening date. As of

the grant date, the fair value was $258,000 and the Company had estimated that Meliá assumes

responsibility as of July 1, 2015. As of March 6, 2014 the Company assessed the probability

that this performance condition would be met at 100%, but the actual date on which this

performance condition is expected to be achieved was postponed. As of April 14, 2015 the

estimated opening date was postponed to the third quarter 2017. The Company still assesses

the probability that this performance condition will be met at 100% as of the opening date.

Hence, the remaining fair value of the award will be expensed on a straight-line basis over the

recalculated expected remaining vesting-period.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

14.

STOCK COMPENSATION – Continued

Stock Options – Summary

A summary of stock options outstanding as per June 30, 2015 is as follows:

Options outstanding

Number of

Weighted average

Options

exercise price

remaining

contractual life

Outstanding January 1, 2015

32,000,000

$ 0.05

8.42 years

Granted

Exercised

Forfeited or expired

Outstanding June 30, 2015

32,000,000

$ 0.05

7.92 years

Exercisable June 30, 2015

The following table depicts the Company’s non-vested options as of June 30, 2015 and changes

during the period:

Non-vested options

Shares under Options

Weighted average grant date

fair value

Non-vested at December 31, 2014

32,000,000

$ 0.053

Non-vested-granted

Vested

Non-vested, forfeited or cancelled

Non-vested at June 30, 2015

32,000,000

$ 0.053

Under the provisions of ASC 718 Compensation – Stock Compensation, the Company is

required to measure and recognize compensation expense related to any outstanding and

unvested stock options previously granted, and thereafter recognize, in its consolidated

financial statements, compensation expense related to any new stock options granted after

implementation using a calculated fair value based option-pricing model. The Company uses

the Black-Scholes option-pricing model to calculate the fair value of all of its stock options and

its assumptions are based on historical and available market information. No stock options were

granted for the periods ended June 30, 2015 and June 30, 2014.

Assumption

June 30, 2015

June 30, 2014

Dividend yield

Risk-free interest rate used (average)

Expected market price volatility

Average expected life of stock options

n.a

The computation of the expected volatility assumption used in the Black-Scholes calculation

for new grants is based on historical volatilities of a peer group of similar companies in the

same industry. The expected life assumptions are based on underlying contracts.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

14.

STOCK COMPENSATION - Continued

Stock Options – Summary - Continued

As of June 30, 2015, the Company had unrecognized compensation expenses related to stock

options currently outstanding, to be recognized in future quarters respectively years as follows:

Through to

Year ending

Stock-based compensation (options)

December 31,

2015

2016

2017

Unrecognized compensation expense

67,476

134,956

33,739

15.

SUMMARY OF SHARE AND OPTION COMPENSATION EXPENSE

The Company recorded the following amounts related to stock based compensation expense

during the periods ended June 30, 2015 respectively June 30, 2014:

Three

Six months

Three

Summary of share and option

months June

June 30,

months

Six months

based compensation expense

30, 2015

2015

June 30,

2014

Share grants (see Note 14 for

102,500

212,666

112,500

317,333

details)

Option grants (see Note 14 for

33,738

67,476

69,404

448,162

details)

Total

(recorded under general &

136,238

280,142

181,904

765,495

administrative expense)

16.

FUTURE LEASE COMMITTMENTS

On December 1, 2012, the Company entered into a 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.

December 31,

Future lease commitments

2015

2014

2015

65,000

2016

130,000

2017

130,000

2018

2019

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

17.

NOTE PAYABLE

June 30, 2015

December 31, 2014

Promissory note

2,000,000

Specogna Holding AG

707,428

R. Weimar (private investor)

167,396

316,331

Total

2,167,396

3,023,759

Promissory Note

As part of the completion of the purchase of Altos del Risco on March 9, 2013, the parties

agreed that $2,000,000 of the purchase price would be converted into a non-interest bearing

and uncollateralized loan payable, which was originally due for payment on March 8, 2014,

then extended to March 8, 2015. On March 16, 2015 the Company agreed with the counterparty

to extend the due date to March 16, 2016.

Loans Specogna Holding AG

On May 15, 2014 the Company entered into a short term loan agreement for CHF 1.0 million

($1.01 million) with Specogna Holding AG. This loan was repayable on July 31, 2014, and

bore a lump remuneration as interest of CHF 30,000 (approximately $32,100). This loan was

repaid in 2014.

On September 16, 2014, the Company entered into a short term loan agreement for

approximately $736,000 with Specogna Holding AG (“Specogna“) repayable on October 31,

2014, with a fixed interest payment of approximately $32,000. The loan was secured

personally and jointly by Dr. Max Rössler, Mr. Josef Mettler and Mr. Hans Rigendinger. The

amounts due to Specogna were repaid on March 24, 2015 by Aires on behalf of SunVesta

AG, with no penalties incurred.

Loan R. Weimar (private investor)

On May 23, 2014, the Company entered into a short term loan agreement for approximately

$376,800 with Roland Weimar. The loan was repayable in five instalments, (four payments of

$84,700, one payment of $38,000), with the initial payment due on June 2, 2014 and the latest

payment due on June 1, 2015. The interest rate is 2 % per annum. The Company had repaid

approximately $209,000 as of the filing date of this report. The agreement does not stipulate

any repercussions for the late payments.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

18.

OPENING DATE “PARADISUS PAPAGAYO BAY RESORT & LUXURY VILLAS”

On June 2, 2014, the Company amended its agreement with Meliá (“Sixth addendum to the

management agreement of March 8, 2011”) to postpone the opening date as follows:

- The construction of the “Paradisus” will be completed by November 15, 2015

- Should the “Paradisus” not be completed by November 15, 2015, (subject to force

majeure) and should an extension date not be agreed, subsequent to November 15,

2015, the Company will be obligated to pay Meliá a daily amount of $2,000 as

liquidated damages.

- Should the Company be unable to complete the construction of the “Paradisus” by

February 15, 2016, Meliá, can terminate the management agreement obligating the

Company to compensate Meliá in the amount of $5,000,000 unless the respective

parties agree to extend such date.

Since the completion date for the Paradisus Papagayo Bay Resort & Luxury Villas

development is now anticipated for the third quarter of 2017, the Company is in discussions

with Meliá regarding another addendum that would allow an extension of the deadlines

stipulated in the Sixth Addendum. The Company is confident that a further addendum to its

agreement with Meliá will be concluded. However, should the Company not be successful, in

concluding a further addendum, the penalty for not achieving the most recently agreed

completion date would be $5,000,000.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

19.

EARNINGS PER SHARE

Basic earnings per share are the result of dividing the Company’s net income (or net loss) by

the weighted average number of shares outstanding for the contemplated period. Diluted

earnings per share are calculated applying the treasury stock method. When there is a net

income dilutive effect all stock-based compensation awards or participating financial

instruments are considered. When the Company posts a loss, basic loss per share equals diluted

loss per share. The following table depicts how the denominator for the calculation of basic and

diluted earnings per share was determined under the treasury stock method.

Three-month

Six-month

Three-month

Six-month

Earnings per share

period ended

June 30, 2015

June 30, 2014

Company posted

Net loss

Basic weighted average shares

outstanding

92,941,603

92,775,305

87,041,603

86,646,575

Dilutive effect of common stock

equivalents

None

Dilutive weighted average shares

outstanding

92,941,603

92,775,305

87,041,603

86,646,575

A total of 9,400,000 common shares vested were not issued as per balance sheet date and are

included in the basic weighted average shares outstanding.

The following table shows the number of stock equivalents that were excluded from the

computation of diluted earnings per share for the respective period because the effect would

have been anti-dilutive.

Three-month

Six-month

Three-month

Six-month

Earnings per share

period ended

June 30, 2015

June 30, 2014

Options to Hans Rigendinger

10,000,000

Options to Dr. M. Rössler

10,000,000

Options to Josef Mettler

12,000,000

Total Options

32,000,000

Shares to Hans Rigendinger

7,500,000

10,000,000

(retention bonus – non vested)

Shares to Josef Mettler (retention

18,000,000

21,000,000

award)

Shares to Howard Glicken and

400,000

José Maria Figueres (retention

award)

Total Shares

25,900,000

31,400,000

Total Options and Shares

57,900,000

63,400,000

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

20.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses according consolidated statement of comprehensive loss

include:

Three-month

Six-month

Three-month

Six-month

General and administrative expenses

period ended

June 30, 2015

June 30, 2014

Rental & related expenses

49,951

101,629

44,471

89,106

Audit

127,720

177,530

93,289

183,401

Consulting

317,042

592,381

430,775

1,032,883

Marketing, Investor & public relations

29,121

43,762

28,083

35,945

Travel expenses

112,818

287,751

77,810

182,570

Personnel costs including social security’s

costs and share based remuneration

509,862

1,711,031

506,603

1,405,081

Various other operating expenditures

223,068

311,965

190,331

494,368

Total according statements of

comprehensive loss

1,369,582

3,226,049

1,371,362

3,423,534

21.

SUBSEQUENT EVENTS

Management has evaluated subsequent events after the balance sheet date, through the issuance

of the financial statements, for appropriate accounting and disclosure. The Company has

determined that there were no such events that warrant disclosure or recognition in the financial

statements, except for the below:

The status of financing the project is as follows:

On March 10, 2015, the Company executed a letter of engagement with ISM Capital LLP, a

London based investment firm, for the purpose of conducting a $100 million asset backed bond

issuance. Despite the firm’s commitment to identify investors, the success of this proposed

bond issuance for the amount contemplated or any lesser amount, does not guarantee that all or

part of the amount offered will be subscribed.

In the context of the guaranty agreement that is also mentioned in Note 3 (“Going Concern”),

the major shareholders will provide personel guarantees to investors, so that they will be in

a position to secure the necessary funds for the repayment of the CHF bonds, which are due on

August 31, 2015.

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 month periods ended June 30, 2015 and June 30, 2014. 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 worldwide. Our initial focus is

concentrated on offering luxury hotel products located in attractive, top-class coastal vacation

destinations in countries such as Costa Rica that are fast emerging as popular tourist destinations.

Each prospective development takes into consideration country specific conditions and general

considerations that include the stability of local political conditions, geologically useful cultivability,

and the types of destinations that attract a five-star clientele. Once identified as eligible, prospective

developments are 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 in two phases as Vista Mar (Family Concierge)

and Vista Bahia (Royal Service), 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. All

permitting for the project is in place, including permission to incorporate the beachfront adjacent to

the two concessions into the development and all significant site work completed. Vertical

construction is expected to commence in the third quarter of 2015, while the opening of.the Paradisus

Papagayo Bay Resort & Luxury Villas is scheduled for the third quarter of 2017, subject to the

procurement of the requisite financing.

Specifications

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

— eco-luxury all-inclusive resort

— 382-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

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

Vista Mar

Family Concierge

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

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

The Family Concierge area will include:

— 166 Junior Suites Deluxe

(47* square meters)

— 34 Suites Deluxe

(87* square meters)

— 33 Suites Premium

(93* square meters)

— 6 Handicapped Junior Suites Deluxe

(47* square meters)

— 1 Bridal Suites

(93* square meters)

— 2 Deluxe Suites Presidential

(88* square meters)

— 1 Presidential Suite

(194* 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. Family Concierge guests will furthermore have access to restaurants, bars,

and lounges. The planned Onyx Night Club and the Gabi Club will be located near the beach.

Vista Bahia

Royal Service

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

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

The Royal Service area will include:

— 108 Junior Suites Grand Deluxe

(43-60* square meters)

— 2 Junior Suites Grand Deluxe for Handicapped Guests

(53* square meters)

— 6 Grand Master Suites

(87* square meters)

— 2 Deluxe Suites Presidential

(60 square meters)

— 1 Grand Presidential Suite (4 bedrooms)

(145* square meters)

— 20 one or two bedroom Garden Villas

(91–212* square meters)

— Room size does not include balconies and terraces.

* 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.

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

— more than 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 meters 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 meters 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 lease them back to the

resort when not occupied by the owners.

Management

Overall project development is led by Josef Mettler, our Chief Executive Officer, Charles Fessel,

Project Director Paradisus Papagayo Bay Resort & Luxury Villas, Hans Rigendinger, Chairman of the

Board and Chief Operating Officer of 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 led by Concreta Srl.

Resort management is to be provided by Melía Hotels International (“Melía”). “Paradisus” is Meliá’s

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

world. Melía 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 Melía,

Sol Melía, ME by Sol Melía, Innside by Sol Melía, Tryp, Sol Melía, Sol Melía Vacation Club, and

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

and the Dominican Republic.

Since the completion date for the Paradisus Papagayo Bay Resort & Luxury Villas development is

now anticipated for the third quarter of 2017, the Company is in the process of reaching an agreement

to further amend the management agreement with Meliá dated August 18, 2014. The amended

agreement presently stipulates that if the Papagayo Bay Resort & Luxury Villa’s is not completed by

February 15, 2016, and if an extension date is not agreed, then Meliá could terminate the management

agreement and cause the Company to pay a penalty of $5 million. The Company is confident that an

agreement will be reached to extend the completion date to the third quarter of 2017.

Additional Concession Properties

On April 20, 2012, the Company entered into an agreement with Meridian IBG (“Meridian”), as

amended on November 13, 2012, and replaced on May 7, 2013, to purchase two additional concession

properties in Polo Papagayo, Guanacaste, comprised of approximately 230,000 square meters for

$17,500,000. One of the concessions lies adjacent to the existing concessions (La Punta) and the other

is in close proximity to the Paradisus Papagayo Bay Resort & Luxury Villas development.

The Company had paid down-payments on the purchase of these properties of $2,669,816 as of June

30, 2015, and is in discussions with Meridian regarding an amendment to the agreement. Should the

Company not be successful in obtaining an amendment to the agreement, it would have to write-off

$300,000 of that purchase price already paid.

Finance

The anticipated completion of the Paradisus Papagayo Bay Resort & Luxury Villas in the third quarter

of 2017 will require a net investment of approximately $198 million (including non-recuperated

overhead expenses), of which approximately $55 million has been expended as of June 30, 2015. We

expect to realize a minimum of $140 million in new funding over the next twelve months. New

funding over the next twelve months is expected to be raised from debt financing through bonds, a

credit facililty from construction contractors, shareholder loans and, if necessary, the guaranty

agreement borne by certain principal shareholders and participants in management .

Detailed below is a brief description of material debt obligations as of period end.

Bonds

The Company has four bond issues outstanding, denominated in EUR (€) or Swiss Francs (CHF).

EUR (€) Bonds

The Company initiated an unsecured EUR bond offering on December 2, 2013, of up to €15,000,000

in units of €10,000 that bear interest at 7.25% per annum payable each December 1 over a three year

term that matures on December 2, 2016. We had realized $7,342,995 as of the year ended December

31, 2014, and $7,008,182 as of June 30, 2015 (decrease due to foreign currency adjustments), for a

cumulative amount of $7.02 million as of the date of this report.

The Company initiated a parallel offering of unsecured EUR bonds on December 2, 2013, of up to

€15,000,000 in units of €10,000 that bear interest at 7.25% per annum payable each December 2 over

a three year term that matures on December 2, 2016. We had realized $1,714,991 as of the year ended

December 31, 2014 and $1,581,721as of June 30, 2015 (decrease due to foreign currency

adjustments), for a cumulative amount of $1.61 million as of the date of this report.

Swiss Francs (CHF) Bonds

The Company initiated an unsercured CHF bond offering on September 1, 2011, of up to CHF

15,000,000 in units of CHF 50,000 that bear interest at 7.25% per annum payable each August 31

over a four year term that matures on August 31, 2015. We had realized $10,802,722 as of the year

ended December 31, 2014 and $11,570,323 as of June 30, 2015, for a cumulative amount of $11.12 as

of the date of this report (decrease due to foreign currency adjustments).

The Company initiated another offering of unsecured CHF bonds on September 1, 2013, of up

to CHF 15,000,000 in units of CHF 10,000 that bear interest at 7.25% per annum payable each

August 31, over a two year term that matures on August 31, 2015. We had realized $14,709,176 as of

the year ended December 31, 2014 and $24,377,410 as of June 30, 2015, for a cumulative amount of

$25.66 million as of the date of this report (decrease due to foreign currency adjustments).

Aires International Investment, Inc.

On July 27, 2011, SunVesta AG entered into a line of credit agreement with Aires International

Investments Inc. (“Aires”), a company owned by Dr. Rӧssler (a director of the Company). The loan

agreement was amended on May 11, 2012 and on June 21, 2012 and then replaced by a new loan

agreement on October 31, 2013, that included the following conditions:

— All existing loan agreements or credit facilities, including amendments, between SunVesta AG

and Aires were cancelled and superseded by the new loan agreement.

— The loans are due after December 31, 2017 and before December 31, 2020.

— Despite the scheduled repayment dates, each party has the option to cancel the loan agreement

with a prior notice period of 90 days, requiring repayment of the loans in full.

— Loan amounts outstanding including any additional amounts and additions are subordinated.

— Interest on the loan amounts is 7.25% per annum, which charge is accrued to the loan account.

The Company had borrowed $32,631,771 from Aires as of June 30, 2015 and $30,299,312 as of

December 31, 2014.

Dr. Max Rӧssler

Over the course of 2012 and 2013, the Company entered into a series of interest free loans with Dr.

Max Rӧssler, a director of the Company and a principal of Aires. The loans were originally due either

on predetermined dates or on demand, repayable in cash or in a fixed number of shares of certain

publically traded entities. On April 19, 2013, the Company and Dr. Rössler transferred amounts due to

him under loans dated June 7, 2012 and March 1, 2013, for $1,810,000 and $50,0000 respectively to

the existing loan agreement with Aires. The due dates of the remaining loans to Dr. Rӧssler were

extended to May 30, 2016.

The Company had borrowed $850,770 from Dr. Rӧssler as of June 30, 2015 as follows:

Date of Agreement

Amount

Public Entity

July 24, 2012

$457,127

10,000

Schindler Holding AG

August 8, 2012

$393,643

700

Zug Estates Holding AG

Global Care AG

On September 23, 2014, the Company entered into a short term loan agreement of approximately

$191,849 (CHF 185,000) with Global Care AG (“Global Care”), a company owned by Dr. Rӧssler (a

director of the Company), repayable on October 31, 2014, with a fixed interest payment of $20,740

(CHF 20,000). The amounts due to Global Care had not been paid as of the filing date of this report.

According to the agreement, there are no penalties for late payments.

The Company owed Global Care $219,439 as of June 30, 2015 and $186,963 as of December 31,

2014.

DIA S.A.

On March 8, 2013, the Company entered into an interest free loan agreement with DIA S.A. in the

amount of $2,000,000 payable on March 8, 2014, in connectionwith the purchase of land adjacent to

the Paradisus Papagayo Bay Resort & Luxury Villas from Altos held in the name of Altos del Risco

S.A. The terms of the loan agreement were amended on March 16, 2015, to extend the due date for

said payable until March of 2016.

Specogna Holding AG

On September 16, 2014, the Company entered into a short term loan agreement for approximately

$736,000 with Specogna Holding AG (“Specogna”) repayable on October 31, 2014, with a fixed

interest payment of approximately $32,000. The loan was secured personally and jointly by Dr. Max

Rössler, Mr. Josef Mettler and Mr. Hans Rigendinger. The amounts due to Specogna were repaid on

March 24, 2015, by Aires on behalf of the Company, with no penalties incurred.

Roland Weimar

On May 23, 2014, the Company entered into a short term loan agreement for approximately $376,800

with Roland Weimar (“Weimar”). The loan was repayable in five instalments, (four payments of

$84,700, one payment of $38,000), with the initial payment due on June 2, 2014 and the latest

paymentdue on June 1, 2015. The interest rate is 2 % per annum. The Company has repaid

approximately $209,000 as of the filing date of this report. The agreement does not stipulate any

repercussions for the late payments.

The Company owed Weimar $167,396 as of June 30, 2015 and $316,331 as of December 31, 2014.

Timeline

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

follows:

— commence onsite vertical construction in the third quarter of 2015

— complete construction in the second quarter of 2017

— handover to Melía in the third quarter of 2017

Results of Operations

During the six month period ended June 30, 2015, our operations were focused on (i) completing

earth work excavations on the Paradisus Papagayo Bay Resort & Luxury Villas property; (ii)

furthering discussions with prospective project development partners; (iii) pursuing additional debt

financing to fund the construction of the project; (iv) seeking approval to extend the term of the

concessions; (v) pursuing permission for an “Article 21” concession for beachfront properly adjacent

to the project.; and (vi) commencing the process to create sub-concessions for prospective villa

owners within the development.

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

partners in the form of loans. Capital raised to date has been allocated primarily to the development of

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

Comprehensive Losses

Comprehensive losses for the three month period ended June 30, 2015 were $5,990,275 as compared

to $2,567,886 for the three month period ended June 30, 2014. The increase in comprehensive losses

over the comparative three month period can be attributed primarily to the transition to foreign

currency translation losses as a result of long term intercompany receivables denominated in Swiss

Francs, the increase in foreign exchange losses due to volatility in the currency markets, the increase

in amotization of debt issuance costs associated with financing activites, and the increase in interest

expenses associated with outstanding debt issues, offset by lower general and administrative expenses

and the increase in interest income. The variance in losses over the comparative three month periods

is reconciled below:

Comprehensive loss for the three months ended June 30, 2014,

$2,567,886

Variances

Decrease in general and administrative expenses

(1,780) Decrease in consulting expenses

Increase in interest income

(4,711) Increase in deposits

Increase in interest expense

468,457 Increase in interest expensed to outstanding debt

issues.

Increase in amortization of debt issuance costs

444,064 Increase in expenses associated with financing

activities and related expenses (commission).

Increase in exchange losses

923,632 Foreign currency gain on EUR bond due to

strengthening of CHF against the EUR, offset by.

foreign currency losses on Aires loan due to strength of

CHF against the USD.

Increase in other expenses

3,959 Increase in miscellaneous expenses.

Transition to foreign currency translation losses

1,588,768 Transition to foreign currency translation losses due to

a long term intercompany receiveable that is

denominated in Swiss Francs.

Total variances

$3,422,389

Comprehensive loss for the three months ended June 30, 2015

$5,990,275

Comprehensive losses for the six month period ended June 30, 2015 were $10,228,627 as compared

to $5,668,793 for the six month period ended June 30, 2014. The increase in comprehensive losses

over the comparative six month period can be attributed primarily to the transition to foreign currency

translation losses as a result of long term intercompany receivables denominated in Swiss Francs, the

increase in foreign exchange losses due to volatility in the currency markets, the increase in

amotization of debt issuance costs associated with financing activites, and the increase in interest

expenses associated with outstanding debt issues, offset by lower general and administrative expenses

and the increase in interest income. The variance in losses over the comparative six month periods is

reconciled below:

Comprehensive loss for the six months ended June 30, 2014

$5,668,793

Variances

Decrease in general and administrative expenses

(197,305) Decrease in consulting expenses

Increase in interest income

(11,493) Increase in deposits

Increase in interest expense

1,242,742 Increase in interest expensed to outstanding debt

issues.

Increase in amortization of debt issuance costs

816,470 Increase in expenses associated with financing

activities and related expenses (commission).

Increase in exchange losses

303,034 Foreign currency gain on EUR bond due to

strengthening of CHF against the EUR, offset by.

foreign currency losses on Aires loan due to strength of

CHF against the USD.

Decrease in other expenses

(28,924) Decrease in miscellaneous expenses.

Increase in foreign currency translation losses

2,434,160 Increase in foreign currency translation losses due to a

long term intercompany receiveable that is

denominated in Swiss Francs.

Income taxes

1,150 Tax expense

Total variances

$4,559,834

Comprehensive loss for the three months ended June 30, 2015

$10,228,627

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

year ended December 31, 2015.

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 inception to

June 30, 2015, 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

Since inception the Company has experienced significant changes in liquidity, capital resources, and

stockholders’ equity.

As of June 30, 2015 and December 31, 2014, the following were working capital items:

June 30,

December 31,

2015

2014

Current assets

Cash and cash equivalents

708,828

14,347

Receivable from related parties

23,933

27,163

Other assets

422,183

289,156

Total current assets

1,154,944

330,666

Current liabilities

Bank liabilities

153,375

Accounts payable

5,521,040

6,181,057

Accrued expenses

9,080,204

5,444,514

Notes payable

2,167,396

3,023,759

Notes payable to related parties

1,302,236

1,162,100

CHF-Bond

35,947,733

25,511,898

Total current liability

54,018,609

41,476,703

Net working capital

(52,863,665)

(41,146,037)

As of June 30, 2015 and December 31, 2014, the following were the items making up the total

stockholders’ deficit:

June 30,

December 31,

2015

2014

Assets

Current assets

1,154,944

330,666

Non-current assets

61,706,689

58,083,516

Total assets

62,861,633

58,414,182

Liabilities

Current liabilities

54,018,609

41,476,703

Non-current liabilities

41,422,598

39,568,568

Total liabilities

95,441,207

81,045,271

Total stockholders’ deficit

(32,579,574)

(22,631,089)

The Company’s negative net working capital of $52,863,665 is of immediate concern and will require

significant action to meet anticipated cash needs, including the upcoming maturity on August 31,

2015, of CHF-bonds in the aggregate amount of $35,947,733. Management is in the process of

initiating a new bond issue as a means to satisfy these bonds.

Net cash flow used in operating activities for the six months ended June 20, 2015, was $3,806,738, as

compared to $3,142,719 for the six months period ended June 30, 2014. The Company expects to

continue to continue to use net cash flow in operating activities until we complete the Paradisus

Papagayo Bay Resort & Luxury Villas project, which completion is projected for the third quarter of

2017.

Net cash used in investing activities for the six months ended June 30, 2015, was $4,691,170 as

compared to $5,038,474 for the six month period ended June 30, 2014. Net cash used in investing

activities in the current six month period is comprised of recievables from related parties, the purchase

of property and equipment and down payments for property and equipment, offset by other

receivables from related parties, deposits related to construction activities and restricted cash. Net

cash used in investing activities in the prior comparable six month period was comprised of the

repayment of receivables from related parties, the purchase of property and equipment and deposits

related to construction.

We expect negative net cash flow in investing activities to continue while in the process of developing

the Paradisus Papagayo Bay Resort & Luxury Villas.

Net cash provided by financing activities for the six month period ended June 30, 2015, was

$9,191,280 as compared to $7,994,267 for the six month period ended June 30, 2014. Net cash

provided by financing activities in the current six month period is comprised of proceeds from bond

issuances net of commissions and proceeds from notes payable from related parties, offset by a

decrease in bank liabilities, the repayment of notes payable to related parties, the payment of debt

issuance costs, changes in other debt.. Net cash provided by financing activities in the prior

comparable six month period was comprised of proceeds from notes payable from related parties,

proceeds from notes payable, proceeds from bond issuances net of commissions and the sale of

treasury stock, offset by the repayment of notes payable to related parties, the repayment of

outstanding bonds and debt issuance costs.

We expect net cash flow provided by financing activities to continue due to the financing necessary to

complete the development of the Paradisus Papagayo Bay Resort & Luxury Villas.

Management believes that cash on hand, related party loans and the assurance of the Guaranty

Agreement as described in the going concern paragraph below are sufficient for us to conduct

operations over the next twelve months.

We had no lines of credit or other bank financing arrangements as of June 30, 2015.

We have commitments for executed purchase orders and agreements in the amount of $57 million as

of June 30, 2015, in connection with the development of the Paradisus Papagayo Bay Resort &

Luxury Villas, which commitments are included in the required estimated net financing of $198

million to complete the project. Most material commitments are not contractually agreed as of the end

of the period. We have cancellable commitments to Meridian that are not included in the required

financing for the development of the Paradisus Papagayo Bay Resort & Luxury Villas of

approximately $15,000,000 as of June 30, 2015, for the purchase of two additional concession

properties in Polo Papagayo, Guanacaste, Costa Rica.

We maintain a defined benefit plan that covers all of our Swiss employees and have employment

agreements with our Chief Executive Officer and Chief Operating Officer as of June 30, 2015.

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.

We have no current plans to make any changes in the number of our employees as of June 30, 2015.

Future Financings

A letter of engagement was executed with ISM Capital LLP, a London based investment firm, on

March 10, 2015, for the purpose of conducting a $100 million asset backed bond issuance. Despite the

firm’s commitment to identify investors, the success of this proposed bond issuance for the amount

contemplated or any lesser amount, does not guarantee that all or part of the amount offered will be

subscribed.

The major shareholders will provide personal guarantees to investors, in the context of the Guaranty Agreement, so that they will be in a position to secure the necessary funds for the repayment of the CHF bonds, which are due on August 31, 2015.

Off-Balance Sheet Arrangements

As of June 30, 2015, 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 $198 million.

The project is expected to open in the third quarter of 2017. Until the completion of the project, the

following expenditures are estimated to be incurred:

a. Gross project cost

208,000,000

b. Less: Proceeds from sale of villas

(25,000,000)

c. Net project cost

183,000,000

d. Overhead expenses

27,000,000

e. Less: Recuperated in gross project cost

(12,000,000)

f Total, excluding other potential projects

198,000,000

Sixty percent (60%) of the “Net project cost” is intended to be financed through the issuance of

secured bonds, for which negotiations have been initiated. The remaining forty percent (40% of the

“Net project cost”, as well as “non-recuperated overhead expenses” and the cost of potential “other

projects” are intended to be financed by the main shareholders or lenders of the project in the absence

of alternative financing committements, i.e. Zypam Ltd., shareholder and related entity to Mr. Josef

Mettler, Mr. Hans Rigendinger, shareholder, Chief Operating Officer and Company Board Member,

Dr. Max Rössler, Company Board Member and controlling shareholder of Aires, Mr Josef Mettler,

shareholder, Director and Chief Executive Officer.

On July 16, 2012, Mr. Mettler, Mr. Rigendinger and Dr. Rӧssler entered into a Guaranty Agreement

in favour of the Company. 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 the Company 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 the Company has secured financing for the completion of the

project.

Based on this Guaranty Agreement, management believes that available funds are sufficient to finance

cash flows for the twelve months subsequent to June 30, 2015, and the filing date, though future

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

financing.

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. 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

— 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 elsewhere in this

report. 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 annual report, an evaluation was carried out by the

Company’s management, with the participation of its 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, 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 that 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 quarter ended June 30, 2015, 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

On July 16, 2015, the Company’s board of directors unanimously adopted an audit committee charter

and appointed Josef Mettler, José Maria Figureres and Howard Glicken to the newly formed audit

committee.

On July 16, 2015, the Company’s board of directors unanimously adopted a new Code of Business

Conduct and Ethics, a copy of which is attached hereto as Exhibit 14.

ITEM 6.

EXHIBITS

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

page 47 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

August 19, 2015

Josef Mettler

Chief Executive Officer, Chief Financial Officer,

Principal Accounting Officer and Director

/s/ Hans Rigendinger

August 19, 2015

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 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).

10.4*

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).

10.5*

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

Max Rӧssler.

10.6*

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.

10.7*

Employment Agreement dated July 4, 2013 between the Company and Josef Mettler (incorporated by

reference to the Form 10-Q filed with the Commission on October 10, 2013).

10.8*

Assignment of Debt Agreement dated December 31, 2012, between the Company, SunVesta AG and

Aires International Investments, Inc. (incorporated by reference to the Form 10-Q filed with the

Commission on December 13, 2013).

10.9*

Debt Settlement Agreement dated December 31, 2012, between the Company and Hans Rigendinger

(incorporated by reference to the Form 10-Q filed with the Commission on December 13, 2013).

10.10*

Loan Agreement dated October 31, 2013, between SunVesta AG and Aires International Investments,

Inc. (incorporated by reference to the Form 10-Q filed with the Commission on December 13, 2013).

10.11*

Assignment of Debt Agreement dated December 31, 2013, between the Company, SunVesta AG and

Aires International Investments, Inc.(incorporated by reference to the Form 10-Q filed with the

Commission on May 20, 2014).

10.12

Assignment of Debt Agreement dated December 31, 2014, between the Company, SunVesta AG and

Aires International Investments, Inc.

10.13*

Addendum to Employment Agreement dated March 6, 2015, between the Company and Josef Mettler

(incorporated by reference to the Form 10-Q filed with the Commission on May 5, 2015).

Code of Business Conduct and Ethics adopted on July 16, 2015.

21*

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

on April 15, 2015).

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.

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.

99*

SunVesta, Inc. 2013 Stock Option Plan (incorporated by reference to the Form 10-Q filed with the

Commission on October 10, 2013).

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.

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