Attached files
| file | filename |
|---|---|
| EX-32 - SUNVESTA CERTIFICATION - SUNVESTA, INC. | exhibit32.htm |
| EX-21 - SUNVESTA SUBS - SUNVESTA, INC. | exhibit21.htm |
| EX-31 - SUNVESTA CERTIFICATION - SUNVESTA, INC. | exhibit31.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2015.
oTRANSITION 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
98-0211356
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
Seestrasse 97, Oberrieden, Switzerland CH-8942
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: +41 43 388 40 60
Securities registered under Section 12(b) of the Act: none.
Securities registered under Section 12(g) of the Act: common stock (title of class), $0.01 par value.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes oNo þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes oNo þ
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 þNo 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 þNo o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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. Smaller reporting company þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes oNo þ
The aggregate market value of the registrant’s common stock, $0.01 par value (the only class of voting stock), held by non-affiliates
52,634,005 shares was approximately $17,369,221 based on the based on the average closing bid and ask prices ($0.33) for the
common stock on May 13, 2016.
At May 13, 2016, the number of shares outstanding of the registrant’s common stock, $0.01 par value (the only class of voting
stock), was 95,941,603.
1
TABLE OF CONTENTS
PART I
Item1.
Business
3
Risk Factors
12
Unresolved Staff Comments
12
Properties
13
Legal Proceedings
13
Mine Safety Disclosures
13
PART II
Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of
14
Equity Securities
Selected Financial Data
15
Management's Discussion and Analysis of Financial Condition and Results of Operations
15
Quantitative and Qualitative Disclosures about Market Risk
21
Financial Statements and Supplementary Data
21
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
22
Controls and Procedures
22
Other Information
24
PART III
Directors, Executive Officers, and Corporate Governance
25
Executive Compensation
29
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
33
Matters
Certain Relationships and Related Transactions, and Director Independence
34
Principal Accountant Fees and Services
35
PART IV
Exhibits, Financial Statement Schedules
36
37
2
PART I
ITEM 1.
As used herein the terms “Company,” “we,” “our,” and “us” refer to SunVesta, Inc., its predecessors,
and its subsidiaries, unless context indicates otherwise.
Corporate History
The Company was incorporated in the State of Florida on September 12, 1989. On August 24, 2007, the
Company acquired SunVesta Holding AG (hereinafter “SunVesta AG”) as a wholly-owned subsidiary.
SunVesta AG was incorporated in Switzerland on December 18, 2001, and is domiciled in the Canton of
Zurich, Switzerland. SunVesta AG operates through five wholly owned subsidiaries:
— SunVesta Projects & Management AG (Switzerland)
— SunVesta Costa Rica Limitada (Costa Rica)
— Rich Land Investments Limitada (Costa Rica)
— Altos del Risco SA (Costa Rica)
— SunVesta Holding España SL (Spain)
The Company’s principal place of business is located at Seestrasse 97, Oberrieden, Switzerland CH-8942.
Our telephone number is + 41 43 388 40 60.
Our registered agent is Hubco Registered Agents Services, Inc., located at 155 Office Plaza Drive, first
Floor, Tallahassee, Florida, 32301. Hubco’s telephone number is (800) 443-8177.
SunVesta
Business Overview
We are in the business of developing high-end luxury hotels and resorts worldwide. Our intention is to
develop luxury hotel products located in countries such as Costa Rica that are emerging as popular tourist
destinations. Any prospective development will take into consideration country specific conditions and
general considerations applicable to hospitality properties. Considerations include political stability, site
suitability, and the presence of the types of attractions that draw a five-star clientele. Once identified as
eligible, a prospective development is compared against a validation checklist and then, if warranted,
subjected to a substantial due diligence inquiry. Since location is key to the success of any luxury
hospitality project, the site of any prospective development will be carefully considered during our
eligibility process.
Paradisus Papagayo Bay Resort & Luxury Villas
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 no later than during the third quarter of 2016, while the opening of the Paradisus Papagayo
Bay Resort & Luxury Villas is scheduled for the fourth quarter 2017. The estimated commencement of
construction and opening dates are subject to the procurement of sufficient financing to complete the
development.
3
Specifications
Paradisus Papagayo Bay Resort & Luxury Villas’ initial specifications are to be as follows:
— eco-luxury all-inclusive resort
— 382-keys
— direct beach access
— Nine restaurants and eleven bars and lounges
— Yhi Spa and Health Club
— Paradisus’ adults-only “Royal Service” level of accommodations
— Paradisus’ “Family Concierge” program
— 19,000 square feet of meeting facilities with the business traveler in mind
Vista Mar
Family Concierge
The Family Concierge will be a family orientated part of the Paradisus Papagayo Bay Resort & Luxury
Villas. The accommodations will be designed to satisfy the needs of the modern family.
The Family Concierge area will include:
— 166 Junior Suites Deluxe
(47* square meters)
— 34 Suites Deluxe
(87* square meters)
— 33 Suites Premium
(93* square meters)
— 6 Handicapped Junior Suites Deluxe
(47* square meters)
— 1 Bridal Suites
(93* square meters)
— 2 Deluxe Suites Presidential
(88* square meters)
— 1 Presidential Suite
(194* square meters)
*
Room size does not include balconies and terraces.
All ground floor suites will have direct access to swim-up pools. Each of the suites and villas will have a full
view of the sea. Family Concierge guests will furthermore have access to restaurants, bars, and lounges.
The planned 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.
4
All ground floor suites will have direct access to swim-up pools. Each of the suites and villas will have a full
view of the sea. Royal Service guests will furthermore have access to restaurants, bars, lounges, fitness
equipment, spas and outside massage areas.
The Paradisus Papagayo Bay Resort & Luxury Villa’s will feature other highlights including:
— more than 65 private, swim up and resort pools including the world’s second largest Infinity Pool
all within idyllic landscaped grounds
— a wedding chapel with a stunning ocean view
— rain forest walkways that permit guests to experience the flora and fauna of the rain forest
— a multipurpose convention hall with over 2,000 square meters of space that can be utilized as a
whole or divided to create smaller meeting rooms
— a full service spa committed to providing for the wellbeing of our guests. The spa will be located
with a 180-degree sea view within approximately 1,000 square meters that will include 12 large
treatment rooms, a hairdresser, relaxation areas, pools, saunas and steam rooms
— the 20 private villas will be located within the Royal Service area of the resort. The present
intention being that these villas will be sold to individuals who will then lease them back to the
resort when not occupied by the owners.
Management
Overall project development is led by Josef Mettler, our Chief Executive Officer, Charles Fessel, Project
Director Paradisus Papagayo Bay Resort & Luxury Villas, Hans Rigendinger, Chairman of the Board and
Chief Operating Officer of SunVesta AG and Ernst Rosenberger, the Company’s Corporate Controller. The
lead architect is Ossenbach, Pendones & Bonilla, one of Costa Rica’s largest architectural offices with over
45 architects and designers. Civil engineering services are provided by DEHC Engineers and structural
engineering services by IEAC. Landscape architects are TPA and interior designers are led by Concreta Srl.
Resort management is to be provided by Melía Hotels International (“Melía”). “Paradisus” is Meliá’s
five-star all-inclusive luxury hotel brand that is well recognized in the hospitality industry around the world.
Melía was founded in 1956 in Palma de Mallorca, Spain and is today one of the world’s largest resort hotel
chains, as well as Spain’s leading hotel chain for business or leisure. The company currently offers more
than 300 hotels in 26 countries over four continents under its Gran Sol Melía, Sol Melía, ME by Sol Melía,
Innside by Sol Melía, Tryp, Sol Melía, Sol Melía Vacation Club, and Paradisus brands. The Paradisus brand
represents all-inclusive luxury resorts with hotels in Mexico and the Dominican Republic.
Since the completion date for the Paradisus Papagayo Bay Resort & Luxury Villas development is now
anticipated for the fourth quarter of 2017, the Company is in the process of reaching an agreement to further
amend the management agreement with Meliá dated August 18, 2014. The amended agreement presently
stipulates that if the Papagayo Bay Resort & Luxury Villa’s is not completed by February 15, 2016, and if
an extension date is not agreed, then Meliá could terminate the management agreement and cause the
Company to pay a penalty of $5 million. Even though the anticipated completion date is beyond that agreed
in the most recent amended agreement the Company believes that a new agreement will be reached with
Meliá to extend the completion date to the fourth quarter of 2017.
5
Dated April 27, 2016, a seventh addendum was signed between the Company and Melia with 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 an extension to such date, after September 15, 2018 the Owner shall pay the Manager a
daily amount of USD 2,000 as liquidated damages.
c. Should the completion not occur by November 15, 2018, the manager shall be entitled to terminate
the agreement unless the Parties agree in writing to extend such date. The owner shall be obliged to
pay the manger an amount of USD 5,000,000 as liquidated damages solely to compensate the
Manager.
Additional Concession Properties
On April 20, 2012, the Company entered into an agreement with Meridian IBG (“Meridian”), as amended
on November 13, 2012, and replaced on May 7, 2013, to purchase two additional concession properties in
Polo Papagayo, Guanacaste, comprised of approximately 230,000 square meters for $17,500,000. One of
the concessions lies adjacent to the existing concessions (La Punta) and the other is in close proximity.
The Company had paid down-payments on the purchase of these properties of $2,669,816 as of December
31, 2015, and is in discussions with Meridian regarding an amendment to the agreement. Should the
Company not be successful in obtaining an amendment to the agreement, it would have to write-off
$300,000 of the purchase price that has already been paid to Meridian in addition to a 5% penalty. The
potential penalty is $50,000 as of December 31, 2015.
Swiss Hospitality Project
OnSeptember 19, 2016, the Company signed an agreement for the acquisition of four existing hotels in the Canton of Graubünden, Switzerland. The properties comprise an aggregate of 141 rooms. The consideration for this down payment is $302,267, which amount was paid on October 25, 2015. Should the transaction not close before a datethat is yet to be renegotiated then the consideration will not be refundable. In the event that the transaction does close then this consideration will be allocated to the total purchase price for the hotels.
Finance
The anticipated completion of the Paradisus Papagayo Bay Resort & Luxury Villas in the fourth quarter of
2017 will require a net investment of approximately $192 million (excluding non-recuperated overhead
expenses), of which approximately $61 million has been expended as of December 31, 2015. We expect to
realize a minimum of $140 million in new funding over the next twelve months. New funding over the next
twelve months is expected to be raised from debt financing through bonds, shareholder loans and, if
necessary, the guaranty agreement borne by certain principal shareholders and participants in management.
Detailed below is a brief description of material debt obligations as of period end.
Bonds
SunVesta AG, has four bond issues outstanding, denominated in either EUR (€) or Swiss Francs (CHF).
6
EUR (€) Bonds
The Company initiated an unsecured EUR bond offering on December 2, 2013, of up to €15,000,000 in
units of €10,000 that bear interest at 7.25% per annum payable each December 1 over a three-year term that
matures on December 2, 2016. We had realized $7,342,995 as of the year ended December 31, 2014, and
$6,861,936 as of December 31, 2015 (variance due to valuation), for a cumulative amount of $6.86 million
as of the date of this report.
The Company initiated a parallel offering of unsecured EUR bonds on December 2, 2013, of up to
€15,000,000 in units of €10,000 that bear interest at 7.25% per annum payable each December 2 over a
three-year term that matures on December 2, 2016. We had realized $1,714,991 as of the year ended
December 31, 2014 and $1,626,695 as of December 31, 2015 (variance due to valuation), for a cumulative
amount of $1.63 million as of the date of this report.
Swiss Francs (CHF) Bonds
The Company initiated an unsecured CHF bond offering on September 1, 2011, of up to CHF 15,000,000 in
units of CHF 50,000 that bear interest at 7.25% per annum payable each August 31 over a four-year term
that matured on August 31, 2015. We had realized $10,802,722 as of the year ended December 31, 2014
and $11,263,765 as of the maturity date.
The Company initiated a parallel offering of unsecured CHF bonds on September 1, 2013, of up to CHF
15,000,000 in units of CHF 10,000 that bear interest at 7.25% per annum payable each August 31, over a
two-year term that matured on August 31, 2015. We had realized $14,709,176 as of the year ended
December 31, 2014 and $26,315,110 as of the maturity date.
The Company initiated a new offering of senior unsecured CHF bonds on October 1, 2015, of up to CHF
45,000,000 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 $26,470,395 as of the year ended December 31, 2015.
The Company initiated a new parallel offering of senior unsecured CHF bonds on October 1, 2015, of up to
CHF 15,000,000 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 $2,250,048 as of the year ended December 31, 2015.
Aires International Investment, Inc.
On July 27, 2011, the Company entered into a line of credit agreement with Aires International Investments
Inc. (“Aires”), a company owned by Dr. Rӧssler (a director of the Company). The loan agreement was
amended on May 11, 2012 and on June 21, 2012. On October 31, 2013, the line of credit agreement was
replaced by a new loan agreement, that included the following conditions:
— All existing loan agreements or credit facilities, including amendments, between the Company
and Aires were cancelled and superseded by a new loan agreement.
— The loans are now due after December 31, 2017 and before December 31, 2020.
— Despite the scheduled repayment date, either party has the option to cancel the loan agreement
with a prior notice period of 90 days, requiring repayment of the loans in full.
— Loan amounts outstanding including any additional amounts and additions are subordinated.
— Interest on the loan amounts is 7.25% per annum, which charge is accrued.
7
The Company had borrowed $47,198,362 from Aires as of December 31, 2015 and $30,299,312 as of
December 31, 2014 (both amounts excluding accrued interest)
Dr. Max Rӧssler
Over the course of 2012, the Company entered into a series of interest free loans that totaled approximately
$800,000 with Dr. Max Rӧssler, a director of the Company and a principal of Aires that were initially
repayable in December of 2012, but were extended through December of 2015. The loans were originally
due either on predetermined dates or on demand, repayable in cash or in a fixed number of shares of certain
publically traded entities. The Company had the right of settlement and carried the loans at their fair values,
which was the amount of cash paid in without consideration for the change in value of the underlying
securities. In December 2015, Dr. Rössler and the Company settled these loans through a transfer to a
separate debtor - Aires - of $1,551,669 (CHF 1,535,900). The Company assessed this debt modification to
be an extinguishment under the guidance prescribed in ASC 470-50 and correspondingly recognized a loss
on extinguishment in its statements of comprehensive loss for $748,466.
Loan due to Global Care AG
During 2014, Global Care AG loaned the Company $186,398 (CHF 185,000), which amount was repayable
on October 31, 2014. The loan includes a fixed interest payment of $20,570 (CHF 20,000). As of the date of
this report, both amounts are overdue. According to the agreement, there are no penalties for late payment.
Receivable from and loans to Josef Mettler
On June 30, 2015, Aires International Investments, Inc. absorbed the Company’s receivables from Mr.
Mettler of $1,507,128 (CHF 1,419,412) by crediting the amount due to the Company against the amount
due from the Company to Aires. As of December 31, 2015, there is a payable to Mr. Mettler of $70,135
(CHF 69,609).
For the year ended December 31, 2014, the amount borrowed by the Company became a loan receivable to
the Company of $1,455,214. In the third and fourth quarters of 2014, Aires absorbed the Company's
receivables from Mr. Mettler by crediting the amount due to the Company against the amount due from the
Company to Aires.
Receivables from 4f capital AG
For the year ended December 31, 2014, the amount owed by the Company became a receivable to the
Company for $1,142,681 from 4f capital ag.
During the third and fourth quarters of 2014, Aires absorbed the Company's receivable from 4f capital ag in
the amount of $1,142,682 by crediting the amount due to the Company against the amount due from the
Company to Aires
For the year ended December 31, 2015, there were no such transactions.
Current account Sportiva participations ag
For the year ended December 31, 2015, the Company borrowed approximately $2.8 million and repaid
approximately $2.3 million resulting in a payable as of December 31, 2015, of $528,660 (CHF 524,695) to
Sportiva participations ag. The amount due to Sportiva participations ag carries an interest rate of 3%.
8
DIA S.A.
On March 8, 2013, the Company entered into an interest free loan agreement with DIA S.A. for $2,000,000
payable on March 8, 2014, in connection with the purchase of land concession being part of the Paradisus
Papagayo Bay Resort & Luxury Villas project from Altos held in the name of Altos del Risco S.A. The
terms of the loan agreement were amended on March 16, 2015, to extend the due date for said payable until
March of 2016. The amounts due to Altos had not been paid as of the filing date of this report.
Subsequent to the balance sheet date the parties agreed on new payment terms. They provide for four equal
quarterly payments of USD 500,000 each, the first one being due by August 31, 2016.
Timeline
Our expected timeline for developing the Paradisus Papagayo Bay Resort & Luxury Villas has been
extended due to delays associated with administrative hurdles and securing necessary financing for the
development as follows:
— commence onsite vertical construction in the third quarter of 2016
— complete construction in the fourth quarter of 2017
— handover to Melía in the fourth quarter of 2017
Competition
Three key factors have been taken into consideration when defining our hotel competitors in relation to the
Paradisus Papagayo Bay Resort & Luxury Villas:
— the proximity of competitors to our location in Guanacaste Province, Costa Rica
— the consumption habits of prospective clientele
— the ability to compete based on product similarity in relation to service standards, facilities,
the availability of equipment and the number or variety of services offered.
Based on our criteria we have determined that our prospective competitors are those characterized as
five-star holiday resorts in geographic proximity to our planned location.
Luxury Hotel Resorts
We distinguish between primary and secondary competitors.
Primary competition in Guanacaste Province is comprised of the following properties:
— Four Seasons Peninsula Papagayo
— JW Marriot Guanacaste
— Hilton Papagayo Costa Rica
— Westin Golf Resort & Spa Playa Conchal
— Andaz Peninsula Papagayo Resort
— Dreams Las Mareas Costa Rica
The closest direct and most prominent competition for our Guanacaste property will be the Four Seasons
Hotel.
9
All of our primary competitive establishments have common characteristics with a standard vacation resort
format with much more equipment and many more facilities to offer than hotels based in a city such as:
— several modules/ lodging buildings around central services
— ample water areas with outdoor swimming pools, areas for hammocks and sun bathing
— children and entertainment activity areas
— restaurant pool areas with bars and service throughout the day
— large lounges for breakfast, lunch and dinner services
— alternative gastronomic or theme restaurants
— sports areas (basketball court, tennis courts, golf course, soccer field)
— Fitness Center, Wellness Center and Spa Areas
Our competitors are managed by leading international chains or experienced domestic companies.
Despite what might be construed as obvious obstacles to entry, including robust competition within the
hospitality industry in Guanacaste Province, we believe that our development of the Paradisus Papagayo
Bay Resort & Luxury Villas will be successful based principally on the following factors:
— the beach front location of the development
— environmental integrity in project development and operation
— the reputation of the Paradisus brand in the region and internationally
Further, we believe that we have certain distinctive competitive advantages over all or many of our
competitors including:
— location in one of the most appealing areas worldwide
— outstanding product with unique features
— superior project development and management agreements that maximize resources and
broaden market penetration
We believe that all of the factors detailed above, in combination with the dedication of our personnel and
partners, will enable us to be competitive in developing the Paradisus Papagayo Bay Resort & Luxury
Villas.
Marketability
Costa Rican Tourism
Costa Rica has a long track record of political stability along with a well-established outward-looking
growth model. The government has adopted a proactive policy of fostering higher-end beach resort tourism,
mainly through fiscal incentives for investors. As such, Costa Rica is benefiting from a burgeoning hotel
development pipeline and is emerging as a regional hotel investment hot-spot, including the development of
upscale and luxury hotels. This environment provides much fertile ground for real estate investors and
developers to expand their search for profitable growth. Foreign tourism investment is projected to continue
this upward trend over the next several years as demand outpaces the existing lodging and tourism services
supply.
10
Costa Rica stands as the most visited nation in the Central American region. The Costa Rican Tourism
Institute (“ICT”) is responsible for collecting information on the number and economic impact of tourists
that visit Costa Rica. ICT also collects information related to hotel rooms and the country of origin for
tourists arriving in Costa Rica. Records produced by ICT detail that the number of tourists visiting Costa
Rica reached 2.66 million in 2015, representing an increase of 5 % over 2014.
The 2015 Travel and Tourism Competitiveness Index (“TTCI”), indicates that Costa Rica reached the
42ndplace in the world ranking (up 5 places since 2013), classified as the second most competitive among
Latin American countries after Mexico, and ranking sixth in the Americas. Focusing solely on the sub index
measuring natural and cultural resources, Costa Rica ranks 26th worldwide, and 5th when considering just
the natural resources criteria. The TTCI report also notes Costa Rica's other attractions such as tourism
services infrastructure ranking 32nd, qualification of the labour force ranking 37th, business environment
ranking 47th and air transport infrastructure ranking 47th in the world.
ICT has determined that the most relevant origin markets in terms of demand are the United States, Canada
and Mexico which generated approximately 50% (2014: 49%) of all tourists followed by Central American
countries including Guatemala, El Salvador, Panama and Nicaragua, which generated approximately 27%
of the tourists arriving in Costa Rica in 2015. According to official data, the United States remains the
largest source of tourists to Costa Rica with a total of 1,077,044 in 2015 (2014: 997,262), representing
40.5% (2014: 39.5%) of all visitors. Tourists visiting Costa Rica from European countries represented
approximately 15% of all tourists in 2015 led by Spain, Germany, France Italy.
Geography
Costa Rica’s Guanacaste Province is bound in the east by a group of vegetated volcanoes and the west by
beaches on the Pacific Ocean. The province contains heavily forested areas and seven national parks, and
includes the Area de Conservación Guanacaste World Heritage Site. Guanacaste is the northern-most
province of Costa Rica, with the Papagayo Bay a 40-minute flight from San Jose and a half hour car transfer
to the beach. Tourism has emerged as the most lucrative revenue source in the province. Tourists to the
Guanacaste Province of Costa Rica are most often motivated by a desire for favorable weather and beach
conditions. Active tourism – those activities including canopying, trekking, visiting volcanoes and flora or
fauna watching – are secondary considerations.
We believe that our development will be well located as a hospitality property.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements and Labor Contracts
The Company holds no patents, trademarks, licenses, franchises, or concessions other than having
registered its “SunVesta” trademark in various countries.
The Company is not subject to any labor contracts.
Governmental and Environmental Regulation
Our operations are subject to a variety of national, federal, provincial and local laws, rules and regulations
relating to, among other things, worker safety and the use, storage, discharge and disposal of
environmentally sensitive materials. We believe that we are in compliance in all material respects with all
laws, rules, regulations and requirements that affect our business. Further, we believe that compliance with
such laws, rules, regulations and requirements do not impose a material impediment on our ability to
conduct business.
11
Costa Rican National Environmental Office
The Costa Rican National Environmental Office (“SETENA”) created by the Organic Environmental Law
is tasked with administering the process of reviewing and evaluating environmental impact considerations.
Local municipal governments often require a ruling from SETENA before issuing building permits. Any
larger project in Costa Rica must apply for an Environmental Impact Statement from SETENA before
development is permitted. Delays associated with this process would have a negative impact on the
Company’s project in Guanacaste Province.
The Company is not aware of any existing environmental impact issues that could have a material effect on
the development of the Paradisus Papagayo Bay Resort & Luxury Villas.
Costa Rican Sustainable Development
Costa Rica is considered as being in the forefront of implementing environmental policies. The country’s
national strategies for sustainable development are a broad matrix of policies requiring eco-friendly
practices, such as Agenda 21. The Agenda 21 process as developed by the 1992 and 2002 Earth Summits is
defined as a participative planning tool in which sectors in the government and civil society concertedly
determine the course to be taken by their communities, regions, or countries in pursuit of sustainable
development. This process and other Costa Rican sustainable development policies could delay or increase
the cost of the development of the property.
The Company is not aware of any existing environmental impact issues that could have a material effect on
the development of the Paradisus Papagayo Bay Resort & Luxury Villas.
Climate Change Legislation and Greenhouse Gas Regulation
Many studies over the past couple decades have indicated that emissions of certain gases contribute to
warming of the Earth’s atmosphere. In response to these studies, many nations agreed to limit emissions of
“greenhouse gases” or “GHGs” pursuant to the United Nations Framework Convention on Climate Change,
and the “Kyoto Protocol” to which Costa Rica is a signatory. Greenhouse gas legislation in Costa Rica
could have a material adverse effect on our business, financial condition, and results of operations.
The Company is not aware of any existing environmental impact issues that could have a material effect on
the development of the Paradisus Papagayo Bay Resort & Luxury Villas.
Employees
The Company is a development stage company and currently has four employees at December 31, 2015 and
six employees as of the reporting date. Our management uses consultants, attorneys, and accountants to
assist in the conduct of our business.
ITEM 1A.
RISK FACTORS
Not required of smaller reporting companies.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
Not applicable.
12
ITEM 2.
Costa Rican Properties
The Company owns the concession rights for approximately 20 hectares of undeveloped prime land in
Guanacaste Province, Costa Rica. The purchase of the original concession of approximately 8 hectares was
completed for a consideration of $7,000,000. The purchase of the additional 12 hectares was based on an
agreement dated March 22, 2010, with DIA of San Jose, Costa Rica. The total purchase price for the
concessions was $12,700,000 of which $10,700,000 had been paid as of December 31, 2014, with the
remainder of $2,000,000 converted into an interest free loan due by March of 2016. The amounts due to
Altos had not been paid as of the filing date of this report.
Subsequent to the balance sheet date the parties agreed on new payment terms. They provide for four equal
quarterly payments of USD 500,000 each, the first one being due by August 31, 2016.
On April 20, 2012, the Company entered into an agreement with Meridian IBG (“Meridian”), as amended
on November 13, 2012 and replaced on May 7, 2013, to purchase two additional concession properties in
Polo Papagayo, Guanacaste comprised of approximately 230,000 square meters, for $17,500,000. The
Company paid down-payments on the purchase of these properties of $2,669,816 as of December 31, 2015.
Despite the delay in satisfying the purchase price, Meridian has confirmed that the agreement for
completing this purchase and sale is in good order.
Executive Offices
We maintain our offices at Seestrasse 97, Oberrieden Switzerland CH-8942 on a leasehold basis with an
annual rental expense of $130,000 per annum through December 31, 2017.
The Company recognized lease expenses of $130,000 and $130,000 for the years ended December 31, 2015
and 2014, respectively, for the use of these executive offices. We believe that we have sufficient office
space for the foreseeable future in order to pursue the completion of the project described herein.
ITEM 3.
LEGAL PROCEEDINGS
None.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
13
PART II
ITEM 5.
MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS,
AND ISSUER PURCHASES OF EQUITY SECURITIES
The Company’s common stock is quoted on the OTCQB, a service maintained by OTC Link under the
symbol “SVSA.” Trading in the common stock over-the-counter market has been limited and sporadic and
the quotations set forth below are not necessarily indicative of actual market conditions. These prices reflect
inter-dealer prices without retail mark-up, mark-down, or commission, and may not necessarily reflect
actual transactions. The high and low bid prices for the common stock for each quarter of the years ended
December 31, 2015 and 2014 are as follows:
Year
Quarter Ended
High
Low
2015
December 31
$0.25
$0.15
September 30
$0.25
$0.24
June 30
$0.25
$0.14
March 31
$0.16
$0.06
2014
December 31
$0.07
$0.05
September 30
$0.06
$0.06
June 30
$0.05
$0.10
March 31
$0.10
$0.07
Capital Stock
The following is a summary of the material terms of the Company’s capital stock. This summary is subject
to and qualified by our articles of incorporation and bylaws.
Common Stock
As of December 31, 2015, there were 89 shareholders of record holding 95,941,603 shares of fully paid and
non-assessable common stock of the 200,000,000 shares of common stock, par value $0.01, authorized.
The Board of Directors believes that the number of beneficial owners is greater than the number of record
holders because a portion of our outstanding common stock is held in broker “street names” for the benefit
of individual investors. The holders of the common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of stockholders. Holders of the common stock have no preemptive
rights and no right to convert their common stock into any other securities. There are no redemption or
sinking fund provisions applicable to the common stock.
Preferred Stock
As of December 31, 2015, there were no shares issued and outstanding of the 50,000,000 shares of
preferred stock authorized. The par value of the preferred stock is $0.01 per share. Our preferred stock may
have such rights, preferences and designations and may be issued in such series as determined by the Board
of Directors.
Stock Options
As of December 31, 2015, we have granted 32,000,000 outstanding stock options, pursuant to the 2013
SunVesta Stock Option Plan, to purchase shares of our common stock at an exercise price of $0.05 that vest
according to the realization of specific milestones, none of which have vested as of year-end.
14
Warrants
As of December 31, 2015, we have no outstanding warrants to purchase shares of our common stock.
Dividends
We have not declared any cash dividends since inception and do not anticipate paying any dividends in the
near future. The payment of dividends on our common stock is within the discretion of the Board of
Directors subject to earnings, capital requirements, financial condition, and other relevant factors including
those contractual restrictions related to certain debt obligations and those limitations generally imposed by
applicable state law.
Transfer Agent and Registrar
Our transfer agent and registrar is Standard Register & Company, Inc., located at 12528 South 1840 East,
Draper, Utah 84020 and their phone number is (801) 571-8844.
Purchases of Equity Securities made by the Issuer and Affiliated Purchasers
None.
Recent Sales of Unregistered Securities
None.
ITEM 6.
SELECTED FINANCIAL DATA
Not required.
ITEM 7.
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 current report contain forward-looking statements that involve risks and uncertainties.
Forward-looking statements can also 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 thereto included in this current report. Our fiscal year end is December 31.
15
Discussion and Analysis
Our plan of operation through December of 2017 is to commence the construction of the Paradisus
Papagayo Bay Resort & Luxury Villas project, the completion of which will require a total net investment
of approximately $192 million (excluding non-recuperated overhead expenses and the anticipated $25
million in net proceeds for the sale of private villas). We plan to realize a minimum of $100 million in new
funding over the next twelve months and an additional $40 million in funding by the time the development
is completed, though our actual financing requirements may be adjusted to suit that amount realized. New
funding over the next twelve months is expected to be raised from debt financing through bonds,
shareholder loans and the guaranty agreement.
Results of Operations
During the year ended December 31, 2015, our operations focused on (i) completing earthwork; (ii) seeking
prospective project development partners; (iii) pursuing additional debt financing; (iv) obtaining
government approval to extend the term of the concessions; (v) obtaining government approval to include
beachfront property adjacent to the project; and (vi) creating sub-concessions for prospective villa owners.
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 used to develop the Costa Rican property
including for the purchase of the land concessions, earthwork, and general and administrative costs.
Comprehensive Losses
The variance in losses over the comparative annual period is reconciled below:
Comprehensive loss 2014
4,482,482
Variances 2015 from 2014
Decrease in general and administrative expenses
748,420 Decrease in consulting expenses
Increase in interest income
8,951 Increase in deposits
Increase in interest expense
(1,675) Increase in borrowings
Increase in amortization of debt issuance costs
(2,499,185) Increase in provisions
Change in Fair Value of Conversion Feature
386,660 Decrease in fair value of conversion
feature from inception to year end
Loss on extinguishment of debt
(7,678,080) Comprised of loss due to repayment of
loans from Dr. Max Rössler ($748,000)
and loss on extinguishment associated
with settlement of matured old CHF bonds
with substantially different convertible
CHF bonds ($6,929,000)
Decrease in exchange gains
(2,652,223) Decrease in exchange gain due to less
volatility in the value of the EUR and CHF
in relation to the value of USD.
Increase in other expenses
(92,954) Increase in miscellaneous expenses
Income taxes
(1,151) Immaterial
Decrease in foreign currency translation gain
(2,955,132) Decrease in foreign currency fluctuations
in 2015 when compared to previous
period
Total variances
(14,736,369)
Comprehensive loss 2015
19,218,851
We did not generate revenue during this period and we expect to continue to incur losses through the year
ended December 31, 2016.
16
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
December 31, 2015, in connection with the purchase of land that includes a hotel concession in Costa Rica
and expects to incur future cash outflows on capital expenditure as discussed in the "Liquidity and Capital
Resources" and the "Going Concern" paragraphs below.
Liquidity and Capital Resources
The Company has been in the development stage since inception and has experienced significant changes in
liquidity, capital resources, and stockholders’ equity.
As of December 31, 2015 and 2014, the following were the working capital items:
December 31, December 31,
2015
2014
Current assets
Cash and cash equivalents
111,830
14,347
Receivable from related parties
19,945
27,163
Other assets
158,574
289,156
Total current assets
290,349
330,666
Current liabilities
Bank liabilities
179,313
153,375
Accounts payable
8,048,608
6,181,057
Accrued expenses
7,831,247
5,444,514
Notes payable
2,736,912
3,023,759
Notes payable to related parties
1,130,978
1,162,100
CHF-Bond
-
25,511,898
EUR-Bond
8,488,631
-
Total current liability
28,415,689
41,476,703
Net working capital
(28,125,340)
(41,146,037)
17
As of December 31, 2015 and 2014 the following were the items making up the total stockholders’ deficit:
December 31, December 31,
2015
2014
Assets
Current assets
290,349
330,666
Non-current assets
70,002,299
58,083,516
Total assets
70,292,648
58,414,182
Liabilities
Current liabilities
28,415,689
41,476,703
Non-current liabilities
83,141,947
39,568,568
Total liabilities
111,557,638
81,045,271
Total stockholders’ deficit
(41,264,988)
(22,631,089)
The negative working capital of $28,125,340 is of immediate concern that requires the Company to take
significant action in the near term to meet anticipated cash needs. Meanwhile, management continues to
believe that it can address liquidity problems as necessary by relying on the guaranty provided by certain
principals of the Company.
Net cash flow used in operating activities for the twelve months ended December 31, 2015, was
$6,024,873, as compared to $7,493,010 for the twelve-month period ended December 31, 2014.
We expect to continue to use net cash flow in operating activities until the Company completes the
Paradisus Papagayo Bay Resort & Luxury Villas project, which completion is projected for the fourth
quarter of 2017.
Net cash used in investing activities for the twelve months ended December 31, 2015, was $9,178,106 as
compared to $7,784,605 for the twelve-month period ended December 31, 2014. Net cash used in investing
activities in the current twelve-month period is comprised of receivables from related parties, purchase of
property and equipment, advance payments to subcontractors, and down payments for property and
equipment, offset by deposits related to construction activities and restricted cash. Net cash used in
investing activities in the prior comparable twelve-month period was comprised of receivables from related
parties, purchase of property and equipment, deposits related to construction and restricted cash.
We expect to continue to use net cash flow in investing activities while in the process of developing the
Paradisus Papagayo Bay Resort & Luxury Villas.
Net cash provided by financing activities for the twelve-month period ended December 31, 2015, was
$15,326,185 as compared to $14,618,170 for the twelve-month period ended December 31, 2014. Net cash
provided by financing activities in the current twelve-month period is comprised of bank liabilities, notes
payable to related parties, notes payable and bond issuances net of commissions, offset by the repayment of
notes payable to related parties, the repayment of outstanding bonds, debt issuance costs, and changes in
other debt. Net cash provided by financing activities in the prior comparable twelve-month period was
comprised of bank liabilities, notes payable to related parties, notes payable, bond issuances net of
commissions, changes in other debt and the sale of treasury stock, offset by the repayment of notes payable
to related parties, the repayment of notes payable, the repayment of bonds and debt issuance costs.
We expect net cash flow provided by financing activities to continue in order for the Company to secure
necessary financing to complete the development of the Paradisus Papagayo Bay Resort & Luxury Villas.
18
Management believes that cash on hand, related party loans and the assurance of the Guaranty Agreement
as described in the going concern paragraph below are sufficient for us to conduct operations over the next
twelve months.
We had a bank liability of $179,313 as of December 31, 2015, which represents a temporary, secured
overdraft facility bearing an interest rate of 8.9%.
We have commitments for executed purchase orders and agreements for $57 million as of December 31,
2015, in connection with the development of the Paradisus Papagayo Bay Resort & Luxury Villas, which
commitments are included in the required estimated net financing of $192 million to complete the project.
Most material commitments are not contractually agreed as of the end of the period. We have cancellable
commitments to Meridian that are not included in the required financing for the development of the
Paradisus Papagayo Bay Resort & Luxury Villas of approximately $15,000,000 as of December 31, 2015,
for the purchase of two additional concession properties in Polo Papagayo, Guanacaste, Costa Rica.
We maintain a defined benefit plan that covers all of our Swiss employees and have employment
agreements with our Chief Executive Officer and Chief Operating Officer as of December 31, 2015.
We have no current plans for significant purchases or sales of plant or equipment, except in connection with
the planned construction of the Paradisus Papagayo Bay Resort & Luxury Villas, and the acquisition of “La
Punta” and the four hotels in Graubünden.
We have no current plans to make any changes in the number of our employees as of December 31, 2015.
Future Financings
The Company signed a letter of engagement with ISM Capital LLP (“ISM”), a London based investment
firm, on March 10, 2015, to conduct a $100 million asset backed bond issuance. On October 4, 2015, the
bilateral agreement with ISM was extended into a multilateral agreement, with Stifel Nicolaus Europe Ltd
(“Stifel”), to enlarge the territories in which the offering could be presented to include North America.
Despite the commitment to identify investors, the success of this proposed bond issuance for the amount
contemplated or any lesser amount, does not guarantee that all or part of the amount offered will be
subscribed. Neither of Stifel or ISM has yet conducted the anticipated offering.
The Company will continue to rely on the terms of the Guaranty Agreement as necessary to meet shortfalls
in development financing.
Off-Balance Sheet Arrangements
As of December 31, 2015, we had no significant off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in financial condition, revenues
or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to
stockholders.
Going Concern
The Company intends to build a hotel in the Papagayo Gulf Tourism Project area of Guanacaste, Costa
Rica. The total net investment is estimated to be approximately $192 million.
19
The project is expected to open in the fourth quarter of 2017. Until the completion of the project, the
following expenditures are estimated to be incurred:
a. Gross project cost
$
217,000,000
b. Less: Proceeds from sale of villas
(25,000,000)
c. Net project cost
192,000,000
d. Overhead expenses
20,000,000
f Total, excluding other potential projects
$
212,000,000
Sixty percent (60% ) of the net project cost is intended to be financed through the issuance of secured
bonds, for which negotiations have been initiated. The remaining forty percent (40% of the net project cost,
as well as overhead expenses and the cost of other potential projects are intended to be financed by the main
shareholders or lenders of the project, i.e. Zypam Ltd., shareholder and related entity to Mr. Josef Mettler,
Mr. Hans Rigendinger, shareholder, Chief Operating Officer and Company Board Member, Dr. Max
Rössler, Company Board Member and controlling shareholder of Aires, Mr Josef Mettler, shareholder,
Director and Chief Executive Officer.
On July 16, 2012, 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 they will act as guarantors to creditors to the extent of the
project’s ongoing capital requirements. On September 22, 2015, the signatories to the guaranty formally
agreed to maintain the guaranty, as necessary, until December 31, 2018, 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 December 31, 2015
and the filing date, though future anticipated cash outflows for investing activities continue to depend on
the availability of financing.
Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition
The statements contained in the section titled Management’s Discussion and Analysis of Financial
Condition and Results of Operations and elsewhere in this current report, with the exception of historical
facts, are forward-looking statements. We are ineligible to rely on the safe-harbor provision of the Private
Litigation Reform Act of 1995 for forward looking statements made in this current report. Forward-looking
statements reflect our current expectations and beliefs regarding our future results of operations,
performance, and achievements. These statements are subject to risks and uncertainties and are based upon
assumptions and beliefs that may or may not materialize. These statements include, but are not limited to,
statements concerning:
— our anticipated financial performance and business plan
— the sufficiency of existing capital resources
— our ability to raise additional capital to fund cash requirements for future operations
— uncertainties related to our future business prospects
— our ability to generate revenues to fund future operations
— the volatility of the stock market
— general economic conditions
20
We wish to caution readers that our operating results are subject to various risks and uncertainties that could
cause our actual results to differ materially from those discussed or anticipated elsewhere in this report. We
also wish to advise readers not to place any undue reliance on the forward-looking statements contained in
this report, which reflect our beliefs and expectations only as of the date of this report. We assume no
obligation to update or revise these forward-looking statements to reflect new events or circumstances or
any changes in our beliefs or expectations, other than as required by law.
Recent Accounting Pronouncements
Please see Note 2 to the accompanying consolidated financial statements for recent accounting
pronouncements.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our audited financial statements for the years ended December 31, 2015 and 2014 are attached hereto as
F-1 through F-50.
21
SUNVESTA, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
Page
Report of Independent Registered Public Accounting Firm
F-2
Consolidated Balance Sheets
F-3
Consolidated Statements of Comprehensive Loss
F-4
Consolidated Statements of Stockholders’ Deficit
F-5
Consolidated Statements of Cash Flows
F-6
Notes to Consolidated Financial Statements
F-8
F-1
Tel. +41 44 444 35 55
BDO AG
Fax +41 44 444 37 66
Fabrikstrasse 50
8031 Zürich
![[sunvesta10k2015final11thm002.gif]](sunvesta10k2015final11thm002.gif){kind=small}
Switzerland
Report of Independent Registered Public Accounting Firm
Board of Directors and Shareholders
SunVesta, Inc., Oberrieden, Switzerland
We have audited the accompanying consolidated balance sheets of SunVesta, Inc. as of December 31, 2015
and 2014 and the related consolidated statements of comprehensive loss, stockholders’ deficit, and cash
flows for each of the two years in the period ended December 31, 2015. These financial statements are the
responsibility of the Company’s management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audits included consideration of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position of SunVesta, Inc. at December 31, 2015 and 2014, and the results of its operations and
its cash flows for each of the two years in the period ended December 31, 2015, in conformity with
accounting principles generally accepted in the United States of America.
Zürich, May 13, 2016
BDO AG
// Christoph Tschumi
// Julian Snow
Christoph Tschumi
ppa. Julian Snow
F-2
| SUNVESTA, INC. |
| CONSOLIDATED BALANCE SHEETS |
|
|
|
| ||
|
| December 31, 2015 |
| December 31, 2014 | |
| Assets |
|
|
|
|
| Current assets |
|
|
|
|
| Cash and cash equivalents | $ | 111,830 |
| 14,347 |
| Receivable from related parties |
| 19,945 |
| 27,163 |
| Other assets |
| 158,574 |
| 289,156 |
| Total current assets |
| 290,349 |
| 330,666 |
| Non-current assets |
|
|
|
|
| Property and equipment - net |
| 61,271,424 |
| 51,201,352 |
| Deposits related to construction work |
| 798,874 |
| 820,565 |
| Debt issuance costs - net |
| 2,995,209 |
| 2,006,849 |
| Notes receivable |
| 280,242 |
| - |
| Down payment for property and equipment |
| 2,972,083 |
| 2,369,816 |
| Restricted cash |
| 1,684,467 |
| 1,684,934 |
| Total non-current assets |
| 70,002,299 |
| 58,083,516 |
| Total assets | $ | 70,292,648 |
| 58,414,182 |
|
|
|
|
|
|
| Liabilities and stockholders' deficit |
|
|
|
|
| Current liabilities |
|
|
|
|
| Bank liabilities |
| 179,313 |
| 153,375 |
| Accounts payable |
| 8,048,608 |
| 6,181,057 |
| Accrued expenses |
| 7,831,247 |
| 5,444,514 |
| Note payable |
| 2,736,912 |
| 3,023,759 |
| Notes payable to related parties |
| 1,130,978 |
| 1,162,100 |
| EUR-Bond |
| 8,488,631 |
| - |
| CHF-Bond |
| - |
| 25,511,898 |
| Total current liabilities |
| 28,415,689 |
| 41,476,703 |
| Non-current liabilities |
|
|
|
|
| EUR-Bond |
| - |
| 9,057,986 |
| Convertible CHF-Bond |
| 28,720,443 |
| - |
| Liability related to conversion feature |
| 6,976,322 |
| - |
| Notes payable to related parties |
| 47,198,362 |
| 30,299,312 |
| Other long term debts |
| 36,140 |
| 74,837 |
| Pension liabilities |
| 210,680 |
| 136,433 |
| Total non-current liabilities |
| 83,141,947 |
| 39,568,568 |
| Total liabilities | $ | 111,557,636 |
| 81,045,271 |
|
|
|
|
| |
| 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; 95,941,603 shares issued and outstanding, as of December 31, 2015 and 83,541,603 shares issued and outstanding as of December 31, 2014 |
| 959,416 |
| 835,416 |
| Additional paid-in capital |
| 23,403,438 |
| 22,942,486 |
| Accumulated other comprehensive income / (loss) |
| 1,778,961 |
| 1,265,590 |
| Accumulated deficit |
| (67,406,803) |
| (47,674,581) |
| Treasury stock, 0 shares, as of December 31, 2015 and December 31, 2014, respectively |
| - |
| - |
| Total stockholders' deficit |
| (41,264,988) |
| (22,631,089) |
| Total liabilities and stockholders' deficit | $ | 70,292,648 |
| 58,414,182 |
The accompanying notes are an integral part of these consolidated financial statements
F-3
| SUNVESTA, INC. |
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS |
| Years Ended December 31, 2015 and 2014 |
|
| 2015 |
| 2014 |
| |
|
|
|
|
|
|
|
| Revenues |
|
|
|
|
|
| Revenues, net | $ | - |
| - |
|
| Cost of revenues |
| - |
| - |
|
| Gross profit |
| - |
| - |
|
|
|
|
|
|
|
|
| Operating expenses |
|
|
|
|
|
| General and administrative expenses |
| (5,986,071) |
| (6,734,491) |
|
| Total operating expenses |
| (5,986,071) |
| (6,734,491) |
|
|
|
|
|
|
|
|
| Loss from operations | $ | (5,986,071) |
| (6,734,491) |
|
|
|
|
|
|
|
|
| Other income / (expenses) |
|
|
|
|
|
| Interest income |
| 44,957 |
| 36,006 |
|
| Interest expense |
| (4,147,997) |
| (4,146,322) |
|
| Amortization of debt issuance costs and commissions |
| (3,428,099) |
| (928,914) |
|
| Change in Fair Value of Conversion Feature |
| 386,660 |
| - |
|
| Loss on extinguishment of debt |
| (7,678,080) |
| - |
|
| Exchange differences |
| 1,185,680 |
| 3,837,903 |
|
| Other income / (expenses) |
| (108,121) |
| (15,168) |
|
| Total other income / (expenses) |
| (13,745,000) |
| (1,216,495) |
|
|
|
|
|
|
|
|
| Loss before income taxes |
| (19,731,071) |
| (7,950,986) |
|
| Income Taxes |
| (1,151) |
| - |
|
| Net loss |
| (19,732,222) |
| (7,950,986) |
|
|
|
|
|
|
|
|
| Other Comprehensive loss: |
|
|
|
|
|
| Foreign currency translation |
| 513,371 |
| 3,468,504 |
|
| Total Comprehensive loss | $ | (19,218,851) |
| (4,482,482) |
|
|
|
|
|
|
|
|
| Loss per common share |
|
|
|
|
|
| Basic and diluted | $ | (0.21) |
| (0.09) |
|
|
|
|
|
|
|
|
| Weighted average common shares |
|
|
|
|
|
| Basic |
| 94,338,589 |
| 88,325,165 |
|
| Diluted |
| 94,338,589 |
| 88,325,165 |
|
The accompanying notes are an integral part of these consolidated financial statements.
F-4
SUNVESTA, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
Years Ended December 31, 2015 and 2014
Common
Additional
Accumulated
Accumulated
Treasury
Total
Stock
Paid in Capital
Other
deficit
Stock
Stockholders’
Comprehensive
Deficit
Income (Loss)
December 31, 2013
835,416 $
21,852,666 $
(2,202,914) $
(39,723,595) $
(23,755) $
(19,262,182)
Net loss
-
-
-
(7,950,986)
-
(7,950,986)
Foreign currency
-
-
3,468,504
-
-
3,468,504
translation
Stock based
compensation expense
-
1,103,275
-
-
-
1,103,275
Sale of treasury stock
-
(13,455)
-
-
23,755
10,300
December 31, 2014
$
835,416 $
22,942,486 $
1,265,590 $
(47,674,581) $
- $
(22,631,089)
Net loss
-
-
-
(19,732,222)
-
(19,732,222)
Foreign currency
-
-
513,371
-
-
513,371
translation
Stock based
compensation expense
124,000
460,952
-
-
-
584,952
December 31, 2015
$
959,416 $
23,403,438 $
1,778,961 $
(67,406,803) $
- $
(41,264,988)
The accompanying notes are an integral part of these consolidated financial statements.
F-5
SUNVESTA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2015 and 2014
2015
2014
Cash flows from operating activities
Net loss
$
(19,732,223)
(7,950,986)
Adjustments to reconcile net loss to net cash
Depreciation and amortization
67,163
62,478
Amortization of debt issuance costs and commissions
3,428,099
928,914
Unrealized exchange differences
(1,925,603)
(1,301,145)
Stock compensation expense
584,952
1,103,275
Loss on extinguishment of debt
7,678,080
-
Change in Fair Value of conversion feature
(386,660)
-
Increase in pension fund commitments
74,833
50,604
- Increase / decrease in:
Other current assets
130,582
(270,465)
Accounts payable
1,910,735
(544,694)
Accrued expenses
2,145,169
429,009
Net cash used in operating activities
(6,024,873)
(7,493,010)
Cash flows from investing activities
Notes receivable
(280,242)
Receivables from related parties
(1,507,128)
(2,625,058)
Purchase of property and equipment
(6,801,793)
(5,005,536)
Deposits related to construction
21,811
(151,477)
Down payments for property and equipment
(610,810)
-
Restricted cash
56
(2,534)
Net cash used in investing activities
(9,178,106)
(7,784,605)
Cash flows from financing activities
Increase in bank liabilities
25,938
153,375
Proceeds from notes payable related parties
18,579,621
2,114,876
Repayment of notes payable related parties
(2,320,261)
(1,733,837)
Proceeds from notes payable
607,151
2,690,800
Repayment of notes payable
(121,486)
(1,076,495)
Proceeds from bond issuance, net of commissions
12,405,719
20,664,185
Repayment of bonds
(9,837,471)
(5,729,712)
Payment for debt issuance costs
(4,013,026)
(2,519,733)
Changes in other long term debt
-
44,411
Purchase/Sale of treasury stock
-
10,300
Net cash provided by financing activities
15,326,185
14,618,170
Effect of exchange rate changes
(25,723)
44,119
Net increase / - decrease in cash
97,483
(615,326)
Cash and cash equivalents, beginning of period
14,347
629,673
Cash and cash equivalents, end of period
$
111,830
14,347
The accompanying notes are an integral part of these consolidated financial statements
F-6
SUNVESTA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2015 and 2014
Additional information
2015
2014
Interest paid
2,395,000
1,509,889
Capitalized interest and debt issuance costs for construction (non-cash)
3,335,000
2,883,999
Repayment of Specogna Holding AG loan by Aires (non-cash)
707,428
-
Assumption of loans Josef Mettler by AIRES (non-cash)
1,507,128
1,455,214
Assumption of loans 4f capital by AIRES (non-cash)
-
1,142,681
Payment of Wernli loan by AIRES
-
568,000
Assumption of loans Dr. Max Rössler by AIRES (non-cash)
1,551,669
-
The accompanying notes are an integral part of these consolidated financial statements
F-7
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
1.
CORPORATE INFORMATION
On August 27, 2007, SunVesta Inc. (“SunVesta”) acquired SunVesta Holding AG (“SunVesta
AG”) (collectively “the Company”). SunVesta AG holds five wholly-owned subsidiaries:
SunVesta Projects and Management AG, a Swiss company; Rich Land Investments Limitada, a
Costa Rican company (“Rich Land”); SunVesta Costa Rica Limitada, a Costa Rican company
(“SVCR”), Altos del Risco SA, a Costa Rican company (“AdR”) and SunVesta Holding España SL
(“España”), a Spanish company.
In January 2005, the Company changed its business focus to the development of holiday resorts and
investments in the hospitality and related industry. The Company has one major project 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 still in 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
Principles of Consolidation
The consolidated financial statements include those of the Company and its subsidiaries. One
hundred percent of assets and liabilities as well as revenues and expenses of all consolidated
companies are included. Receivables, payables, as well as revenues and expenses between
consolidated companies are eliminated. Unrealized intercompany profits, which may be included
in assets as of the end of the respective periods are also eliminated. Certain previously reported
amounts have been reclassified to conform to the current presentation.
Fiscal year
The fiscal year of the Company and all its subsidiaries correspond with the calendar year.
Use of estimates
These consolidated financial statements are prepared in conformity with accounting principles
generally accepted in the United States of America (“US GAAP”) and require management to
make assumptions and estimates, which have an impact on the reported assets and liabilities as well
as on the disclosure of contingent assets and liabilities at the balance sheet dates. These
considerations also impact reported income statement items. While the effective amounts may vary
from the estimates, management is convinced that all relevant information having an impact on the
estimates have been taken into consideration and are appropriately disclosed. Management
believes that the valuation of property and equipment includes substantial estimates.
F-8
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
2.
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Cash and cash equivalents
Cash and cash equivalents include petty cash, post and bank accounts as well as time deposits with
maturities of less than three months.
Notes receivable
Notes receivable consists of an advance due from REP Caribbean Development Corporation. This
receivable is stated at the amount the Company intends to collect. The Company makes ongoing
estimates regarding the collectability.
Allowance for Doubtful Accounts
Management makes ongoing estimates relating to the collectability of receivable balances and
maintains a reserve for estimated losses resulting from the inability of counterparties to meet their
financial obligation to us. As of December 31, 2015 and 2014 the Company does not have any
amounts reserved in the consolidated balance sheet nor bad debt expense recorded in the statement
of comprehensive loss.
Other assets
Other assets include items, such as value added tax, withholding tax or similar credits with
maturities less than one year.
Property and equipment
Property and equipment are valued at cost less accumulated depreciation. Repair and maintenance
expenses are charged to the income statement when incurred. The cost of fixed assets, including
leasehold improvements are capitalized and depreciated over the following useful lives:
— Land (concessions)
not depreciated
— IT equipment
3 years
— Other equipment and furniture
5 years
— Leasehold improvements
5 years
— Vehicles
5 years
— Project in process
not depreciated until project finished
The cost and the related accumulated depreciation are removed from the balance sheet at the time
of disposal.
Project in process relates to costs incurred directly related to the planning and construction of the
hotel in the Papagayo Gulf Tourism Project of Costa Rica and are reasonably recoverable from
future hotel and rental operations or the sale of certain apartments. Once the project in process is
finished the Company will reclassify the capitalized costs to corresponding categories and
determine the depreciation method and depreciation period.
F-9
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
2.
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Interest capitalization
Interest expense is capitalized on the carrying value of the construction in progress during the
construction period, in accordance with ASC 835-20, Capitalization of Interest. With respect to the
construction in progress, the Company capitalized $9,365,000 and $6,030,000 of interest expense
and debt issuance costs as of December 31, 2015 and December 31, 2014, respectively to property
and equipment.
Deposits related to construction work
The Company prepays deposits for construction work, which costs are capitalized initially and will
be amortized once construction has begun.
Debt issuance costs
Debt issuance costs arise as a result of issuing debt, i.e. the EUR bonds, CHF bonds, CHF
convertible bonds and the loan with Aires International Investments Inc., and are amortized over
the life of the debt using the effective interest method. The costs comprise of finder's fees of
generally between three and 12 percent of the amount issued and costs incurred in connection with
issuing the bonds, such as legal and accounting fees, and stamp duty taxes. The accumulated
amortization of debt issuance costs was $797,857 and $4,345,089 as of December 31, 2015 and
December 31, 2014, respectively.
Down payment for property and equipment
Down payments for property and equipment are recorded at cost. Once the corresponding property
and equipment item has been completely purchased, it will be reclassified to a corresponding
subcategory within property and equipment and amortized. The Company assesses regularly if the
down payments are recoverable in accordance with ASC 360 Property, Plant, and Equipment.
Should any down payments due to specific circumstances not be assessed as recoverable, they will
be impaired.
Restricted Cash
Restricted cash includes cash that is not disposable for the Company without third party permission
such as rental deposits or deposits related to the project in process. Based on the nature of the
Company’s underlying business it will be determined whether a deposit is recorded as a current or
non-current asset.
F-10
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
2.
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Impairment of Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be recoverable. The carrying value of a
long-lived asset or asset group is considered to be impaired when the undiscounted expected cash
flows from the asset or asset group are less than its carrying amount. An impairment loss is
recognized to the extent that the carrying value of the asset exceeds its fair value. Fair value is
determined based on quoted market prices, where available, or is estimated as the present value of
the expected future cash flows from the asset or asset group discounted at a rate commensurate with
the risk involved.
Income taxes
The Company has not incurred material current taxes on income as it has not generated taxable
income in any of the jurisdictions in which it operates.
Deferred taxes are calculated on the temporary differences that arise between the tax base of an
asset or liability and its carrying value on the balance sheet of the Company prepared for
consolidation purposes, with the exception of temporary differences arising on investments in
foreign subsidiaries where the Company has plans to permanently reinvest profits into the foreign
subsidiaries.
Deferred tax assets on tax loss carry-forwards are only recognized to the extent that it is more likely
than not, that future profits will be available and the tax loss carry-forward can be utilized.
Changes to tax laws or tax rates enacted at the balance sheet date are taken into account in the
determination of the applicable tax rate provided that they are likely to be applicable in the period
when the deferred tax assets or tax liabilities are realized.
The Company is subject to income taxes in the United States of America, Switzerland, Spain and
Costa Rica. Significant judgment is required in determining income tax provisions and in
evaluating tax positions.
The Company recognizes the benefit of uncertain tax positions in the financial statements when it is
more likely than not that the position will be sustained on examination by the tax authorities. The
benefit recognized is the largest amount of tax benefit that is greater than 50 percent likely of being
realized on settlement with the tax authority, assuming full knowledge of the position and all
relevant facts. The Company adjusts its recognition of these uncertain tax benefits in the period in
which new information is available impacting either the recognition or measurement of its
uncertain tax position. Interest and penalties related to uncertain tax positions are recognized as
income tax expense.
F-11
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
2.
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Concentration of risks
Financial instruments that potentially subject the Company to concentrations of credit risk are
primarily cash and cash equivalents. Cash and cash equivalents are maintained with several
financial institutions. Deposits held with banks may exceed the amount of insurance provided on
such deposits. Generally, these deposits may be redeemed upon demand. Cash and cash equivalents
are subject to currency exchange rate fluctuations.
Foreign Currency Translation and Transactions
The consolidated financial statements of the Company are presented in US Dollars (“$”) which is
also the functional currency of the parent company. The financial position and results of operations
of our foreign subsidiaries are determined using the currency of the environment in which an entity
primarily generates and expends cash as the functional currency. Assets and liabilities of these
subsidiaries are translated at the exchange rate in effect at each year-end. Statement of
comprehensive loss accounts are translated at the average rate of exchange prevailing during the
year. Translation adjustments arising from the use of differing exchange rates from period to period
are included in accumulated other comprehensive income (loss) in stockholders’ deficit. Gains and
losses resulting from foreign currency transactions are included in other income and expenses
(exchange differences), except intercompany foreign currency transactions that are of a
long-term-investment nature which are included in accumulated other comprehensive income in
stockholders’ equity.
Bonds
Bonds comprise of bonds payable in Euros (“EUR”) and Swiss Francs (“CHF”), which bear fixed
interest rates. Bonds are carried at notional value. If a bond becomes repayable within the next 12
months from the balance sheet date on, such bond or the corresponding portion of this bond will be
categorized as current. Commissions paid to bondholders themselves are reflected as debt
discounts and amortized over the term of the bond, based on the “effective interest method”. The
amortization expense is reflected in amortization of debt issuance cost.
F-12
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
2.
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Pension Plan
The Company maintains a pension plan covering all employees in Switzerland; it 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
statement of comprehensive loss 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, by recording a corresponding
expense 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.
Related parties
Parties are considered to be related if one party directly or indirectly controls, is controlled by, or is
under common control with the other party, if it has an interest in the other party that gives
significant influence over the party, if it has joint control over the party, or if it is an associate or a
joint venture. Senior management of the Company or close family members is also deemed to be
related parties.
Earnings per Share
Basic earnings per share are calculated using the Company’s weighted-average outstanding
common shares. When the effects are not anti-dilutive, diluted earnings per share is calculated
using the weighted-average outstanding common shares and the dilutive effect of warrants and
stock options, if any, as determined under the treasury stock method.
Additionally, the Company's two convertible CHF-Bonds were issued in October 2015. These
convertible CHF bonds convert into shares of Sunvesta Holding AG, the Company's wholly owned
subsidiary. The resulting common shares assumed to be converted as of the issuance date are
included in the denominator for diluted EPS under the if-converted method to the extent that their
effect is considered dilutive.
F-13
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
2.
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, restricted cash,
receivables from related parties, bank liabilities, accounts payable to third or related parties, note
payables to third or related parties and bonds. The fair value of these financial instruments
approximate their carrying value due to the short maturities of these instruments, unless otherwise
explicitly noted.
ASC 820 Fair Value Measurements establishes a three-tier fair value hierarchy, which prioritizes
the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs
such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active
markets that are either directly or indirectly observable; and Level 3, defined as unobservable
inputs in which little or no market data exists, therefore requiring an entity to develop its own
assumptions.
Stock-based compensation
Stock-based compensation costs are recognized in earnings using the fair value based method for
all awards granted. Compensation costs for unvested stock options and awards are recognized in
earnings over the requisite service period based on the fair value of those options and awards. For
employees, fair value is estimated at the grant date and for non-employees’ fair value is
re-measured at each reporting date as required by ASC 718 Compensation-Stock Compensation,
and ASC 505-50 Equity-Based Payments to Non-Employees. Fair values of awards granted under
the share option plans are estimated using a Black-Scholes option pricing model. The model’s input
assumptions are determined based on available internal and external data sources. The risk-free rate
used in the model is based on the US treasury rate for the expected contractual term. Expected
volatility is based on historical volatilities of a peer group of similar companies in the same
industry.
Derivative Financial Instruments
Derivative financial instruments are initially measured at fair value at the contract date and are
subsequently measured to fair value at each reporting date. The Company's derivative financial
instrument relates to the conversion feature bifurcated from the Company's convertible CHF Bond
(Note 12), is accounted for under ASC 815 and recorded as Liability related to conversion feature
in the consolidated balance sheets. Changes in the fair value each period (gains or losses) are
reflected in the statement of comprehensive loss as Change in Fair Value of Conversion Feature.
F-14
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
2.
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
New accounting standards – not adopted
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.
In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards
Updates (ASU) 2015-03 which requires that debt issuance costs be reported in the balance sheet as
a direct deduction from the face amount of the related liability, consistent with the presentation of
debt discounts. Prior to the amendments, debt issuance costs were presented as a deferred charge
(i.e., an asset) on the balance sheet. The ASU provides examples illustrating the balance sheet
presentation of notes net of their related discounts and debt issuance costs. Further, the
amendments require the amortization of debt issuance costs to be reported as interest expense.
Similarly, debt issuance costs and any discount or premium is considered in the aggregate when
determining the effective interest rate on the debt. The amendments are effective for public
business entities for fiscal years beginning after December 15, 2015, and interim periods within
those fiscal years. The application of this ASU will result in the reclassification of debt issuance
cost and the relating amortization.
In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards
Updates (ASU) 2014-15 requiring an entity’s management to evaluate whether there are conditions
or events, considered in aggregate, that raise substantial doubt about entity’s ability to continue as a
going concern within one year after the date that the financial statements are issued (or within one
year after the date that the financial statements are available to be issued when applicable). The
amendments to (ASU) 2014-15 are effective for the annual period ending after December 15, 2016,
and for annual periods and interim periods thereafter. Early application is permitted. The Company
is in the process of evaluating the prospective impact that (ASU) 2014-15 will have on its balance
sheet.
F-15
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
3.
GOING CONCERN
The Company is currently working on building a hotel in the Papagayo Gulf Tourism Project area
of Guanacaste, Costa Rica. The project is expected to open in the fourth quarter of 2017. Until the
completion of the project, the following expenditures are estimated to be incurred:
a. Gross project cost
$
217,000,000
b. Less: Proceeds from sale of villas
(25,000,000)
c. Net project cost
192,000,000
d. Overhead expenses
20,000,000
e. Total, excluding other potential projects
$
212,000,000
Sixty percent (60%) of the Net project cost is intended to be financed through the issuance of
secured bonds, for which negotiations have been initiated. The remaining forty percent (40%) of
the Net project cost, as well as non-recuperated overhead expenses are intended to be financed by
the main shareholders or lenders of the project, i.e. Zypam Ltd., shareholder and related entity to
Mr. Josef Mettler, Mr. Hans Rigendinger, shareholder, Company Director and Chief Operating
Officer, Dr. Max Rӧssler, controlling shareholder of Aires International Investment, Inc. and
Company Director, Mr. Josef Mettler, shareholder, Company Director, Chief Executive Officer
and Chief Financial Officer.
On July 16, 2012, certain principal shareholders of the Company or principal lenders to the project
entered into a Guaranty Agreement in favor of the Company. The purpose of the guaranty is to
ensure that until financing is secured for the entire project that they will act as guarantors to
creditors to the extent of the project’s ongoing capital requirements. On September 22, 2015, the
signatories to the guaranty formally agreed to maintain the guaranty, as necessary, until December
31, 2018, 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 December 31, 2015 and the filing date, though future anticipated cash outflows for investing
activities continue to depend on the availability of financing.
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 & cash
USD ($)
EURO
CHF
CRC
Total
Total
equivalents
December 31, 2015 December 31, 2014
original currency
98,629
10,696
1,507
8,533
in $
98,629
11,667
1,518
16
111,830
14,347
USD ($) =
US Dollar
EURO =
Euro
CHF
=
Swiss Francs
CRC
=
Costa Rican Colón
F-16
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
5.
RESTRICTED CASH
As of December 31, 2015, the Company has the following restricted cash positions:
Restricted Cash
December 31, 2015
December 31, 2014
$
$
Credit Suisse in favor of
BVK Personalvorsorge des Cantons Zurich
128,805
129,272
HSBC in favor of
Costa Rican Tourism Board
370,000
370,000
Banco Nacional de Costa Rica in favor of the
Costa Rican Environmental Agency – SETENA
622,312
622,312
Banco National de Costa Rica in favor of the Costa Rican
Tourism Board
563,350
563,350
Gross
1,684,467
1,684,934
Restricted cash positions in favor of Costa Rican Tourism Board and Costa Rican Environmental
Agency – SETANA are related to the hotel project in Costa Rica and therefore their release is not
expected before finalization of the corresponding project. Due to this fact these restricted cash
positions have been classified as long term.
The restricted cash position in favor of BVK Personalvorsorge des Cantons Zurich is a rental
deposit related to a long term lease contract for office space. Due to this fact this restricted cash
position is also classified as long term.
6.
NOTE RECEIVABLE
On June 15, 2015, the Company granted REP Caribbean Development Corporation, a third party, a
short term advance in the amount of $250,000. The repayment was due on November 30, 2015 with
a fixed interest payment of $5,000. The advance is secured by a non-related Swiss individual. On
December 10, 2015 the advance was increased by $25,000. Including accrued interest, the overdue
amount at December 31, 2015 was approximately $280,000.
Dated April 27, 2016 the related party QuadEquity Holdings AG has signed a commitment to
purchase against cash this note receivable not later than June 30, 2016.
F-17
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
7.
PROPERTY & EQUIPMENT
December 31, 2015
December 31, 2014
Land
$
19,700,000
19,700,000
IT Equipment
185,846
185,846
Other equipment and furniture
278,000
277,557
Leasehold improvements
66,617
66,617
Vehicles
139,000
139,000
Construction in-process
41,412,351
31,275,559
Gross
61,781,814
51,644,579
Less accumulated depreciation
(510,390)
(443,227)
Net
$
61,271,424
51,201,352
Depreciation expenses for the year
67,163
62,478
Property and equipment is comprised primarily of land held in Costa Rica that is currently being
developed for hotels and capitalized project costs in connection with the Papagayo Gulf Tourism
project. The land amounts to $19.7 million comprised of $7 million related to the concession held
by Rich Land (~84,000 m2) and $12.7 million held by AdR (~120,000 m2).
The Rich Land concession is a right to use the property for a specific period of time of initially 20
years from the date of grant, which thereafter can be renewed at no further cost, if the landholder is
up to date with its obligations and if there is no significant change in government policies. The
current concession initially expired in June 2022.
The AdR concession is also a right to use the property for a specific period of time of initially 30
years from the date of grant, which thereafter can be renewed at no further cost, if the landholder is
up to date with its obligations and if there is no significant change in government policies. The
current concession initially expired in November 2036.
On July 14, 2015 the Consejo del Polo de DesarrolloTuristico Papagayo at ICT (Council of
Papagayo Tourism Development Project), unanimously has approved the extension of both
concessions until 2052.
The construction in process through December 31, 2015 and December 31, 2014, is represented
primarily by architectural work related to the hotel and apartments as well as construction work.
Deposit related to construction work
For the year ended December 31, 2015, the Company made deposits with several contractors to
initiate earth moving groundwork. These deposits will be offset against invoices for such
groundwork as completed. As of December 31, 2015 and 2014, the Company has deposits of
$798,874 and $820,565 respectively remaining.
F-18
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
8.
DOWN PAYMENTS FOR PROPERTY & EQUIPMENT
December 31, 2015
December 31, 2014
La Punta (neighboring piece of land)
$
2,669,816
2,369,816
Hotels Engadina
$
302,267
Gross
$
2,972,083
2,369,816
Total (net)
$
2,972,083
2,369,816
Agreement to purchase neighboring pieces of land
On April 20, 2012, the Company entered into an agreement to purchase two additional concession
properties located at Polo Papagayo, Guanacaste, with a total surface of approximately 230,000
square meters for $22,895,806, whereof fifty percent was to be paid in cash and the other fifty
percent through a combination of a 10 percent equity share in La Punta (the concession properties
in Polo Papagayo) and five percent in equity of Paradisus Papagayo Bay Resort & Luxury Villas
(currently under construction). Both of these are located in Costa Rica. The payment schedule was
as follows:
-
$0.5 million is required as a cash payment by May 16, 2012
-
$5.0 million is required as a cash payment by August 31, 2012
-
$5.698 million is required as a cash payment by January 31, 2013
-
Equity is required to be transferred upon final payment
On November 13, 2012, the above agreement was amended to decrease the total purchase price to
$17.2 million with no equity payments. The terms and conditions of the cash payment were to be
defined. Furthermore, all payments by the Company to date and in the future became refundable.
During the second quarter of 2013, the Company entered into a new, revised agreement for the
purchase of two additional concession properties at Polo Papagayo, Guanacaste. The original
contract as described above was cancelled and replaced by a new contract, which included the
following clauses:
-
The total purchase price is $17,500,000 of which $1,369,816 has been paid as of date of the new revised
agreement and therefore $16,130,184 is outstanding as per date of the new, revised agreement.
-
Since the original seller of these two additional concession properties at Polo Papagayo, Guanacaste owes a
third party $8,000,000 the Company has to pay $8,000,000 of the purchase price directly to this third party
instead of the original seller. The remaining $8,130,184 will be paid directly to the original seller of the
concession properties.
-
The payment schedule for these two additional concession properties at Polo Papagayo Guanacaste is as
hereinafter:
Third Party
-
$300,000 on May 4, 2013 which was paid on May 3, 2013 and is non-refundable
-
$1,000,000 on June 30, 2013, which is refundable and $700,000 of this $1,000,000 was paid on October 29,
2013. The remaining $300,000 was paid in 2015.
-
$1,000,000 on July 31, 2013, which is refundable and has not been paid as of the date of this report.
-
$1,000,000 on August 31, 2013 which is refundable and has not been paid as of the date of this report.
-
$1,500,000 on September 30, 2013, which is refundable and has not been paid as of the date of this report.
-
$1,500,000 on October 31, 2013, which is refundable and has not been paid as of the date of this report.
-
$1,700,000 on November 30, 2013, which is refundable and has not been paid as of the date of this report.
$8,000,000 in total to Third Party
F-19
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
8.
DOWN PAYMENT FOR PROPERTY & EQUIPMENT - CONTINUED
Original Seller
-
$1,000,000 on January 31, 2014 which has not been paid as of the date of this report and is non-refundable.
-
$1,000,000 on February 28, 2014 which has not been paid as of the date of this report and is non-refundable.
-
$1,000,000 on March 31, 2014 which has not been paid as of the date of this report and is non-refundable.
-
$1,000,000 on April 30, 2014 which has not been paid as of the date of this report and is non-refundable.
-
$1,000,000 on May 31, 2014 which has not been paid as of the date of this report and is non-refundable.
-
$1,000,000 on June 30, 2014 which has not been paid as of the date of this report and is non-refundable.
-
$1,000,000 on July 31, 2014 which has not been paid as of the date of this report and is non-refundable.
$1,130,184 on August 31, 2014 which has not been paid as of the date of this report and is non-refundable.
$8,130,184 in total to Original Seller
The Company had paid down payments on the purchase of these properties of $2,669,816 as of
December 31, 2015, of which $300,000 was paid in refundable payments during the period ended
December 31, 2015 as part of the new, revised agreement noted above totaling $16,100,000. The
Company is in discussions with the Original Seller regarding an extension of this agreement.
Additionally, a failure to pay will lead to liquidated damages of 5% of any installments paid toward
the purchase price. Should the Company not be successful in obtaining a time extension for the
payment of the purchase price or amendment to the purchase agreement, it will have to write-off
$300,000 of that purchase price paid in 2013 for the new, revised agreement and 5% of additional
damages on the additional $1,000,000 paid for a total of $50,000, which is not refundable as per
contract terms.
The original $1,369,816 was made pursuant to a previous agreement and is not subject to the 5%
liquidated damages clause.
Down payment for Purchase Four Hotels in the Canton of Graubünden, Switzerland
On September 19, 2016, the Company signed an agreement for the acquisition of four existing
hotels in the Canton of Graubünden, Switzerland. The properties comprise an aggregate of 141
rooms. The consideration for this down payment is $302,267, which amount was paid on October
25, 2015. Should the transaction not close before a date that is yet to be renegotiated then the
consideration will not be refundable. In the event that the transaction does close then this
consideration will be allocated to the total purchase price for the hotels.
F-20
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
9.
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 December 31, 2015 and December 31, 2014, respectively, there are no financial assets or
liabilities measured on a recurring basis at fair value.
F-21
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
9.
FAIR VALUE MEASUREMENT - CONTINUED
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:
—
Cash and cash equivalents – carrying amount approximated fair value.
—
Restricted cash – carrying amount approximated fair value.
—
Receivables from related parties (current) – carrying amount approximated fair value due to the short term nature of
the receivables.
—
Accounts Payable – carrying amount approximated fair value.
—
Note payable – carrying amount approximated fair value due to the short term nature of the note payable.
—
Bank liabilities - carrying amount approximated fair value due to the short term nature of bank liabilities.
—
Notes receivable - carrying amount approximated fair value.
—
Notes payable to related parties - Dr. M. Rӧssler (current) –The fair value was calculated based on the underlying
publically traded shares. However, the Company records the loan at nominal value. The Company does not have
sufficient cash to repurchase the shares as of balance sheet date and hence repay the loans in shares.
—
Notes payable to related parties – (current) – carrying amount approximated fair value due to the short term nature of
the notes payable.
—
EUR– bond (old) – carrying amount approximated fair value due to its short term nature
—
EUR- bonds – The fair values of the bonds payable are classified as level 3 fair values. The fair values of the bonds
have been determined by discounting cash flow projections discounted at the respective interest rates of 7.25% for
EUR bonds, which represents the current market rate based on the creditworthiness of the Company. Hence, the
carrying values approximate fair value.
—
CHF-bonds – The fair values of the bonds payable are classified as level 3 fair values. The fair values of the bonds
have been determined by discounting cash flow projections discounted at the respective interest rates of 7.25% for
CHF bonds, which represents the current market rate based on the creditworthiness of the Company. Hence, the
carrying values approximate fair value.
—
Notes payable to related parties – Aires (non-current) – The fair values of the notes payable to Aires International
Investments Inc. are classified as level 3. The fair values of the notes were determined by discounting cash flow
projections discounted at the respective interest rates of 7.25%, which represents the current market rate based on the
creditworthiness of the Company. Hence, the carrying value approximates fair value.
—
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.
Hence the carrying value of the obligation approximates the fair value.
F-22
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
9.
FAIR VALUE MEASUREMENT - CONTINUED
The fair value of our financial instruments is presented in the table below:
December 31, 2015
December 31, 2014
Carrying
Fair Value Carrying
Fair Value
Fair Value Reference
Amount
Amount
Levels
$
$
$
$
Cash and cash equivalents
111,830
111,830
14,347
14,347
1
Note 4
Restricted cash
1,684,467
1,684,467 1,684,934
1,684,934
1
Note 5
Receivables from related
parties – other (current)
19,945
19,945
27,163
27,163
3
Note 10
Accounts Payable
8,048,608
8,048,608 6,181,057
6,181,057
1
-
Bank liabilities
179,313
179,313
153,375
153,375
1
Note11
Note payable
2,736,912
2,736,912 3,023,759
3,023,759
1
Note 17
Notes payable to related
parties – Dr. M. Rӧssler
-
-
803,223
765,890
1
Note 10
(current)
Notes payable to related
1,973
1,973
1,914
1,914
3
Note 10
parties – Rigendinger (current)
Notes payable to related
1,129,005
1,129,005
356,963
356,963
3
Note 10
parties – other (current)
Notes receivable
280,242
280,242
0
0
3
Note 6
EUR-bonds
8,488,631
8,488,631 9,057,986
9,057,986
3
Note 12
CHF-bonds
-
- 25,511,898
25,511,898
3
Note 12
Convertible CHF-bonds
28,720,443
28,720,443
0
0
3
Note 12
Notes payable to related
47,198,362
47,198,362 30,299,312
30,299,312
3
Note 10
parties – Aires (non-current)
Liability related to conversion
feature
6,976,322
6,976,322
0
0
3
Note 12
The Company's financial liabilities measured at fair value on a recurring basis consisted of the
liability relates to conversion feature as of the following date:
Balance at December 31, 2014
-
Value at Inception (Loss on Extinguishment) - October 1, 2015
$6,929,614
Q4 Additions
$433,368
Change in Fair Value of Conversion Feature
($386,660)
Balance at December 31, 2015
$6,976,322
F-23
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
9.
FAIR VALUE MEASUREMENT - CONTINUED
The Company used a Black-Scholes model to value the Liability related to conversion feature as of
October 1, 2015 and December 31, 2015.
The assumptions as of October 1, 2015 are as follows:
Stock Price: CHF 5.08
Annualized Risk Free Rate: .72%
Exercise Price: CHF 8
Annualized Volatility: 80%
Time to Maturity: 3 years
The assumptions as of December 31, 2015 are as follows:
Stock Price: CHF 5.08
Annualized Risk Free Rate: .72%
Exercise Price: CHF 8
Annualized Volatility: 80%
Time to Maturity: 2.75 years
F-24
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
10.
RELATED PARTY TRANSACTIONS
The advances from (to) related parties are composed as follows:
Receivables
Payables
December 31,
December 31,
December 31,
December 31,
2015
2014
2015
2014
1
Hans Rigendinger
-
-
1,973
1,914
2
Aires International
-
-
47,198,362
30,299,312
3
Dr. Max Rӧssler
-
-
-
803,223
4
Akyinyi Interior and
Exterior Decoration
-
-
290,000
170,000
5
Global Care AG
-
-
240,210
186,963
6
Geoffrey Long
19,945
27,163
-
-
7
Sportiva participations
ag
-
-
528,660
-
8
Josef Mettler
70,135
9
QuadEquity Holdings
-
-
-
-
10 4f capital ag
-
-
-
-
Total excluding
interest
19,945
27,163
48,329,340
31,461,412
Accrued interest
-
-
6,370,579
3,818,494
Total
19,945
27,163
54,699,919
35,279,906
of which non-current
-
-
47,198,362
30,299,312
Related party
Capacity
Interest Repayment
Rate
Terms
Security
1 Hans Rigendinger Shareholder, COO and Company board member
3%
none
none
2 Aires International Company owned 100% by Dr. Max Rössler, a Company board member
3 Dr. Max Rӧssler
Shareholder and Company board member
Akyinyi Interior
4 and Exterior
Company owned by the wife of CEO, who is also a
Decoration
Company board member
none
none
none
5 Global Care AG
Company owned by Dr. Max Rössler
none
none
none
6 Geoffrey Long
Head of Accounting “The Americas”
none
none
none
7 Sportiva
participations ag
Company owned by Josef Mettler
3%
none
none
8 Josef Mettler
Shareholder, CEO, CFO and Company board member
3%
none
none
9 Quad Equity
Company owned by Josef Mettler (see above)
none
none
none
10 4f capital ag
Company owned by Josef Mettler (see above)
none
none
none
F-25
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
10.
RELATED PARTY TRANSACTIONS - CONTINUED
Loan agreement Aires International Investment Inc.
As of December 31, 2015, the Company owes Aires International Inc. the following:
Borrower
Debt instrument
Amount in CHF
Amount in
Annual
Repayment date
denominated in
USD
interest
*
CHF
rate
SunVesta Inc.
Promissory note
10,044,370
10,234,240
7.25 %
Dec 31, 2017
SunVesta Inc.
Promissory note
10,000,000
10,089,900
7.25 %
Dec 31, 2017
SunVesta Inc.
Promissory note
10,000,000
10,089,900
7.25 %
Dec 31, 2017
SunVesta Inc.
Promissory note
2,750,408
2,775,134
7.25 %
Dec 31, 2017
SunVesta Holding
Loan agreement
13,904,120
14,009,188
7.25 %
Dec 31, 2017
Total
47,198,362
*
The notes may be repaid in whole or in part.
Loans due to Dr. Max Rӧssler
In 2012, Dr. Max Rössler, a related party, provided loans totaling $0.8 million that were initially
repayable in December 2012 but were extended through December 2015. These loans were to be
repaid in cash or with the delivery of certain shares of equity in two public companies. The
Company had the right of settlement and carried the loans at their fair values, which was the
amount of cash paid in without considerations for the change in value of the underlying securities.
In December 2015, Dr. Rössler and the Company settled these loans through a transfer to a separate
debtor - Aires - of $1,551,669 (CHF 1,535,900). The Company assessed this debt modification to
be an extinguishment under the guidance prescribed in ASC 470-50 and correspondingly
recognized a Loss on Extinguishment in its statements of comprehensive loss for $748,466.
Loan due to Global Care AG
During 2014, Global Care AG loaned the Company $186,398 (CHF 185,000), which amount was
repayable on October 31, 2014. The loan includes a fixed interest payment of $20,570 (CHF
20,000). As of the date of this report, both amounts are overdue. According to the agreement, there
are no penalties for late payment.
Receivable from and loans to Josef Mettler
On June 30, 2015, Aires International Investments, Inc. absorbed the Company’s receivables from
Mr. Mettler of $1,507,128 (CHF 1,419,412) by crediting the amount due to the Company against
the amount due from the Company to Aires. As of December 31, 2015, there is a payable to Mr.
Mettler of $70,135 (CHF 69,609).
For the year ended December 31, 2014, the amount borrowed by the Company became a loan
receivable to the Company of $1,455,214. In the third and fourth quarters of 2014, Aires
International Investments Inc. absorbed the Company's receivables from Mr. Mettler by crediting
the amount due to the Company against the amount due from the Company to Aires.
F-26
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
10.
RELATED PARTY TRANSACTIONS - CONTINUED
Receivables from 4f capital AG
For the year ended December 31, 2014, the amount owed by the Company became a receivable to
the Company for $1,142,681 from 4f capital ag.
In the third and fourth quarters of 2014, Aires International Investments Inc. absorbed the
Company's receivables from 4f capital ag in the amount of $1,142,681 by crediting the amount due
to the Company against the amount due from the Company to Aires.
For the year ended December 31, 2015, there were no such transactions.
Current account Sportiva participations ag
During the period ended December 31, 2015 the Company borrowed approximately $2.8 million
and repaid $2.3 million resulting in a payable as of December 31, 2015 of $528,660 (CHF
524,695). The Current account Sportiva participations ag carries an interest rate of 3%.
Commissions paid or payable to related parties
During the periods ended December 31, 2015, and December 31, 2014, the Company paid
commissions to 4f Capital AG in the amount of $253,945 and $123,000, respectively, for services
related to financing the Company. These costs are capitalized as debt issuance costs. 4f Capital AG
is a company owned and directed by Mr. Mettler (Board Member and CEO of the Company) that
receives a commission of 1.5% for new funds that the Company receives based on consulting
services rendered by 4f Capital AG.
Hans Rigendinger
In 2013, the Company borrowed $600,000 at 3% interest from Hans Rigendinger. The amount due
to Mr. Rigendinger for this loan at December 31, 2015 was $1,973.
Mr. Rigendinger also held bonds denominated in Euros and Swiss Francs valued at approximately
$492,000 as of December 31, 2015 and $4,316,000 as of December 31, 2014.
Service fees paid or payable to Akyinyi Interior and Exterior Decoration
During the periods ended December 31, 2015, and December 31, 2014, the Company paid fees to
Akyinyi Interior and Exterior Decoration, which is a company owned by the wife of a member of
the Board of Directors, related to interior design of the Papagayo Gulf Tourism project in the
amount of approximately $120,000 for both years. These costs have been capitalized to property
and equipment.
F-27
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
10.
RELATED PARTY TRANSACTIONS - CONTINUED
Consulting Fees paid or payable to Cambridge Limited Corp.
During the periods ended December 31, 2015, and December 31, 2014, the Company paid fees to
Cambridge Limited Corporation, which is a company owned by the father-in-law of a member of
the Board of Directors. These fees related to accounting and consulting services rendered in Costa
Rica for the Company in the amount of approximately $179,279 and $166,851, respectively.
11.
BANK LIABLITIES
The bank liabilities due at December 31, 2015 and 2014 in the amounts of $179,313 and $153,375
respectively, represent temporary, secured overdraft facilities, bearing an interest rate of 8.9%.
12.
BONDS
Description
EUR (€) bond old (repaid)
CHF bond I (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:
May 12, 2010
June 3, 2011
Volume:
Up to € 25,000,000
Up to CHF 15,000,000
Units:
€1,000
CHF 50,000
Offering period:
11/10/2010 – 04/30/2011
09/01/2011 – 02/28/2012
Due date:
November 30, 2013
August 31, 2015
Issuance price:
100 %
100%
Issuance day:
December 1, 2010
September 1, 2011
Interest rate:
8.25% p.a.
7.25% p.a.
Interest due dates:
November 30 of each year,
August 31 of each year,
the first time November 30, 2011
the first time August 31, 2012
Applicable law:
Swiss
Swiss
F-28
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
12.
BONDS - CONTINUED
Description
EUR (€) bond new I
CHF bond 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 €15,000,000
Up to CHF 15,000,000
Units:
€10,000
CHF 10,000
Offering period:
11/07/2013 – 03/31/2014
05/01/2014 – 06/30/2014
Due date:
December 2, 2016
August 31, 2015
Issuance price:
100%
100 %
Issuance day:
December 2, 2013
September 01, 2013 (retroactive)
Interest rate:
7.25% p.a.
7.25 % p.a.
Interest due dates:
December 2
August 31
Applicable law:
Swiss
Swiss
Description
EUR (€) bond new II (parallel)
Issuer:
SunVesta Holding AG
Type of securities:
Bond in accordance with Swiss law
Approval by SunVesta AG BOD:
May 19, 2014
Volume:
Up to EUR 15,000,000
Units:
EUR 10,000
Offering period:
05/01/14 – 06/30/14
Due date:
December 02, 2016
Issuance price:
100 %
Issuance day::
December 02, 2013 (retroactive)
Interest rate:
7.25 % p.a.
Interest due dates:
December 02
Applicable law:
Swiss
F-29
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
12.
BONDS – CONTINUED
On September 30, 2015, the Company approved the issuance of two new 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,
Senior convertible bonds,
convertible into shares of the
convertible into shares of the
issuer, in accordance with Swiss
issuer, in accordance with Swiss
law
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
September 30 of each year, the
first time September 30, 2016
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
In October 2015, Sunvesta Holding AG, a wholly owned subsidiary of the Company settled
approximately $27,300,000 worth of old CHF-Bonds which had matured on August 31, 2015 and
were extended through September 30, 2015 (i.e. unpaid). These were rolled forward/exchanged
into two substantially different convertible bonds of Sunvesta Holding AG. One is a $45,000,000
Convertible Bond and the other a $15,000,000 Convertible Bond as is discussed in tables above.
These new Convertible bonds are substantially different than the previous CHF bonds that matured
in the third quarter of 2015 and this is subsequently accounted for as an extinguishment. The
Company has recorded a loss on extinguishment equal to the fair value of the conversion feature.
Third party issuance costs totaling $3,100,000 have been capitalized and amortized over the life of
the bonds under the effective interest rate method. Finally, the fair value of the liability related to
conversion feature was expensed in the period.
F-30
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
12.
BONDS - CONTINUED
The nominal amounts have changed as follows:
CHF Bond
CHF Bond
CHF BOND I
2015
2014
$
$
Balances January 1
10,999,192
8,558,443
Cash inflows
-
5,542,245
Cash outflows
(5,913,796)
-
Foreign currency adjustments
159,884
(953,513)
Reclassifications to CHF Bond II
-
(2,147,983)
Reclassifications to Convertible CHF Bond I
(2,005,548)
-
Reclassifications to Convertible CHF Bond II
(3,239,732)
-
Sub-total
-
10,999,192
Discounts (commissions paid to bondholders)
(670,764)
(670,764)
Accumulated amortization of discounts
670,764
474,294
Accumulated Unamortized discounts
-
(196,470)
Balances December 31 (Carrying value)
-
10,802,722
From the CHF Bond I issue in this rollforward, $2,005,548 was reclassified to the Convertible CHF
Bond I in the fourth quarter of 2015. Additionally, $3,239,732 was reclassified to the Company's
CHF Convertible Bond II.
In 2014, the Company reclassified $2,147,983 to CHF Bond II. As CHF Bond II has identical terms
as CHF Bond I, this reclassification is neither an extinguishment nor modification.
EUR-Bond
EUR-Bond
(new)
(new)
2015
2014
$
$
Balances January 1
7,355,572
6,757,065
Cash inflows
281,754
1,562,402
Cash outflows
-
-
Foreign currency adjustments
(765,696)
(963,896)
Sub-total
6,871,630
7,355,572
Discounts (commissions paid to bondholders)
(23,753)
(17,305)
Accumulated Amortization of discounts
14,059
4,729
Accumulated Unamortized discounts
(9,694)
(12,576)
Balance December 31 (Carrying value)
6,861,936
7,342,995
F-31
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
12.
BONDS - CONTINUED
As per date of this report the Company has realized a cumulative amount of EUR 6.30 million
($6.87 million) related to the EURO Bond I.
EUR-Bond
EUR-Bond
old
old
EURO BOND I
2015
2014
$
$
Balances January 1
-
5,786,248
Cash inflows
-
-
Cash outflows
-
(5,729,712)
Foreign currency adjustments
-
(56,536)
Sub-total
-
-
Discounts (commissions paid to bondholders)
-
(248,195)
Accumulated Amortization of discounts
-
248,195
Accumulated Unamortized discounts
-
-
Balance December 31 (Carrying value)
-
-
CHF Bond II
CHF Bond II
CHF BOND II
2015
2014
$
$
Balances January 1
15,304,228
-
Cash inflows
10,819,209
12,912,402
Cash outflows
(3,923,675)
-
Foreign currency adjustments
(51,779)
243,843
Reclassifications from CHF Bond I
-
2,147,983
Reclassifications to Convertible CHF Bond I
(185,127)
-
Reclassifications to Convertible CHF Bond II
(21,962,856)
-
Sub-total
-
15,304,228
Discounts (commissions paid to bondholders)
(1,578,825)
(1,041,917)
Accumulated amortization of discounts
1,578,825
446,864
Accumulated Unamortized discounts
-
(595,052)
Balances December 31 (Carrying value)
-
14,709,176
From the CHF Bond II issue in this rollforward, $185,127 was reclassified to the Convertible CHF
Bond I in Q4 2015. Additionally, $21,962,856 was reclassified to the Company's CHF Convertible
Bond II.
F-32
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
12.
BONDS - CONTINUED
EUR-Bond
EUR-Bond
new II
new II
EURO BOND NEW II
2015
2014
$
$
Balances January 1
1,761,258
-
Cash inflows
-
1,960,226
Cash outflows
-
-
Foreign currency adjustments
(102,958)
(198,968)
Sub-total
1,658,300
1,761,258
Discounts (commissions paid to bondholders)
(59,740)
(59,740)
Accumulated Amortization of discounts
28,135
13,473
Accumulated Unamortized discounts
(31,605)
(46,266)
Balances December 31 (Carrying value)
1,626,695
1,714,991
As per date of this report, the Company has realized a cumulative amount of EUR 1.51 million
($1.64 million) related to the EURO Bond new II.
Convertible
Convertible
CHF Bond I
CHF Bond I
Convertible CHF BOND I
2015
2014
$
$
Balances January 1
-
-
Cash inflows
100,990
-
Cash outflows
-
-
Foreign currency adjustments
(41,617)
-
Reclassifications from CHF Bonds I and II
2,190,675
-
Sub-total
2,250,048
-
Discounts (commissions paid to bondholders)
-
Accumulated Amortization of discounts
-
Accumulated Unamortized discounts
-
Balances December 31 (Carrying value)
2,250,048
-
In the fourth quarter of 2015, the Company issued this Convertible CHF Bond I with funds received
from new bondholders totaling $100,990. Additionally, $2,005,548 was reclassified from CHF
Bond I and $185,127 was reclassified from CHF Bond II.
As per date of this report, the Company has realized a cumulative amount of CHF 2.42 million
($2.64 million) related to the Convertible Bond I.
F-33
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
12.
BONDS - CONTINUED
Convertible
Convertible
CHF Bond II
CHF Bond II
Convertible CHF BOND II
2015
2014
$
$
Balances January 1
-
-
Cash inflows
1,747,122
-
Cash outflows
-
-
Foreign currency adjustments
(479,315)
-
Reclassifications from CHF Bonds I and II
25,202,588
-
Sub-total
26,470,395
-
Discounts (commissions paid to bondholders)
0
-
Accumulated Amortization of discounts
-
-
Accumulated Unamortized discounts
0
-
Balances December 31 (Carrying value)
26,470,395
-
In fourth quarter of 2015, the Company issued this Convertible CHF Bond II with funds received
from new bondholders totaling $1,747,122. Additionally, $3,239,732 was reclassified from CHF
Bond I and $21,962,856 was reclassified from CHF Bond II.
As per date of this report the Company has realized a cumulative amount of CHF 29.05 million
($29.27 million) related to the Convertible Bond II.
F-34
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
13.
INCOME TAXES
The components of loss before income taxes are as follows:
December 31, 2015
December 31, 2014
Domestic
(3,863,810)
(1,571,359)
Foreign
(15,867,261)
(6,379,627)
Loss before income tax
(19,731,071)
(7,950,986)
Income taxes relating to the Company’s operations are as follows:
December 31, 2015
December 31, 2014
Current income taxes
US Federal, state and local
-
-
Foreign
(1,151)
-
Deferred income taxes
-
-
US Federal, state and local
-
-
Foreign
-
-
Income tax expense/recovery
(1,151)
-
Income taxes at the United States federal statutory rate compared to the Company’s income tax
expenses as reported are as follows:
December 31, 2015
December 31, 2014
Net loss before income tax
(19,731,071)
(7,950,986)
Statutory rate
35%
35%
Expected income tax recovery
(6,905,875)
(2,782,845)
Impact on income tax expense/recovery from
Change in valuation allowance
4,979,054
1,284,444
Different tax rates in foreign jurisdictions
697,632
140,441
Expiration of unused tax loss carry forwards
-
268,151
Permanent differences
1,803,538
-
Tax penalty US Federal, state and local
-
-
Difference due to tax review / previous year adjustments
(633,957)
1,263,087
Others
58,457
(173,278)
Income tax expense
(1,151)
-
F-35
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
13.
INCOME TAXES - CONTINUED
The Company’s deferred tax assets and liabilities consist of the following:
December 31, 2015
December 31, 2014
Deferred tax assets
Tax loss carry forward
17,321,345
12,342,291
Valuation allowance
(17,321,345)
(12,342,291)
Deferred tax assets/liabilities
-
-
As of April 2, 2012, the Company was advised by the Internal Revenue Service (IRS) of aggregate
penalties amounting to $140,000. This penalty concerns failures to file certain tax returns for the
years ended 2008, 2009 and 2010. Despite an ongoing appeal process, the Company changed its
assessment during the year ended December 31, 2012 and determined that it is “more likely than
not” that it will have to pay the penalty. Therefore, the Company recorded $140,000 in income tax
expense.
As of December 31, 2015 and 2014, there were no known uncertain tax positions. We have not
identified any tax positions for which it is reasonably possible that a significant change will occur
during the next 12 months.
Pursuant to ASC 740-10-25-3 Income Taxes, an income tax provision has not been made for U.S.
or additional foreign taxes since all subsidiaries of the Company are not generating income nor are
expected to in the foreseeable future. The company expects that future earnings will be reinvested,
but could become subject to additional tax if they were remitted as dividends or were loaned to the
Company, or if the Company should sell or dispose of its stock in the foreign subsidiaries. It is not
practical to determine the deferred tax liability, if any, that might be payable on foreign earnings
because if the Company were to repatriate these earnings, the Company believes there would be
various methods available to it, each with different U.S. tax consequences.
The Company’s operating loss carry forward of all jurisdictions expire according to the following
schedule:
Domestic
Foreign
2016
-
764,332
2017
-
5,674,921
2018
-
9,940,370
2019
-
6,381,864
2020
-
2,680,101
2021
-
7,624,181
2022
-
14,832,242
Beyond 2022
20,229,018
-
Total operating loss carry forwards
$
20,229,018
47,898,011
F-36
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
13.
INCOME TAXES - CONTINUED
The following tax years remain subject to examination:
United States of America
Switzerland
Costa Rica*
2008
YES
NO
N/A
2009
YES
NO
N/A
2010
YES
NO
N/A
2011
YES
NO
N/A
2012
YES
YES
N/A
2013
YES
YES
YES
2014
YES
YES
YES
2015
YES
YES
YES
* The Costa Rican companies are taxable since 2013.
F-37
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
14.
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.
Net periodic pension cost has been included in the Company’s results as follows:
2015
2014
Projected Benefit Obligations beginning of year
$
352,704
293,423
Service cost - current
56,927
50,733
Interest expense
5,239
5,356
Benefit payments and transfers
(12,091)
(12,127)
Actuarial gains/losses
61,864
42,749
Currency translation losses
(1,067)
(27,430)
Projected Benefit Obligations end of year
$
463,576
352,704
Fair Asset Values beginning of year
$
216,271
202,896
Expected returns
6,448
5,558
Contributions paid
46,348
42,446
Benefits paid and transfers
(12,091)
(12,127)
Actuarial gains/losses
(3,426)
(3,537)
Currency translation losses
(654)
(18,965)
Fair Asset Value of assets end of year
$
252,896
216,271
Net liabilities
$
(210,680)
(136,433)
F-38
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
14.
PENSION PLAN - CONTINUED
The following were the primary assumptions:
Future benefits, to the extent that they are based on compensation, include salary increases, as
presented above, consistent with past experiences and estimates of future increases in the Swiss
labor market.
December 31, 2015
December 31, 2014
Assumptions at year end
Discount rate
0.80%
1.50%
Expected rate of return on plan assets
3.00%
3.00%
Future salary increases
1.50%
1.50%
Future pension increases
0.00%
0.00%
Net periodic pension costs have been included in the Company’s results as follows:
December 31, 2015
December 31, 2014
Pension expense
Current service cost
$
56,927
50,733
Net actuarial (gain) loss recorded
-
(606)
Interest cost
5,239
5,356
Expected return on assets
(6,448)
(5,558)
Employee contributions
(23,174)
(21,223)
Net periodic pension cost
$
32,544
28,701
For the years ended December 31, 2015 and December 31, 2014 the Company made cash
contributions of $23,000 and $21,200, respectively, to its defined benefit pension plan.
All of the assets are held under the collective contract by the plan’s re-insurance Company and are
invested in a mix of Swiss and international bond and equity securities within the limits prescribed
by the Swiss Pension Law.
The expected future cash flows to be paid by the Company in respect of employer contribution to
the pension plan for the year ending December 31, 2016 are $23,000.
F-39
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
15.
STOCK COMPENSATION
The Company has included share based compensation under the SunVesta Inc. Stock Option Plan
2013 (“the 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 shares under the Plan.
The purpose of the Plan is to advance the interests of the Company by encouraging its employees to
remain associated with the Company and assist the Company in building value. Such share based
remuneration includes either shares or options to acquire shares of the Company’s common stock.
For all employees, fair value is estimated at the grant date. Compensation costs for unvested shares
are expensed over the requisite service period on a straight-line basis.
Share Grants – Mr. Hans Rigendinger
On January 1, 2013, the Company granted to Hans Rigendinger 3,500,000 common shares, valued
at $0.08 an amount equal to the share price and fair value of the shares on the grant date. These
shares were granted as a signing bonus with the Company. Additionally, the Company granted
2,500,000 common shares as a retention award due on each anniversary of his signing with the
Company. The employment contract was initially for three years with an additional bilateral option
for an additional two years. Therefore, the Company could be required to issue up to 12,500,000
common shares through January 1, 2018.
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. These were
issued in connection with his appointment to the Board of Directors. These shares were officially
issued on October 15, 2013.
Share Grants – Mr. Josef Mettler
On July 4, 2013, the Company granted 5,000,000 common shares to Josef Mettler, valued at $0.07,
an amount equal to the share price and fair value of the shares on the grant date, in connection with
his employment agreement. These shares were officially issued on October 15, 2013. Additionally,
the Company granted 3,000,000 common shares as a retention award for each completed year of
employment (e.g. first time as per July 4, 2014). The employment contract is for an initial term of
three years with an additional bilateral option for another two, two-year periods, but a maximum of
December 31, 2020. Therefore, in total the Company could be requested to issue up to 21,000,000
common shares through December 31, 2020 related to the retention bonus.
F-40
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
15.
STOCK COMPENSATION - CONTINUED
Share Grants – Mr. José María Figueres
On March 10, 2014, the Company authorized the issuance of 500,000 common shares, valued at
$0.10, an amount equal to the share price and therefore the fair value on grant date, and a retention
award of 200,000 common shares for each fully completed year of service to José María Figueres
in connection with his appointment to the Board of Directors.
Share Grants – Mr. Howard M. Glicken
On March 10, 2014, the Company authorized the issuance of 500,000 common shares, valued at
$0.10, an amount equal to the share price and therefore the fair value on grant date, and a retention
award of 200,000 common shares for each fully completed year of service to Howard Glicken in
connection with his appointment to the Board of Directors.
Based on these contracts the Company has included the following stock-based compensation in the
Company’s results:
Stock-based compensation (shares)
December 31, 2015
December 31, 2014
Shares granted
46,800,000 shares
46,400,000 shares
Fair Value respectively market price on grant date
$0.0744
$0.0744
Total maximal expenses (2013-2020)
$3,450,000
$3,450,000
Shares vested
23,900,000 shares
18,000,000 shares
Unvested shares
22,900,000 shares
28,400,000 shares
As of December 31, 2015, the Company expects to record compensation expense in the future up to
$1,345,000 as follows:
Stock-based
Year ending December 31,
compensation
2016
2017
2018
2019
2020
(shares)
$
$
$
$
$
Unrecognized
compensation
410,000
410,000
210,000
210,000
105,000
expense
F-41
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
15.
STOCK COMPENSATION - CONTINUED
Stock Options – Mr. Hans Rigendinger
The Company granted to Hans Rigendinger, in connection with his employment contract,
10,000,000 stock options on January 1, 2013. Each option entitles Mr. Rigendinger to buy one
Company share at a strike price of $0.05. These options will be vested in two identical installments
(installment A and B) of 5,000,000 options.
Installment A is contingent on obtaining a financing arrangement 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 will not be completed. Therefore, the
Company assessed the probability of completion to be zero and recognized no expense. On July 4,
2013, the Company authorized a revised stock option agreement. This removed the requirement for
financing with a specific counterparty and updated for any counterparty. As of date of the revised
stock option agreement, the fair value was $246,000. Installment A was modified on July 4, 2013,
since the initial performance condition was improbable to be met. Since the modification changed
the expectation that the options will ultimately vest and no expense had been recognized for the
original award, the fair value of the modified award has been expensed on a straight line basis over
the expected vesting period.
For installment B, it is required that Meliá Hotels International (“Melía”) assumes management
responsibilities for Paradisus Papagayo Bay Resort & Luxury Villas. As of grant date, the fair value
was $340,000 and the Company estimated that Meliá assumes responsibility as of July 1, 2015. As
of March 6, 2014 the Company still assesses the probability that this performance condition will be
met at 100%, but the date the performance condition will be achieved was postponed to the fourth
quarter 2015, as the opening date was postponed. As of the date of this report, the estimated
opening date was postponed to the fourth quarter 2017. The Company still assessed the probability
that this performance condition will be met at 100%. Hence, the remaining fair value of the award
will be expensed on a straight-line basis over the recalculated expected remaining vesting-period.
F-42
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
15.
STOCK COMPENSATION - CONTINUED
Stock Options – Dr. Max Rӧssler
The Company granted to Dr. Max Rӧssler, in connection with his appointment to the Board of
Directors, 10,000,000 stock options on July 3, 2013. Each option entitles Dr. Rӧssler to buy one
Company share at a strike price of $0.05. These options will be vested in two identical installments
(installment A and B) of 5,000,000 options.
For installment A (5,000,000 options), it is required to complete a financing arrangement for the
Project. As of grant date, the fair value was $249,835. The Company expensed the total fair value
on a straight-line basis over the expected vesting period.
For installment B (5,000,000 options), it is required that Meliá assumes management
responsibilities for Paradisus Papagayo Bay Resort & Luxury Villas. As of 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
will be met at 100%, but the date the performance condition will be achieved was postponed to the
fourth quarter 2015, as the opening date was postponed. As of the date of this report, the estimated
opening date was postponed to the fourth quarter 2017. The Company still assessed the probability
that this performance condition will be met at 100%. Hence, the remaining fair value of the award
will be expensed on a straight-line basis over the recalculated expected remaining vesting-period.
Stock Options – Mr. Josef Mettler
The Company granted to Josef Mettler, in connection with his employment contract, 12,000,000
stock options on July 4, 2013. Each option entitles Mr. Mettler to buy one share at a strike price of
$0.05. These options have three different performance conditions.
For installment A (3,000,000 options), it is required to complete a bridge financing arrangement.
As of grant date the fair value was $149,000. The Company expensed the total fair value on a
straight-line basis over the expected vesting period.
For installment B (4,000,000 options), it is required to complete a financing arrangement (main
financing arrangement for Paradisus Papagayo Bay Resort & Luxury Villas). As of grant date the
fair value was $200,000. The Company has expensed the total fair value on a straight-line basis
over the expected vesting period.
For installment C (5,000,000 options), it is required that Meliá assumes management
responsibilities for Paradisus Papagayo Bay Resort & Luxury Villas. As of grant date, the fair value
was $258,000 and the Company estimated that Meliá assumes responsibility as of July 1, 2015. As
of March 6, 2014 the Company still assesses the probability that this performance condition will be
met at 100%, but the date the performance condition will be achieved was postponed to the fourth
quarter 2015, as the opening date was postponed. As of the date of this report, the estimated
opening date was postponed to the fourth quarter 2017. The Company still assessed the probability
that this performance condition will be met at 100%. Hence, the remaining fair value of the award
will be expensed on a straight-line basis over the recalculated expected remaining vesting-period.
F-43
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
15.
STOCK COMPENSATION - CONTINUED
Summary
A summary of stock options outstanding as per December 31, 2015 is as follows:
Options outstanding
Number of
Weighted average
Weighted average
Options
exercise price
remaining
contractual life
Outstanding January 1, 2015
32,000,000
$ 0.05
8.42 years
Granted
0
Exercised
0
Forfeited or expired
0
Outstanding December 31, 2015
32,000,000
$ 0.05
7.42 years
Exercisable December 31, 2015
0
The following table depicts the Company’s non-vested options as of December 31, 2015 and
changes during the period:
Non-vested options
Shares under Options
Weighted average grant
date fair value
Non-vested at December 31, 2014
32,000,000
$ 0.053
Granted
-
-
Vested
-
-
Forfeited or canceled
-
-
Non-vested at December 31, 2015
32,000,000
$ 0.053
Under the provisions of ASC 718 Compensation – Stock Compensation, the Company is required
to measure and recognize compensation expense related to any outstanding and unvested stock
options previously granted, and thereafter recognize, in its consolidated financial statements,
compensation expense related to any new stock options granted after implementation using a
calculated fair value based option-pricing model. The Company uses the Black-Scholes
option-pricing model to calculate the fair value of all of its stock options and its assumptions are
based on historical and available market information. The following assumptions were used to
calculate the compensation expense and the calculated fair value of stock options granted:
Assumption
December 31, 2015
December 31, 2014
Dividend yield
Risk-free interest rate used (average)
Expected market price volatility
Average expected life of stock options
n.a.
n.a.
F-44
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
15.
STOCK COMPENSATION - CONTINUED
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.
As of December 31, 2015, the Company had unrecognized compensation expenses related to stock
options currently outstanding, to be recognized in future quarters respectively years as follows:
Through to
Through to
Stock-based compensation (options)
December 31, 2016
December 31, 2017
$
$
Unrecognized compensation expense
134,956
33,739
16.
SUMMARY OF STOCK AND OPTION COMPENSATION EXPENSE
The Company recorded the following amounts related to stock based compensation expense during
the periods ended December 31, 2015:
Summary of share and option based compensation
December 31, 2015
December 31, 2014
expense
$
$
Option grants
134,952
560,941
Share grants
450,000
542,334
Total (recorded under general & administrative expense)
584,952
1,103,275
17.
FUTURE LEASE COMMITMENTS
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.
Future lease commitments
December 31, 2015
December 31,
$
2014
$
2016
130,000
130,000
2017
130,000
130,000
F-45
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
18.
NOTES PAYABLE
December 31, 2015
December 31, 2014
$
$
Promissory note
2,000,000
2,000,000
Specogna Holding AG
605,743
707,428
R. Weimar (private investor)
131,169
316,331
Total
2,736,912
3,023,759
Promissory Note
As part of the completion of the purchase of Altos del Risco on March 9, 2013, the parties agreed
that $2,000,000 of consideration is converted into a non-interest bearing and uncollateralized loan
payable which was originally due for payment on March 8, 2014, then extended to March 8, 2015.
On March 16, 2015, the Company agreed with the counterparty to extend the due date through
March 16, 2016. As of the date of this report the promissory note remains outstanding.
Loans Specogna Holding AG
On May 15, 2014 the Company entered into a short term loan agreement for CHF 1.0 million
($1.01 million) with Specogna Holding AG (“Specogna) repayable on July 31, 2014, with a fixed
interest payment of approximately $30,300. This loan was repaid in 2014.
On September 16, 2014, the Company entered into a short term loan agreement for approximately
$736,000 with Specogna repayable on October 31, 2014, with a fixed interest payment of
approximately $32,000. The loan was secured personally and jointly by Dr. Max Rössler, Mr. Josef
Mettler and Mr. Hans Rigendinger. The amounts due to Specogna were repaid on March 24, 2015,
by Aires on behalf of the Company, with no penalties incurred.
On December 31, 2015, the Company entered into a short term loan agreement for approximately
$607,000 with Specogna repayable on February 29, 2016, with an interest payment of 8 % per
annum. The loan is secured personally and jointly by Dr. Max Rössler, Mr. Josef Mettler and Mr.
Hans Rigendinger.
Loan R. Weimar (private investor)
On May 23, 2014, the Company entered into a short term loan agreement for approximately
$376,800 with Roland Weimar. The loan was repayable in five installments, (four payments of
$84,700, one payment of $38,000), with the initial payment due on June 2, 2014 and the latest one
due on June 1, 2015. The interest rate is 2 % per annum. The Company has repaid $245,631 of the
loan as of the filing date of this report, whereas the entire loan amount should have been repaid.
The agreement does not stipulate any repercussions for late payments.
Bruno Wernli
On September 16, 2014, the Company entered into a short term loan agreement for approximately
$568,000 with Bruno Wernli (“Wernli”), repayable on October 31, 2014, with a fixed interest
payment of approximately $53,000. The loan was secured personally and jointly by Dr. Max
Rössler, Mr. Josef Mettler and Mr. Hans Rigendinger. The amounts due to Wernli were repaid on
December 19, 2014, by Aires on behalf of the Company.
F-46
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
19.
OPENING DATE “Paradisus Papagayo Bay Resort & Luxury Villas”
On June 2, 2014, the Company amended its agreement with Meliá (“Sixth addendum to the
management agreement of March 8, 2011”) to postpone the opening date as follows:
- The construction of the “Paradisus” will be completed by November 15, 2015
- Should the “Paradisus” not be completed by November 15, 2015, (subject to force majeure)
and should an extension date not be agreed, subsequent to November 15, 2015, the Company
will be obligated to pay Meliá a daily amount of $2,000 as liquidated damages.
- Should the Company be unable to complete the construction of the “Paradisus” by February
15, 2016, Meliá, can terminate the management agreement obligating the Company to
compensate Meliá in the amount of $5,000,000 unless the respective parties agree to extend
such date.
Dated April 27, 2016 a seventh addendum has been signed between the Company and Melia with
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 an extension to such date, after September 15, 2018 the Owner shall pay the
Manager a daily amount of USD 2,000 as liquidated damages.
c.
Should the completion not occur by November 15, 2018, the manager shall be entitled to
terminate the agreement unless the Parties agree in writing to extend such date. The owner shall be
obliged to pay the manger an amount of USD 5,000,000 as liquidated damages solely to
compensate the Manager.
20.
SEGMENT INFORMATION
The chief operating decision maker (“CODM”) is the Company’s CEO. Neither the CODM nor the
Company’s directors receive disaggregated financial information about the locations in which
project development is occurring. Therefore, the Company considers that it has only one reporting
segment.
The following table presents the Company’s tangible fixed assets by geographic region:
December 31, 2015
December 31, 2014
Location of tangible assets
Switzerland
$
76,573
115,210
Costa Rica
61,194,851
51,086,142
Total
$
61,271,424
51,201,352
F-47
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
21.
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
Year Ended
Year Ended
December 31, 2015
December 31, 2014
Company posted
Net loss
Net loss
Basic weighted average shares outstanding
94,338,589
88,325,165
Dilutive effect of common stock equivalents
None
None
Dilutive weighted average shares outstanding
94,338,589
88,325,165
As of December 31, 2014, there were a total of 6,500,000 common shares vested were not issued
and included in the basic weighted average shares outstanding.
The following table shows the number of stock equivalents that were excluded from the
computation of diluted earnings per share for the respective period because the effect would have
been anti-dilutive.
Earnings per share
Year Ended
Year Ended
December 31, 2015
December 31, 2014
Options to Hans Rigendinger
10,000,000
10,000,000
Options to Dr. M. Rössler
10,000,000
10,000,000
Options to Josef Mettler
12,000,000
12,000,000
Total Options
32,000,000
32,000,000
Shares to Hans Rigendinger
7,500,000
10,000,000
(retention bonus – non vested)
Shares to Josef Mettler (retention award – non
15,000,000
18,000,000
vested)
Shares to Howard Glicken and José Maria Figueres
400,000
400,000
(retention award – non vested)
Shares associated with Convertible CHF Bonds
3,558,068
0
Total Shares
26,458,068
28,400,000
Total Options and Shares
58,458,068
60,400,000
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.
F-48
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
22.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses according consolidated statement of comprehensive loss
include:
General and administrative expenses
December 31, 2015
December 31, 2014
$
$
Rental & related expenses
194,982
175,394
Audit
267,087
235,995
Consulting
1,379,976
1,908,621
Marketing, Investor & public relations
127,458
68,828
Travel expenses
561,803
492,323
Personnel costs including social security’s costs and share
based remuneration
2,636,788
2,904,293
Various other operating expenditures
817,977
949,037
Total according statements of comprehensive loss
5,986,071
6,734,491
23.
SUBSEQUENT EVENTS
Management has evaluated subsequent events after the balance sheet date, through the issuance of
the financial statements, for appropriate accounting and disclosure. The Company has determined
that there were no such events that warrant disclosure or recognition in the financial statements,
except for the below:
Termination of agreement with Concreta
In March 2013, SunVesta Holding AG, together with SunVesta Costa Rica Ltda. concluded an
agreement with Concreta S.R.L for the “Design & Execution Plans, Logistics, Supply and
Installation of all Interiors” for our “Papagayo Bay Resort & Luxury Villas” project in Costa Rica.
Over the time, the project developed differently to what the parties expected. Consequently,
contract renegotiations became necessary. As these renegotiations could not be finalized
satisfactorily, the Company terminated the existing contract effective February 3, 2016. The
Company does not expect any negative financial consequences as result of this termination.
DIA S.A.
On March 8, 2013, the Company entered into an interest free loan agreement with DIA S.A. for
$2,000,000 payable on March 8, 2014, in connection with the purchase of land concession being
part of the Paradisus Papagayo Bay Resort & Luxury Villas project from Altos held in the name of
Altos del Risco S.A. The terms of the loan agreement were amended on March 16, 2015, to extend
the due date for said payable until March of 2016. The amounts due to Altos had not been paid as of
the filing date of this report.
Subsequent to the balance sheet date the parties agreed on new payment terms. They provide for
four equal quarterly payments of USD 500,000 each, the first one being due by August 31, 2016.
F-49
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
23.
SUBSEQUENT EVENTS - CONTINUED
Management agreement with Meliá Hotels International
Dated April 27, 2016 a seventh addendum has been signed between the Company and Melia with
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 an extension to such date, after September 15, 2018 the Owner shall pay the
Manager a daily amount of USD 2,000 as liquidated damages.
c.
Should the completion not occur by November 15, 2018, the manager shall be entitled to
terminate the agreement unless the Parties agree in writing to extend such date. The owner shall be
obliged to pay the manger an amount of USD 5,000,000 as liquidated damages solely to
compensate the Manager.
Down payment for Purchase Four Hotels in the Canton of Graubünden, Switzerland
Dated May 10, 2016 the Company, QuadEquity Holdings AG and the potential Seller of the four
hotels concluded an agreement, whereby QuadEquity Holdings AG assumes all the Company’s
rights and obligations from the original contract. In return, QuadEquity Holdings AG will pay the
Company the amount of USD 302,000 (CHF 300,000) before May 30, 2016.
Agreement to set-up a Special Purpose Vehicle (“SPV”) for the issuance of new bonds
Dated May 09, 2016 the Company concluded an agreement with a third party and the following
major terms and conditions:
a.
The third party will create and operate an SPV in accordance with Luxembourg law (a so
called “Compartment”)
b.
This SPV will allow a securitisation of a bond (“Schuldverschreibung”).
c.
While SPV will be the Issuer, it remains the Company’s obligation to sell the bonds.
d.
Only the SPV will be liable towards the bondholders.
e.
The Company, on the other hand, will have to pledge its major assets in favour of the SPV.
f.
The Company incurs one-time set-up fees as well as annual running fees.
F-50
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A.
CONTROLS AND PROCEDURES
Management's Annual Report on Internal Control over Financial Reporting
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this annual report, an evaluation was carried out by the Company’s
management, with the participation of the Chief Executive Officer and chief financial officer, of the
effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) under the
Securities Exchange Act of 1934 (“Exchange Act”)). Disclosure controls and procedures are designed to
ensure that information required to be disclosed in reports filed or submitted under the Exchange Act are
recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules
and forms, and that such information is accumulated and communicated to management, including the chief
executive officer and chief financial officer, to allow timely decisions regarding required disclosures.
Based on that evaluation, the Company’s management concluded, as of the end of the period covered by
this report, that the Company’s disclosure controls and procedures were ineffective in recording,
processing, summarizing, and reporting information required to be disclosed, within the time periods
specified in the Commission’s rules and forms, and 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.
Management’s Report on Internal Control over Financial Reporting
The management of the Company is responsible for establishing and maintaining adequate internal control
over financial reporting. The Company’s internal control over financial reporting is a process, under the
supervision of the chief executive officer and the chief financial officer, designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of the Company’s financial
statements for external purposes in accordance with United States generally accepted accounting principles
(GAAP). Internal control over financial reporting includes those policies and procedures that:
— pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the
transactions and dispositions of the Company’s assets
— provide reasonable assurance that transactions are recorded as necessary to permit preparation of the
financial statements in accordance with generally accepted accounting principles, and that receipts
and expenditures are being made only in accordance with authorizations of management and the
Board of Directors
— provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the Company’s assets that could have a material effect on the financial
statements
Due to its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions or that the degree of compliance
with the policies or procedures may deteriorate.
22
The Company’s management conducted an assessment of the effectiveness of our internal control over
financial reporting as of December 31, 2015, based on criteria established in Internal Control – Integrated
Framework (1992) issued by the Committee of Sponsoring Organizations (COSO) of the Treadway
Commission, which assessment identified material weaknesses in internal control over financial reporting.
A material weakness is a control deficiency, or a combination of deficiencies in internal control over
financial reporting that creates a reasonable possibility that a material misstatement in annual or interim
financial statements will not be prevented or detected on a timely basis. Since the assessment of the
effectiveness of our internal control over financial reporting did identify material weaknesses, management
considers its internal control over financial reporting to be ineffective.
The matters involving internal control over financial reporting that our management considered to be
material weaknesses were:
Lack of Appropriate Independent Oversight. The Board of Directors has not provided an appropriate level
of oversight over the Company’s consolidated financial reporting and procedures for internal control,
which oversight might include challenging management’s accounting for and reporting of transactions.
Accordingly, we determined that this control deficiency as of December 31, 2015, constituted a material
weakness.
Failure to Segregate Duties. The Board of Directors has not maintained any segregation of duties within the
Company’s management, instead relying on a single individual to fill the role of chief executive officer,
chief financial officer and principal accounting officer, responsible for a broad range of duties that cannot
be properly reconciled with a singular management resource. Accordingly, we determined that this control
deficiency as of December 31, 2015, constituted a material weakness.
As a result of the material weaknesses in internal control over financial reporting described above, the
Company’s management has concluded that, as of December 31, 2015, that the Company’s internal control
over financial reporting was not effective based on the criteria in Internal Control – Integrated Framework
(1992) issued by the COSO. The Company intends to remedy its material weaknesses by:
— bolstering the composition of the audit committee to comprise non-managerial directors only to
oversee management
— engaging an individual to serve as chief financial officer and principal accounting officer to segregate
the duties of chief executive officer and chief financial officer
During the year, the Company formed an audit committee comprised of two independent directors and a
managerial director to provide oversight over management. Due to limitations as to the number of
independent directors, the inclusion of the Company’s chief executive officer on the audit committee may
have a stifling affect on the effectiveness of the committee to oversee management.
The Company also engaged sufficient outside accounting resources competent in the application of US
GAAP to our financial statement disclosures.
The Company also expects to segregate the duties of chief executive officer and chief financial officer as
financial resources permit in order to bolster internal controls.
23
This annual report does not include an attestation report of our independent registered public accounting
firm regarding internal control over financial reporting. We were not required to have, nor have we,
engaged our independent registered public accounting firm to perform an audit of internal control over
financial reporting pursuant to the rules of the Commission that permit us to provide only management’s
report in this annual report.
Changes in Internal Controls over Financial Reporting
During the quarter ended December 31, 2015, there has been no change in internal control over financial
reporting that has materially affected, or is reasonably likely to materially affect our internal control over
financial reporting.
9B.
OTHER INFORMATION
None.
24
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Officers and Directors
The following table sets forth the name, age and position of the director and executive officers of the
Company:
Name
Age
Year
Positions Held
Appointed
Josef Mettler
55
2008
CEO, CFO, PAO and Director
Hans Rigendinger
70
2013
COO and Director
Dr. Max Rӧssler
76
2013
Director
José Maria Figueres
62
2014
Director
Howard Glicken
73
2014
Director
Josef Mettler was appointed Chief Executive Officer, chief financial officer, principal accounting officer,
and director of the Company on September 16, 2008.
Mr. Mettler also serves as a director and employee of SunVesta AG.
Business Experience
From 1995 until 2005 Mr. Mettler was co-owner and managing director of Bonne Ville Group AG, a Swiss
company specializing in information technology services. Mr. Mettler was responsible for marketing,
business development, and IT project management. While at Bonne Ville he co-founded OpenLimit
Holding AG, a Swiss IT company specializing in encryption and digital signature technologies. Between
2005 and 2007 Mr. Mettler formed SunVesta AG and developed the SunVesta business model. In 2008 Mr.
Mettler launched QuadEquity SPC, a private equity hedge fund.
Officer and Director Responsibilities and Qualifications
Mr. Mettler is responsible for the overall management of the Company and is involved in many of its
day-to-day operations, finance and administration.
Mr. Mettler earned a BA in Economics from OEKREAL Business & Management School, Zurich
(Switzerland). He also graduated as a Business Data Processing Specialist.
Other Public Company Directorships in the Last Five Years
None.
Hans Rigendinger was appointed as Chief Operating Officer and as a director on January 1, 2013.
Mr. Rigendinger also serves as a director and employee of SunVesta AG.
25
Business Experience
Since early 1972 to present, Mr. Rigendinger has led his own engineering firm in the planning and
implementation of a variety of commercial projects employing a staff of up to 40 employees. Over this time
span Mr. Rigendinger and his company have been responsible for the planning and implementation of over
300 bridge structures, approximately 500 buildings and a few dozen large industrial plants. Since 1995, Mr.
Rigendinger has been involved in several real estate projects that have included commercial, residential and
tourist properties. He has also spent the last 15 years supporting the development and expansion of an
industrial waste glass recycling company.
Officer and Director Responsibilities and Qualifications
Mr. Rigendinger’s knowledge, experience and solid know-how in the field of civil engineering and real
estate is extremely valuable to the Company’s operations as it moves forward with the development of the
Paradisus Papagayo Bay Resort & Luxury Villas.
Mr. Rigendinger earned a Master’s Degree in Civil Engineering, with an emphasis on supporting structures
and foundations (Civil and Structural Engineering) at the Swiss Federal Institute of Technology in 1969.
Other Public Company Directorships in the Last Five Years
None.
Dr. Max Rӧssler was appointed as a director of the Company on July 3, 2013.
Dr. Rӧssler also serves as a director of SunVesta AG.
Business Experience
Dr. Rӧssler has lectured and been involved in research as a professor at ETH in the fields of applied
mathematics and operations research. During his tenure with ETH, Dr. Rӧssler began to apply
mathematical methods to problems related to financial investments. Dr. Rӧssler joined Credit Suisse in
1978 as head analyst of the department for fixed income products. Since 1997, Dr. Rӧssler has worked with
SUVA (Swiss National Accident Insurance Fund) as a manager of a portion of their fixed-income
investments and currently holds advisory board mandates for two Swiss private banks.
Officer and Director Responsibilities and Qualifications
Dr. Rössler’s knowledge, and experience with fixed income investments is extremely valuable to the
Company’s Board of Directors as it moves forward with financing its business model.
Dr. Rössler studied mathematics at the Swiss Federal Institute of Technology Zurich (ETH) and
earned his doctorate at Harvard University.
Other Public Company Directorships in the Last Five Years
None.
26
José Maria Figueres was appointed as a director of the Company on March 10, 2014.
Business Experience
Following his graduate studies at Harvard, Mr. Figueres was elected as the President of Costa Rica in 1994,
a position in which he served for four years. When his service as President came to an end, Mr. Figueres
was appointed to the Board of Directors of Terremark Worldwide, Inc., a global IT company that provided
industry managed services such as cloud computing, collocation and web hosting solutions for enterprise IT
infrastructures. A year after joining Terremark, Mr. Figueres joined the World Economic Forum in Davos,
Switzerland. Five years later, Mr. Figueres undertook a one year assignment as managing director of the
Talal Abu-Ghazaleh Organization, a global consulting group headquartered in Amman, Jordon. Between
2006 and 2009, Mr. Figueres served on the International Advisory Board of Abraaj Capital, a private equity
firm with over $6 billion in assets under management. He then went on to join the Advisory Board of Grupo
Arcano, a financial services firm based in Madrid, Spain, a leading boutique for investment banking and
asset management services. Mr. Figueres joined IJ Partners in Geneva, Switzerland, as a managing partner
in 2010. Since 2010, Mr. Figueres has served as the Chairman of the Carbon War Room, an independent
non-profit organization focused on the global transition to a low carbon economy. Mr. Figueres was
appointed President of the Carbon War Room in 2012.
Officer and Director Responsibilities and Qualifications
Mr. Figueres’s knowledge, experience and business acumen on a global level in addition to his direct
connection to Costa Rica is extremely valuable to the Company’s Board of Directors as it moves forward
with its hotel development in Costa Rica.
Mr. Figueres completed his undergraduate studies at the United States Military Academy (West Point) and
completed his Master’s Degree in Public Administration at the John F. Kennedy School of Government at
Harvard University.
Other Public Company Directorships in the Last Five Years
None.
Howard H. Glicken was appointed as a director of the Company on March 10, 2014.
Business Experience
Between 1972 and 1981 Mr. Glicken served as the Chief Executive Officer and Chairman of the Board of
MGI Industries, which company controlled the design and manufacture of extrusion tools for the metals
industry in Latin America. Mr. Glicken joined Jillian’s Entertainment Corporation in 1983 to serve as its
Chairman and Chief Executive Officer until 1992. Over this period Jillian’s became one of the largest
United States purchasers of Latin American gold ore. Following his tenure at Jillian’s, Mr. Glicken was
appointed Chairman of the Commonwealth Group, a Washington, D.C. public policy and consulting firm
with extensive business activities in Latin America. Mr. Glicken worked with the Commonwealth Group
until 1996 before forming the America’s Group. He currently serves as Chairman and Chief Executive
Officer of the America’s Group, a Miami based consulting/merchant banking firm focused solely on Latin
America, Mexico and the Caribbean.
27
Officer and Director Responsibilities and Qualifications
Mr. Glicken years of business and political experience in Latin America is extremely valuable to the
Company’s Board of Directors as it seeks to garner the attention of those in the region that might assist in
the development of its hotel project in Costa Rica.
Mr. Glicken attended the University of Florida, the American Banking Institute and the Harvard University
Advanced Institute on Negotiation.
Other Public Company Directorships in the Last Five Years
None.
Family Relationships
There are no family relationships between or among the directors or executive officers.
Involvement in Certain Legal Proceedings
During the past ten years there are no events that occurred related to an involvement in legal proceedings
that are material to an evaluation of the ability or integrity of the Company’s directors, or persons
nominated to become directors or executive officers.
Term of Office
Our directors were appointed for a one (1) year term to hold office until the next annual meeting of our
shareholders or until removed from office in accordance with our bylaws. Our officers were appointed by
our Board of Directors and will hold office until the expiration of their employment contracts or removal by
the board.
No other persons are expected to make any significant contributions to the Company’s executive decisions
who are not executive officers or directors of the Company.
Compliance with Section 16(A) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires officers and directors and persons who own
more than ten percent of a registered class of our equity securities to file reports of ownership and changes
in their ownership with the Commission, and forward copies of such filings to us. Based solely upon a
review of Forms 3, 4 and 5 furnished to us, we are not aware of any persons who, during the period ended
December 31, 2015, failed to file, on a timely basis, reports required by Section 16(a) of the Exchange Act.
Code of Ethics
We have adopted a Code of Ethics within the meaning of Item 406(b) of Regulation S-K of the Securities
Exchange Act of 1934 that applies to directors and senior officers, such as the principal executive officer,
principal financial officer, controller, and persons performing similar functions. The Company has
incorporated a copy of its Code of Ethics as Exhibit 14 to this Form 10-K. Further, our Code of Ethics is
available in print, at no charge, to any security holder who requests such information by contacting us.
28
Board of Directors Committees
The Board of Directors has formed an audit committee and adopted an audit charter. The audit committee is
comprised of two independent directors and one managerial director.
An audit committee typically reviews, acts on and reports to the Board of Directors with respect to various
auditing and accounting matters, including the recommendations and performance of independent auditors,
the scope of the annual audits, fees paid to the independent auditors, and internal accounting and financial
control policies and procedures.
The Board of Directors has not established a compensation committee, nominating committee or
compliance and ethics committee.
Director Compensation
Our directors are reimbursed for out-of-pocket costs incurred in attending meetings and compensated for
services as directors of the Company in the form of stock options and stock awards. Cash compensation is
also paid in certain instances to directors of the Company’s subsidiary companies, including to our chief
executive officer who also serves as a director of SunVesta AG.
The Company has compensated directors in the past and may adopt additional provisions for compensating
directors for their services in the future.
ITEM 11.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Chief Executive Officer
Our chief executive officer has an employment agreement dated July 4, 2013, that includes an addendum
dated March 6, 2015 with the Company and an employment agreement dated January 5, 2011, with
SunVesta AG. His employment agreements entitle our chief executive officer to base salaries, bonuses for
his service in addition to certain benefits including per diem allowances, car allowances, housing
allowances, and representation allowances. The employment agreement with the Company also provided
for a signing bonus payable in cash and Company stock, stock options and an annual retention award
payable in stock. The initial term of the Company employment agreement expires on December 31, 2016,
and can be renewed for two successive two year terms. The compensation package was deemed appropriate
for our chief executive officer and was approved by the Company’s Board of Directors.
For the year ended December 31, 2015, $1,697,445 was paid to or accrued for our chief executive officer of
which $504,000 was salary, $822,500 was a bonus, and $370,945 in all other compensation of which
$18,000 was out of pocket expenses, $48,000 was car allowances, $36,000 was living away allowance,
$253,945 were commissions and $15,000 was board of directors fees for service to both SunVesta AG and
SunVesta Projects & Management AG.
For the year ended December 31, 2014, $1,293,968 was paid to or accrued for our chief executive officer of
which $537,314 was salary, $546,269 was a bonus, and $210,385 in all other compensation of which
$123,000 was commission paid to 4f capital ag, $19,666 was out of pocket expenses, $51,331 was car
allowances and $16,388 was board of directors fees for service to both SunVesta AG and SunVesta Projects
& Management AG.
29
Chief Operating Officer
Our chief operating officer has an employment agreement dated December 31, 2012, with the Company
and an employment agreement dated January 17, 2013, with SunVesta AG, pursuant to which he receives a
base salary and is entitled to receive a bonus for his service to the Company in addition to certain benefits
including per diem allowances, car allowances, housing allowances, and representation allowances. The
employment agreement with the Company also provides for a signing bonus payable in Company stock,
stock options and an annual retention award. The initial term of the employment agreement expires on
December 31, 2015, and can be renewed for two successive one year terms. The Company elected to renew
our chief operating officer’s employment agreement for one-year term with a further option that it be
renewed for an additional year. The compensation package is deemed appropriate for our chief operating
officer and was approved by the Company’s Board of Directors.
For the year ended December 31, 2015, $296,000 was paid to or accrued for our chief operating officer, of
that amount $240,000 was salary, $36,000 in car allowances and $20,000 was board of directors’ fees for
service to both SunVesta AG and SunVesta Projects & Management AG.
For the year ended December 31, 2014, $317,284 was paid to or accrued for our chief operating officer, of
that amount $256,657 was salary, $38,776 in car allowances and $21,851 was board of directors’ fees for
service to both SunVesta AG and SunVesta Projects & Management AG.
Summary
The following table provides summary information for the years ended December 31, 2015 and 2014
concerning cash and non-cash compensation paid or accrued by the Company to or on behalf of (i) the chief
executive officer and (ii) any other employee to receive compensation in excess of $100,000:
Executive Summary Compensation Table
Name and
Year
Salary
Bonus
Stock
Option
Non-Equity
Change in
All Other
Total
Principal
($)
($)
Awards
Awards
Incentive Plan
Pension Value
Compensation
($)
Position
($)
($)(1)
Compensation
and
($)
($)
Nonqualified
Deferred
Compensation
($)
Josef Mettler
2015
504,000
822,500
-
-
-
-
370,945 1,697,445
CEO, CFO,
2014
537,314
546,269
-
-
-
-
210,385 1,293,968
PAO
Hans
2015
240,000
-
-
-
-
-
56,000
296,000
Rigendinger
2014
256,657
-
-
-
-
-
60,627
317,284
COO
(1) See Note 14 to the audited financial statements included in this Form 10-K for the year ended December 31, 2015, for further
information concerning the Company’s reliance on the Black Sholes option-pricing model to calculate the fair value of stock
options
30
Outstanding Equity Awards
The following table provides summary information for the period ended December 31, 2015, concerning
unexercised options, stock that has not vested, and equity incentive plan awards by the Company to or on
behalf of (i) the chief executive officer and chief financial officer and (ii) the three most highly
compensated individuals whose total compensation exceeds $100,000:
Outstanding Equity Awards at Fiscal Year-End
Option awards
Stock awards
Equity
incentive
plan
Equity
awards:
incentive
market or
plan
Number
Equity
payout
awards:
of
Market
incentive plan value of
Number of
number of
shares
value of
awards:
unearned
securities
Number of
securities
or units
shares or
number of
shares,
underlying
securities
underlying
of stock units of
unearned
units or
unexercised underlying
unexercised Option
that
stock that shares, units or other rights
options
unexercised
unearned
exercise Option
have not have not
other rights that that have
(#)
options
options
price
expiration vested
vested(5)
have not vested not vested
Name
exercisable (#) exercisable
(#)
($)
date
(#)
($)
(#)
($)
Josef Mettler
0 12,000,000(1)
-
0.05 July 2, 2023
-
0.25 18,000,000(3))
-
Hans
Rigendinger
0 10,000,000(2)
-
0.05 December
31, 2022
-
0.25 10,000,000(4)
-
(1) Mr. Mettler’s stock options vest on the completion of certain business development milestones as follows: 3,000,000 stock
option on that date on which the Company or a related entity completes a bridge financing for the Papagayo Bay Resort & Luxury
Villas; 4,000,000 stock options on that date on which the Company or related entity completes a financing sufficient to complete the
Papagayo Bay Resort & Luxury Villas; and 5,000,000 stock options on that date on which Meliá assumes management
responsibility for the Papagayo Bay Resort & Luxury Villas.
(2) Mr. Rigendinger’s stock options vest on the completion of certain business development milestones as follows: 5,000,000
stock options on that date on which the Company or related entity completes a financing sufficient to complete the Papagayo Bay
Resort & Luxury Villas; and 5,000,000 stock options on that date on which Meliá assumes management responsibility for the
Papagayo Bay Resort & Luxury Villas.
(3) Mr. Mettler’s equity incentive shares are characterized as a retention award of which 3,000,000 shares are earned on each
anniversary of his term of employment over an initial term of three years that will automatically renew for two successive two
year terms to a maximum of 21,000,000 shares subject to earlier termination.
(4) Mr. Rigendinger’s equity incentive shares are characterized as a retention award of which 2,500,000 shares are earned on each
anniversary of his term of employment over an initial term of three years that will automatically renew for two successive one
year terms to a maximum of 12,500,000 shares subject to earlier termination.
(5) The per share value at December 31, 2015, was $0.25.
31
2013 SunVesta Stock Option Plan
Our Board of Directors adopted and approved the 2013 SunVesta Stock Option Plan (“Plan”) on January
1, 2013, which provides for the granting and issuance of up to 50,000,000 million shares of our common
stock. The Company has granted 32,000,000 stock options from the Plan at a $0.05 exercise price per
share for ten years. The Stock Option Plan has 18,000,000 options available for future grant.
Our Board of Directors administers our Plan, however, they may delegate this authority to a committee
formed to perform the administration function of the Plan. The Board of Directors or a committee of the
board has the authority to construe and interpret provisions of the Plan as well as to determine the terms of
an award. Our Board of Directors may amend or modify the Plan at any time. However, no amendment or
modification shall adversely affect the rights and obligations with respect to outstanding awards unless the
holder consents to that amendment or modification.
We have no agreement that provides for payments to our Chief Executive Officer or Chief Operating
Officer at, following, or in connection with his resignation or retirement except any accrued obligations and
the continuation of health insurance or pension benefits. However, both employment agreements do
provide for a severance payment in the event of a change of control, a change in our officer’s
responsibilities within the Company, either before or after a change in control, and their resignation for
what is defined in his employment agreement as “good reason”
We do maintain a pension plan covering all employees in Switzerland. Our model allocates pension costs
over the service period of employees eligible for the plan.
The following table provides summary information for the year ended December 31, 2015, concerning cash
and non-cash compensation paid or accrued by the Company to or on behalf of its non-executive directors.
Director Summary Compensation Table
Name
Fees earned
Stock
Option
Non-equity
Nonqualified
All other
Total
or paid in
awards
Awards
incentive plan
deferred
compensation
($)
cash
($)
($)
compensation
compensation
($)
($)
($)
($)
Dr. Max Rӧssler
-
-
-
-
-
-
-
Jose Maria
- 70,000
-
-
-
-
70,000
Figueres
Howard H.
- 70,000
-
-
-
-
70,000
Glicken
32
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information concerning the ownership of the Company’s 95,941,603
shares of common stock issued and outstanding as of May 09, 2016 with respect to: (i) all directors; (ii)
each person known by us to be the beneficial owner of more than five percent of our common stock; and
(iii) our directors and executive officers as a group.
Names and Addresses of Managers and
Beneficial Owners
Title of Class
Number of Shares
Percent of
Class
Joseph Mettler
CEO, CFO, PAO and Director
97 Seestrasse, CH-8942
Common
11,191,514(1)
11.7%
Oberrieden, Switzerland
Hans Rigendinger
COO and Director
97 Seestrasse, CH-8942
Common
27,716,084(2)
28.9%
Oberrieden, Switzerland
Dr. Max Rӧssler
Director
97 Seestrasse, CH-8942
Common
3,000,000(3)
3.1%
Oberrieden, Switzerland
José Maria Figueres
Director
97 Seestrasse, CH-8942
Common
700,000(4)
0.7%
Oberrieden, Switzerland
Howard M. Glicken
Director
97 Seestrasse, CH-8942
Common
700,000(5)
0.7%
Oberrieden, Switzerland
Officer and directors (5) as a group
Common
43,307,598
45.1%
(1) Common stock attributed to Mr. Mettler includes 2,418,180 shares held by Zypam Ltd., a related entity. Mr. Mettler also holds
12,000,000 unvested stock options granted pursuant to the 2013 SunVesta Stock Option Plan, to purchase additional shares of the
Company’s common stock at an exercise price of $0.05, subject to vesting based on the achievement of certain milestones tied to
the development of the Paradisus Papagayo Bay Resort & Luxury Villas and the right to earn up to an additional 15,000,000 shares
as a retention award of 3,000,000 shares issued on each anniversary of his employment agreement to earlier termination.
(2) Mr. Rigendinger also holds 10,000,000 unvested stock options granted pursuant to the 2013 SunVesta Stock Option Plan, to
purchase additional shares of the Company’s common stock at an exercise price of $0.05, subject to vesting based on the
achievement of certain milestones tied to the development of the Paradisus Papagayo Bay Resort & Luxury Villas and the right to
earn up to an additional 7,500,000 shares as a retention award of 2,500,000 shares issued on each anniversary of his employment
subject to earlier termination.
(3) Dr. Rӧssler also holds 10,000,000 unvested stock options granted pursuant to the 2013 SunVesta Stock Option Plan, to purchase
additional shares of the Company’s common stock at an exercise price of $0.05, subject to vesting based on the achievement of
certain milestones tied to the development of the Paradisus Papagayo Bay Resort & Luxury Villas.
(4) José Maria Figueres can earn an additional 200,000 shares on each anniversary of service as a director.
(5) Howard M. Glicken can earn an additional 200,000 shares on each anniversary of service as a director.
33
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND
DIRECTOR INDEPENDENCE
Neither our directors or executive officers, nor any proposed nominee for election as a director, nor any
person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights
attached to all of our outstanding shares, nor any members of the immediate family (including spouse,
parents, children, siblings, and in−laws) of any of the foregoing persons has any material interest, direct or
indirect, in any transaction since the beginning of our last fiscal year or in any presently proposed
transaction which, in either case, has or will materially affect us except as follows:
Over our last fiscal year, the Company paid or accrued fees of approximately $120,000 to Akyinyi Interiors
and Exterior Decoration for interior design based consulting services rendered by an entity related to the
wife of Josef Mettler, one of our directors and chief executive officer.
Over the last fiscal year, the Company paid fees of approximately $179,279 to Cambridge Limited
Corporation, related to accounting and consulting services rendered in Costa Rica, which entity is owned by
the father-in-law of Josef Mettler, one of our directors and chief executive officer.
Over the last fiscal year, the Company increased its loan obligation to Aires to $47,198,362, which entity is
owned by Dr. Max Rӧssler, one of our directors.
Sportiva Participations AG
Over the past fiscal year, the Company borrowed $2,776,658 at 3% interest from Sportiva participations ag.
which entity is owned by Mr Josef Mettler, one of our Directors and Chief Executive Officer and repaid
$2,247,998 leaving a year-end balance of $528,660 due.
Director Independence
The Company is quoted on the Over the Counter inter-dealer quotation system, which does not have
director independence requirements. However, for purposes of determining director independence, we have
applied the definitions set out in NASDAQ Rule 4200(a)(15) which states that a director is not considered
to be independent if he or she is also an executive officer or employee of the corporation. Accordingly, as of
December 31, 2015, we consider two of our directors independent, neither of whom is employed by the
Company.
34
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Fees and Services
BDO AG (“BDO”) has provided audits of our annual financial statements and a review of our quarterly
financial statements for the periods ended December 31, 2015 and December 31, 2014 respectively. The
following is an aggregate of fees billed during each of the last fiscal years for professional services rendered
by each of our principal accountants.
BDO Fees and Services
2015
Audit fees
$
255,114
Audit-related fees
-
Tax fees - preparation and filing of three major tax-related forms and tax planning.
-
All other fees - other services provided by our principal accountants.
-
Total fees paid or accrued to our principal accountants
$
255,114
BDO Fees and Services
2014
Audit fees
$
188,640
Audit-related fees
-
Tax fees - preparation and filing of three major tax-related forms and tax planning.
-
All other fees - other services provided by our principal accountants.
-
Total fees paid or accrued to our principal accountants
$
188,640
Audit Committee Pre-Approval
We do not have a standing audit committee. Therefore, all services provided to us by BDO, as detailed
above, were pre-approved by our Board of Directors. BDO performed all work with their permanent
full-time employees.
35
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Consolidated Financial Statements
The following documents are filed under “Item 8. Financial Statements and Supplementary Data,” pages
F-1 through F-50, and are included as part of this Form 10-K:
Financial Statements of the Company for the years ended December 31, 2015 and 2014:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Comprehensive Loss
Consolidated Statements of Stockholders’ Deficit
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(b) Exhibits
The exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on
page 38 of this Form 10-K, and are incorporated herein by this reference.
(c) Financial Statement Schedules
We are not filing any financial statement schedules as part of this Form 10-K because such schedules are
either not applicable or the required information is included in the financial statements or notes thereto.
36
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SUNVESTA, INC.
Date
/s/ Josef Mettler
May 13, 2016
Josef Mettler
Chief Executive Officer, Chief Financial Officer
Principal Accounting Officer and Director
/s/ Hans Rigendinger
May 13, 2016
Hans Rigendinger
Chief Operating Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Josef Mettler
Director, Chief Executive Officer,
May 13, 2016
Josef Mettler
Chief Financial Officer, and
Principal Accounting Officer
/s/ Hans Rigendinger
Director, Chief Operating Officer
May 13, 2016
Hans Rigendinger
/s/ Howard Glicken
Director
May 13, 2016
Howard H. Glicken
37
INDEX TO EXHIBITS
Exhibit
Description
3.1.1*
Articles of Incorporation (incorporated by reference from the Form 10-SB filed with the Commission on
December 31, 1999).
3.1.2*
Amended Articles of Incorporation (incorporated by reference from the Form 10-KSB filed with the
Commission on April 9, 2003)
3.1.3*
Amended Articles of Incorporation (incorporated by reference from the Form 10-QSB filed with the
Commission on November 17, 2003).
3.1.4*
Amended Articles of Incorporation (incorporated by reference from the Form 8-K filed with the Commission
on September 27, 2007).
3.2.1*
Bylaws (incorporated by reference from the Form 10-SB filed with the Commission on December 31, 1999).
3.2.2*
Amended Bylaws (incorporated by reference from the Form 10-QSB filed with the Commission on November
17, 2003).
10.1*
Securities Exchange Agreement and Plan of Exchange dated June 18, 2007 between the Company and
SunVesta AG (formerly ZAG Holdings AG) (incorporated by reference from the Form 8-K filed with the
Commission on June 21, 2007).
10.2*
Purchase and Sale Agreement between ZAG Holding AG and Trust Rich Land Investments, Mauricio Rivera
Lang dated May 1, 2006, for the acquisition of Rich Land Investments Limitada.
10.3*
Debt Settlement Agreement dated March 1, 2010, between the Company and Zypam, Ltd. (incorporated by
reference from the Form 8-K filed with the Commission on March 10, 2010).
10.4*
Debt Settlement Agreement dated March 1, 2010, between the Company and Hans Rigendinger (incorporated
by reference from the Form 8-K filed with the Commission on March 10, 2010).
10.5*
Guaranty Agreement dated July 16, 2012, between SunVesta, Mr. Mettler, Mr. Rigendinger and Dr. Rӧssler.
10.6*
Employment Agreement dated January 1, 2013 between the Company and Hans Rigendinger (incorporated by
reference to the Form 8-K filed with the Commission on February 4, 2013.
10.7*
Employment Agreement dated July 4, 2013 between the Company and Josef Mettler (incorporated by reference
to the Form 10-Q filed with the Commission on October 10, 2013).
10.8*
Assignment of Debt Agreement dated December 31, 2012, between the Company, SunVesta AG and Aires
International Investments, Inc. (incorporated by reference to the Form 10-Q filed with the Commission on
December 13, 2013).
10.9*
Debt Settlement Agreement dated December 31, 2012, between the Company and Hans Rigendinger
(incorporated by reference to the Form 10-Q filed with the Commission on December 13, 2013).
10.10*
Loan Agreement dated October 31, 2013, between SunVesta AG and Aires International Investments, Inc.
(incorporated by reference to the Form 10-Q filed with the Commission on December 13, 2013).
10.11*
Assignment of Debt Agreement dated December 31, 2013, between the Company, SunVesta AG and Aires
(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 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).
Subsidiaries of the Company
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14 of the
Securities and Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99*
SunVesta, Inc. 2013 Stock Option Plan (incorporated by reference to the Form 10-Q filed with the Commission
on October 10, 2013).
101. INS
XBRL Instance Document†
101. PRE
XBRL Taxonomy Extension Presentation Linkbase†
101. LAB
XBRL Taxonomy Extension Label Linkbase†
101. DEF
XBRL Taxonomy Extension Label Linkbase†
101. CAL
XBRL Taxonomy Extension Label Linkbase†
101. SCH
XBRL Taxonomy Extension Schema†
*
Incorporated by reference to previous filings of the Company.
†
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or
part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, or
deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934,
and otherwise is not subject to liability under these sections.
38