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EX-32 - EXHIBIT 32 - SUNVESTA, INC.ex32.htm
EX-31 - EXHIBIT 31 - SUNVESTA, INC.ex31.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended September 30, 2017.

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from to .

 

Commission file number: 000-28731

 

SUNVESTA, INC.

(Exact name of registrant as specified in its charter)

 

Florida

(State or other jurisdiction of

incorporation or organization)

98-0211356

(I.R.S. Employer

Identification No.)

 

Seestrasse 97, Oberrieden, Switzerland CH-8942

(Address of principal executive offices) (Zip Code)

 

+ 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 ☒  No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒  No ☐

 

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

 

Large accelerated filer ☐   Accelerated filer ☐
     
Non-accelerated filer ☐   Smaller reporting company ☒

 

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

Yes ☐  No ☒

 

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 November 13, 2017, was 104,741,603.

 

 1 

 

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION PAGE
   
Item 1. Financial Statements 3
   
Consolidated Balance Sheets as of September 30, 2017 (unaudited) and December 31, 2016
   
Unaudited Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2017 and September 30, 2016 5
   
Unaudited Consolidated Statements of Stockholders, Equity for the nine months ended September 30, 2017
   
Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and September 30, 2016 7
   
Notes to Unaudited Consolidated Financial Statements 8
   
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 32
   
Item 3. Quantitative and Qualitative Disclosures about Market Risk 40
   
Item 4. Controls and Procedures 40
   
PART II – OTHER INFORMATION  
   
Item 1. Legal Proceedings 41
   
Item 1A. Risk Factors 41
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 41
   
Item 3. Defaults upon Senior Securities 41
   
Item 4. Mine Safety Disclosures 41
 
Item 5. Other Information 41
   
Item 6. Exhibits 41
   
Signatures  42
   
Index to Exhibits  43

 

 2 

 

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 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.

 

Due to rounding, the sum of individual positions may be higher or lower than 100%.

 

 3 

 

 

SUNVESTA, INC.

CONSOLIDATED BALANCE SHEETS

 

   September 30, 2017
(Unaudited)
  December 31, 2016
Assets          
Current assets          
Cash and cash equivalents   4,553,872    806,440 
Receivable from related parties   —      49,292 
Other assets   737,459    456,099 
Total current assets  $5,291,330    1,311,830 
Non-current assets          
Property and equipment - net   73,053,771    66,216,658 
Deposits related to construction work   1,069,477    190,549 
Notes receivable   —      280,242 
Restricted cash   1,670,164    1,667,052 
Total non-current assets  $75,793,412    68,354,502 
Total assets  $81,084,743    69,666,332 
           
Liabilities and stockholders' deficit          
Current liabilities          
Accounts payable   2,312,044    3,311,512 
Accrued expenses   3,453,700    3,160,723 
Note payable   —      1,500,000 
Notes payable to related parties   —      307,088 
Other liabilities   26,013    120 
Convertible CHF-Bonds   12,711,869    6,202,921 
Liability related to conversion feature   1,334,210    —   
EUR-Bond   —      484,463 
Total current liabilities  $19,837,836    14,966,826 
Non-current liabilities          
Convertible CHF-Bonds   —      31,892,613 
CHF-Bonds   30,087,541    16,384,893 
Liability related to conversion feature   —      5,936,378 
Notes payable to related parties   93,153,232    51,473,793 
Pension liabilities   192,947    184,469 
Total non-current liabilities  $123,433,720    105,872,146 
Total liabilities  $143,271,556    120,838,972 
           
Stockholders' deficit          
Preferred stock,  $0.01 par value; 50,000,000 shares
authorized, no shares issued and outstanding
   —      —   
Common stock, $0.01 par value; 200,000,000 shares authorized; 101,841,603 shares issued and outstanding   1,018,416    959,416 
Additional paid-in capital   23,373,567    23,238,526 
Accumulated other comprehensive income / (loss)   (561,389)   2,997,562 
Accumulated deficit   (86,017,407)   (78,368,143)
Total stockholders' deficit  $(62,186,813)   (51,172,639)
Total liabilities and stockholders' deficit  $81,084,743    69,666,332 

 

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

 

 4 

 

 

SUNVESTA, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

 

   Three months ended  Nine months ended
   September 30,
2017
  September 30,
2016
  September 30,
2017
  September 30,
2016
   (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)
Revenues            
Revenues, net   —      —      —      —   
Cost of revenues   —      —      —      —   
Gross profit  $—      —      —      —   
                     
Operating expenses                    
General and administrative expenses   (1,740,343)   (1,071,827)   (4,253,599)   (3,998,562)
Impairment expenses   —      —      (280,242)   (296,663)
Total operating expenses  $(1,740,343)   (1,071,827)   (4,533,841)   (4,295,224)
Loss from operations  $(1,740,343)   (1,071,827)   (4,533,841)   (4,295,224)
                     
                     
Other income/(expenses)                    
Interest income   29,460    15,134    60,309    46,162 
Interest expense   (1,949,695)   (1,859,825)   (4,687,418)   (4,799,665)
Change in fair value of conversion feature   311,666    680,580    1,297,206    1,860,806 
Gain/loss on extinguishment of debt   (106,762)   —      2,138,858    (1,071,317)
Exchange differences   790,470    (1,240,451)   (1,749,921)   322,882 
Other income/(expenses)   (22,811)   (15,064)   (88,018)   (25,589)
Total other expenses  $(947,672)   (2,419,625)   (3,028,985)   (3,666,721)
                     
                     
Loss before income taxes   (2,688,015)   (3,491,452)   (7,562,826)   (7,961,945)
Income Taxes   (1,305)   —      (86,438)   —   
Net loss  $(2,689,320)   (3,491,452)   (7,649,265)   (7,961,945)
                     
Other comprehensive income/(loss)                    
Foreign currency translation   1,479,171    119,460    (3,558,951)   (2,702,023)
Actuarial gains/(losses)   —      —      —      —   
Comprehensive loss  $(1,210,149)   (3,371,991)   (11,208,216)   (10,663,968)
                     
Loss per common share                    
Basic and diluted  $(0.03)   (0.03)   (0.07)   (0.08)
                     
Weighted average common shares                    
Basic and diluted   104,741,603    101,740,479    105,905,770    99,707,537 

 

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

 

 5 

 

 

SUNVESTA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

 

  Common Stock  Additional Paid-in Capital  Accumulated Other Comprehensive Loss  Accumulated deficit  Treasury Stock  Total Stockholders’ Deficit
December 31, 2016 $959,416   $23,238,526   $2,997,562   $(78,368,143)  $—     $(51,172,639)
Translation adjustments  —      —      (3,558,951)   —      —      (3,558,951)
Net loss  —      —      —      (7,649,264)   —      (7,649,264)
Stock based compensation expense  59,000    135,041    —      —      —      194,041 
September 30, 2017 $1,018,416   $23,373,567   $(561,389)  $(86,017,407)  $—     $(62,186,814)

 

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

  

 6 

 

 

SUNVESTA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

   January 1 to September 30,
2017
  January 1 to September 30,
2016
   (Unaudited)  (Unaudited)
Cash flows from operating activities          
Net loss  $(7,649,264)   (7,961,945)
Adjustments to reconcile net loss to net cash          
Depreciation and amortization   29,880    29,585 
Impairment expenses   269,695    296,663 
Amortization of debt issuance costs and commissions   1,236,543    1,776,231 
Accrued interest on debt   3,716,523    2,696,792 
Extinguishment of debt   (2,138,858)   1,071,317 
Unrealized exchange differences   1,766,165    (411,374)
Stock compensation expense   194,041    (235,153)
Other income related to conversion feature   (1,337,364)   (1,457,502)
- Cash flow impact of increase / decrease in:          
Other current assets   (526,401)   759,303 
Accounts payable   (1,271,338)   (3,042,107)
Accrued expenses   (2,762,378)   424,203 
Other liabilities   25,524    —   
Net cash used in operating activities  $(8,447,232)   (6,053,988)
Cash flow from investing activities          
Payments to acquire property, plant and equipment   (2,768,445)   (1,198,012)
Proceeds from sale of property, plant and equipment   32,260    36,578 
Deposits related to construction work   (878,903)   (641,818)
Down payments for property and equipment   —      309,023 
Restricted cash   2,549    14,050 
Net cash used in investing activities  $(3,612,539)   (1,480,178)
Cash flows from financing activities          
Repayments of bank liabilities   —      (178,053)
Proceeds from notes payable related parties   17,794,570    8,233,385 
Repayment of notes payable related parties   —      (7,784,216)
Proceeds from bond issuance, net of commissions
and debt issuance costs
   1,275,655    11,127,996 
Repayment of bonds   (2,305,714)   (890,379)
Proceeds from note payable and other debt   525,055    (23,090)
Repayments of note payable and other debt   (1,500,000)   (102,679)
Net cash provided by financing activities  $15,789,566    10,382,963 
Effect of exchange rate changes   17,637    25,070 
Net increase / - decrase in cash   3,747,431    2,873,867 
Cash and cash equivalents, beginning of period   806,440    111,830 
Cash and cash equivalents, end of period  $4,553,871    2,985,697 
           
Additional information          
Capitalized interest and debt issuance costs for construction (non-cash)   2,976,526    2,679,526 
Transfer of Convertible CHF-Bond II to CHF-Bond IV (non-cash)   26,138,355    —   
Transfer of Convertible CHF-Bond II to notes payable to
Global Care AG (non-cash)
   1,035,894    —   
Transfer of CHF Bond III original to notes payable to
Global Care AG (non-cash)
   15,375,505    —   
Assumption of payables due from AIRES by Global Care AG (non-cash)   —      7,621,345 
Assumption of payables due from AIRES by Sportiva (non-cash)   —      1,533,150 
Reversal of capitalized payment obligations for constructions (non-cash)        451,816 
Interest paid   1,405,175    —   

 

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

 

 7 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

1. Corporate Information

 

On August 27, 2007, SunVesta Inc. (“Company”) acquired SunVesta Holding AG (“SunVesta AG”). SunVesta AG has three wholly-owned subsidiaries: SunVesta Projects and Management AG, a Swiss company; SunVesta Costa Rica SA, a Costa Rican company and SunVesta Holding España SL, a Spanish company.

 

The Company is focused on the development of a holiday resort in Costa Rica. Planning for this project has been fully completed, all consents have been granted, and excavation work began in March 2013. The Company is in the process of securing financing for the project and has not realized revenue to date. Since the financing of the 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”).

 

2. Significant Accounting Policies

 

New accounting standards – not adopted

 

In January 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The update requires several changes with respect to recognition and measurement as well as disclosure requirements with respect to financial instruments). The amendments to (ASU) 2016-01 are effective for the annual period ending after December 15, 2017, and for annual periods and interim periods thereafter. Early application is permitted. The Company has concluded that (ASU) 2016-01 will not have an impact on its consolidated results of operations, financial condition, cash flows, and financial statement disclosures.

 

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-02, Leases (Topic 842). The standard requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. The standard requires lessors to classify leases as either sales-type, finance or operating. A sales-type lease occurs if the lessor transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer of control, the lease is treated as a financing lease. If the lessor does not convey risks and rewards or control, an operating lease results. The standard will become effective for the Company beginning January 1, 2019. The Company is currently assessing the impact adoption of this standard will have on its consolidated results of operations, financial condition, cash flows, and financial statement disclosures.

 

 8 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

2. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

 

New accounting standards – not adopted

 

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, requiring certain changes to the recognition and measurement as well as disclosure of incurred and expected credit losses. The standard will become effective for the Company beginning January 1, 2020. The Company is currently assessing the impact adoption of this standard will have on its consolidated results of operations, financial condition, cash flows, and financial statement disclosures.

 

In November 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2016-18, requiring that restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of- period total cash amounts shown on the statement of cash flows. Consequently, transfers between cash and restricted cash will not be presented as a separate line item in the operating, investing or financing sections of the cash flow statement. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company considers that ASU 2016-18 will have a limited impact on the presentation of the statement of cash flows.

 

In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2017-07, requiring certain changes to the presentation of the expenses related to postretirement benefits accounted for under Topic 715. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company is currently assessing the impact adoption of this standard will have on its consolidated results of operations, financial condition, cash flows, and financial statement disclosures.

 

In May 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2017-09, requiring certain changes to the presentation and disclosures of changes to share-based payment awards under Topic 718. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company is currently assessing the impact adoption of this standard will have on its consolidated results of operations, financial condition, cash flows, and financial statement disclosures.

 

In July 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2017-11, requiring certain changes to the presentation and disclosures of changes to liability or equity classification of financial instruments. The amendments are effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company is currently assessing the impact adoption of this standard will have on its consolidated results of operations, financial condition, cash flows, and financial statement disclosures.

 

 9 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

2. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

 

New accounting standard updates - adopted

 

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 has assessed that ASU 2014-15 has no effect on its financial statements, as a note with respect to the going concern assumption is already presented.

 

In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2016-9, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, requiring certain changes to recognition and measurement as well as disclosure of Share-Based Payments. The standard will become effective for the Company beginning January 1, 2017. The Company has assessed the impact that adoption of this standard has on its consolidated results of operations, financial condition, cash flows, and financial statement disclosures. ASU 2016-9 is part of the FASB’s simplification initiative and offers certain accounting policy choices and simplifications. Based on the current stock option plans, there is no effect from ASU 2016-9 on the Company’s consolidated results of operations, financial condition, cash flows, and financial statement disclosures.

 

 10 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

3. GOING CONCERN

 

The Company is currently working on building a holiday resort in the Papagayo Gulf Tourism Project area of Guanacaste, Costa Rica. The project is not expected to open before the end of 2018. Until the completion of the project, the following expenditures are estimated to be incurred:

 

a.   Gross project cost  $242,000,000 
b.   Less: Proceeds from sale of villas   (25,000,000)
c.   Net project cost   217,000,000 
d.   Overhead expenses   20,000,000 
e.   Total, excluding other potential projects  $237,000,000 

 

Seventy percent of the net project cost is intended to be financed through the issuance of secured debt facilities, for which negotiations are in progress. The remaining thirty percent 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, i.e Dr. Hans Rigendinger, shareholder, Company Director and Chief Executive Officer, and Dr. Max Rӧssler, controlling shareholder of Aires International Investment Inc. and Global Care AG as well as Company Director.

 

On July 16, 2012, certain principal shareholders of the Company or principal lenders to the project entered into a Guaranty Agreement in favor of the Company. The purpose of the guaranty is to ensure that until such time as financing is secured for the entire project that they will act as guarantors to creditors of SunVesta Holding AG.

 

On September 22, 2015, the signatories to the guaranty formally agreed to maintain the guaranty, as necessary, until December 31, 2018.

 

On October 28, 2016, Dr. Hans Rigendinger and Dr. Max Rössler formally agreed to maintain the guaranty, as necessary, until completion of the construction of Paradisus Papagayo Bay Resort & Luxury Villas, after which date the guaranty will expire.

 

The Guaranty Agreement requires that within 30 days of receiving a demand notice, requested funds are made available by the guarantors to the Company. Based on this guaranty, management believes that available funds are sufficient to finance cash flows for the twelve months subsequent to September 30, 2017 and the filing date.

 

4. 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 and cash equivalents  USD  CHF  Other  Total  Total
            September 30,
2017
  December 31,
2016
original currency   4,600    4,419,670    12,905           
in $   4,600    4,535,977    13,295    4,553,872    806,440 


 

USD ($) = US Dollar
CHF = Swiss Francs
Other = Australian Dollar and Costa Rican Colón

 

 11 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

5. RESTRICTED CASH

 

As of September 30, 2017, the Company has the following restricted cash positions:

 

   September 30, 2017  December 31, 2016
   $  $
Credit Suisse in favor of BVK pension fund   131,061    125,400 
Banco Lafise in favor of the Costa Rican Tourism Board   933,350    933,350 
Banco Lafise in favor Costa Rican Environmental Agency – SETENA   605,753    608,302 
Gross   1,670,164    1,667,052 


 

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 pension fund is a rental deposit related to a long term lease contract for office space.

 

6. NOTE RECEIVABLE

 

On June 15, 2015, the Company loaned REP Caribbean Development Corporation (“REP Caribbean”), a third party, $250,000 secured by a non-related Swiss individual. The loan was due on November 30, 2015, in addition to a fixed interest payment of $5,000. On September 15, 2015, the Company entered into an agreement with REP Caribbean and 4f Capital, a related party, netting receivables due to the respective parties that resulted in the satisfaction of the full loan amount due from REP Caribbean to the Company and a receivable against 4f Capital in the amount of approximately $250,000 as of December 31, 2016 and $250,000 as of December 31, 2015. On December 10, 2015, the Company loaned an additional unsecured amount of $25,000 to REP Caribbean. The Company erroneously reported as of December 31, 2016 and December 31, 2015, that the amount due from REP Caribbean was approximately $280,000. Since 4f Capital is in liquidation, and the likelihood that REP Caribbean will repay the unsecured $25,000 due is in doubt, the receivable erroneously reported as approximately $280,000, was fully impaired as of March 31, 2017.

 

7. PROPERTY & EQUIPMENT

 

   September 30, 2017  December 31, 2016
Concession Land  $19,700,000    19,700,000 
IT Equipment   231,220    221,060 
Other equipment and furniture   231,233    219,734 
Leasehold improvements   77,405    74,004 
Vehicles   —      74,000 
Construction in-process   53,343,006    46,457,172 
Gross   73,582,864    66,745,970 
Less accumulated depreciation   (529,093)   (529,312)
Net  $73,053,771    66,216,658 
Depreciation expenses for the period ended September 30, 2017 and December 2016   29,880    61,771 

 

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SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

7. PROPERTY & EQUIPMENT – CONTINUED

 

Concession Properties

 

Property and equipment is comprised of concession land held in Costa Rica that is being developed for a hotel, planning expenses, earth works and capitalized project costs in connection with the Papagayo Gulf Tourism project. The concession land amounts to $19.7 million related to the concessions held by SunVesta Costa Rica SA. $7 million (~94,000 m2) and $12.7 million (~133,000 m2).

 

The $7 million 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 was to expire in June 2022.

 

The $12.7 million 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 was to expire in November 2036.

 

On July 14, 2015 the Consejo del Polo de DesarrolloTuristico Papagayo at ICT (Council of Papagayo Tourism Development Project), unanimously approved the extension of both concessions until 2052.

 

Additional Properties

 

On April 24, 2013, the Company entered into a new agreement to purchase two additional concession properties located in Polo Papagayo, Guanacaste for a total of $17,500,000 payable to the seller and a third party against a refundable deposit of $1,369,816 payable over terms minus $300,000 in liqudated damages of 5% in the event the purchase did not close. The Company failed to perform according to the terms of the purchase agreement and the transaction was terminated by the third party and thereafter by the Company.

 

The Company initiated legal proceedings against the seller and separately the third party for the recovery of that portion of the refundable deposits paid to the seller and to the third party. The aggregate amount in dispute was approximately $1.5 million. The legal proceeding againt the seller has since been dismissed on technical grounds and the legal proceeding against the third party has been withdrawn by the Company on contractual grounds. The Company is assessing whether to file a new complaint against the seller.

 

As of September 30, 2017, no gain has been recognized with respect to the claims against the seller and the third party in connection with the additional concession properties.

 

All expenses related to the agreements with the seller and the agreement with the third party seller, were impaired as of December 31, 2016.

 

Deposit related to construction work

 

The Company placed deposits with contractors for earth moving groundwork and infrastructure work. These deposits will be offset against invoices as such works is completed. As of September 30, 2017 and December 31, 2016, the Company has deposits of $1,069,477 and $190,549 respectively, which have not yet been set off.

 

 13 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

8. 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 classifies 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 September 30, 2017 and December 31, 2016, respectively, there are no financial assets or liabilities measured on a recurring basis at fair value with the exception of the liability related to the conversion feature.

 

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:

 

 14 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

8. 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.
Notes receivable - carrying amount approximated fair value.
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% or 6.5% respectively for CHF bonds, which represented the current market rate based on the creditworthiness of the Company at issuance. Hence, the carrying values approximate fair value.
Notes payable to related parties – Aires and Global Care (non-current) – The fair values of the notes payable to Aires International Investments Inc. and Global Care AG 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.
Convertible CHF-bonds – The fair values of the convertible bonds payable are classified as level 3 fair values. The fair values of the convertible bonds have been determined by discounting cash flow projections discounted at the respective interest rates of 6.00% for convertible CHF bonds, which represents the current market rate based on the creditworthiness of the Company. Hence, the carrying values approximate fair value.
Liability related to conversion feature - The fair value of the liability related to conversion feature is classified as level 3 in the fair value hierarchy. The fair value of the liability is determined using a Black Scholes model to calculate the option value at each reporting date and multiplied by the number of potentially convertible shares.

 

 15 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

8. FAIR VALUE MEASUREMENT – CONTINUED

 

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

 

   September 30, 2017  December 31, 2016      
   Carrying Amount $  Fair Value $  Carrying Amount $  Fair Value $  Fair Value Levels  Ref-erence
Cash and cash equivalents   4,553,872    4,553,872    806,440    806,440    1    Note 4 
Restricted cash   1,670,164    1,670,164    1,667,052    1,667,052    1    Note 5 
Receivables from related parties – other (current)   —      —      49,292    49,292    3    Note 9 
Accounts Payable   2,312,044    2,312,044    3,311,512    3,311,512    1    —   
Note payable   —      —      1,500,000    1,500,000    1    Note 15 
Notes payable to related parties – other (current)   —      —      307,088    307,088    3    Note 9 
Notes receivable   —      —      280,242    280,242    3    Note 6 
EUR-bonds   —      —      484,463    484,463    3    Note 10 
Convertible CHF-bonds   12,711,869    12,711,869    38,095,533    38,095,533    3    Note 10 
CHF-bonds   30,087,541    30,087,541    16,384,893    16,384,893    3    Note 10 
Notes payable to related parties (non-current)   93,153,232    93,153,232    51,473,793    51,473,793    3    Note 9 
Liability related to conversion feature   1,334,210    1,334,210    —      —      3    Note 10 

 

 

The Company,s financial liabilities measured at fair value on a recurring basis consisted of the liability related to conversion feature as of the following date:

 

Balance at December 31, 2016   5,936,378 
Additions/(Decrease)   (40,158)
Change in Fair Value of Conversion Feature   (1,297,206)
Gain/loss on extinguishment of debt (in addition to any recognized gain/loss on extinguishment of the underlying financial instrument)   (3,466,897)
FX Revaluation   202,093 
Balance at September 30, 2017   1,334,210 

 

Total income related to the conversion feature including the gain on the extinguishment of debt in the nine months up to September 30, 2017, amounts to $4,804,261. The Company used a Black-Scholes model to value the liability related to conversion feature as of September 30, 2017 and December 31, 2016. Decrease of the conversion feature due to a decrease of bond volume are accounted for within interest expense. In the consolidated statement of comprehensive loss, an amount of $3,466,897 has been reclassed from impact of the conversion feature to gain on extinguishment of debt, due to a reclass from the CHF convertible bonds to non-convertible CHF-bonds.

 

The assumptions as of September 30, 2017 are as follows:

 

Stock Price: CHF 5.08 Annualized Risk Free Rate: 0.001%  
Exercise Price: CHF 8 Annualized Volatility: 80%  
Time to maturity: 1.00 years    

 

The assumptions as of December 31, 2016 are as follows:

 

Stock Price: CHF 5.08 Annualized Risk Free Rate: 0.001%  
Exercise Price: CFH 8 Annualized Volatility: 80%  
Time to maturity: 1.75 years    

 

 16 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

9. RELATED PARTY TRANSACTIONS

 

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

 

      Receivables  Payables
      September 30, 2017  December 31, 2016  September 30, 2017  December 31, 2016
1  Aires International   —      —      56,684,218    51,473,793 
2  Global Care AG   —      —      36,469,014    —   
3  Turan Tokay   —      49,292    —      —   
   Total   —      49,292    93,153,232    51,473,793 
   of which non-current   —      —      93,153,232    51,473,793 

 

As of December 31, 2016, a payable of $290,000 was presented as a liability to the related party Akyinyi Interior and Exterior Decoration and $17,088 to the late Josef Mettler, each of which were no longer related parties at that time.

 

The receivable due from Turan Tokay of $49,292 was fully impaired in 2017.

 

   Related party  Capacity  Interest Rate  Repayment Terms  Security
1  Aires International  Company owned by Dr. Rössler, a board member   7.25%  See below   none 
2  Global Care AG  Company owned by Dr. Rössler, a board member   7.25%  See below   none 
3  Turan Tokay  Shareholder   3%  none   none 

 

Loan agreement Aires International Investment Inc.

 

As of September 30, 2017, the Company owed Aires International Inc. the following:

 

Borrower  Debt instrument denominated in CHF  Amount in CHF  Amount in USD  Annual interest rate  Repayment date *
SunVesta Inc.  Promissory note   10,044,371    10,308,739    7.25%  After Dec 31, 2020
SunVesta Inc.  Promissory note   10,000,000    10,263,200    7.25%  After Dec 31, 2020
SunVesta Inc.  Promissory note   10,000,000    10,263,200    7.25%  After Dec 31, 2020
SunVesta Inc.  Loan agreement   11,866,619    12,174,254    7.25%  After Dec 31, 2020
SunVesta Holding  Loan agreement   13,324,189    13,674,825    7.25%  After Dec 31, 2020
Total           56,684,218         

 

* The notes may be repaid in whole or in part.

 

Loan due to Global Care AG

 

In 2017, Global Care AG, a company owned by Dr. Rӧssler (a director of the Company), provided $36,469,014 ($1,564,444 with a transfer of convertible bonds to the loan and $15,375,505 with a transfer of bonds to the loan) to the Company at 7.25% interest, repayable not before December 31, 2020.

 

 17 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

10. BONDS

 

Description  EUR (€) bond new I
(repaid)
  EUR (€) bond new II (parallel)
(repaid)
Issuer:  SunVesta Holding AG  SunVesta Holding AG
Type of securities:  Bond in accordance with Swiss law  Bond in accordance with Swiss law
Approval by SunVesta AG BOD:  October 31, 2013  May 19, 2014
Volume:  Up to EUR15,000,000  Up to EUR 15,000,000
Units:  EUR10,000  EUR 10,000
Offering period:  11/07/2013 – 03/31/2014  05/01/14 – 06/30/14
Due date:  December 2, 2016  December 02, 2016
Issuance price:  100%  100%
Issuance day:  December 2, 2013  December 02, 2013 (retroactive)
Interest rate:  7.25% p.a.  7.25 % p.a.
Interest due dates:  December 02  December 02
Applicable law:  Swiss  Swiss

 

EURO (€) Bond new I  EURO Bond (New) 2017  EURO Bond (New) 2016
   $  $
Balances January 1   31,541    6,871,630 
Cash inflows   —      —   
Cash outflows   —      (6,736,255)
Reclassification from / to Bond (net)   (32,271)   —   
Foreign currency adjustments   730    (103,834)
Sub-total   —      31,541 
Discounts (commissions paid to bondholders) and
debt issuance costs
   (588,613)   (588,613)
Accumulated amortization of discounts and
debt issuance costs
   588,613    563,636 
Total accumulated unamortized discounts and
debt issuance costs
   —      (24,977)
Balances September 30 and December 31 (Carrying value)   —      6,564 

 

 18 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

10. BONDS – CONTINUED

 

EURO (€) Bond new II  EUR Bond
new II
2017
  EUR Bond
new II
2016
   $  $
       
Balances January 1   511,805    1,658,300 
Cash inflows   —      —   
Cash outflows   (510,120)   (159,950)
Reclassification from / to Bond (net)   (9,761)   (953,683)
Foreign currency adjustments   8,075    (32,862)
Sub-total   —      511,805 
Discounts (commissions paid to bondholders) and
debt issuance costs
   (174,660)   (174,660)
Accumulated amortization of discounts and
debt issuance costs
   174,660    140,754 
Reclassification from / to Bond (net)   —      —   
Total accumulated unamortized discounts and
debt issuance costs
   —      (33,906)
Balances September 30 and December 31 (Carrying value)   —      477,899 

 

On September 30, 2015, the Company approved the issuance of two new Convertible CHF-bonds.

 

The major terms and conditions are the following:

 

Description  Convertible CHF Bond I  Convertible CHF Bond II
Issuer:  SunVesta Holding AG  SunVesta Holding AG
Type of securities:  Senior convertible bonds,
convertible into shares of the
issuer, in accordance with
Swiss law
  Senior convertible bonds,
convertible into shares of the
issuer, in accordance with
Swiss law
Approval by SunVesta AG BOD:  September 30, 2015  September 30, 2015
Volume:  Up to CHF 45,000,000  Up to CHF 15,000,000
Denomination:  CHF 5,000  CHF 5,000
Offering period:  October 01, 2015  October 01, 2015
Maturity date:  September 30, 2018  September 30, 2018
Issue price:  100%  100%
Redemption price:  100%  100%
Issuance date:  October 01, 2015  October 01, 2015
Coupon:  6.00 % p.a.  6.00 % p.a.
Interest due dates:  September 30 of each year, the
first time September 30, 2016
  September 30 of each year, the
first time September 30, 2016
Reference price:  CHF 6.50  CHF 6.50
Initial conversion price:  CHF 8.00  CHF 8.00
Applicable law:  Swiss  Swiss

 

 19 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

10. BONDS – CONTINUED

 

Convertible CHF BOND I  Convertible CHF Bond I 2017  Convertible CHF Bond I 2016
   $  $
Balances January 1   3,648,383    2,250,048 
Cash inflows   —      1,640,887 
Cash outflows   —      (103,008)
Foreign currency adjustments   167,678    (105,058)
Reclassification from / to Bond (net)   —      (34,486)
Sub-total   3,816,061    3,648,383 
Discounts (commissions paid to bondholders) and debt issuance costs   (240,760)   (136,722)
Accumulated Amortization of discounts and debt issuance costs   167,180    117,652 
Reclassification from / to Bond (net)   —      (104,038)
Total Accumulated Unamortized discounts and debt issuance costs   (73,580)   (123,108)
Balances September 30 and December 31 (Carrying value)   3,742,480    3,525,275 

 

In the first quarter of 2016, the Company reclassified $634,186 from Convertible CHF Bond I.

 

As per date of this report, the Company has realized a cumulative amount of $2.26 million (CHF 2.20 million) related to the CHF Convertible Bond I. The difference between the carrying value as of September 30, 2017 and the value as per date of this report is due to a transfer of $1.49 million in other bonds. The transfers in detail are: $1.23 million (CHF 1.2 million) to CHF Bond III original, $0.16 million (CHF 0.15 million) to Convertible CHF bond II and $0.1 million (CHF 0.1) to CHF Bond IV.

 

Convertible CHF BOND II  Convertible CHF Bond II 2017  Convertible CHF Bond II 2016
   $  $
Balances January 1   36,770,369    26,470,395 
Cash inflows   20,079    7,142,850 
Cash outflows   (1,795,594)   (787,371)
Foreign currency adjustments   1,229,708    (1,187,441)
Reclassification from / to Bond (net)   (27,174,249)   5,131,937 
Sub-total   9,050,313    36,770,369 
Discounts (commissions paid to bondholders) and debt issuance costs   (4,791,566)   (4,890,690)
Accumulated Amortization of discounts and debt issuance costs   4,710,642    2,586,541 
Reclassification from / to Bond (net)   (0)   104,038 
Total Accumulated Unamortized discounts and debt issuance costs   (80,924)   (2,200,111)
Balances September 30 and December 31 (Carrying value)   8,969,389    34,570,259 

 

 

 20 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

10. BONDS – CONTINUED

 

In April 2016, Global Care AG (a related party controlled by Dr. Rössler, a Company board member) assumed a liability of CHF 4.5 million due to Aires International Investment Inc., (also a related party controlled by Dr. Rössler). This CHF 4.5 million was subsequently subscribed into bonds of the Convertible Bond II issue. As the conversion inclues a significant conversion option, the exchange is treated as an extinguishment of debt and an amount of $1,071,317 has been reclassified in the comprehensive statements of loss from revaluation of conversion feature to extinguishment of debt. In 2017, $26,138,355 was transferred to the new CHF-Bond IV and $1,035,894 to a note payable to Global Care AG. As the terms of the new bond are significantly different to the convertible bond, an unamortized transaction cost of $1,221,277 were recognized as a gain on extinuishment of debt in the statement of comprehensive income. As per date of this report, the Company has realized a cumulative amount of $9.13 million (CHF 8.89 million) related to the Convertible Bond II. The difference between the carrying value as of September 30, 2017 and the value as of date of this report is due to a transfer of $0.16 million (CHF 0.15 million) from the Convertible CHF Bond I.

 

The Company initiated a new offering of senior unsecured CHF bonds on September 21, 2016, of up to CHF 20,000,000 in units of CHF 5,000 that bear interest at 6.50% per annum payable each August 15, over a four-year term that matures on August 15, 2020, with the following conditions:

 

Description  CHF Bond III
Issuer:  SunVesta Holding AG
Type of securities:  Senior bonds
Approval by SunVesta AG BOD:  July 7, 2016
Volume:  Up to CHF 20,000,000
Denomination:  CHF 5,000
Offering period:  November 30, 2016
Maturity date:  August 15, 2020
Issue price:  100%
Redemption price:  100%
Issuance date:  September 21, 2016
Coupon:  6.50 % p.a.
Interest due dates:  August 15 of each year, the first
time August 15, 2017
Applicable law:  Swiss

 

CHF BOND III original  CHF Bond III 2017  CHF Bond III 2016
   $  $
Balances January 1   15,601,389    —   
Cash inflows   1,374,842    699,650 
Cash outflows   —      —   
Foreign currency adjustments   918,879    (290,665)
Reclassification from / to Bond (net)   (15,375,505)   15,192,404 
Sub-total   2,519,605    15,601,389 
Discounts (commissions paid to bondholders) and debt issuance costs   (188,000)   (56,643)
Accumulated Amortization of discounts and debt issuance costs   95,689    3,814 
Reclassification from/to Bond (net)   —      (49,975)
Total Accumulated Unamortized discounts and debt issuance costs   (92,311)   (102,804)
Balances September 30 and December 31 (Carrying value)   2,427,294    15,498,586 

 

 21 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

10. BONDS – CONTINUED

 

During the year 2016 an amount of $15,192,404 (CHF 15.2 million) was subscribed into this CHF Bond III with loans from related parties. Since the new debt was not significantly different from the old debt and did not include a conversion feature deemed substantive, the exchange was not treated as an extinguishment of debt. In the third quarter 2017, $ 15,375,505 (CHF 14.8 million) was transferred from this CHF Bond III to loans from related parties. The exchange was treated as an extinguishment of debt with a corresponding expense $106,762.

 

As per date of this report, the Company has realized a cumulative amount of $3.60 million (CHF 3.51 million) related to the CHF Bond III original. The difference between the carrying value as of September 30, 2017 and the value as of date of this report is due to a transfer from Convertible CHF Bond I.

 

Within the abovementioned facility, the Company initiated a new parallel offering of senior unsecured CHF bonds on September 21, 2016. An amount of $979,510 of which was reclassified from EUR Bond II.

 

Within the CHF Bond III, the Company initiated a new parallel offering of senior unsecured CHF bonds on September 21, 2016.

 

CHF BOND III parallel  CHF Bond III 2017  CHF Bond III 2016
   $  $
Balances January 1   961,595    —   
Cash inflows   —      —   
Cash outflows   —      —   
Foreign currency adjustments   43,674    (17,915)
Reclassification from / to Bond (net)   43,015    979,510 
Sub-total   1,048,284    961,595 
Discounts (commissions paid to bondholders) and debt issuance costs   (79,289)   (79,289)
Accumulated Amortization of discounts and debt issuance costs   15,959    4,001 
Reclassification from / to Bond (net)   —      —   
Total Accumulated Unamortized discounts and debt issuance costs   (63,330)   (75,288)
Balances September 30 and December 31 (Carrying value)   984,954    886,307 

 

As per date of this report, the Company has realized a cumulative amount of $0.98 million (CHF 0.96 million) related to the CHF Bond III parallel.

 

 22 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

10. BONDS – CONTINUED

 

As of March 6, 2017 the Company has approved issuance of a new bond with the following conditions.

 

Description  CHF Bond IV
Issuer:  SunVesta Holding AG
Type of securities:  Senior bonds
Approval by SunVesta AG BOD:  March 6, 2017
Volume:  Up to CHF 50,000,000
Denomination:  CHF 1,000
Offering period:  May 1st – November 1st, 2017
Maturity date:  August 15, 2022
Issue price:  100%
Redemption price:  100%
Issuance date:  May 1, 2017
Coupon:  6.50 % p.a.
Interest due dates:  May 1st  of each year, the first
time May 1st, 2018
Applicable law:  Swiss

 

CHF BOND IV  CHF Bond IV 2017
   $
Balances January 1   —   
Cash inflows   1,405,881 
Foreign currency adjustments   415,791 
Reclassification from / to Bond (net)   26,138,355 
Sub-total   27,960,026 
Discounts (commissions paid to bondholders) and debt issuance costs   (1,388,875)
Accumulated Amortization of discounts and debt issuance costs   104,142 
Reclassification from / to Bond (net)   —   
Total Accumulated Unamortized discounts and debt issuance costs   (1,284,733)
Balances September 30 (Carrying value)   26,675,293 

 

In 2017, $26,138,355 were transferred from CHF Bond III original.

 

As per date of this report, the Company has realized a cumulative amount of $26.77 million (CHF 26.08 million) related to the CHF Bond IV. The difference between the carrying value as of September 30, 2017 and the value as of date of this report is due to a transfer of $0.10 million (CHF 0.10 million) from Convertible CHF Bond I.

 

 23 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

11. 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:

 

Pension expense 

Three months ended

September 30, 2017

 

Nine months ended

September 30, 2017

 

Three months ended

September 30, 2016

 

Nine months

ended

September 30, 2016

   $    $    $    $ 
Current service cost   14,055    42,166    15,357    46,070 
Net actuarial (gain) loss recognized   —      —      —      —   
Interest cost   577    1,732    945    2,836 
Expected return on assets   (1,431)   (4,292)   (1,916)   (5,749)
Employee contributions   (5,020)   (15,059)   (5,877)   (17,631)
Net periodic pension cost   8,182    24,546    8,509    25,526 

 

During the three month, periods ended September 30, 2017 and September 30, 2016, the Company made cash contributions of $5,020 and $15,534, respectively, to its defined benefit pension plan.

 

All of the assets are held under a collective contract by the plan’s re-insurance company and are invested in a mix of Swiss and international fixed-income and equity securities within the limits set out by the Swiss pension law.

 

The remaining expected future cash flows to be paid by the Company in respect to employer contributions to the pension plan for the year ended December 31, 2017, are $10,039.

 

 24 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

12. STOCK COMPENSATION

 

The Company has included share based compensation under the SunVesta Inc. Stock Option Plan 2013 (“Plan”) as part of the total remuneration in certain employment and Board of Director’s contracts. The Company is authorized to grant up to 50,000,000 stock options under the Plan to acquire shares of its common stock.

 

The purpose of the Plan is to advance the interests of the Company by encouraging its employees to remain associated with the Company and to assist it in building value.

 

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 3,500,000 common shares to Dr. Hans Rigendinger, valued at $0.08 an amount equal to the share price and fair value of the shares on the grant date in connection with his employment agreement with the Company. His employment agreement obligates the Company to issue 2,500,000 common shares as a retention award on each anniversary of the employment agreement. The employment agreement has an initial term of three years with the option to extend for an additional two years. Dr. Rigendinger’s employment agreement was renewed on January 1, 2016. Therefore, the Company may issue up to 12,500,000 common shares, of which 10,000,000 have been earned, through January 1, 2018.

 

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 an amount equal to the share price and fair value of the shares on the grant date in connection with his appointment to the Board of Directors.

 

Share Grants – Mr. Josef Mettler

 

On July 4, 2013, the Company granted 5,000,000 common shares to Josef Mettler, valued at $0.07, an amount equal to the share price and fair value of the shares on the grant date, in connection with his employment agreement with the Company. His employment agreement obligated the Company to issue 3,000,000 common shares as a retention award on each anniversary of the employment agreement. The employment agreement had an initial term of three years with the option to extend for two additional two-year periods. Mr. Mettler’s employment agreement was renewed on July 4, 2016. Therefore, in total the Company could have issued up to 21,000,000 common shares, of which 9,000,000 were earned prior to his death, through December 31, 2020.

 

Josef Mettler died during the third quarter of 2016. Subsequently, the necessary accrual up until his death was reversed as of September 30, 2016.

 

Share Grants – Mr. José María Figueres

 

On March 10, 2014, the Company granted 500,000 common shares to José María Figueres, valued at $0.10, an amount equal to the share price and therefore the fair value on grant date, in connection with his appointment to the Board of Directors. His appointment obligates the Company to issue 200,000 common shares for each fully completed year of service.

 

 25 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

12. STOCK COMPENSATION – CONTINUED

 

Share Grants –Howard Glicken

 

On March 10, 2014, the Company granted 500,000 common shares to Howard Glicken, valued at $0.10, an amount equal to the share price and therefore the fair value on grant date, in connection with his appointment to the Board of Directors. His appointment obligates the Company to issue 200,000 common shares for each fully completed year of service.

 

Share Grants – Third party

 

On November 1, 2016, the Company granted 10,000,000 common shares to a non-related individual, valued at a total of $240,947 (CHF 240,000) the fair value on grant date, in connection with his consulting services for the Company. His appointment obligated the Company to issue 1,666,667 common shares for each fully completed month of service. From November 1, 2016 to April 30, 2017, the individual earned a total of 10,000,000 shares, creating an expense for the Company in the amount of $240,947. In the second quarter of 2017, it was agreed with the third party to replace the granted shares with a cash compensation $240,947 (CHF 240,000).

 

Share Grants – Summary

 

Based on these contracts, the Company has included the following stock-based compensation in the Company’s results:

 

Stock-based compensation (shares) Three and nine months
ended September 30, 2017
Three and nine months
ended September 30, 2016
Shares granted 57,200,000 shares 46,800,000 shares
   Fair Value respectively  market price on grant date $0.0659 $0.0737 
   Total maximal expenses (2013-2020) $3,770,947 $3,450,000 
   Shares vested 32,700,000 shares 29,800,000 shares 
   Shares forfeited 22,000,000 shares 12,000,000 shares 
   Unvested shares 2,500,000 shares 17,000,000 shares 

 

Of the granted shares, 12,000,000 were forfeited due to the death of Josef Mettler during the third quarter 2016. In the second quarter 2017, 10,000,000 were forfeited when replaced by cash compensation.

 

As of September 30, 2017, the Company expects to record compensation expense in the future up to $50,000 as follows:

 

      Year ending December 31,
Stock-based compensation (shares)  Through December 31, 2017
$
  2018
$
  2019
$
 

2020

$

Unrecognized compensation expense   50,000    —      —      —   

  

Stock Options – Dr. Hans Rigendinger

 

The Company granted 10,000,000 stock options to Dr. Hans Rigendinger on January 1, 2013, in connection with his employment contract. Each option entitles Dr. Rigendinger to buy one Company share at an exercise price of $0.05. These options vest in two identical installments (Installment A and Installment B) of 5,000,000.

 

 26 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

12. STOCK COMPENSATION – CONTINUED

 

Stock Options – Dr. Hans Rigendinger - continued

 

Installment A vesting was contingent on realizing a financing arrangement with a specific counterparty. 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 would 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 that removed the requirement for financing with a specific counterparty and updated for any counterparty. As of the date of the revised stock option agreement, the fair value was $246,000. Since the modification changed the expectation that the options would 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 recalculated expected remaining vesting period.

 

Installment B vesting is contingent on Meliá Hotels International (“Melía”) assuming management responsibilities for the Paradisus Papagayo Bay Resort & Luxury Villas. As of the grant date, the fair value was $340,000 and the Company 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 would be met to be 100%, but the date on which the performance condition would have to be achieved was postponed to the fourth quarter 2015, in line with the expected opening date.

 

As of the date of this report, the estimated opening date has been postponed further to a date after the fourth quarter 2018, being the required date of the performance condition. The Company still assesses the probability that this performance condition will be met at 100%. Hence, the remaining fair value of the award has been expensed on a straight-line basis over the recalculated expected remaining vesting period.

 

Stock Options – Dr. Max Rӧssler

 


The Company granted 10,000,000 stock options to Dr. Max Rӧssler on July 3, 2013, in connection with his appointment to the Board of Directors. Each option entitles Dr. Rӧssler to buy one Company share at an exercise price of $0.05. These options vest in two identical installments (Installment A and Installment B) of 5,000,000 options.

 

Installment A vesting is contingent on realizing a financing arrangement to complete the development of the Paradisus Papagayo Bay Resort & Luxury Villas. As of the grant date, the fair value was $249,835. The Company has expensed the total fair value of the award on a straight-line basis over the expected vesting period.

 

Installment B vesting is contingent on Meliá assuming management responsibilities for the Paradisus Papagayo Bay Resort & Luxury Villas. As of the grant date the fair value was $258,210 and the Company 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 would be met to be 100%, but the date on which the performance condition would have to be achieved was postponed to the fourth quarter 2015, in line with the expected opening date.

 

As of the date of this report, the estimated opening date has been postponed further to a date after the fourth quarter 2018, being the required date of the performance condition. The Company still assesses the probability that this performance condition will be met at 100%. Hence, the remaining fair value of the award has been expensed on a straight-line basis over the recalculated expected remaining vesting period.

 

 27 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

12. STOCK COMPENSATION – CONTINUED

 

Stock Options – Mr. Josef Mettler

 

The Company granted several installments of stock options in connection with his employment contract.

 

Due to his passing away during the third quarter 2016, the probability that any of the corresponding performance conditions will be met is 0%. Therefore, all previously recognized expenses in the amount of $561,064, corresponding to options that had not yet vested, were reversed as of September 30, 2016.

 

Stock Options – Summary

 

A summary of stock options outstanding as per September 30, 2017 is as follows:

 

Options outstanding  Number of Options  Weighted average exercise price  Weighted average remaining contractual life
Outstanding January 1, 2017   20,000,000   $0.05    6.38 years 
Granted   —             
Exercised   —             
Forfeited or expired   —             
Outstanding September 30, 2017   20,000,000   $0.05    5.63 years 
Exercisable September 30, 2017   —             

 

The following table depicts the Company’s non-vested options as of September 30, 2017 and changes during the period:

 

Non-vested options  Shares under Options  Weighted average grant date fair value
Non-vested at January 1, 2017   20,000,000   $0.075 
Non-vested-granted   —      —   
Vested   —      —   
Non-vested, forfeited or cancelled   —      —   
Non-vested at September 30, 2017   20,000,000   $0.075 

 

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 September 30, 2017 and September 30, 2016.

 

Assumption   

September 30,

2017

    

September 30,

2016

 
Dividend yield   n.a    n.a 
Risk-free interest rate used (average)   n.a    n.a 
Expected market price volatility   n.a    n.a 
Average expected life of stock options   n.a    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.

 

 28 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

12. STOCK COMPENSATION – CONTINUED

 

As of September 30, 2017, the Company had unrecognized compensation expenses related to stock options currently outstanding, to be recognized in future quarters or years, respectively as follows:

 

Stock-based compensation (options)  Through December 31, 2017
$
  Year ending December 31, 2018
$
Unrecognized compensation expense   10,241    30,723 

  

13. SUMMARY OF SHARE AND OPTION COMPENSATION EXPENSE

 

The Company recorded the following amounts related to stock based compensation expense during the periods ended September 30, 2017 and September 30, 2016, respectively:

 

Summary of share and option based compensation expense 

Three months ended September 30, 2017

$

 

Three months ended September 30, 2016

$

 

Nine months ended September 30, 2017

$

 

Nine months ended September 30, 2016

$

Share grants (see Note 12 for details)   50,000    60,000    163,318    285,000 
Option grants (see Note 12 for details)   10,241    (550,823)   30,723    (520,153)
Total
(recorded under general & administrative expense)
   60,241    (490,823)   194,041    (235,153)

 

 

 

14. 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. This contract was extended to December 31, 2018 in the third quarter 2017.

 

Future lease commitments 

September 30, 2017

$

 2017    162,500 

 

15. NOTE PAYABLE

 

   September 30, 2017  December 31, 2016
    $    $ 
Promissory note   0    1,500,000 
Total   0    1,500,000 

 

On September 19, 2016, the Company signed an agreement with the counterparty, which stipulated payment terms of four quarterly installments of $500,000 each starting on November 21, 2016. The last tranch was repaid in the 3rd quarter 2017.

 

 29 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

16. OPENING DATE “Paradisus Papagayo Bay Resort & Luxury Villas”

 

On April 27, 2016, the Company amended its agreement with Meliá (“Seventh addendum to the management agreement of March 8, 2011”) to postpone the opening date as follows:

 

a.New completion date: September 15, 2018 (subject to force majeure)

 

b.Should the completion not occur by September 15, 2018 and should the parties not have agreed in writing an extension to such date, after September 15, 2018, the Company will be obligated to pay Melía a daily amount of $2,000 as liquidated damages.

 

c.Should the completion not occur by November 15, 2018, Meliá will be entitled to terminate the agreement and $5,000,000 in liquidated damages unless the parties agree in writing to extend the completion date.

 

The dates stipulated above are no longer likely to be realized. Consequently, it will be necessary to enter into an 8th Addendum with Meliá. The Company is confident that it will be able to achieve this objective in due course.

 

17. 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.

 

Earnings per share 

Three-month period ended

September 30, 2017

  Three-month period ended September 30, 2016  Nine-month period ended September 30, 2017  Nine-month period ended September 30, 2016
Company posted   Net loss    Net loss    Net loss    Net loss 
Basic weighted average shares outstanding   104,741,603    101,740,479    105,905,770    99,707,537 
Dilutive effect of common stock equivalents   None    None    None    None 
Dilutive weighted average shares outstanding   104,741,603    101,740,479    105,905,770    99,707,537 

 

A total of 2,900,000 common shares have vested, that had not been issued, as of the balance sheet date are included in the basic weighted average of shares outstanding.

 

 30 

 

 

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

 

17. EARNINGS PER SHARE - CONTINUED

 

The following table shows the number of stock equivalents of SunVesta Inc. that were excluded from the computation of diluted earnings per share for the respective period because the effect would have been anti-dilutive.

 

Earnings per share 

Three-month period ended

September 30, 2017

 

Three-month period ended

September 30, 2016

 

Nine-month period ended

September 30, 2017

 

Nine-month period ended

September 30, 2016

Options to Hans Rigendinger   10,000,000    10,000,000    10,000,000    10,000,000 
Options to Dr. M. Rössler   10,000,000    10,000,000    10,000,000    10,000,000 
Options to Josef Mettler                  12,000,000 
Total Options   20,000,000    20,000,000    20,000,000    32,000,000 
                     
Shares to Hans Rigendinger
(retention bonus – non vested)
   2,500,000    5,000,000    2,500,000    5,000,000 
Shares to Josef Mettler’s estate (retention award)   0    0    0    15,000,000 
Shares to Howard Glicken and José Maria Figueres (retention award)   400,000    400,000    400,000    400,000 
Total Shares   2,900,000    5,400,000    2,900,000    20,400,000 
                     
Total Options and Shares   22,900,000    25,400,000    22,900,000    52,400,000 

 

Options related to Convertible CHF bonds: Each bond in the principal amount of CHF 5,000 can be converted on any business day during the conversion period into 625 common shares of SunVesta Holding AG at a conversion price equal to CHF 8.

 

A number of 1,498,928 stock equivalents of SunVesta Holding AG associated with the Convertible CHF Bond were excluded from the computation of diluted earnings per share for the nine-month period ended September 30, 2017, because the effect would have been anti-dilutive (4,259,465 for the nine-month period ended September 30, 2016).

 

18. GENERAL AND ADMINISTRATIVE EXPENSES

 

General and administrative expenses according to the consolidated statement of comprehensive loss include:

 

   Three-month period ended September 30, 2017  Three-month period ended September 30, 2016  Nine-month period ended September 30, 2017  Nine-month period ended September 30, 2016
    $    $    $    $ 
Rental & related expenses   35,192    49,032    111,305    153,817 
Audit   2,800    63,698    152,406    251,338 
Consulting   1,206,332    1,022,910    2,385,665    1,984,715 
Marketing, Investor & public relations   12,770    36,055    41,011    77,364 
Travel expenses   97,451    66,053    403,957    262,966 
Personnel costs including social security’s costs and share based remuneration   282,557    (219,192)   796,525    686,963 
Office expenses   —      —      203    —   
Various other operating expenditures   103,242    53,270    362,527    581,397 
Total according statement of comprehensive loss  $1,740,343    1,071,827    4,253,599    3,998,562 

 

 

19. 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 are no events that warrant disclosure or recognition in the financial statements.

 

 31 

 

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 nine-month periods ended September 30, 2017 and September 30, 2016. Our fiscal year end is December 31.

Discussion and Analysis

Business Overview

We are in the business of developing high-end luxury hotels and resorts in countries that are emerging as popular tourist destinations. Our intention is to develop luxury hotel products located in countries such as Costa Rica that are emerging as popular tourist destinations. Our first hospitality development, to be constructed on 20.5 hectares of prime land located in Guanacaste Province, Costa Rica is the Paradisus Papagayo Bay Resort & Luxury Villas, a five-star luxury hotel. 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 during the fourth quarter of 2017, while the opening of the Paradisus Papagayo Bay Resort & Luxury Villas is scheduled not before the fourth quarter 2018. The estimated commencement of construction and opening dates are subject to securing sufficient capital commitments to complete the development.

 

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



 32 

 

 

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.

 

 33 

 

 

Management

 

Overall project development is led by Dr. Hans Rigendinger, our Chairman of the Board and Chief Executive Officer, Charles Fessel, Project Director Paradisus Papagayo Bay Resort & Luxury Villas, Cyrill Escher, Chief Funding Officer 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 Laboratorio Quattro.

 

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. Melía 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 has been delayed to the fourth quarter of 2018, the Company reached an agreement dated April 28, 2016, to amend the original agreement with Meliá dated March 8, 2011. The current agreement stipulates the following major conditions:

 

a.New completion date: September 15, 2018 (subject to force majeure)
b.Should the completion not occur by September 15, 2018 and should the parties not have agreed in writing to an extension to such date, after September 15, 2018, the Company will be required to pay Melía a daily amount of $2,000 as liquidate d damages.
c.Should the completion not occur by November 15, 2018, and should the parties to the management agreement not agree to an e xtension, the Company will be obligated to pay Meliá $5,000,000 as liquidated damages.

 

Since the dates stipulated in the most recent agreement with Melía are unlikely to be realized the Company understands that.it will be necessary to draft and sign an 8th Addendum with Melia. The Company is confident that it will be able to achieve this objective in due course.

 

Additional Concession Properties

 

On April 24, 2013, the Company entered into new agreements for the purchase of two additional concession properties located in Polo Papagayo, Guanacastefor a total of $17,500,000. The terms of the agreements included amounts payable to the seller and a third party against a refundable deposit of $1,369,816 minus a non-refundable amount of $300,000 and a liqudated damages penalty of 5% in the event the purchase did not close. The Company failed to perform according to the terms of the purchase agreements and the transaction was terminated by the third party and thereafter by the Company.

 

Finance

 

The anticipated completion of the Paradisus Papagayo Bay Resort & Luxury Villas will require a net investment of approximately $217 million (excluding non-recuperated overhead expenses), of which approximately $73 million has been expended as of September 30, 2017. We aim to realize a minimum of $140 million in new funding over the next six months. New funding over the next six months is expected to be raised from debt financing through bonds, 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.

 

 34 

 

 

Bonds

 

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

 

Swiss Francs (CHF) Convertible Bonds

 

The Company initiated an offering of senior unsecured CHF bonds on October 1, 2015, of up to CHF 15,000,000 in units of CHF 5,000 that bear interest at 6.00% per annum payable each September 30, over a three-year term that matures on September 30, 2018, which are convertible into shares of SunVesta Holding AG at CHF 8.00. We had realized $3,816,061 as of September 30, 2017 and $3,648,383 as of December 31, 2016 in connection with this offering.

 

The Company initiated a parallel offering of senior unsecured CHF bonds on October 1, 2015, of up to CHF 45,000,000 in units of CHF 5,000 that bear interest at 6.00% per annum payable each September 30, over a three-year term that matures on September 30, 2018, which are convertible into shares of SunVesta Holding AG at CHF 8.00. We had realized $9,050,313 as of September 30, 2017 and $36,770,369 as of December 31, 2016, in connection with this offering. Included in these amounts was approximately $6.2 million (CHF 6.32 million) that by agreement with certain bondholders deviated from the standard terms to provide for repayment by February 28, 2017.

 

Swiss Francs (CHF) Bonds

 

The Company initiated a new offering of senior unsecured CHF bonds on September 21, 2016, of up to CHF 20,000,000 in units of CHF 5,000 that bear interest at 6.50% per annum payable each August 15, over a four-year term that matures on August 15, 2020. We had realized $2,519,605 as of September 30, 2017 and $15,601,389 as of December 31, 2016.

 

The Company initiated a new parallel offering of senior unsecured CHF bonds on September 21, 2016, of up to CHF 20,000,000 in units of CHF 5,000 that bear interest at 6.50% per annum payable each August 16, over a four-year term that matures on August 15, 2020. We had realized $1,048,284 of September 30, 2017 and $961,595 as of December 31, 2016.

 

The Company initiated a new parallel offering of senior unsecured CHF bonds on March 6, 2017, of up to CHF 50,000,000 in units of CHF 1,000 that bear interest at 6.50% per annum payable each May 1, over a five-year term that matures on August 15, 2022. We had realized $27,960,026 of September 30, 2017.

 

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 credit line was amended and then replaced by a new loan agreement on December 31, 2016, that includes 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, 2020 and before December 31, 2022.
After December 31, 2020, Aires has the option to cancel the loan agreement with a prior notice period of 90 days, requiring repayment of the loans in full.
SunVesta AG has the right to repay the loan at any time with a prior notice period of 90 days.
Loan amounts outstanding including any additional amounts and additions are subordinated.
Interest on the loan amounts is 7.25% per annum, which is accrued to the loan account.  

 

The Company had borrowed $56,684,218 from Aires as of September 30, 2017 and $51,473,793 as of December 31, 2016.

 

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Loan Global Care AG

 

In 2017, Global Care AG, a company owned by Dr. Rӧssler (a director of the Company), provided $36,469,014 to the Company at 7.25% interest, repayable not before December 31, 2020.

 

Promissory Note Blue Dot SA (formerly DIA S.A)

 

On March 8, 2013, the Company entered into an interest free loan agreement with Blue Dot SA (formerly DIA SA) (“Blue Dot”) in connection with the purchase of the land concession for the Paradisus Papagayo Bay Resort & Luxury Villas project.

 

On September 21, 2016, the Company signed a new agreement, which stipulated that the total amount of $2,000,000 was repayable in four quarterly installments of $500,000 each, starting on November 21, 2016.

 

The Promissory Note to Blue Dot was fully paid as of September 30, 2017. As of December 31, 2016, the outstanding amount was $1,500,000.

Results of Operations

During the nine-month period ended September 30, 2017, 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; and (iii) pursuing additional debt financing to fund the construction of the project.

 

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

 

The variance in losses over the comparative nine- month periods is reconciled:

 

Three months July 1 to September 30 2016   (3,371,991)   
Variances during the 3 months        
Increase in general and administrative expenses   (668,516)  Increase in consulting expenses over the previous year
Increase  in interest income   14,326   Immaterial
Increase  in interest expenses   (89,871)  Increase in overall debt obligations.
Change in fair values of conversion features   (368,915)  Decrease in gain due to lower volume change in conversion feature in 2017
Loss on extinguishment of debt   (106,762)  Negative impact from debt extinguishment in 2017
Increase in foreign exchange exchange gains   2,030,920   Currency fluctuations
Increase in other income/(expenses)   (7,747)  Immaterial
Income Taxes   (1,305)  Immaterial
Increase in foreign currency translation gains   1,359,710   Currency fluctuations
Total variances   2,161,842    
Three months July to September 2017   (1,210,149)   

 

 

We did not generate revenue during this period and we expect to continue to incur losses through the year ended December 31, 2017.

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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 September 30, 2017, in connection with the purchase of land concessions in Costa Rica, as well as the planning and construction of the project 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 September 30, 2017 and December 31, 2016, the following were working capital items:

 

   September 30, 2017  December 31, 2016
Current assets      
Cash and cash equivalents   4,553,872    806,440 
Receivable from related parties   —      49,292 
Other assets   737,459    456,099 
Total current assets   5,291,330    1,311,830 
Current liabilities          
Accounts payable   2,312,044    3,311,512 
Accrued expenses   3,453,700    3,160,723 
Notes payable   —      1,500,000 
Notes payable to related parties   —      307,088 
Bonds   12,711,869    6,687,384 
Liability related to conversion feature   1,334,210    —   
Other liabilities   26,013    120 
Total current liabilities   19,837,837    14,966,826 
Net working capital   (14,546,506)   (13,654,996)

 

As of September 30, 2017, and December 31, 2016, the following were the items making up the total stockholders, deficit:

 

   September 30, 2017  December 31, 2016
Assets      
Current assets   5,291,330    1,311,830 
Non-current assets   75,793,413    68,354,502 
Total assets   81,084,743    69,666,332 
Liabilities          
Current liabilities   19,837,837    14,966,825 
Non-current liabilities   123,433,720    105,872,146 
Total liabilities   143,271,556    120,838,971 
Total stockholders’ deficit   (62,186,813)   (51,172,639)

 

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The Company’s negative net working capital of $14,546,506 is a concern going forward. However, based on the guaranty signed by certain principals, the Company believes that it can address liquidity problems.

 

Net cash flow used in operating activities for the nine-month period ended September 30, 2017, was $8,447,232, as compared to $6,053,988 for the nine-month period ended September 30, 2016.

 

We expect 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 fourth quarter of 2018.

 

Net cash used in investing activities for the nine-month period ended September 30, 2017, was $3,612,539 as compared to $1,480,178 for the nine-month period ended September 30, 2016. Net cash used in investing activities in the current nine-month period is comprised of the purchase of property and equipment, offset by the sale of equipment. Net cash used in investing activities in the prior comparable nine-month period was comprised of the purchase of property and equipment, and deposits related to construction, offset by receivables from related parties and restricted cash.

 

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 nine-month period ended September 30, 2017, was $15,789,566 as compared to $10,382,963 for the nine-month period ended September 30, 2016. Net cash provided by financing activities in the current nine-month period is comprised of proceeds from notes payable to related parties, proceeds from bond issuances net of commissions, and proceeds from other debt, offset by repayments of bonds and other debt. Net cash provided by financing activities in the prior comparable nine-month period was comprised of proceeds from notes payable related parties, and proceeds from bond issuances net of commissions, offset by the decrease in bank liabilities and the repayment of other debt.

 

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, current bond offerings 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 formal lines of credit or other bank financing arrangements as of September 30, 2017.

 

We have commitments that include an award letter issued in favor of certain general contractors together with purchase orders and related agreements for $130 million as of September 30, 2017, in connection with the development of the Paradisus Papagayo Bay Resort & Luxury Villas, which commitments are included in the required estimated net financing of $217 million to complete the project.

 

We maintain a defined benefit plan that covers all of our Swiss employees.

 

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 September 30, 2017.

 

Off-Balance Sheet Arrangements

 

As of September 30, 2017, 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.

 

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Going Concern

 

The Company is currently working on building a resort in the Papagayo Gulf Tourism Project area of Guanacaste, Costa Rica. The project is not expected to open before the end of 2018. Until the completion of the project, the following expenditures are estimated to be incurred:

 

a.  Gross project cost  $242,000,000 
b.  Less: Proceeds from sale of villas   (25,000,000)
c.  Net project cost   217,000,000 
d.  Overhead expenses   20,000,000 
e.  Total, excluding other potential projects  $237,000,000 

 

Seventy percent of the net project cost is intended to be financed through the issuance of secured bonds, for which negotiations are in progress. The remaining thirty percent 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, i.e Dr. Hans Rigendinger, shareholder, Company Director and Chief Executive Officer, Dr. Max Rӧssler, controlling shareholder of Aires International Investment Inc. and Global Care AG as well as Company Director.

 

On July 16, 2012, certain principal shareholders of the Company or principal lenders to the project entered into a Guaranty Agreement in favor of the Company. The purpose of the guaranty is to ensure that until financing is secured for the entire project that signatores will act as guarantors to creditors of SunVesta Holding AG to the extent of the project’s ongoing capital requirements.

 

On October 28, 2016, Dr. Hans Rigendinger and Dr. Max Rössler formally agreed to maintain the guaranty, as necessary, until completion of the construction of Paradisus Papagayo Bay Resort & Luxury Villas, after which date the guaranty will expire.

 

The Guaranty Agreement requires that within 30 days of receiving a demand notice, requested funds are made available by the guarantors to the Company. Based on this guaranty, management believes that available funds are sufficient to finance cash flows for the twelve months subsequent to September 30, 2017 and the filing date.

 

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 complete the Paradisus Papagayo Bay Resort
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.

 

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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 current 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 not effective 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 September 30, 2017, 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.

 

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PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

The Company initiated legal proceedings against Meridian IBG, Inc. (“Meridian”) on April 21, 2017, in the Hennepin County District Court, Fourth Judicial District. The claim was based on Meridian’s alleged failure to perform according to the terms of a purchase and sale agreement dated April 24, 2013, pursuant to which Meridian was to return deposits in the amount of $1,669,701 paid against the purchase of certain properties in Guanacaste, Costa Rica on providing notice of cancellation minus 5% in liquidated damages. The Company sought return of the deposits, interest on the deposits and expenses accrued in pursuing its claim. Meridian did not respond to the Companys complaint and filed a motion to dismiss. On September 12, 2017, the court granted Meridian’s motion, without prejudice, on the grounds that Minnesota state courts were not an appropriate venue for the ligitation. The Company is assessing whether to file a new complaint against Meridian in a different venue.

 

ITEM 1A. RISK FACTORS

 

Not required of smaller reporting companies.

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

 

On August 23, 2017, the Company authorized the issuance of 2,900,000 shares of restricted common stock valued at $0.07 a share to certain individuals, earned in connection with either an employment agreement or service to the board of directors, in reliance on the exemptions from registration provided by Section 4(2) and Regulation S of the Securities Act of 1933, as amended (“Securities Act”) as follows:

 

Name  Shares  Consideration  Value  Exemption
Hans Rigendinger   2,500,000   Employment Agreement  $0..07   Section 4(2)/Reg S
José Maria Figueres   200,000   BOD Services  $0..07   Section 4(2) Reg S
Howard Glicken   200,000   BOD Services  $0..07   Section 4(2)

 

The Company complied with the exemption requirements of Section 4(2) of the Securities Act based on the following factors: (1) the issuances were isolated private transactions that did not involve a public offering; (2) the offerees had access to the kind of information which registration would disclose; (3) the offerees were financially sophisticated; and (4) all of the offerees serve the Company as either officers, directors or both. The Company also complied with the exemption requirements of Regulation S, where applicable, with no offering efforts in the United States, offering securities only to offerees who were outside the United States, and ensuring that the offerees to whom the securities were offered were non-U.S. offerees with addresses in foreign countries. The shares were issued to the respective offerres subsequent to period end.

 

ITEM 3. DEFAULTS ON SENIOR SECURITIES

 

None

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None

 

ITEM 6. EXHIBITS

 

Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page 44 of this Form 10-Q, and are incorporated herein by this reference.

 

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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: November 13, 2017   /s/ Hans Rigendinger
    Hans Rigdendinger
    Chief Executive Officer, Chief Financial Officer
    Principal Accounting Officer and Director

 

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INDEX TO EXHIBITS

 

ExhibitDescription
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, Jthe late osef 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 the late 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. (incorporated by reference to the Form 10-Q filed with the Commission on August 19, 2015).
10.13*Addendum to Employment Agreement dated March 6, 2015, between the Company and the late Josef Mettler (incorporated by reference to the Form 10-Q filed with the Commission on May 5, 2015).
14*Code of Business Conduct and Ethics adopted on July 16, 2015 (incorporated by reference to the Form 10-Q filed with the Commission on August 19, 2015).

21*Subsidiaries of the Company (incorporated by reference from the Form 10-K filed with the Commission on March 17, 2017).
31Certification 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.
32Certification 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.INSXBRL Instance Document
101.PREXBRL Taxonomy Extension Presentation Linkbase
101.LABXBRL Taxonomy Extension Label Linkbase
101.DEFXBRL Taxonomy Extension Label Linkbase
101.CALXBRL Taxonomy Extension Label Linkbase
101.SCHXBRL 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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