Attached files
| file | filename |
|---|---|
| EXCEL - IDEA: XBRL DOCUMENT - ROI LAND INVESTMENTS LTD | Financial_Report.xls |
| EX-31.1 - CERTIFICATION - ROI LAND INVESTMENTS LTD | roi_10q-3101.htm |
| EX-31.2 - CERTIFICATION - ROI LAND INVESTMENTS LTD | roi_10q-3102.htm |
| EX-32.2 - CERTIFICATION - ROI LAND INVESTMENTS LTD | roi_10q-3202.htm |
| EX-32.1 - CERTIFICATION - ROI LAND INVESTMENTS LTD | roi_10q-3201.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2014
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______.
Commission File Number: 333-171892
ROI LAND INVESTMENTS LTD.
(Exact name of registrant as specified in its charter)
| Nevada | 26-1574051 | ||
|
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) | ||
|
825 Lebourgneuf Blvd., Suite 315 Quebec, Quebec |
G2J 0B9 | ||
| (Address of principal executive offices) | (Zip Code) |
(418) 780-3982
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:
| Large accelerated filer o | Accelerated filer o |
| Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of November 13, 2014, the registrant had 20,141,340 shares of its Common Stock, $0.0001 par value, outstanding.
ROI LAND INVESTMENTS LTD.
FORM 10-Q
SEPTEMBER 30, 2014
TABLE OF CONTENTS
| PART I – FINANCIAL INFORMATION | 3 | |
| Item 1. | Financial Statements | 3 |
| Consolidated Balance Sheets as of September 30, 2014 (unaudited) and December 31, 2013 | 3 | |
| Consolidated Statements of Operations for the Three and Nine months Ended September 30, 2014 and 2013 (unaudited) | 4 | |
| Consolidated Statements of Cash Flows for the Nine months Ended September 30, 2014 and 2013 (unaudited) | 5 | |
| Notes to Consolidated Financial Statements (unaudited) | 6 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 11 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 15 |
| Item 4. | Controls and Procedures | 15 |
| PART II – OTHER INFORMATION | 15 | |
| Item 1. | Legal Proceedings | 15 |
| Item 1A. | Risk Factors | 15 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 15 |
| Item 3. | Defaults Upon Senior Securities | 15 |
| Item 4. | Mine Safety Disclosures | 15 |
| Item 5. | Other Information | 16 |
| Item 6. | Exhibits | 16 |
| SIGNATURES | 17 | |
| 2 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
ROI Land Investments Ltd.
Consolidated Balance Sheets
| September 30, | December 31, | |||||||||||
| 2014 | 2013 | |||||||||||
| (unaudited) | ||||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash | $ | 3,299,200 | $ | – | ||||||||
| Accounts receivable | 307,222 | – | ||||||||||
| Prepaid expenses and other current assets | 1,643,293 | – | ||||||||||
| Total current assets | 5,249,715 | – | ||||||||||
| Other assets: | ||||||||||||
| Notes receivable | 49,291 | – | ||||||||||
| Mortgage notes receivable | 1,849,280 | – | ||||||||||
| Land held for development | 63,425 | – | ||||||||||
| Deposits on land | 1,240,976 | – | ||||||||||
| Total assets | $ | 8,452,687 | $ | – | ||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 12,393 | $ | 9,226 | ||||||||
| Due to shareholder | – | 2,800 | ||||||||||
| Total current liabilities | 12,393 | 12,026 | ||||||||||
| Other liabilities: | ||||||||||||
| Escrow deposits on convertible notes payable | 2,824,139 | – | ||||||||||
| Total liabilities | 2,836,532 | 12,026 | ||||||||||
| Commitments and contingencies | – | – | ||||||||||
| Stockholders' equity (deficit): | ||||||||||||
| Preferred stock, 50,000,000 shares authorized, par value $0.0001,no shares issued or outstanding | – | – | ||||||||||
| Common stock, 100,000,000 shares authorized, $.0001 par value, 20,141,340 and 8,475,500 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively | 2,014 | 848 | ||||||||||
| Additional paid-in capital | 4,649,243 | 109,651 | ||||||||||
| Common stock issuable | 4,149,263 | – | ||||||||||
| Accumulated other comprehensive loss | (75,841 | ) | – | |||||||||
| Accumulated deficit | (3,108,524 | ) | (122,525 | ) | ||||||||
| Total stockholders' equity (deficit) | 5,616,155 | (12,026 | ) | |||||||||
| Total liabilities and stockholders' equity (deficit) | $ | 8,452,687 | $ | – | ||||||||
See accompanying notes to financial statements.
| 3 |
ROI Land Investments Ltd.
Consolidated Statements of Operations
(unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Net revenue | $ | 106,631 | $ | – | $ | 106,631 | $ | – | ||||||||
| General and administrative expenses | 1,342,614 | 3,962 | 2,782,407 | 14,279 | ||||||||||||
| Loss from operations | (1,235,983 | ) | (3,962 | ) | (2,675,776 | ) | (14,279 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 19,456 | – | 22,474 | – | ||||||||||||
| Interest expense | – | (550 | ) | – | (1,650 | ) | ||||||||||
| Exchange gain (loss) | (29,959 | ) | – | (47,712 | ) | – | ||||||||||
| Other expense | – | – | (284,985 | ) | – | |||||||||||
| Total other income (expense) | (10,503 | ) | (550 | ) | (310,223 | ) | (1,650 | ) | ||||||||
| Loss before income taxes | (1,246,486 | ) | (4,512 | ) | (2,985,999 | ) | (15,929 | ) | ||||||||
| Provision for income taxes | – | – | – | – | ||||||||||||
| Net loss | $ | (1,246,486 | ) | $ | (4,512 | ) | $ | (2,985,999 | ) | $ | (15,929 | ) | ||||
| Net loss per share - basic and diluted | $ | (0.08 | ) | $ | (0.00 | ) | $ | (0.25 | ) | $ | (0.00 | ) | ||||
| Weighted average number of shares outstanding - Basic and Diluted | 14,996,623 | 8,475,500 | 11,986,595 | 8,475,500 | ||||||||||||
| Net loss | $ | (1,246,486 | ) | $ | (4,512 | ) | $ | (2,985,999 | ) | $ | (15,929 | ) | ||||
| Foreign currency translation loss | (97,601 | ) | – | (75,841 | ) | – | ||||||||||
| Total comprehensive loss | $ | (1,344,087 | ) | $ | (4,512 | ) | $ | (3,061,840 | ) | $ | (15,929 | ) | ||||
See accompanying notes to financial statements.
| 4 |
ROI Land Investments Ltd.
Consolidated Statements of Cash Flows
(unaudited)
| For the Nine Months Ended September 30, | ||||||||
| 2014 | 2013 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (2,985,999 | ) | $ | (15,929 | ) | ||
| Adjustments to reconcile net loss to net cash used in operations: | ||||||||
| Stock based consulting fees | 1,833,977 | – | ||||||
| Accrued interest on notes payable | – | 1,650 | ||||||
| Accrued interest on notes receivable | (22,474 | ) | – | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (114,539 | ) | – | |||||
| Prepaid expenses and other current assets | (22,346 | ) | – | |||||
| Accounts payable | 3,167 | 2,894 | ||||||
| Net cash used in operating activities | (1,308,214 | ) | (11,385 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Funding of notes receivable | (49,291 | ) | – | |||||
| Funding of mortgage notes receivable | (2,041,963 | ) | – | |||||
| Acquisition of land held for development | (63,425 | ) | – | |||||
| Deposits made on land acquisition | (1,240,976 | ) | – | |||||
| Net cash used in investing activities | (3,395,655 | ) | – | |||||
| Cash flows from financing activities: | ||||||||
| Advance from officer | – | 10,810 | ||||||
| Amounts due to shareholder, net | (2,800 | ) | – | |||||
| Proceeds from sale of convertible note subscriptions | 2,824,139 | – | ||||||
| Proceeds from sale of common stock | 1,301,894 | – | ||||||
| Proceeds from common stock subscriptions | 4,145,063 | – | ||||||
| Issuance costs | (189,386 | ) | – | |||||
| Net cash provided by financing activities | 8,078,910 | 10,810 | ||||||
| Effect of exchange rate changes on cash | (75,841 | ) | – | |||||
| Net increase (decrease) in cash | 3,299,200 | (575 | ) | |||||
| Cash at beginning of period | – | 575 | ||||||
| Cash at end of period | $ | 3,299,200 | $ | – | ||||
Continued | ||||||||
| 5 |
ROI Land Investments Ltd.
Consolidated Statements of Cash Flows (Continued)
(unaudited)
| For the Nine Months Ended September 30, | ||||||||
| 2014 | 2013 | |||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | – | $ | – | ||||
| Cash paid for taxes | $ | – | $ | – | ||||
| Supplemental disclosure of non-cash financing activities: | ||||||||
| Mortgage note sold: | ||||||||
| Notes receivable | $ | 192,683 | $ | – | ||||
| Accounts receivable | $ | (192,683 | ) | $ | – | |||
| 8,795,000 shares of common stock issued for consulting fees: | ||||||||
| Prepaid expenses and other current assets | $ | (3,078,250 | ) | $ | – | |||
| Common stock | $ | 879 | $ | – | ||||
| Additional paid in capital | $ | 3,077,371 | $ | – | ||||
| 12,000 shares of common stock issuable for consulting fees: | ||||||||
| Prepaid expenses and other current assets | $ | (4,200 | ) | $ | – | |||
| Common stock issuable | $ | 4,200 | $ | – | ||||
See accompanying notes to financial statements.
| 6 |
ROI LAND INVESTMENTS LTD.
Notes to Consolidated Financial Statements
September 30, 2014
(unaudited)
Note 1 – Organization, Presentation and Going Concern
Organization
ROI Land Investments Ltd. was incorporated in Nevada on December 13, 2007 under the name Conex MD, Inc.
As of September 17, 2013, ROI Land Investments Ltd. was a provider of specialized healthcare staffing to small and medium sized businesses. The Company had recruited healthcare professionals on assignments of varied duration and in permanent positions with clients in the United States. The services included hiring administration, information technology, sales and at the executive level.
On September 17, 2013, Lamar Investment Ltd (“Lamar”) purchased 5,000,000 shares of restricted stock of Conex MD, Inc., representing 59% of the shares in the Company from its two then-current Directors, Dr. Jacob Bar Ilan and Dr. Ely Steinberg for $230,000.00 in cash. Subsequently the shareholders of the Company voted in the two current Directors, Patrick Bragoli & Sebastien Cliche, as noted in an 8-K filed September 25, 2013. Subsequently, on May 19, 2014, Mr. Bragoli resigned as Director. Additionally, on October 28, 2013, FINRA gave final approval to the name change to ROI Land Investments Ltd and the ticker symbol to the ROII to better reflect the new direction of the Company.
ROI Land Investments Ltd now specializes in land development opportunities both in Canada as well as internationally. The Company's business model consist of acquiring attractive land free of zoning restrictions, obtaining the necessary permits, outsourcing developments of the infrastructure and profiting from the sale of the subdivided land units to large residential and commercial building developers. Our business model also consists of providing financing opportunities to qualified joint venture partners.
On November 15, 2013, the Company organized ROI DEV Canada Inc. (“ROI DEV”), a Canada Chart corporation, as a wholly-owned subsidiary. ROI DEV was organized to acquire and manage land acquisitions in Canada.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial statement presentation and in accordance with Form 10-Q. Accordingly, they do not include all of the information and footnotes required in annual financial statements. In the opinion of management, the unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position and results of operations and cash flows for the interim periods reported in this Form 10-Q. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year.
These unaudited consolidated financial statements should be read in conjunction with the 2013 audited annual financial statements included in the Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on April 14, 2014.
Going Concern
The accompanying unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred a net loss of $2,985,999 for the nine months ended September 30, 2014 and has incurred cumulative losses since inception of $3,108,524. These conditions raise substantial doubt about the ability of the Company to continue as a going concern.
The ability of the Company to continue as a going concern is dependent upon its abilities to generate revenues, to continue to raise investment capital, and develop and implement its business plan. No assurance can be given that the Company will be successful in these efforts.
The unaudited financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern. No assurance can be given that the Company will be successful in these efforts.
| 7 |
ROI LAND INVESTMENTS LTD.
Notes to Consolidated Financial Statements
September 30, 2014
(unaudited)
Note 2 – Notes Receivable
Notes Receivable
On August 20th, 2014, ROI DEV agreed to fund Coast to Coast Holdings, Inc. (“CTC”), a Canadian Construction corporation, a total of $49,291 (CAD 55,000) for an initial payment on a property development project under the Framework Agreement between the parties. On the same date, ROI DEV paid an installment of $49,291 (CAD 55,000) towards the funding and entered into a note receivable which is due on December 30, 2015 and bears interest at 8% per annum.
Mortgage Notes Receivable
On June 17, 2014, ROI DEV entered into a Framework Agreement with CTC. Under the terms of the agreement, ROI DEV will provide funding to CTC in the form of mortgage notes payable for property development projects, and provide financial and real estate advisory services, for a period of up to ten years. ROI DEV has the right to make the loan or not and each individual loan will be evidenced by its own promissory note with terms agreed on by the parties.
During the nine months ended September 30, 2014, ROI DEV funded a total of five loans totaling $2,091,254 (CAD 2,333,468). For the nine months ended September 30, 2014, the Company recognized $22,559 (CAD 24,779) of accrued interest on the loans, which is included in prepaid expenses and other current assets at September 30, 2014.
On June 14, 2014, ROI DEV agreed to fund CTC a total of $277,822 (CAD 310,000) for a property development project under the Framework Agreement between the parties. On the same date, ROI DEV paid an installment of $277,822 (CAD 310,000) towards the funding and entered into a mortgage note receivable which is due the earlier of July 15, 2016 or the date the subject property is sold by CTC and bears interest at 8% per annum and a 50 % participation to the profit (or commission on the future profit of the sale of the property). ROI DEV obtained a first mortgage lien for $277,822 (CAD 310,000).
On June 26th, 2014, ROI DEV agreed to fund CTC a total of $192,683 (CAD 215,000) for a property development project under the Framework Agreement between the parties. On the same date, ROI DEV paid an installment of $192,683 (CAD 215,000) towards the funding and entered into a mortgage note receivable which is due the earlier of July 15, 2016 or the date the subject property is sold by CTC and bears interest at 8% per annum and a 50 % participation to the profit (or commission on the future profit of the sale of the property). ROI DEV obtained a first mortgage lien totaling $192,683 (CAD 215,000). On September 1, 2014, the mortgage note, and accrued interest of $3,970 (CAD 4,430), was sold. $106,631 (CAD 117,500) of commission revenue was earned on the sale.
On August 15th, 2014, ROI DEV agreed to fund CTC a total of $878,108 (CAD 979,812) for a property development project under the Framework Agreement between the parties. On the same date, ROI DEV paid an installment of $878,108 (CAD 979,812) towards the funding and entered into a mortgage note receivable which is due the earlier of August 15, 2016 or the date the subject property is sold by CTC and bears interest at 8% per annum and a 50 % participation to the profit (or commission on the future profit of the sale of the property). ROI DEV obtained a first mortgage lien totaling $878,108 (CAD 979,812).
On September 15th, 2014, ROI DEV agreed to fund CTC a total of $693,350 (CAD 773,655) for a property development project under the Framework Agreement between the parties. On the same date, ROI DEV paid an installment of $693,350 (CAD 773,655) towards the funding and entered into a mortgage note receivable which is due the earlier of September 15, 2016 or the date the subject property is sold by CTC and bears interest at 8% per annum and a 50 % participation to the profit (or commission on the future profit of the sale of the property). ROI DEV obtained a first mortgage lien totaling $693,350 (CAD 773,655).
Note 3 – Land Held for Development
On August 1, 2014, the Company acquired a 2.15% interest in a land development project in France known as “Louisette Memories SARL” for $63,425 (EUR 50,000). The land consists of 226,000 square feet to be sub-divided into 30 residential properties. The Company is a co-investor with Rome Finance Group and Capital Evolution Group SAS.
| 8 |
ROI LAND INVESTMENTS LTD.
Notes to Consolidated Financial Statements
September 30, 2014
(unaudited)
Note 4 – Deposits on Land
On March 24, 2014, the Company’s wholly-owned subsidiary, ROI DEV, executed a Definitive Agreement for the purchase of land from 9284-0784 Québec Inc. The land consists of 1,971,000 square feet in suburban Quebec and is known as the “Beauport/Cambert Project”. Per the terms of the Agreement, the total cost of the purchase is $5,299,879 (CAD 5,913,723), of which $268,830 (CAD 300,000) was tendered upon execution as a firm initial deposit, with the remaining balance of $5,031,019 (CAD 5,613,723) to be paid on or before June 1, 2014. As the balances were not paid by June 1, 2014, the Company and 9284-0784 Quebec Inc. agreed to extend the due date and the Company paid additional deposits totaling $761,800 (CAD 850,000) and fees to extend the payment date of the transaction of $210,346 (CAD 234,709), which have been capitalized as part of the cost of the project. The Company’s former director, Patrick Bragoli, and current CEO and Chairman, Sebastien Cliche, each own 16.67% of 9284-0784 Quebec Inc.
On October 14, 2014, ROI DEV closed on the purchase of the land. The total cost of the purchase was $5,510,225 (CAD 6,148,432).
Note 5 – Convertible Notes Payable
During the nine months ended September 30, 2014, the Company initialized a convertible note offering to raise up to a total of $5,500,000. The notes will for a term of three years, bearing interest up to 10% per annum, are secured by an assignment of a First Ranking Mortgage on the Beauport property noted above, and are convertible at the option of the note holder at any time after the six month anniversary of the closing of the note at a conversion price equal to 90% of the average market price of the shares during the 30 day trading period preceding the conversion date. As of September 30, 2014, the Company received a total of $2,824,139 from the offering. This amount is being held in escrow until the offering is closed, which at that time individual note agreements will be issued to the noteholders. The offering closed on October 14, 2014 with an aggregate of $4,516,940 being raised.
Note 6 – Other Expense
During the nine months ended September 30, 2014, the Company paid $284,985 to Lamar to enable Lamar to acquire the 5,000,000 shares to effectuate the change in control. This expense has been classified as other expense.
Note 7 – Related Party Transactions
During the year ended December 31, 2013, an officer of the Company advanced $8,250 to the Company for the payment of professional fees. These amounts were forgiven in September 2013 and recorded as additional paid in capital.
During the year ended December 31, 2013, a shareholder paid approximately $7,200 of accounts payable on behalf of the Company. Such amounts were forgiven in September 2013 and recorded as additional paid in capital.
During the year ended December 31, 2013, a shareholder paid $2,800 of professional fees on behalf of the Company. The balance of $2,800 was outstanding at December 31, 2013. During the nine months ended September 30, 2014, the $2,800 was repaid to the shareholder.
During the nine months ended September 30, 2014, the Company paid $67,483 to Cliche Investments LLC for consulting services. Sebastien Cliche, a director of the Company, is the sole member of Cliche Investments LLC.
On May 14, 2014, the Company issued 1,500,000 shares to its President, Philippe Germain.
On May 16, 2014, the Company entered into an employment agreement with Sebastien Cliche, its Director and Chairman. The agreement is effective as of May 1, 2014 and expires on May 1, 2019 and is automatically renewed for an additional one year term unless the Company or Executive delivers written notice to the other party at least 60 days preceding the expiration of the initial term or any one-year extension. The employment agreement provides for compensation of $6,500 per month. In addition, the Executive received an initial award of 1,500,000 shares of the Company’s common stock and will additionally receive 1,000,000 shares every twelve months thereafter as per the duration of the agreement.
On July 24, 2014, the Company issued 1,000,000 shares as a severance payment to its former director, Patrick Bragoli.
| 9 |
ROI LAND INVESTMENTS LTD.
Notes to Consolidated Financial Statements
September 30, 2014
(unaudited)
Note 8 – Stockholders’ Equity (Deficit)
Authorized Capital
The Company has 100,000,000 authorized shares of Common Stock at $0.0001 par value and 50,000,000 authorized shares of Preferred Stock at par value of $0.0001 per share. All common shares have equal voting rights, are non-assessable and have one vote per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company.
Common Stock
During the nine months ended September 30, 2014, the Company received cash of $657,894 for 1,870,840 shares of its common stock.
During the nine months ended September 30, 2014, the Company received cash of $4,145,063 for stock subscriptions to purchase 11,843,035 shares of its common stock at $0.35 per share. The amount is included in common stock issuable at September 30, 2014.
During the nine months ended September 30, 2014, the Company issued 8,795,000 shares of common stock for consulting services from ten individuals. The shares were valued at $0.35, based on the price of shares sold to investors, for a total of $3,078,250. As of September 30, 2014, $1,479,777 has been charged to operations and the remaining $1,598,473 is included in prepaid expenses.
During the nine months ended September 30, 2014, the Company entered into a consulting agreement and agreed to issue 12,000 shares of common stock for consulting services. The shares are valued at $0.35, based on the price of shares sold to investors, for a total of $4,200 and are included in common stock issuable at September 30, 2014. As of September 30, 2014, the $4,200 has been charged to operations.
On July 24, 2014, the Company issued 1,000,000 shares as a severance payment to its former director, Patrick Bragoli. The shares were valued at $0.35, based on the price of shares sold to investors, for a total of $350,000.
Note 9 – Commitments and Contingencies
On February 18, 2014, the Company entered into a consulting agreement with Alternative Strategy Partners Pte. Ltd. The consultant will provide specialized services to the Company in assisting and identifying viable and qualified offshore sources of funding for the Company’s land acquisitions. As consideration for the consultant’s services to be provided, the Company shall pay a consulting fee of CAD $0.18 per square foot of property financed through the Consultant’s aid, plus a one-time advisory fee of up to US $100,000 upon the closing of the land acquisition, subject exclusively to the Company’s discretion.
The Company has entered into certain consulting agreements which call for introduction fees to be paid to the consultants for capital received by the Company from investors introduced by the consultants. The fees range from i) 8% in cash and 4% in common stock to ii) 10% in cash and 10% in common stock of the amounts received by the Company. As of September 30, 2014, the Company has secured $1,750,000 in equity funding and $200,000 in convertible notes payable funding directly from the introductions by the consultants. $261,000 in introduction fees will be due and payable upon the Company closing on the Beauport/Cambert Project and will be credited to paid-in capital as issuance costs at that time.
Note 10 – Subsequent Events
From October 1, 2014 through November 12, 2014, the Company received $1,692,801 for the sales of convertible notes payable.
From October 1, 2014 through November 12, 2014, the Company received $1,439,886 for subscriptions to purchase 4,113,959 shares of common stock.
On October 14, 2014, ROI DEV closed on the purchase of the land known as the “Beauport/Cambert Project”. The total cost of the purchase was $5,510,225 (CAD 6,148,432).
The Company has evaluated subsequent events through the date the financial statements were issued and filed with the SEC. The Company has determined that there are no other events that warrant disclosure or recognition in the consolidated financial statements.
| 10 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements made in this Form 10-Q are "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company's plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate and, therefore, there can be no assurance the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.
The forward-looking statements included in this Form 10-Q and referred to elsewhere are related to future events or our strategies or future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "believe," "anticipate," "future," "potential," "estimate," "encourage," "opportunity," "growth," "leader," "expect," "intend," "plan," "expand," "focus," "through," "strategy," "provide," "offer," "allow," commitment," "implement," "result," "increase," "establish," "perform," "make," "continue," "can," "ongoing," "include" or the negative of such terms or comparable terminology. All forward-looking statements included in this Form 10-Q are based on information available to us as of the filing date of this report, and the Company assumes no obligation to update any such forward-looking statements, except as required by law. Our actual results could differ materially from the forward-looking statements.
Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and in our subsequent filings with the Securities and Exchange Commission. The following discussion of our results of operations should be read together with our financial statements and related notes included elsewhere in this report.
Company Overview
ROI Land Investments Ltd. (“ROI”) operates in the land development sub-sector niche of the real estate industry, where its main activity consists of acquiring, zoning and converting raw land into a construction-ready site. The land development process implemented by ROI consists of four phases:
| · | Land acquisition - Purchasing land ready for development, in a strategic location and without any prohibited zoning restrictions | |
| · | Permits applications - Executed within the local municipalities to effectuate the legal right for current and future infrastructures development. | |
| · | Infrastructures - Outsourcing to qualified experts of the necessary technical and construction work | |
| · | Profit taking - Final Sale of the licensed, zoned and (by now) subdivided and construction-ready land unit to large regional residential developers |
Company History
On December 13, 2007, the Company was incorporated in Nevada. We were engaged in the business of providing specialized healthcare staffing to small and medium sized businesses.
Pursuant to stock a Subscription Agreement dated December 13, 2007, we offered and sold 2,500,000 shares of our common stock to Dr. Ely Steinberg our President and a Director, at a purchase price of $0.0001 per share, for aggregate proceeds of $250. Pursuant to a stock Subscription Agreement dated December 13, 2007, we offered and sold 2,500,000 shares of our common stock to Dr. Jacob Bar-Ilan our Secretary, Treasurer and a Director, at a purchase price of $0.0001 per share, for aggregate proceeds of $250. Between December 2009 and January 2010, we accepted subscriptions for 3,475,500 shares of our common stock from 36 investors at a purchase price of $0.02 per share, for aggregate proceeds of $69,510.
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Dr. Ely Steinberg has served as our President and Chief Executive Officer from December 13, 2007, until September 17, 2013, when Lamar Investment Ltd purchased 5,000,000 shares of restricted stock of ROI Land Investments Ltd., representing 59% of the shares in the Company from its two then-current Directors, Dr. Jacob Bar Ilan and Dr. Ely Steinberg for $230,000.00 in cash. Subsequently the shareholders of the Company voted in two Directors, Patrick Bragoli & Sebastien Cliche, as noted in an 8-K filed September 25, 2013. Subsequently, on May 19, 2014, Mr. Bragoli resigned as Director. Additionally, on October 28, 2013, FINRA gave final approval to the name change to ROI Land Investments Ltd and the ticker symbol to the ROII to better reflect the new direction of the Company.
ROI Land Investments Ltd now specializes in land development opportunities both in Canada as well as internationally. The Company's business model consist of acquiring attractive land free of zoning restrictions, obtaining the necessary permits, outsourcing developments of the infrastructure and profiting from the sale of the subdivided land units to large residential and commercial building developers. Our business model also consists of providing financing opportunities to qualified joint venture partners.
On November 15, 2013, the Company organized ROI DEV Canada Inc. (“ROI DEV”), a Canada Chart corporation, as a wholly-owned subsidiary. ROI DEV was organized to acquire and manage land acquisitions in Canada.
On March 24, 2014, the Company’s wholly-owned subsidiary, ROI DEV, executed a Definitive Agreement for the purchase of land from 9284-0784 Québec Inc. The land consists of 1,971,000 square feet in suburban Quebec and is known as the “Beauport/Cambert Project”. Per the terms of the Agreement, the total cost of the purchase is $5,299,879 (CAD 5,913,723), of which $268,830 (CAD 300,000) was tendered upon execution as a firm initial deposit, with the remaining balance of $5,031,019 (CAD 5,613,723) to be paid on or before June 1, 2014. As the balances were not paid by June 1, 2014, the Company and 9284-0784 Quebec Inc. agreed to extend the due date and the Company paid additional deposits totaling $761,800 (CAD 850,000) and finance charges on the outstanding balance of $210,346 (CAD 234,709). The Company’s former director, Patrick Bragoli, and current CEO and Chairman, Sebastien Cliche, each own 16.67% of 9284-0784 Quebec Inc.
On June 17, 2014, ROI DEV entered into a Framework Agreement with Coast to Coast Holding Ltd. (“CTC”), a Canadian corporation. Under the terms of the agreement, ROI DEV will provide funding to CTC in the form of mortgage notes payable for property development projects, and provide financial and real estate advisory services, for a period of up to ten years. ROI DEV has the right to make the loan or not and each individual loan will be evidenced by its own promissory note with terms agreed on by the parties. During the nine months ended September 30, 2014, ROI DEV funded a total of five loans totaling $2,091,254 (CAD 2,333,468).
During the nine months ended September 30, 2014, the Company initialized a convertible note payable offering to raise up to a total of $5,500,000. The bonds will for a term of three years bearing interest at 8% to 10% per annum. As of September 30, 2014, the Company received a total of $2,824,139 from the offering. This amount is being held in escrow until the offering is closed, which at that time individual note agreements will be issued to the noteholders. The offering closed on October 14, 2014 with an aggregate of $4,516,940 being raised.
Plan of Operation
ROI is a Land Development Company that owns and operates businesses in the land development industry. The Company's business model consists of acquiring attractive land free of zoning restrictions, obtaining the necessary permits, outsourcing developments of the infrastructure and profiting from the sale of the subdivided land units to large residential and commercial building developers. Our mission is to maximize our return on investment within the land development sector in Canada as well as Internationally. These investments and/or acquisitions may be directly acquired by our Company’s or via qualified Joint Venture Partners. Alternatively, our Company’s for practical purposes functions as a land investment banking firm. We strive to maintain the utmost respect of the environment, particularly by emphasizing and preserving more green spaces than the local laws require.
Results of Operations
For the three months ended September 30, 2014 compared to the three months ended September 30, 2013
Revenues
Revenues for the three months ended September 30, 2014 were $106,631 as compared to $ nil for the three months ended September 30, 2013. The revenues consisted of commissions earned on the sale of a mortgage note receivable.
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Operating Expenses and Other Income (Expense)
For the three months ended September 30, 2014, our total operating expenses were $1,342,614 compared to $3,962 for the three months ended September 30, 2013 resulting in an increase of $1,338,652. The increase is attributable to our efforts in organizing the Company in its new business model. Operating expenses for the three months ended September 30, 2014 consisted of consulting expense of $829,179 (of which $825,468 was stock based), legal fees of $79,710, stock based severance expense of $350,000, and other corporate expenses and overhead of $79,763. The Company’s operating expenses for the three months ended September 30, 2013 consisted of professional fees related to the preparation, audit and filing of the Company’s 2012 Annual Report of $3,962.
Other income (expense) incurred during the three months ended September 30, 2014 included interest income of $19,456 (2013: $-0-), interest expense of $-0- (2013: $550), and exchange losses of $29,959 (2013: $-0-).
Net loss for the three months ended September 30, 2014 was $1,246,486 compared to $4,512 for the three months ended September 30, 2013.
For the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013
Revenues
Revenues for the nine months ended September 30, 2014 were $106,631 as compared to $ nil for the nine months ended September 30, 2013. The revenues consisted of commissions earned on the sale of a mortgage note receivable.
Operating Expenses and Other Income (Expense)
For the nine months ended September 30, 2014, our total operating expenses were $2,782,407 compared to $14,279 for the nine months ended September 30, 2013 resulting in an increase of $2,768,128. The increase is attributable to our efforts in organizing the Company in its new business model. Operating expenses for the nine months ended September 30, 2014 consisted of consulting expense of $1,963,169 (of which $1,483,977 was stock based), legal fees of $164,664, stock based severance expense of $350,000, and other corporate expenses and overhead of $304,574. The Company’s operating expenses for the nine months ended September 30, 2013 consisted of professional fees related to the preparation, audit and filing of the Company’s 2012 Annual Report of $14,279.
Other income (expense) incurred during the nine months ended September 30, 2014 included interest income of $22,474 (2013: $-0-), interest expense of $-0- (2013: $1,650), exchange losses of $47,712 (2013: $-0-), and other expense of $284,985 (2013: $-0-).
Net loss for the nine months ended September 30, 2014 was $2,985,999 compared to $15,929 for the nine months ended September 30, 2013.
Liquidity and Capital Resources
Overview
Historically, we have funded our working capital needs through sales of common stock and convertible notes payable and advances from officers and shareholders. Future cash needs for working capital, acquisitions and capital expenditures may require management to seek additional equity or obtain credit facilities. The sale of additional equity could result in additional dilution to the Company's shareholders. A portion of the Company's cash may be used to acquire or invest in complementary businesses or projects. From time to time, in the ordinary course of business, the Company evaluates potential acquisitions of such businesses or projects.
For the nine months ended September 30, 2014, we funded our operations through the sales of common stock, commons stock subscriptions and convertible notes payable, while for the nine months ended September 30, 2013, we funded our operations through cash advanced from an officer. Our principal use of funds during the nine months ended September 30, 2014 has been for the down payment on the acquisition of land, the financing of mortgage notes payable and for general corporate expenses.
Liquidity and Capital Resources during the Nine months ended September 30, 2014 compared to the Nine months ended September 30, 2013
As of September 30, 2014, we had cash of $3,299,200 and working capital of $5,237,322. The Company used cash in operations of $1,308,214 for the nine months ended September 30, 2014 compared to cash used in operations of $11,385 for the nine months ended September 30, 2013. The cash used in operating activities for the nine months ended September 30, 2014 was attributable to the Company's net loss of $2,985,999, increased by interest accrued on notes receivable of $22,474 and the net changes in operating assets and liabilities of $133,718 and offset by stock based consulting fees of $1,833,977. Cash used in operations for the nine months ended September 30, 2013 was attributable to the Company's net loss of $15,929 offset by interest accrued on notes payable of $1,650 and the net changes in operating assets and liabilities of $2,894.
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Cash used in investing activities was $3,395,655 and $-0- for the nine months ended September 30, 2014 and 2013, respectively. Cash used in investing activities for the nine months ended September 30, 2014 was $2,091,254 for the funding of mortgage notes, $63,425 for the acquisition of land held for development, and $1,240,976 for deposits on land held for development.
Cash provided by financing activities was $8,078,910 and $10,810 for the nine months ended September 30, 2014 and 2013, respectively. Cash provided by financing activities for the nine months ended September 30, 2014 included $2,824,139 of proceeds from the sale of convertible notes payable subscriptions, proceeds from the sale of common stock of $1,301,894 and proceeds from common stock subscriptions of $4,145,063, offset by amounts paid to a shareholder for advances of $2,800 and issuance costs on proceeds received for the sale of common stock and subscriptions of $189,386. Cash provided by financing activities for the nine months ended September 30, 2013 was advances from an officer of $10,810.
From October 1, 2014 through November 12, 2014, the Company received $1,692,801 for the sales of convertible notes payable.
From October 1, 2014 through November 12, 2014, the Company received $1,439,886 for subscriptions to purchase 4,113,959 shares of common stock.
On October 14, 2014, ROI DEV closed on the purchase of the land known as the “Beauport/Cambert Project”. The total cost of the purchase was $5,510,225 (CAD 6,148,432).
In addition, we will require additional financing during the current fiscal year to meet our working capital needs.
Going Concern
Due to the uncertainty of our ability to meet our current operating and capital expenses, our independent auditors included an explanatory paragraph in their report on the financial statements for the year ended December 31, 2013 regarding concerns about our ability to continue as a going concern. Our consolidated financial statements contain additional note disclosures describing the circumstances that lead to this conclusion by our independent auditors.
Our unaudited consolidated financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that we will be able to continue as a going concern. Our unaudited consolidated financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.
There is no assurance that our operations will be profitable. Our continued existence and plans for future growth depend on our ability to obtain the additional capital necessary to operate either through the generation of revenue or the issuance of additional debt or equity.
Off-Balance Sheet Arrangements
We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experiences and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions and conditions. We continue to monitor significant estimates made during the preparation of our financial statements. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.
See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 2, “Summary of Significant Accounting Policies” in our audited financial statements as of and for the year ended December 31, 2013, included in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on April 14, 2014.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The disclosure required under this item is not required to be reported by smaller reporting companies.
Item 4. Controls and Procedures.
| (a) | Evaluation of Disclosure Controls and Procedures |
In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by the Company's management, with the participation of the principal executive officer and the principal financial officer, of the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act")) as of September 30, 2014. 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 Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to management, including the chief executive officer and the 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 accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosures.
| (b) | Changes in Internal Control over Financial Reporting |
There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
Item 1A. Risk Factors.
The disclosure required under this item is not required to be reported by smaller reporting companies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On July 24, 2014, pursuant to consulting agreements, the Company issued 1,345,000 shares of the Company’s common stock to four individuals for consulting services to be rendered valued at $470,750.
These securities were not registered under the Securities Act of 1933, as amended (the “Securities Act”), but were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act as a transaction by an issuer not involving a public offering.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
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Item 5. Other Information.
None.
Item 6. Exhibits
| Exhibit 31.1 | Rule 13a-14(a) Certification by the Principal Executive Officer * | |
| Exhibit 31.2 | Rule 13a-14(a) Certification by the Principal Financial Officer * | |
| Exhibit 32.1 | Certification by the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ** | |
| Exhibit 32.2 | Certification by the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ** | |
| Exhibit 101.INS | XBRL Instance Document ** | |
| Exhibit 101.SCH | XBRL Schema Document ** | |
| Exhibit 101.CAL | XBRL Calculation Linkbase Document ** | |
| Exhibit 101.DEF | XBRL Definition Linkbase Document ** | |
| Exhibit 101.LAB | XBRL Label Linkbase Document ** | |
| Exhibit 101.PRE | XBRL Presentation Linkbase Document ** |
* Filed herewith
** Furnished herewith
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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.
| ROI LAND INVESTMENTS LTD. | ||
| Date: November 18, 2014 | By: /s/ Sebastien Cliche | |
| Sebastien Cliche | ||
|
Chairman Chief Executive Officer (Principal Executive Officer) Interim Chief Financial Officer (Principal Financial Officer) |
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