SUNVESTA, INC. - FORM 10-Q - November 10, 2016

Attached files

file	filename
EX-32 - CERTIFICATION - SUNVESTA, INC.	exhibit32.htm
EX-31 - CERTIFICATION - SUNVESTA, INC.	exhibit31.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES

EXCHANGE ACT OF 1934 for the quarterly period ended September 30, 2016.

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES

EXCHANGE ACT OF 1934 for the transition period from to

Commission file number: 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

Seestrasse 97, Oberrieden, Switzerland CH-8942

(Address of principal executive offices) (Zip Code)

011 41 43 388 40 60

(Registrant’s telephone number, including area code)

n/a

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

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

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

shorter period that the registrant was required to file such reports), and (2) has been subject to such

filing requirements for the past 90 days. Yes þ No o



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

corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant

to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such

shorter period that the registrant was required to submit and post such files). Yes þ No o



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

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

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

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



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

Exchange Act). Yes o No þ



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

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

value (the only class of voting stock), at November 11, 2016, was 95,941,603.

TABLE OF CONTENTS

PART 1- FINANCIAL INFORMATION

Item 1.

Financial Statements:

Consolidated Balance Sheets as of September 30, 2016 (Unaudited) and

December 31, 2015

Unaudited Consolidated Statements of Comprehensive Loss (unaudited) for the

three and nine months ended September 30, 2016 and September 30, 2015

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

nine months ended September 30, 2016

Unaudited Consolidated Statements of Cash Flows (unaudited) for the nine

months ended September 30, 2016 and September 30, 2015

Notes to Unaudited Consolidated Financial Statements

Item 2.

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

Operations

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Item 4.

Controls and Procedures

PART II-OTHER INFORMATION

Item 1.

Legal Proceedings

Item 2.

Risk Factors

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Item 5.

Other Information

Item 6.

Exhibits

Signatures

Index to Exhibits

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

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

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

management, the accompanying unaudited, consolidated financial statements included in this

Form 10-Q reflect all adjustments necessary for a fair presentation of the results of operations for

the periods presented. The results of operations for the periods presented are not necessarily

indicative of the results to be expected for the full year.

SUNVESTA, INC.

CONSOLIDATED BALANCE SHEETS

September 30, 2016

December 31, 2015

(Unaudited)

Assets

Current assets

Cash and cash equivalents

2,985,698

111,830

Receivable from related parties

20,643

19,945

Other assets

549,978

158,574

Total current assets

3,556,320

290,349

Non-current assets

Property and equipment - net

65,084,427

61,271,424

Deposits related to construction work

190,577

798,874

Notes receivable

280,242

Down payment for property and equipment

2,369,816

2,972,083

Restricted cash

1,673,563

1,684,467

Total non-current assets

69,598,624

67,007,090

Total assets

73,154,944

67,297,439

Liabilities and stockholders' deficit

Current liabilities

Bank liabilities

179,313

Accounts payable

4,814,034

8,048,608

Accrued expenses

9,109,806

7,831,247

Note payable

2,660,607

2,736,912

Notes payable to related parties

6,023,048

1,130,978

Convertible CHF-Bond

5,988,898

EUR-Bond

8,728,720

8,347,717

Total current liabilities

37,325,113

28,274,775

Non-current liabilities

Convertible CHF-Bond

32,405,820

25,866,148

Liability related to conversion feature

6,760,662

6,976,322

Notes payable to related parties

48,611,633

47,198,362

Other long-term debts

36,140

Pension liabilities

215,825

210,680

Total non-current liabilities

87,993,940

80,287,652

Total liabilities

125,319,053

108,562,427

Stockholders' equity

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

959,416

Additional paid-in capital

23,168,285

23,403,438

Accumulated other comprehensive income / (loss)

(923,062)

1,778,961

Accumulated deficit

(75,368,748)

(67,406,803)

Total stockholders' deficit

(52,164,109)

(41,264,988)

Total liabilities and stockholders' deficit

73,154,944

67,297,439

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

SUNVESTA, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME / (LOSS)

Three months ended

Nine months ended

September 30,

September 30,

2016

2015

2016

2015

(Unaudited)

Revenues

Revenues, net

Cost of revenues

Gross profit

Operating Expenses

General and administrative expenses

(1,071,827)

(1,117,470)

(3,998,562)

(4,343,520)

Impairment expenses

(296,663)

Total operating expenses

(1,071,827)

(1,117,470)

(4,295,224)

(4,343,520)

Income / (loss) from operations

(1,071,827)

(1,117,470)

(4,295,224)

(4,343,520)

Other income / (expenses)

Interest income

15,134

8,175

46,162

26,657

Interest expense

(1,859,825)

(2,220,004)

(5,870,982)

(6,000,005)

Change in Fair Value of Conversion

680,580

1,860,806

Feature

Exchange differences

(1,240,451)

1,014,604

322,882

309,184

Other income / (expenses)

(15,064)

(35,098)

(25,589)

(84,424)

Total other expenses

(2,419,625)

(1,232,324)

(3,666,721)

(5,748,588)

Profit/ (loss) before income taxes

(3,491,452)

(2,349,793)

(7,961,945)

(10,092,108)

Income Taxes

(1,150)

Net income / (loss)

(3,491,452)

(2,349,793)

(7,961,945)

(10,093,258)

Comprehensive income / (loss)

Foreign currency translation

119,460

1,966,597

(2,702,023)

(518,566)

Comprehensive income / (loss)

(3,371,991)

(383,197)

(10,663,968)

(10,611,824)

Earnings / (loss) per common share

Basic and diluted

(0.03)

(0.02)

(0.08)

(0.11)

Weighted average common shares

Basic and diluted

101,740,479

95,842,702

99,707,537

93,798,380

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

SUNVESTA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

Common

Additional

Accumulated

Total

Stock

Paid-in

Other

Accumulated

Treasury

Stockholders’

Capital

Comprehensive

deficit

Stock

Equity

Income (Loss)

(Deficit)

December 31, 2015

959,416 $ 23,403,438 $

1,778,961 $ (67,406,803) $

- $ (41,264,988)

Translation

adjustments

(2,702,023)

Net loss

(7,961,945)

Stock based

compensation expense

(235,153)

September 30, 2016

959,416 $ 23,168,285 $

(923,062) $ (75,368,748) $

- $ (52,164,109)

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

SUNVESTA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

January 1, to

September 30, 2016

September 30, 2015

(Unaudited)

Cash flow from operating activities

Net loss

(7,961,945)

(10,093,259)

Adjustments to reconcile net loss to net cash

Depreciation and amortization

29,585

50,641

Impairment on Down Payment

296,663

Amortization of debt issuance costs and commissions

1,776,231

2,540,765

Accrued interest on debt

2,696,792

Unrealized exchange differences

(411,374)

(496,382)

Stock compensation expense

(235,153)

435,608

Expenses (+) / Income (-) related to conversion feature

(386,185)

- Cash flow impact of increase / decrease in:

Other current assets

759,303

(12,761)

Accounts payable

(3,042,107)

1,694,770

Accrued expenses

424,203

2,743,294

Net cash used in operating activities

(6,053,988)

(3,137,324)

Cash flow from investing activities

Other receivables from related parties

(1,685,099)

Payments to acquire property, plant and equipment

(1,198,012)

(6,440,625)

Payments to acquire projects

(250,000)

Proceeds from sale of property, plant and equipment

36,578

Deposits related to construction

(641,818)

3,311

Down payments for property and equipment

309,023

(307,841)

Restricted cash

14,050

Net cash used in investing activities

(1,480,178)

(8,680,218)

Cash flows from financing activities

Repayments of bank liabilities

(178,053)

(153,375)

Proceeds from notes payable related parties

8,233,385

9,185,499

Repayment of notes payable related parties

(7,784,216)

Proceeds from bond issuance, net of commissions and debt

11,127,996

9,616,664

Repayment of bonds

(890,379)

(6,443,246)

Repayments of note payable and other debt

(125,769)

(174,760)

Net cash provided by financing activities

10,382,963

12,030,782

Effect of exchange rate changes

25,070

(22,005)

Net increase / - decrease in cash

2,873,867

191,235

Cash and cash equivalents, beginning of period

111,830

14,347

Cash and cash equivalents, end of period

2,985,697

205,582

Additional information

Capitalized interest and debt issuance costs for construction (non-

2,679,526

Reversal of capitalized payment obligation for construction (non-

451,816

Assumption of payables due from AIRES by Global Care AG (non-

7,621,345

Assumption of payables due from Global Care AG by Sportiva (non-

1,533,150

Repayment of Specogna Holding AG loan by Aires

Interest paid

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

1,507,128

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

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

CORPORATE INFORMATION

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

(“SunVesta AG”). Until recently, SunVesta AG held 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.

Effective May 21, 2016, the three Costa Rican companies have been merged, whereby

Altos del Risco SA absorbed its two affiliated companies and subsequently changed its

name to SunVesta Costa Rica SA.

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”).

The accompanying unaudited interim consolidated financial statements have been prepared

by management in accordance with the instructions in Form 10-Q and, therefore, do not

include all information and footnotes required by generally accepted accounting principles

and should, therefore, be read in conjunction with the Company’s Form 10-K, for the year

ended December 31, 2015, filed with the Securities and Exchange Commission. These

statements do include all normal recurring adjustments which the Company believes

necessary for a fair presentation of the statements. The interim results of operations are not

necessarily indicative of the results to be expected for the full year ended December 31,

2016.

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

information disclosed in the notes to the financial statements included in the Company’s

Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange

Commission.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

SIGNIFICANT ACCOUNTING POLICIES

New accounting standard updates – not adopted yet

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 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.

New accounting standard updates - adopted

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 resulted in the reclassification of debt issuance cost and

the relating amortization.

The Company had unamortized debt issuance costs of $2,375,877 and $2,995,209 as of

September 30, 2016 and December 31, 2015 respectively. The Company reclassified

amortization of debt issuance cost and commissions in the amount of $792,583 and

$674,617 to interest expense for the three- months’ periods ended September 30, 2016 and

September 30, 2015, respectively.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

New accounting standard updates – adopted - continued

This ASU was applied retrospectively for all periods presented.

In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting

Standards Updates (ASU) 2016-15 which clarifies how certain cash receipts and cash

payments are presented and classified in the statement of cash flows. The amendments are

intended to reduce diversity in practice. As the update specifies presentation in certain

particular cases, they have no impact on the company’s financial statement as of

September 30, 2016, respectively.

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 2018. Until the completion of the project, the following expenditures are

estimated to be incurred:

Gross project cost

217,000,000

Less: Proceeds from sale of villas

(25,000,000)

Net project cost

192,000,000

Overhead expenses

20,000,000

Total, excluding other potential projects

212,000,000

Seventy percent of the net project cost is intended to be financed through the issuance of

secured bonds, for which negotiations have been initiated. The remaining thirty percent of

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

financed by the main shareholders or lenders of the project, i.e. Zypam Ltd., shareholder and

related entity to the late Mr. Josef Mettler, Mr. Hans Rigendinger, shareholder, Company

Director and interim Chief Executive Officer, Dr. Max Rӧssler, controlling shareholder of

Aires International Investment, Inc. and Company Director.

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

project entered into a Guaranty Agreement in favor of the Company. The purpose of the

guaranty is to ensure that until financing is secured for the entire project that 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.

On October 28, 2016, Hans Rigendinger and Dr. Max Rössler formally agreed to maintain

the guaranty, as necessary, until completion of the construction of Paradisus Papagayo Bay

Resort & Luxury Villas, after which date the guaranty will expire.

The Guaranty Agreement requires that within 30 days of receiving a demand notice,

requested funds are made available by the guarantors to the Company. Based on this

guaranty, management believes that available funds are sufficient to finance cash flows for

the twelve months subsequent to September 30, 2016 and the filing date, though future

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

financing.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

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.

USD

CHF

Other

Total

Cash and cash

equivalents

September 30, 2016 December 31, 2016

original currency 52,765 2,830,117

14,655

in $

52,765 2,921,140

11,793

2,985,698

111,830

USD ($) =

US Dollar

EURO =

Euro

CHF

Swiss Francs

AUD

Australian Dollar

CRC

Costa Rican Colón

RESTRICTED CASH

As of September 30, 2016, the Company has the following restricted cash positions:

Restricted Cash

September 30, 2016

December 31, 2015

Credit Suisse in favor of BVK pension fund

131,911

128,805

Banco Lafise in favor Costa Rican Tourism Board

933,350

HSBC in favor of Costa Rican Tourism Board

370,000

Banco National de Costa Rica in favor of the Costa

Rican Tourism Board

563,350

Banco Lafise in favor Costa Rican Environmental

Agency – SETENA

608,302

Banco Nacional de Costa Rica in favor of the Costa

Rican Environmental Agency – SETENA

622,312

Gross

1,673,563

1,684,467

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

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

therefore their release is not expected before finalization of the corresponding project. Due

to this fact, these restricted cash positions have been classified as long term.

The restricted cash position in favor of BVK pension fund is a rental deposit related to a

long term lease contract for office space. Therefore, this restricted cash position is also

classified as long term.

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 fixed interest, the overdue amount at September 30, 2016 was

approximately $280,000.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

PROPERTY & EQUIPMENT

September 30, 2016

December 31, 2015

Land

19,700,000

IT Equipment

232,537

185,846

Other equipment and furniture

231,142

278,000

Leasehold improvements

77,846

66,617

Vehicles

74,000

139,000

Construction in-process

45,289,888

41,412,351

Gross

65,605,413

61,781,814

Less accumulated depreciation

(520,986)

(510,390)

Net

65,084,427

61,271,424

Depreciation expenses for the period ended

September 30, 2016 and 2015

29,585

16,802

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 related to the

concessions held by SunVesta Costa Rica SA. $7 million (~84,000 m2) and $12.7

million (~120,000 m2).

The $7 million concession is a right to use the property for a specific period of time of

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

cost, if the landholder is up to date with its obligations and if there is no significant

change in government policies. The current concession initially expired in June 2022.

The $12.7 million concession is also a right to use the property for a specific period of

time of initially 30 years from the date of grant, which thereafter can be renewed at no

further cost, if the landholder is up to date with its obligations and if there is no

significant change in government policies. The current concession 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 approved the

extension of both concessions until 2052.

The construction in process through December 31, 2015 and September 30, 2016, is

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

as construction work.

Deposit related to construction work

For the quarter ended September 30, 2016, 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 September 30, 2016 and

December 31, 2015, the Company has deposits of $190,577 and $798,874

respectively, which have not yet been set off.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

DOWN PAYMENTS FOR PROPERTY & EQUIPMENT

September 30, 2016

December 31, 2015

La Punta (neighboring piece of land)

2,669,816

Hotel Engadina

302,267

Gross

2,669,816

2,972,083

Value adjustement on Down Payment La Punta

(300,000)

Total (net)

2,369,816

2,972,083

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 $23,395,806 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 development). Both of

these properties are located in Costa Rica.

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

price to $17,200,200 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 the said properties with a total purchase price of $17,500,000.

As of this balance sheet day, the following is the situation:

Description

Original seller

Third party

Total

USD

Total commitment

9,500,000

8,000,000

17,500,000

Payments till 30 September 2016

1,669,816

1,000,000

2,669,816

Thereof refundable:

(1,669,816)

(700,000)

(2,369,816)

thereof non-refundable

300,000

Total outstanding at 30 September 2016

7,830,184

7,000,000

14,830,184

Thereof overdue

(7,830,184)

(7,000,000)

(14,830,184)

Thereof not overdue

In light of the above situation the Company is in discussions with the Original Seller

regarding an extension and adaptation of the current agreement, which, for all practical

reasons, must be considered obsolete.

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.

Both, the $300,000 write-off (accounted for as impairment expenses) as well as the

$50,000 for additional damages (accounted for as general and administrative expenses)

have been provided for in the results year-to-date 2016.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

DOWN PAYMENTS FOR PROPERTY & EQUIPMENT - CONTINUED

Down payment for Purchase Four Hotels in the Canton of Graubünden, Switzerland

On September 19, 2015, the Company signed an option agreement to acquire four

existing hotels in the Canton of Graubünden, Switzerland with an unrelated third party.

The properties optioned comprise an aggregate of 141 rooms. The consideration for the

option was CHF 300,000, which amount was paid on October 25, 2015.

Dated May 10, 2016, the Company, QuadEquity Holdings AG and the potential Seller of

the four hotels concluded an agreement, whereby QuadEquity Holdings AG assumed all

of the Company’s rights and obligations from the original contract. In return, QuadEquity

Holdings AG would pay the Company the amount of $302,000 (CHF 300,000) before

May 30, 2016. This payment was received by the Company on June 1, 2016.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

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 followinghierarchy:

Level 1

Quoted prices for identical instruments in active markets.

Level 2

Quoted process for similar instruments in active markets, quoted prices for

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

derived valuations in which significant inputs or significant value drivers are

observable in active markets.

Level 3

Model derived valuations in which one or more significant inputs or

significant value-drivers are unobservable.

When available, the Company uses quoted market prices to determine fair value, and

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

available, the Company makes use of observable market based inputs to calculate fair

value, in which case the measurements are classified within Level 2. If quoted or

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

models that use, where possible, current market-based parameters such as interest rates,

yield curves and currency rates. These measurements are classified within Level 3.

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

that is significant to the valuation. A measurement may therefore be classified within

Level 3 even though there may be significant inputs that are readily observable.

Fair value measurement includes the consideration of nonperformance risk.

Nonperformance risk refers to the risk that an obligation (either by counterparty or the

Company) will not be fulfilled. For financial assets traded in an active market (Level 1),

the nonperformance risk is included in the market price. For certain other financial assets

and liabilities (Level 2 and 3), the Company’s fair value calculations have been adjusted

accordingly.

As of September 30, 2016 and December 31, 2015, respectively, there are no financial

assets or liabilities measured on a recurring basis at fair value with the exception of the

liability related to the conversion feature.

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

instruments as discussed above, the Company used the following methods and

assumptions to estimate the fair value of our financial instruments:

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

FAIR VALUE MEASUREMENT - CONTINUED

—

Cash and cash equivalents – carrying amount approximated fair value.

—

Restricted cash – carrying amount approximated fair value.

—

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

nature of the receivables.

—

Accounts Payable – carrying amount approximated fair value.

—

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

—

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

—

Notes 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 convertibleshares.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

FAIR VALUE MEASUREMENT - CONTINUED

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

September 30, 2016

December 31, 2015

Carrying

Fair

Carrying

Fair

Amount $

Value $

Amount $

Value $

Levels Reference

Cash andcash equivalents

2,985,698

111,830

Note 4

Restricted cash

1,673,563

1,684,467

Note 5

Receivables from related parties –

20,643

19,945

Note 10

Accounts Payable

4,814,034

8,048,608

Bank liabilities

179,313

Note 11

Note payable

Note 17

Notes payable to related parties –

4,256,580

Note 10

Dr. M. Rӧssler (current)

Notes payable to related parties –

2,021

1,973

Note 10

Notes payable to related parties –

1,764,447

1,129,005

Note 10

Notes receivable

280,242

EUR-bonds

8,728,720

8,488,631

Note 12

Convertible CHF-bonds

38,394,718

28,720,443

Note 12

Notes payable to related parties –

48,611,633

47,198,362

Note 10

Liability related to conversion

6,760,662

6,976,322

Note 12

The Company's financial liabilities measured at fair value on a recurring basis consisted

of the liability related to conversion feature as of the following date:

Balance at December 31, 2015

6,976,322

Additions

1,474,622

Change in Fair Value of Conversion Feature

(1,860,806)

FX Revaluation

170,524

Balance at September 30, 2016

6,760,662

Total income (+) or expense (-) related to the conversion feature in the nine months up to

September 30, 2016, amounts to $386,184. The Company used a Black-Scholes model to

value the liability related to conversion feature as of September 30, 2016 and December

31, 2015. Increase of the conversion feature due to increase of bond volume are

accounted for under interest expense.

The assumptions as of December 31, 2015 are as follows:

Stock Price: CHF 5.08

Annualized Risk Free

Rate: 0.72% Exercise Price: CHF 8

Annualized

Volatility: 80% Time to Maturity: 2.75 years

The assumptions as of September 30, 2016 are as follows:

Stock Price: CHF 5.08

Annualized Risk Free

Rate: 0.00% Exercise Price: CHF 8

Annualized

Volatility: 80% Time to Maturity: 2 years

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

10.

RELATED PARTY TRANSACTIONS

The notes payable to and receivables from related parties are composed of the follows:

Receivables

Payables

September 30,

December September 30,

December 31,

2016

31, 2015

2016

2015

1 Hans Rigendinger

2,021

1,973

2 Aires International

48,611,633

47,198,362

3 Akyinyi Interior and Exterior

Decoration

290,000

4 Global Care AG

1,474,447

240,210

5 Geoffrey Long

19,945

6 Sportiva participations ag

528,660

7 Late Josef Mettler

70,135

8 QuadEquity Holdings

9 4f capital ag

10 Dr. Max Rössler

4,256,580

11 Turan Tokay

20,643

Total excluding interest

20,643

19,945

54,634,681

48,329,340

Accrued interest

4,489,666

6,370,579

Total

20,643

19,945

59,124,348

54,699,919

of which non-current

48,611,633

47,198,362

Related party

Capacity

Interest Repayment

Rate

Terms

Security

1 Hans Rigendinger Shareholder, interim CEO and Company board

member

none

2 Aires International Company owned by Dr. Max Rössler, a board member

Akyinyi Interior

3 and Exterior

Company owned by the widow of the late Josef

Decoration

Mettler

none

4 Global Care AG

Company owned by Dr. Max Rössler, a board

member

none

5 Geoffrey Long

Head of Accounting “The Americas”

none

6 Sportiva

participations ag

Company formerly owned by the late Josef Mettler

none

7 Late Josef Mettler Former shareholder, CEO, CFO and Company board

member

none

8 QuadEquity

Company formerly owned by the late Josef Mettler

Holdings

(see above)

none

9 4f capital ag

Company formerly owned by the late Josef Mettler

(see above)

none

10 Dr. Max Rössler

Company board member

7.25%

none

11 Turan Tokay

Shareholder

none

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

10.

RELATED PARTY TRANSACTIONS - CONTINUED

Loan agreement Aires International Investment Inc.

As of September 30, 2016 the Company owes Aires International Inc. the following:

Borrower

Debt instrument

Amount in

Annual

Repayment

denominated in

CHF

USD

interest

date

CHF

rate

SunVesta Inc.

Promissory note

10,044,370

10,266,118

7.25 %

Dec 31, 2017

SunVesta Inc.

Promissory note

10,000,000

10,220,769

7.25 %

Dec 31, 2017

SunVesta Inc.

Promissory note

10,000,000

10,220,769

7.25 %

Dec 31, 2017

SunVesta Inc.

Promissory note

4,888,220

5,045,435

7.25 %

Dec 31, 2017

SunVesta Holding Loan agreement

12,458,639

12,858,542

7.25 %

Dec 31, 2017

Total

48,611,633

The notes may be repaid in whole or in part.

Loans Dr. Max Rӧssler

In the third quarter 2016, Dr. Max Rössler provided $4,202,378 (CHF 4,100,000). Interest

of $24,543 was recorded in this period, resulting in a total balance of $4,256,580 as of

September 30, 2016.

Loan Global Care AG

During 2014, Global Care AG loaned the Company $190,270 (CHF 185,000), which

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

$20,570 (CHF 20,000).

Effective June 30, 2016, an amount of $1,440,875 (CHF 1,398,802) was transferred from

the loan account Dr. Max Rössler to the loan account Global Care AG.

Payable to the late Josef Mettler

During the third quarter 2016 Josef Mettler passed away and companies formerly owned

by him are no longer related parties to the Company.

In the third quarter 2016, $17,775 was advanced to the late Josef Mettler for private

expenses, accounted for as other assets as per September 30, 2016.

Current account Sportiva participations ag (a Josef Mettler company)

During the three-month period ended September 30, the following transaction occurred on

the current account Sportive participation ag (only transactions up until the death of Josef

Mettler on September 12, 2016, are shown as Sportiva is no longer a related party after

this date):

CHF

USD

Balance June 30, 2016

(549,440)

(561,569)

Cash repaid to the Company

638,423

654,364

Interest credited to the account

(373)

(382)

Changes in foreign currency

(1,590)

Balance September 12, 2016

88,610

90,823

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

10.

RELATED PARTY TRANSACTIONS - CONTINUED

Service fees paid or payable to Akyinyi Interior and Exterior Decoration

During the three-month periods ended September 30, 2016, and September 30, 2015, the

Company paid or accrued fees to Akyinyi Interior and Exterior Decoration, which is a

company owned by the widow of the late Josef Mettler, related to interior design of the

Papagayo Gulf Tourism project in the amount of $0 and $30,000 respectively. These costs

have been capitalized to property and equipment.

Consulting Fees paid or payable to Cambridge Limited Corp.

During the three month periods ended September 30, 2016, and September 30, 2015, the

Company paid fees to Cambridge Limited Corporation, which is a company owned by the

father-in-law of the late Josef Mettler. These fees related to accounting and consulting

services rendered to the Company in the amount of approximately $36,589 and $48,500,

respectively.

Hans Rigendinger

There are amounts payable of $1,973 as of December 31, 2015 and $2,021 as of

September 30, 2016.

11.

BANK LIABLITIES

The bank liability of $0 and $179,313 as of September 30, 2016 and December 31, 2015,

respectively represented a temporary, secured overdraft facility, bearing an interest rate of

some 9%.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

12.

BONDS

Description

EUR (€) bond new I

EUR (€) bond new II (parallel)

Issuer:

SunVesta Holding AG

Type of securities:

Bond in accordance with Swiss law Bond in accordance with Swiss law

Approval by SunVesta AG BOD:

October 31, 2013

May 19, 2014

Volume:

Up to EUR15,000,000

Up to EUR 15,000,000

Units:

EUR 10,000

Offering period:

11/07/2013 – 03/31/2014

05/01/14 – 06/30/14

Due date:

December 02, 2016

Issuance price:

100%

100 %

Issuance day:

December 02, 2013

December 02, 2013 (retroactive)

Interest rate:

7.25% p.a.

7.25 % p.a.

Interest due dates:

December 02, 2013

December 02, 2016

Applicable law:

Swiss

EURO (€) Bond new I

EURO Bond

EURO Bond

(New) 2016

(New) 2015

Balances January 1

6,871,630

7,355,572

Cash inflows

281,754

Cash outflows

Foreign currency adjustments

191,388

(765,696)

Sub-total

7,063,018

6,871,630

Discounts (commissions paid to bondholders) and

debt issuance costs

(588,613)

Accumulated amortization of discounts and

debt issuance costs

501,320

432,128

Total accumulated unamortized discounts and

debt issuance costs

(87,293)

(156,485)

Balances September 30 and December 31 (Carrying value)

6,975,725

6,715,145

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

6.3 million ($6.99 million) related to the EURO Bond I.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

12. BONDS - CONTINUED

EURO (€) Bond new II

EURO Bond

EURO Bond

New II 2016

new II 2015

Balances January 1

1,658,300

1,761,258

Cash inflows

Cash outflows

Foreign currency adjustments

75,013

(102,958)

Sub-total

1,733,313

1,658,300

Discounts (commissions paid to bondholders) and

debt issuance costs

(174,660)

Accumulated amortization of discounts and

debt issuance costs

194,342

148,932

Total accumulated unamortized discounts and

debt issuance costs

19,682

(25,728)

Balances September 30 and December 31 (Carrying value)

1,752,995

1,632,572

As per date of this report the Company has realized a cumulative amount of EUR 1.51

million ($1.67 million) related to the EURO Bond new II.

Description

CHF bond I (repaid)

CHF bond II parallel (repaid)

Issuer:

SunVesta Holding AG

Type of securities:

Bond in accordance with Swiss law Bond in accordance with Swiss law

Approval by SunVesta AG BOD: June 03, 2011

May 19, 2014

Volume:

CHF 15,000,000

Units:

CHF 50,000

CHF 10,000

Offering period:

09/01/2011 – 02/28/2012

05/01/2014 – 06/30/2014

Due date:

August 31, 2015

Issuance price:

100 %

Issuance day:

September 01, 2011

September 01, 2013 (retroactive)

Interest rate:

7.25 % p.a.

Interest due dates:

August 31, 2015

Applicable law:

Swiss

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

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

Type of securities:

Senior convertible bonds,

convertible into shares of the issuer, convertible into shares of the issuer,

in accordance with Swiss law

Approval by SunVesta AG BOD: September 30, 2015

September 30, 2015

Volume:

Up to CHF 45,000,000

Up to CHF 15,000,000

Denomination:

CHF 5,000

Offering period:

October 01, 2015

Maturity date:

September 30, 2018

Issue price:

100 %

Redemption price:

100 %

Issuance date:

October 01, 2015

Coupon:

6.00 % p.a.

Interest due dates:

September 30 of each year, the first September 30 of each year, the first

time September 30, 2016

Reference price:

CHF 6.50

Initial conversion price:

CHF 8.00

Applicable law:

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 presented 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 financing is therefore 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 at inception have been capitalized and

amortized over the life of the bonds under the effective interest rate method. Finally, the

change of the fair value of the liability related to conversion feature was expensed in the

period.

The nominal and carrying amounts have changed as follows:

CHF Bond

CHF BOND I

2016

2015

Balances January 1

10,999,192

Cash inflows

Cash outflows

(5,913,796)

Foreign currency adjustments

159,884

Reclassifications to CHF Bond II

Reclassifications to Convertible CHF Bond I

(2,005,548)

Reclassifications to Convertible CHF Bond II

(3,239,732)

Sub-total

Discounts (commissions paid to bondholders)

(670,764)

Accumulated amortization of discounts

670,764

Unamortized discounts

Balances September 30 and December 31(Carrying value)

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

12.

BONDS - CONTINUED

From the CHF Bond I issue in this roll forward, $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.

CHF Bond

CHF Bond II

CHF BOND II

2016

2015

Balances January 1

15,304,228

Cash inflows

10,819,209

Cash outflows

(3,923,675)

Foreign currency adjustments

(51,779)

Reclassifications from CHF Bond I

Reclassifications to Convertible CHF Bond I

(185,127)

Reclassifications to Convertible CHF Bond II

(21,962,856)

Sub-total

Discounts (commissions paid to bondholders)

(1,578,825)

Accumulated amortization of discounts

1,578,825

Unamortized discounts

Balances September 30 and December 31 (Carrying

value)

From the CHF Bond II issue in this roll forward, $185,127 was reclassified to the

Convertible CHF Bond I in the fourth quarter of 2015. Additionally, $21,962,856 was

reclassified to the Company's CHF Convertible Bond II.

Convertible CHF BOND I

Convertible

CHF Bond I

2016

2015

Balances January 1

2,250,048

Cash inflows

1,640,887

100,990

Cash outflows

(103,008)

Foreign currency adjustments

64,760

(41,617)

Reclassifications to CHF Bonds

(634,186)

2,190,675

Sub-total

3,218,502

2,250,048

Discounts (commissions paid to bondholders) and debt

issuance costs

(136,722)

(136,219)

Accumulated Amortization of discounts and debt issuance costs

92,761

57,896

Reclassification to CHF Bonds

(104,038)

Total Accumulated Unamortized discounts and debt issuance

costs

(148,000)

(78,323)

Balances September 30 and December 31 (Carrying value)

3,070,502

2,171,725

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. In the

first quarter of 2016, the Company reclassified $634,186 to Convertible CHF Bond II.

As per date of this report, the Company has realized a cumulative amount of CHF 3.12

million ($3.21 million) related to the Convertible Bond I.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

12.

BONDS - CONTINUED

Convertible CHF BOND II

Convertible

CHF Bond

CHF Bond II

II 2016

2015

Balances January 1

26,470,395

Cash inflows

11,364,139

1,747,122

Cash outflows

(787,371)

Foreign currency adjustments

712,559

(479,315)

Reclassifications to CHF Bonds

634,186

25,202,588

Sub-total

38,393,908

26,470,395

Discounts (commissions paid to bondholders) and debt issuance

costs

(4,853,592)

(2,977,065)

Accumulated Amortization of discounts and debt issuance costs

1,679,863

201,093

Reclassification to CHF Bonds

104,038

Total Accumulated Unamortized discounts and debt issuance

costs

(3,069,692)

(2,775,972)

Balances September 30 and December 31 (Carrying value)

35,324,216

23,694,423

In the 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. In the

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

As per date of this report the Company has realized a cumulative amount of CHF 37.20

million ($38.24 million) related to the Convertible Bond II.

Included in the above is an amount of approx. $6.44 million (CHF 6.24 million), which, by

agreement between the Company and the bondholders and as a deviation from the standard

terms, are repayable as of February 28, 2017. As these are due within 12 months from the

reporting date, these funds are classified within current liabilities on the consolidated

balance sheet.

As of September 21, 2016, the Company has started the distribution of a new bond with a

volume of CHF 20.0 million, to be underwritten until November 30, 2016.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

13.

PENSION PLAN

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

considered a defined benefit plan and accounted for in accordance with ASC 715

Compensation - Retirement Benefits. This model allocates pension costs over the service

period of employees in the plan. The underlying principle is that employees render

services ratably over this period, and therefore, the income statement effects of pensions

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

difference between the fair value of plan assets and the projected benefit obligations of

the pension plan on the balance sheet, with a corresponding adjustment recorded in the

net loss. If the projected benefit obligation exceeds the fair value of plan assets, then that

difference or unfunded status represents the pension liability.

The Company records a net periodic pension cost in the statement of comprehensive loss.

The liabilities and annual income or expense of the pension plan is determined using

methodologies that involve several actuarial assumptions, the most significant of which

are the discount rate and the long- term rate of asset return (based on the market-related

value of assets). The fair values of plan assets are determined based on prevailing market

prices.

Actuarial valuation

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

Three months

Three months Nine months Nine months

ended

Pension expense

September 30,

September 30, September 30, September 30,

2016

2015

2016

2015

Current service cost

15,357

14,527

46,070

43,582

Net actuarial (gain) loss recognized

Interest cost

945

1,337

2,836

4,011

Expected return on assets

(1,916)

(1,646)

(5,749)

(4,937)

Employee contributions

(5,877)

(5,914)

(17,631)

(17,741)

Net periodic pension cost

8,509

8,304

25,526

24,011

During the three-month periods ended September 30, 2016 and September 30, 2015 the

Company made cash contributions of $15,534 and $5,914, 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 fixed-income and equity securities

within the limits set out by the Swiss pension law.

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

contributions to the pension plan for the year ended December 31, 2016 are $17,631.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

14.

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 – late Mr. Josef Mettler

On July 4, 2013, the Company granted 5,000,000 common shares to the late 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 have been requested to issue

up to 21,000,000 common shares through December 31, 2020 related to the retention

bonus.

As Josef Mettler passed away during the third quarter 2016, 3,000,000 common shares

were issued for the last time on July 4, 2016. From after this date, the necessary accrual

up until his passing away has been reversed as of September 30, 2016.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

14.

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

Three and nine months

(shares)

ended September 30, 2016

ended September 30, 2015

Shares granted

46,800,000 shares

46,400,000 shares

Fair Value respectively

$0.0737

$0.0744

market price on grant date

Total maximal expenses

$3,450,000

(2013-2020)

Shares vested

29,800,000 shares

23,900,000 shares

Unvested shares

17,000,000 shares

22,900,000 shares

Of the granted shares, 12,000,000 have been forfeited due to the death of Josef

Mettler.

As of September 30, 2016, the Company expects to record compensation expense in the

future up to $420,000 as follows:

Year ending December 31,

Stock-based

Through

compensation

December

(shares)

31, 2016

2017

2018

2019

2020

Unrecognized

compensation

60,000

210,000

expense

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

14.

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 would

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

the probability that this performance condition would be met at 100%, but the date, up to

which the performance condition would have to 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 2018, as was the required date

of the performance condition. 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 – 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.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

14.

STOCK COMPENSATION - CONTINUED

Stock Options – Dr. Max Rӧssler - Continued

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 still assesses the

probability that this performance condition would be met at 100%, but the date, up to

which the performance condition would have to 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 2018, as was the required date

of the performance condition. 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 – late Mr. Josef Mettler

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

contract, 12,000,000 stock options on July 4, 2013. Each option entitled the late Mr.

Mettler to buy one share at a strike price of $0.05. These options had three different

performance conditions.

For installment A (3,000,000 options), it was 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 was 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 was 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 assessed the probability that this

performance condition would be met at 100%, but the date, up to which the performance

condition would have to 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 2018, as was the required date of the performance

condition.

Due to his passing away during the third quarter 2016, the probability that any of the

above performance condition will be met is 0%. Therefore, all previously recognized

expenses in the amount of $561,064 – corresponding to options that have not yet vested for

all installments above – have been reversed as of September 30, 2016.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

14.

STOCK COMPENSATION - CONTINUED

Stock Options – Summary

A summary of stock options outstanding as per September 30, 2016 is as follows:

Options outstanding

Number of

Weighted

Weighted average

Options

average

remaining

exercise price

contractual life

Outstanding January 1, 2016

32,000,000

$ 0.05

7.42 years

Granted

Exercised

Forfeited or expired

(12,000,000)

Outstanding September 30, 2016

20,000,000

$ 0.05

6.63 years

Exercisable September 30, 2016

The following table depicts the Company’s non-vested options as of September 30,

2016 and changes during the period:

Non-vested options

Shares under Options

Weighted average grant date

fair value

Non-vested at January 1, 2016

32,000,000

$ 0.053

Non-vested-granted

Vested

Non-vested, forfeited or cancelled

(12,000,000)

Non-vested at September 30, 2016

20,000,000

$ 0.075

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

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

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

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

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

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

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

stock options were granted for the periods ended September 30, 2016 and September 30,

2015.

Assumption

September 30, 2016

September 30, 2015

Dividend yield

Risk-free interest rate used (average)

Expected market price volatility

Average expected life of stock options

n.a

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

calculation for new grants is based on historical volatilities of a peer group of similar

companies in the same industry. The expected life assumptions are based on underlying

contracts.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

14.

STOCK COMPENSATION - CONTINUED

Stock Options – Summary - Continued

As of September 30, 2016, the Company had unrecognized compensation expenses

related to stock options currently outstanding, to be recognized in future quarters or

years, respectively as follows:

Through to

Year ending

Stock-based compensation (options)

December 31,

2016

2017

2018

Unrecognized compensation expense

40,946

30,723

15.

SUMMARY OF SHARE AND OPTION COMPENSATION EXPENSE

The Company recorded the following amounts related to stock based compensation

expense during the periods ended September 30, 2016, respectively September 30, 2015:

Three

Nine

Summary of share and option

months

based compensation expense

September

30, 2016

30, 2015

30, 2016

30, 2015

Share grants (see Note 14 for

60,000

121,728

285,000

334,394

details)

Option grants (see Note 14 for

(550,823)

33,738

(520,153)

101,214

details)

Total

(recorded under general &

(490,823)

155,466

(235,153)

435,608

administrative expense)

16.

FUTURE LEASE COMMITTMENTS

On December 1, 2012, the Company entered into a lease agreement for the premises for

its Swiss office with a third party. The annual rental expense amounts to approximately

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

September 30,

December 31,

Future lease commitments

2016

2015

2016

32,500

130,000

2017

130,000

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

17.

NOTE PAYABLE

September 30,

December 31,

2016

2015

Promissory note

$2,000,000

$ 2,000,000

Specogna Holding AG

649,684

605,743

R. Weimar (private investor)

10,924

131,169

Total

2,660,607

2,736,912

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 to March 16, 2016.

On April 21, 2016, the Company signed a new agreement, which stipulated new

payment terms. The total amount of $2,000,000 was then repayable in four quarterly

installments of $500,000 each, starting on August 21, 2016.

On September 19, 2016, the Company signed a new agreement, which stipulated that the

first quarterly repayment of $500,000 was due on November 21, 2016, only and not on

August 21, 2016.

Loans Specogna Holding AG

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.

Rössler and Mr. Rigendinger.

Subsequent to the reporting date, this loan has been converted into convertible bonds.

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 $22,683 during first quarter 2016, $34,015 was

transferred to another liability in the second and $66,946 was repaid in the third quarter

2016, whereas the entire loan amount should have been repaid. The agreement does not

stipulate any repercussions for late payments.

On October 4, 2016 the entire amount - including interest - was repaid.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

18.

OPENING DATE “PARADISUS PAPAGAYO BAY RESORT & LUXURY VILLAS”

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

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

- The construction of the “Paradisus” would 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 would 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 obligated 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 was signed between the Company and Meliá

with the following major conditions:

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

Should the completion not occur by September 15, 2018, and should the parties

not have agreed in writing an extension to such date, after September 15, 2018, the

Company shall pay Meliá a daily amount of $2,000 as liquidated damages.

Should the completion not occur by November 15, 2018, the Meliá will be

entitled to terminate the agreement unless the parties agree in writing to extend such date.

The Company shall be obliged to pay Meliá an amount of $5,000,000 as liquidated

damages solely to compensate Meliá.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

19.

EARNINGS PER SHARE

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

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

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

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

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

diluted loss per share. The following table depicts how the denominator for the calculation

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

Three-month

Nine-month

Earnings per share

period ended

period ended

September 30,

2016

2015

2016

2015

Company posted

Net loss

Basic weighted average shares

outstanding

101,740,479

95,842,702

99,707,537

93,798,380

Dilutive effect of common

stock equivalents

None

Dilutive weighted average

shares outstanding

101,740,479

95,842,702

99,707,537

93,798,380

A total of 5,900,000 common shares vested have not been issued as per balance sheet date

but are included in the basic weighted average shares outstanding.

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

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

have been anti-dilutive.

Three-month

Nine-month

Earnings per share

period ended

September 30,

2016

2015

2016

2015

Options to Hans Rigendinger

10,000,000

Options to Dr. M. Rössler

10,000,000

Options to the late Josef Mettler

12,000,000

Total Options

20,000,000

32,000,000

20,000,000

32,000,000

Shares to Hans Rigendinger

5,000,000

7,500,000

5,000,000

7,500,000

(retention bonus – non vested)

Shares to the late Josef Mettler

15,000,000

15,000,0000

15,000,000

(retention award)

Shares to Howard Glicken and

400,000

José Maria Figueres (retention

award)

Shares associated with

4,259,465

Convertible CHF Bonds

Total Shares

9,659,465

22,900,000

9,659,465

22,900,000

Total Options and Shares

29,659,465

54,900,000

29,659,465

54,900,000

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.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

20.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses according to the consolidated statement of

comprehensive loss include:

Three-month

Nine-month

period ended

period ended period ended

period ended

September 30, September 30, September 30, September 30,

2016

2015

2016

2015

Rental & related expenses

49,031

51,674

153,818

153,302

Audit

63,698

2,900

251,338

180,430

Consulting

1,022,910

378,692

1,984,715

971,073

Marketing, Investor & public relations

36,055

26,789

77,364

70,551

Travel expenses

66,053

130,710

262,966

418,460

Personnel costs including social security’s

costs and share based remuneration

(219,192)

455,749

686,963

2,166,779

Various other operating expenditures

53,270

70,959

581,397

382,924

Total according statement of

1,071,827

1,117,470

3,998,562

4,343,520

comprehensive loss

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 the “Papagayo Bay Resort & Luxury

Villas” project in Costa Rica. Over 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. In the meantime, a settlement agreement is being

discussed, which, if signed by the parties, is probable to settle for an estimated amount of

$600,000. This amount is accounted for as of September 30, 2016, under consulting

expenses.

21.

OTHER EVENTS

On May 9, 2016, the Company signed an agreement with “Median Trust SA”, by which

this service provider is mandated to set-up a special purpose vehicle (“SPV”), to be called

“Compartment” in accordance with Luxembourg law. The objective of the SPV is to

obtain an investment grade rating and to make a bond offering of not less than $100

million. The SPV will be the issuer, however, the responsibility to place the bonds remains

with the Company. As of the date of this report, the SPV has not yet been established.

SUNVESTA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

22.

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 the following events that warrant disclosure and no

events that warrant recognition in the financial statements.

On October 28, 2016, Hans Rigendinger and Dr. Max Rössler formally agreed to maintain the

guaranty described under Note 3, as necessary, until completion of the construction of

Paradisus Papagayo Bay Resort & Luxury Villas, after which date the guaranty will expire.

On October 4, 2016 the entire amount of a loan described in Note 17 to R. Weimar was

repaid.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

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

Operations and other parts of this quarterly report contain forward-looking statements that

involve risks and uncertainties.Forward-looking statements can be identified by words such as

“anticipates,” “expects,” “believes,” “plans,” “predicts,” and similar terms. Forward-looking

statements are not guarantees of future performance and our actual results may differ

significantly from the results discussed in the forward-looking statements. Factors that might

cause such differences include but are not limited to those discussed in the subsection entitled

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

Condition below. The following discussion should be read in conjunction with our financial

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

on our three and nine-month periods ended September 30, 2016 and September 30, 2015. Our

fiscal year end is December 31.

Discussion and Analysis

Business Overview

We are in the process of developing high-end luxury hotels and resorts worldwide. Our initial

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

vacation destinations in countries that are fast emerging as popular tourist destinations. Each

prospective development takes into consideration country specific conditions and general

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

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

eligible, prospective developments are compared against a validation checklist and then, if

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

of any tourist based luxury real estate project, each development will be carefully considered

during the eligibility process.

Initial Development

Our initial real estate development on 20.5 hectares of prime land located in Guanacaste

Province, Costa Rica, is the Paradisus Papagayo Bay Resort & Luxury Villas project includes

two concepts; i.e. the Vista Mar (Family Concierge) and the Vista Bahia (Royal Service), a five-

star luxury hotel. All permitting for the project is in place, including permission to incorporate

the beachfront adjacent to the two concessions into the development and all significant site work

completed. Vertical construction is expected to commence in the first quarter of 2017, while the

opening of the Paradisus Papagayo Bay Resort & Luxury Villas is scheduled for the fourth

quarter 2018, subject to the procurement of the requisite financing.

Specifications

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

— eco-luxury all-inclusive resort

— 382-keys

— direct beach access

— five restaurants and five bars

— Yhi Spa and Health Club

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

— Paradisus’ “Family Concierge” program

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

Vista Mar

Family Concierge

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

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

family.

The Family Concierge area will include:

— 166 Junior Suites Deluxe

(47* square meters)

— 34 Suites Deluxe

(87* square meters)

— 33 Suites Premium

(93* square meters)

— 6 Handicapped Junior Suites Deluxe

(47* square meters)

— 1 Bridal Suites

(93* square meters)

— 2 Deluxe Suites Presidential

(88* square meters)

— 1 Presidential Suite

(194* square meters)

Room size does not include balconies and terraces.

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

have a full view of the sea. Family Concierge guests will furthermore have access to restaurants,

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

beach.

Vista Bahia

Royal Service

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

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

The Royal Service area will include:

— 108 Junior Suites Grand Deluxe

(43-60* square meters)

— 2 Junior Suites Grand Deluxe for Handicapped Guests

(53* square meters)

— 6 Grand Master Suites

(87* square meters)

— 2 Deluxe Suites Presidential

(60 square meters)

— 1 Grand Presidential Suite (4 bedrooms)

(145* square meters)

— 20 one or two-bedroom Garden Villas

(91–212* square meters)

* Room size does not include balconies and terraces.

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 Hans Rigendinger, Chairman of the Board, Chief Executive

Officer and Chief Operating Officer of the Company, Charles Fessel, Project Director Paradisus

Papagayo Bay Resort & Luxury Villas 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 Laboratiro Quattro.

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

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

industry around the world. Melía was founded in 1956 in Palma de Mallorca, Spain and is today

one of the world’s largest resort hotel chains, as well as Spain’s leading hotel chain for business

or leisure. 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 2018, the Company reached an

agreement dated April 28, 2016, to further amend the management agreement with Meliá

dated March 8, 2011. The amended agreement presently stipulates that if the Papagayo Bay

Resort & Luxury Villa’s is not completed by November 15, 2018, 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.

Additional Concession Properties

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

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

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

meters for $17,500,000. One of the concessions lies adjacent to the existing concessions (La

Punta) and the other is in close proximity to the Paradisus Papagayo Bay Resort & Luxury Villas

development.

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

September 30, 2016, and is in discussions with Meridian regarding an amendment to the

agreement. Should the Company not be successful in obtaining an amendment to the agreement,

it would have to write-off $300,000 of that purchase price already paid in addition to a 5%

penalty.Both, the $300,000 write-off (accounted for as impairment expenses) as well as the

$50,000 for additional damages (accounted for as general and administrative expenses) have

been provided for in the results year-to-date 2016.

Swiss Hospitality Project

On September 19, 2015, the Company signed an option agreement to acquire four existing hotels

in the Canton of Graubünden, Switzerland with an unrelated third party. The properties optioned

comprise an aggregate of 141 rooms. The consideration for the option was CHF 300,000, which

amount was paid on October 25, 2015. Dated May 10, 2016, the Company, QuadEquity Holdings

AG and the seller of the four hotels concluded an agreement, whereby QuadEquity Holdings AG

assumed all of the Company’s rights and obligations from the original contract. In return,

QuadEquity Holdings AG will pay the Company the amount of $302,000 (CHF 300,000) before

May 30, 2016. This payment was received on June 1, 2016.

Finance

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

quarter of 2018 will require a net investment of approximately $212 million (including non-

recuperated overhead expenses), of which approximately $60 million has been expended as of

September 30, 2016. 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

The Company has four bond issues outstanding, denominated in Euros (€) or Swiss

Francs (CHF). EUR (€) Bonds

The Company initiated an unsecured EUR bonds 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 2

over a three-year term that ends on December 2, 2016. We had realized carrying values of

$6,715,145 as of the year ended December 31, 2015, and $6,975,725 as of September 30, 2016, for

a cumulative amount of $6.99 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 ends on December 2, 2016. We had realized carrying values of $1,632,572 as of

the year ended December 31, 2015 and $1,752,995 as of September 30, 2016, for a cumulative

amount of $1.67 million as of the date of this report.

Swiss Francs (CHF) Bonds

The Company initiated a new offering of senior convertible 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 carrying values of $2,171,725

as of the year ended December 31, 2015 and $3,070,502 as of September 30, 2016, for a

cumulative amount of $3.21 million as of the date of this report.

The Company initiated a new parallel offering of senior convertible 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 carrying values of $23,694,423

as of the year ended December 31, 2015 and $35,324,216 as of September 30, 2016, for a

cumulative amount of $38.24 million as of the date of this report.

Aires International Investment, Inc.

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

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

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

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

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

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

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

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

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

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

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

The Company had borrowed $48,611,633 from Aires as of September 30, 2016 and $47,198,362 as of

December 31, 2015.

Loans Dr. Max Rӧssler

In the third quarter 2016, Dr. Max Rössler provided $4,202,378 (CHF 4,100,000). Interest of $24,543

was recorded in this period, resulting in a total balance of $4,256,580 as of September 30, 2016.

Loan Global Care AG

During 2014, Global Care AG loaned the Company $190,270 (CHF 185,000), which amount was

repayable on October 31, 2014. The loan includes a fixed interest payment of $20,570 (CHF 20,000).

Effective June 30, 2016 an amount of $1,440,875 (CHF 1,398,802) was transferred from the loan

account Dr. Max Rössler to the loan account Global Care AG.

DIA S.A. and his successor Blue Dot SA

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

successor Blue Dot SA respectively in the amount of $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 2016.

On April 21, 2016, the Company signed a new agreement, which stipulated new payment terms. The

total amount of $2,000,000 is now repayable in four quarterly installments of $500,000 each, starting on

August 21, 2016.

On May 21, 2016, the Company signed a new agreement, which stipulated new payment terms. The

total amount of $2,000,000 is now repayable in four quarterly installments of $500,000 each, starting on

November 21, 2016.

Timeline

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

follows:

— commence onsite vertical construction in the first quarter of 2017

— complete construction in the fourth quarter of 2018

— handover to Melía in the fourth quarter of 2018

Results of Operations

During the three-month and nine-month periods ended September 30, 2016, our operations were

focused on (i) completing earth work excavations on the Paradisus Papagayo Bay Resort & Luxury

Villas property; (ii) furthering discussions with prospective project development partners; (iii) pursuing

additional debt financing to fund the construction of the project.

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

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

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

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

Three months July 1^st to September 30, 2015

(383,197)

Variances during the 3 months

Decrease in general and administrative expenses

5,644 There was an increase due to

significantly higher consulting

expenses, project-related and due to

contemplated IPO in Switzerland.

This increase was overcompensated

by negative personnel costs due to a

reversal of share-based payments

for the late Josef Mettler

Increase in interest income

6,960 Increase in deposits

Decrease in interest expenses

360,179 Significantly higher debt,

overcompensated by an increase in

capitalized interest.

Change in fair values of conversion features

680,580 Primarily decrease in time value of

conversion feature

Decrease in unrealized exchange gains

(2,255,054) Currency fluctuations

Decrease in other income / (expenses)

20,034

Increase in foreign currency translation

(1,847,137) Currency fluctuations

Total variances

(2,988,795)

Three months July 1^st to September 30, 2016

(3,371,991)

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

year ended December 31, 2016.

Income Tax Expense (Benefit)

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

and startup costs that will offset future operating profits.

Capital Expenditures

The Company expended a significant amount on capital expenditures for the period from inception to

September 30, 2016, in connection with the purchase of land concessions in Costa Rica, as well as the

planning and construction of the project and expects to incur future cash outflows on capital

expenditure as discussed in the "Liquidity and Capital Resources" and the "Going Concern" paragraphs

below.

Liquidity and Capital Resources

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

stockholders’ equity.

As of September 30, 2016 and December 31, 2015, the following were working capital items:

September 30,

December 31,

2016

2015

Current assets

Cash and cash equivalents

2,985,698

111,830

Receivable from related parties

20,643

19,945

Other assets

549,978

158,574

Total current assets

3,556,320

290,349

Current liabilities

Bank liabilities

179,313

Accounts payable

4,814,034

8,048,608

Accrued expenses

9,109,806

7,831,247

Notes payable

2,660,607

2,736,912

Notes payable to related parties

6,023,048

1,130,978

Bonds

14,717,618

8,347,717

Total current liability

37,325,113

28,274,775

Net working capital

(33,768,793)

(27,984,426)

As of September 30, 2016 and December 31, 2015, the following were the items making up the total

stockholders’ deficit:

September 30,

December 31,

2016

2015

Assets

Current assets

3,556,320

290,349

Non-current assets

69,598,624

67,007,090

Total assets

73,154,944

67,297,439

Liabilities

Current liabilities

37,325,112

28,274,775

Non-current liabilities

87,993,941

80,287,652

Total liabilities

125,319,053

108,562,427

Total stockholders’ deficit

(52,164,109)

(41,264,988)

The Company’s negative net working capital of $33,768,793 is of concern; however, based on the

guaranty signed by certain principals, the Company is convinced that it can address liquidity

problems.

Net cash flow used in operating activities for the nine-month period ended September 30, 2016, was

$6,053,988, as compared to $3,137,324 for the nine-month period ended September 30, 2015.

The Company expects to continue to use net cash flow in operating activities until we complete the

Paradisus Papagayo Bay Resort & Luxury Villas project, which completion is projected for the

fourth quarter of 2018.

Net cash used in investing activities for the nine-month period ended September 30, 2016, was

$1,480,178 as compared to $8,680,218 for the nine-month period ended September 30, 2015. Net

cash used in investing activities in the current nine-month period is comprised of the purchase of

property and equipment, and deposits related to construction, offset by a sale of equipment, a

collection of cash for a down payment and restricted cash. Net cash used in investing activities in the

prior comparable nine-month period was comprised of the purchase of property and equipment,

down payments for property and equipment offset by receivables from related parties, deposits

related to construction and restricted cash. We expect negative net cash flow in investing activities to

continue while in the process of developing the Paradisus Papagayo Bay Resort & Luxury Villas.

Net cash provided by financing activities for the nine-month period ended September 30, 2016, was

$10,382,963 as compared to $12,030,782 for the nine-month period ended September 30, 2015. Net

cash provided by financing activities in the current nine-month period is comprised of proceeds

from notes payable to related parties, and proceeds from bond issuances net of commissions, offset

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

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

comparable nine-month period was comprised of proceeds from notes payable related parties, and

proceeds from bond issuances net of commissions, offset by the decrease in bank liabilities, the

payment of debt issuance costs, and changes in other debt. We expect net cash flow provided by

financing activities to continue due to the financing necessary to complete the development of the

Paradisus Papagayo Bay Resort & Luxury Villas.

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

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

operations over the next twelve months.

We had no formal lines of credit or other bank financing arrangements as of September 30, 2016.

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

as of September 30, 2016, 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 (excluding overhead expenses) 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 September 30, 2016, 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.

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

connection with the planned construction of the Paradisus Papagayo Bay Resort & Luxury Villas.

We have no plans to make any changes in the number of our employees as of September 30, 2016.

Future Financings

On May 9, 2016, the Company signed an agreement with “Median Trust SA”, by which this service

provider is mandated to set-up a special purpose vehicle (“SPV”), as a “Compartment” in

accordance with Luxembourg law. The objective of the SPV is to obtain an investment grade rating

and to make a bond offering of not less than $100 million. The SPV will therefore be the issuer,

however, the responsibility to place the bonds remains with the Company. As of the date of this

report, the SPV has not yet been established.

As of September 21, 2016, the Company has started the distribution of a new bond in the amount of

CHF 20.0 million, to be underwritten until November 30, 2016.

Off-Balance Sheet Arrangements

As of September 30, 2016, 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 $212 million.

The project is expected to open in the fourth quarter of 2018. 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

Seventy percent of the “Net project cost” is intended to be financed through the issuance of secured

bonds, for which negotiations have been initiated. The remaining thirty percent of the “Net project

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

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

alternative financing committements, i.e. Zypam Ltd., shareholder and related entity to the late Mr.

Josef Mettler, Mr. Hans Rigendinger, shareholder, interim Chief Executive Officer and Company

Board Member and Dr. Max Rössler, Company Board Member and controlling shareholder of

Aires.

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

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

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

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

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, the requested funds are made

available by the guarantors to the Company.

On September 12, 2016, the signatories to the guaranty formally agreed to maintain the guaranty, as

necessary, until completion of the construction of Paradisus Papagayo Bay Resort & Luxury Villas,

after which date the guaranty will expire. The guaranty agreement requires that within 30 days of

receiving a demand notice, the requested funds are made available by the guarantors to the

Company.

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

finance cash flows for the twelve months subsequent to September 30, 2016, and the filing date,

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

availability of financing.

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

Condition

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

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

historical facts, are forward-looking statements. Forward-looking statements reflect our current

expectations and beliefs regarding our future results of operations, performance, and

achievements. These statements are subject to risks and uncertainties and are based upon

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

limited to, statements concerning:

— our anticipated financial performance and business plan

— the sufficiency of existing capital resources

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

— uncertainties related to our future business prospects

— our ability to generate revenues to fund future operations

— the volatility of the stock market

— general economic conditions

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

that could cause our actual results to differ materially from those discussed or anticipated

elsewhere in this report. We also wish to advise readers not to place any undue reliance on the

forward-looking statements contained in this report, which reflect our beliefs and expectations

only as of the date of this report. We assume no obligation to update or revise these forward-

looking statements to reflect new events or circumstances or any changes in our beliefs or

expectations, other than as required by law.

Recent Accounting Pronouncements

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

accounting pronouncements.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

RISK

Not applicable.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

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

officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in

Rules 13a-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)). Disclosure controls

and procedures are designed to ensure that information required to be disclosed in reports filed or

submitted under the Exchange Act is recorded, processed, summarized, and reported within the time

periods specified in the Commission’s rules and forms, and that such information is accumulated

and communicated to management, including the chief executive officer and chief financial officer,

to allow timely decisions regarding required disclosures.

Based on that evaluation, the Company’s management concluded, as of the end of the period

covered by this report, that the Company’s disclosure controls and procedures were not effective

in recording, processing, summarizing, and reporting information required to be disclosed, within

the time periods specified in the Commission’s rules and forms, and that such information was

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

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

Changes in Internal Control over Financial Reporting

During the quarter ended September 30, 2016, there has been no change in internal control over

financial reporting that has materially affected, or is reasonably likely to materially affect our

internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

None.

ITEM 1A.

RISK FACTORS

Not required of smaller reporting companies.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF

PROCEEDS

None.

ITEM 3.

DEFAULTS ON SENIOR SECURITIES

None

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.

OTHER INFORMATION

None

ITEM 6.

EXHIBITS

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

on page 51 of this Form 10-Q, and are incorporated herein by this reference.

SIGNATURES

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

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

SunVesta, Inc.

Date

/s/ Hans Rigendinger

November 11, 2016

Hans Rigendinger

Chief Executive Officer, Chief Financial Officer and Chief Operating Officer Principal

Accounting Officer and Director

INDEX TO EXHIBITS

Exhibit

Description

3.1.1*

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

on December 31, 1999).

3.1.2*

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

Commission on April 9, 2003)

3.1.3*

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

Commission on November 17, 2003).

3.1.4*

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

Commission on September 27, 2007).

3.2.1*

Bylaws (incorporated by reference from the Form 10-SB filed with the Commission on December31,

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 Companyand

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

the Commission on June 21, 2007).

10.2*

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

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

10.3*

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

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

10.4*

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

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

10.5*

Guaranty Agreement dated July 16, 2012, between SunVesta AG, Jthe late osef Mettler, Hans

Rigendinger and Max Rӧssler.

10.6*

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

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

10.7*

Employment Agreement dated July 4, 2013 between the Company and the late Josef Mettler

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

10.8*

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

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 InternationalInvestments,

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

10.11*

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

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

Commission on May 20, 2014).

10.12*

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

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

Commission on August 19, 2015).

10.13*

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

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

14*

Code of Business Conduct and Ethics adopted on July 16, 2015 (incorporated by reference to the Form

10-Q filed with the Commission on August 19, 2015).

21*

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

Commission on April 15, 2015).

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

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

Sarbanes-Oxley Act of2002.

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

1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99*

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

Commission on October 10, 2013).

101. INS

XBRL Instance Document^†

101. PRE

XBRL Taxonomy Extension Presentation Linkbase^†

101. LAB

XBRL Taxonomy Extension Label Linkbase^†

101. DEF

XBRL Taxonomy Extension Label Linkbase^†

101. CAL

XBRL Taxonomy Extension Label Linkbase^†

101. SCH

XBRL Taxonomy Extension Schema^†

Incorporated by reference to previous filings of the Company.

^†

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not

“filed” or part of a registration statement or prospectus for purposes of Section 11 or 12 of the

Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the

Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.

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