Attached files
file | filename |
---|---|
EX-32 - COMPANY CERT - SUNVESTA, INC. | exhibit32.htm |
EX-31 - COMPANY CERT - SUNVESTA, INC. | exhibit31.htm |
EX-21 - COMPANY SUBS - SUNVESTA, INC. | exhibit21.htm |
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
(Mark One)
FORM 10-K
þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF1934
For the fiscal year ended December 31, 2016.
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF1934
For the transition period from
to
.
Commission file number: 000-28731
SUNVESTA, INC.
(Exact name of registrant as specified in its charter)
Florida
98-0211356
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
Seestrasse 97, Oberrieden, Switzerland CH-8942
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: +41 43 388 40 60
Securities registered under Section 12(b) of the Act: none.
Securities registered under Section 12(g) of the Act: common stock (title of class), $0.01 par value.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes 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 suchfiles).
Yes þ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is
not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting
company in Rule 12b-2 of the Exchange Act. Smaller reporting company þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ
The aggregate market value of the registrants common stock, $0.01 par value (the only class of voting stock), held by non-
affiliates 22,192,297 shares was approximately $2,441,153 based on the based on the average closing bid and ask prices
($0.11) for the common stock on March 17, 2017.
At March 17, 2017, the number of shares outstanding of the registrants common stock, $0.01 par value (the only class of
voting stock), was 101,841,603.
1
TABLE OF CONTENTS
TABLE OF CONTENTS
PART I
Business
3
Risk Factors
12
Unresolved Staff Comments
12
Properties
13
Legal Proceedings
13
Mine Safety Disclosures
13
PART II
Market for Registrants Common Equity, Related Stockholder Matters, and Issuer Purchases of
14
Equity Securities
Selected Financial Data
15
Management's Discussion and Analysis of Financial Condition and Results of Operations
16
Quantitative and Qualitative Disclosures about Market Risk
21
Financial Statements and Supplementary Data
21
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
22
Controls and Procedures
22
Other Information
24
PART III
Directors, Executive Officers, and Corporate Governance
25
Executive Compensation
29
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
32
Matters
Certain Relationships and Related Transactions, and Director Independence
33
Principal Accountant Fees and Services
34
PART IV
Exhibits, Financial Statement Schedules Form 10-K Summary
35
Signatures
36
2
PART I
ITEM 1.
As used herein the terms Company, we, our, and us refer to SunVesta, Inc., its predecessors,
and its subsidiaries, unless context indicates otherwise.
Corporate History
The Company was incorporated in the State of Florida on September 12, 1989, and acquired SunVesta
Holding AG (SunVesta AG) as a wholly-owned subsidiary on August 24, 2007. SunVesta AG was
incorporated in Switzerland on December 18, 2001, and is domiciled in the Canton of Zurich,
Switzerland. SunVesta AG operates through two wholly owned subsidiaries SunVesta España Holding
SL (Spain) which wholly owns SunVesta Costa Rica SA (Costa Rica) the result of the May 2016 merger
of three Costa Rican companies ( SunVesta Costa Rica Limitada, Rich Land Investments Limitada and
Altos del Risco SA) into Altos del Risco SA which was then renamed SunVesta Costa Rica SA and
SunVesta Projects & Management AG .
The Companys principal place of business is located at Seestrasse 97, Oberrieden, Switzerland CH-8942
and its telephone number is + 41 43 388 40 60.
The Companys registered agent is Hubco Registered Agents Services, Inc., located at 155 Office Plaza
Drive, first Floor, Tallahassee, Florida, 32301. Hubcos telephone number is (800) 443-8177.
SunVesta
Business Overview
We are in the business of developing high-end luxury hotels and resorts in countries that are emerging as
popular tourist destinations. Our intention is to develop luxury hotel products located in countries such as
Costa Rica that are emerging as popular tourist destinations. Our first hospitality development, to be
constructed on 20.5 hectares of prime land located in Guanacaste Province, Costa Rica is the Paradisus
Papagayo Bay Resort & Luxury Villas, a five-star luxury hotel. All permitting for the project is in place,
including permission to incorporate the beachfront adjacent to the two concessions into the development
and all significant site work completed. Vertical construction is expected to commence at the beginning of
the second quarter of 2017, while the opening of the Paradisus Papagayo Bay Resort & Luxury Villas is
scheduled for the fourth quarter 2018. The estimated commencement of construction and opening dates
are subject to securing sufficient capital commitments to complete the development.
Specifications
Paradisus Papagayo Bay Resort & Luxury Villas initial specifications are to be as follows:
eco-luxury all-inclusive resort
382-keys
direct beach access
Nine restaurants and eleven bars and lounges
Yhi Spa and Health Club
Paradisus adults-only Royal Service level of accommodations
Paradisus Family Concierge program
19,000 square feet of meeting facilities with the business traveler in mind
3
Vista Mar
Family Concierge
The Family Concierge will be a family orientated part of the Paradisus Papagayo Bay Resort &
Luxury Villas. The accommodations will be designed to satisfy the needs of the modern family.
The Family Concierge area will include:
166 Junior Suites Deluxe
(47* square meters)
34 Suites Deluxe
(87* square meters)
33 Suites Premium
(93* square meters)
6 Handicapped Junior Suites Deluxe
(47* square meters)
1 Bridal Suites
(93* square meters)
2 Deluxe Suites Presidential
(88* square meters)
1 Presidential Suite
(194* square meters)
*
Room size does not include balconies and terraces.
All ground floor suites will have direct access to swim-up pools. Each of the suites and villas will
have a full view of the sea. Family Concierge guests will furthermore have access to restaurants,
bars, and lounges. The planned Night Club and the Gabi Club will be located near the beach.
Vista Bahia
Royal Service
Our Royal Service will include an extensive range of services such as a butler service, private
pools for each Garden Villa and/or a Jacuzzi in every suite.
The Royal Service area will include:
108 Junior Suites Grand Deluxe
(43-60* square meters)
2 Junior Suites Grand Deluxe for Handicapped Guests
(53* square meters)
6 Grand Master Suites
(87* square meters)
2 Deluxe Suites Presidential
(60 square meters)
1 Grand Presidential Suite (4 bedrooms)
(145* square meters)
20 one or two-bedroom Garden Villas
(91212* 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.
4
The Paradisus Papagayo Bay Resort & Luxury Villas will feature other highlights including:
more than 65 private, swim up and resort pools including the worlds 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
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
sthteea2m0rporoivmaste 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, our Chairman of the Board and Chief
Executive Officer, Charles Fessel, Project Director Paradisus Papagayo Bay Resort & Luxury Villas
and Ernst Rosenberger, the Companys Corporate Controller. The lead architect is Ossenbach,
Pendones & Bonilla, one of Costa Ricas largest architectural offices with over 45 architects and
designers. Civil engineering services are provided by DEHC Engineers and structural engineering
services by IEAC. Landscape architects are TPA and interior designers are led by Laboratorio
Quattro.
Resort management is to be provided by Melía Hotels International (Melía). Paradisus is
Meliás 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
worlds largest resort hotel chains, as well as Spains leading hotel chain for business or leisure.
Melía offers more than 300 hotels in 26 countries over four continents under its Gran Sol Melía,
Sol Melía, ME by Sol Melía, Innside by Sol Melía, Tryp, Sol Melía, Sol Melía Vacation Club, and
Paradisus brands. The Paradisus brand represents all-inclusive luxury resorts with hotels in Mexico
and the Dominican Republic.
Since the completion date for the Paradisus Papagayo Bay Resort & Luxury Villas development has
been delayed to the fourth quarter of 2018, the Company reached an agreement dated April 28, 2016,
to amend the original agreement with Meliá dated March 8, 2011. The current agreement stipulates
the following major conditions:
a.
New completion date: September 15, 2018 (subject to force majeure)
b.
Should the completion not occur by September 15, 2018 and should the Parties not have
agreed in writing an extension to such date, after September 15, 2018 the Owner shall pay
the Manager a daily amount of $ 2,000 as liquidated damages.
c.
Should the completion not occur by November 15, 2018, and should the parties to the
management agreement not agree to an extension, the Company will be obligated to pay
Meliá $5,000,000 as liquidated damages.
5
Additional Concessions
The Company entered into a Purchase and Sale Agreement dated April 24, 2013, with Meridian IBG,
Inc., (Meridian) to purchase Marina Rose Ltda. (Marina Rose), a Costa Rican company that held
certain concessions located in the Gulf of Papagayo, Guanacaste Province, Costa Rica (Meridian
Agreement) for $17,500,000. One of the concessions lies adjacent to the SunVesta Costa Rica SA
concessions (La Punta) and the other is in close proximity. The Meridian Agreement caused the
Company to enter into a Purchase and Sale Agreement dated April 24, 2013, with RBAT Costa Rica
LLC, an entity controlled by Varde Investment Partners LP (Varde) to pay $8,000,000 of the purchase
price payable to Meridian to Varde (Varde Agreement). Varde delivered a notice of termination of the
Varde Agreement to the Company on January 4, 2014, and the Company noticed cancellation of the
Meridian Agreement to Meridian on February 24, 2017.
The Meridian Agreement entitled the Company to reimbursement for all amounts paid as deposits against
the purchase of Marina Rose less a liquidated damages penalty of 5% on providing notice of cancellation.
The Varde Agreement entitled the Company to reimbursement for all amounts paid as deposits minus a
non-refundable payment of $300,000 and a 5% liquidated damages penalty on receiving notice of
termination. The Company has delivered notice of its claims for reimbursement to the respective parties.
Swiss Hospitality Project
The Company signed an option agreement dated September 19, 2015, to acquire four existing hotels in
the Canton of Graubünden, Switzerland. Consideration of CHF 300,000 was paid for the option. On May
10, 2016, the Company, QuadEquity Holdings AG (QuadEquity) and the seller concluded an
agreement, by which QuadEquity assumed all of the Companys rights and obligations from the original
contract, in exchange for which assumption QuadEquity paid the Company the amount of $302,000 (CHF
300,000) 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 $192 million (excluding non-recuperated overhead
expenses), of which approximately $66 million has been expended as of December 31, 2016. We aim to
realize a minimum of $140 million in new funding over the next twelve months. New funding over the
next twelve months is expected to be raised from debt financing through bonds, shareholder loans and, if
necessary, the guaranty agreement borne by certain principal shareholders and participants in
management. Detailed below is a brief description of material debt obligations as of period end.
Bonds
SunVesta AG, has five bond issues outstanding, denominated in either EUR () or Swiss Francs (CHF).
EUR () Bonds
The Company initiated an unsecured EUR bond offering on December 2, 2013, of up to 15,000,000 in
units of 10,000 that bear interest at 7.25% per annum payable each December 1 over a three-year term
that matured on December 2, 2016. We had realized $6,861,936 as of December 31, 2015 and
$7,058,966 as of the maturity date. This bond was substantially repaid, though an amount of $31,541
remained outstanding as of December 31, 2016, pending the receipt of payment instructions from certain
bondholders. At the date of this report $0 remained outstanding.
6
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 matured on December 2, 2016. We had realized $1,626,695 as of December 31,
2015 and $1,686,789 as of the maturity date. This bond was substantially repaid, though an amount of
$511,805 remained outstanding as of December 31, 2016, pending the receipt of payment instructions
from certain bondholders. At the date of this report $0 remained outstanding.
Swiss Francs (CHF) Convertible Bonds
The Company initiated a new offering of senior unsecured CHF bonds on October 1, 2015, of up to
CHF 15,000,000 in units of CHF 5,000 that bear interest at 6.00% per annum payable each September
30, over a three-year term that matures on September 30, 2018, which are convertible into shares of
SunVesta Holding AG at CHF 8.00. We had realized $3,015,474 as of December 31, 2016 and
$2,250,048 as of the year ended December 31, 2015.
The Company initiated a parallel offering of senior unsecured CHF bonds on October 1, 2015, of up to
CHF 45,000,000 in units of CHF 5,000 that bear interest at 6.00% per annum payable each September 30,
over a three-year term that matures on September 30, 2018, which are convertible into shares of SunVesta
Holding AG at CHF 8.00. We had realized $34,570,259 as of the year ended December 31, 2016 and
$23,694,423 as of December 31, 2015. Included in these amounts is approximately $6.2 million (CHF
6.32 million), that by agreement with certain bondholders deviated from the standard terms to provide for
repayment by February 28, 2017. As per date of this report, approximately $1.1 million has been repaid,
the remaining amount has been extended until converted into a new planned bond issue during May 2017.
Swiss Francs (CHF) Bonds
The Company initiated a new offering of senior unsecured CHF bonds on September 21, 2016, of up to
CHF 20,000,000 in units of CHF 5,000 that bear interest at 6.50% per annum payable each August 15,
over a four-year term that matures on August 15, 2020. We had realized $15,601,398 as of the year
ended December 31, 2016. At the date of this report CHF Bonds in the amount of $16,602,100 were
outstanding.
The Company initiated a new parallel offering of senior unsecured CHF bonds on September 21, 2016,
of up to CHF 20,000,000 in units of CHF 5,000 that bear interest at 6.50% per annum payable each
August 16, over a four year term that matures on August 15, 2020. We had realized $961,595 as of the
year ended December 31, 2016.
Aires International Investment, Inc.
On July 27, 2011, the Company entered into a line of credit agreement with Aires International
Investments Inc. (Aires), a company owned by Dr. Rӧssler (a director of the Company). The loan
agreement was amended on May 11, 2012 and on June 21, 2012. On October 31, 2013, the line of
credit agreement was replaced by a new loan agreement, that included the following conditions:
All existing loan agreements or credit facilities, including amendments, between the Company
and Aires were cancelled and superseded by a new loan agreement.
The loans are now due not before December 31, 2020.
Despite the scheduled repayment date, either party has the option to cancel the loan agreement
with a prior notice period of 90 days, requiring repayment of the loans in full.
Loan amounts outstanding including any additional amounts and additions are subordinated.
Interest on the loan amounts is 7.25% per annum, which charge is accrued.
7
The Company had borrowed $51,473,793 from Aires as of December 31, 2016 (including accrued interest
of $4,489,666) and $47,198,362 as of December 31, 2015 (excluding accrued interest of $6,370,579 that
was recorded under accrued expenses as per 31 December, 2015.
Loans from Dr. Max Rӧssler and Global Care AG
During 2016, Dr. Max Rössler provided additional financing of approximately $16.7 million for a total
loan balance of approximately $17.1 million.
In April 2016, Global Care AG (a related party controlled by Dr. Max Rössler, himself board member and
related party) assumed a liability of CHF 4.5 million from Aires International Investment Inc., (also a
related party controlled by Dr. Max Rössler). This CHF 4.5 million was subsequently subscribed into
bonds of the CHF-Convertible Bond issue. As this conversion includes a significant conversion option,
the exchange is treated as an extinguishment of debt and an amount of $1,071,317 has been reclassified
in the statement of profit or loss from revaluation of conversion feature to extinguishment of debt.
In June 2016, there were the following changes to the debt structure:
- A liability of CHF 2,656,083 was transferred from Dr. Max Rössler to Global Care AG
- A liability of CHF 1.5 million was transferred from Sportiva participations ag to Global Care AG
A liability of CHF 1.4 million was transferred from Global Care AG to Dr. Max Rössler.
In December 2016, Dr. Max Rössler subscribed a loan in the amount of CHF 15.2 million into bonds of
the new CHF-Bond issue 2016-2020. As this conversion did not represent a significant change of the
conditions between the old debt and the new debt, the exchange was not treated as an extinguishment of
debt.
Loans to the late Josef Mettler
On September 12, 2016, Josef Mettler, the Companys former Chief Executive officer, passed away and
companies formerly owned by him are no longer related parties to the company. As of December 31,
2016, there are no receivables and payables to the late Josef Mettler. As of December 31, 2015, there was
a payable to Mr. Mettler of $70,135 (CHF 69,609).
Current account Sportiva participations ag (a Josef Mettler company)
For the year ended December 31, 2016, the Company owed nil to Sportiva participations ag. As of
December 31, 2015, the payable balance amounted to $528,660 (CHF 524,695). The amount due to
Sportiva Participations AG carried an interest rate of 3%.
Loan from Blue Dot SA (formerly DIA S.A)
On March 8, 2013, the Company entered into an interest free loan agreement with Blue Dot SA
(formerly DIA SA) in connection with the purchase of the land concession for the Paradisus Papagayo
Bay Resort & Luxury Villas project held by Altos del Risco SA. 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.
8
On September 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.
As of December 31, 2016, the outstanding balance amounts to $1,500,000.
Timeline
Our expected timeline for developing the Paradisus Papagayo Bay Resort & Luxury Villas has been
extended due to delays associated with administrative hurdles and securing necessary financing for
the development as follows:
commence onsite vertical construction at the beginning of the second quarter of 2017
complete construction in the fourth quarter of 2018
handover to Melía in the fourth quarter of 2018
Competition
Three key factors have been taken into consideration when defining our hotel competitors in relation
to the Paradisus Papagayo Bay Resort & Luxury Villas:
the proximity of competitors to our location in Guanacaste Province, Costa Rica
the consumption habits of prospective clientele
the ability to compete based on product similarity in relation to service standards,
facilities, the availability of equipment and the number or variety of services offered.
Based on our criteria we have determined that our prospective competitors are those characterized as
five- star holiday resorts in geographic proximity to our planned location.
Luxury Hotel Resorts
We distinguish between primary and secondary competitors.
Primary competition in Guanacaste Province is comprised of the following properties:
Four Seasons Peninsula Papagayo
JW Marriot Guanacaste
Hilton Papagayo Costa Rica
Westin Golf Resort & Spa Playa Conchal
Andaz Peninsula Papagayo Resort
Dreams Las Mareas Costa Rica
The closest direct and most prominent competition for our Guanacaste property will be the Four Seasons
Hotel.
9
All of our primary competitive establishments have common characteristics with a standard vacation
resort format with much more equipment and many more facilities to offer than hotels based in a city such
as:
several modules/ lodging buildings around central services
ample water areas with outdoor swimming pools, areas for hammocks and sun bathing
children and entertainment activity areas
restaurant pool areas with bars and service throughout the day
large lounges for breakfast, lunch and dinner services
alternative gastronomic or theme restaurants
sports areas (basketball court, tennis courts, golf course, soccer field)
Fitness Center, Wellness Center and Spa Areas
Our competitors are managed by leading international chains or experienced domestic companies. Despite
what might be construed as obvious obstacles to entry, including robust competition within the hospitality
industry in Guanacaste Province, we believe that our development of the Paradisus Papagayo Bay Resort
& Luxury Villas will be successful based principally on the following factors:
the beach front location of the development
environmental integrity in project development and operation
the reputation of the Paradisus brand in the region and internationally
Furthermore, we believe that we have certain distinctive competitive advantages over all or many of our
competitors including:
location in one of the most appealing areas worldwide
outstanding product with unique features
superior project development and management agreements that maximize resources and
broaden market penetration
We believe that all of the factors detailed above, in combination with the dedication of our personnel and
partners, will enable us to be competitive in developing the Paradisus Papagayo Bay Resort & Luxury
Villas.
Marketability
Costa Rican Tourism
Costa Rica has a long track record of political stability along with a well-established outward-looking
growth model. The government has adopted a proactive policy of fostering higher-end beach resort
tourism, mainly through fiscal incentives for investors. As such, Costa Rica is benefiting from a
burgeoning hotel development pipeline and is emerging as a regional hotel investment hot-spot, including
the development of upscale and luxury hotels. This environment provides much fertile ground for real
estate investors and developers to expand their search for profitable growth. Foreign tourism investment
is projected to continue this upward trend over the next several years as demand outpaces the existing
lodging and tourism services supply.
Costa Rica stands as the most visited nation in the Central American region. The Costa Rican Tourism
Institute (ICT) is responsible for collecting information on the number and economic impact of tourists
that visit Costa Rica. ICT also collects information related to hotel rooms and the country of origin for
tourists arriving in Costa Rica. Records produced by ICT detail that the number of tourists visiting Costa
Rica reached 2.93 million in 2016, representing an increase of 10 % over 2015.
10
The 2015 Travel and Tourism Competitiveness Index (TTCI), indicates that Costa Rica reached the
42ndplace in the world ranking (up 5 places since 2013), classified as the second most competitive among
Latin American countries after Mexico, and ranking sixth in the Americas. Focusing solely on the sub
index measuring natural and cultural resources, Costa Rica ranks 26th worldwide, and 5th when
considering just the natural resources criteria. The TTCI report also notes Costa Rica's other attractions
such as tourism services infrastructure ranking 32nd, qualification of the labour force ranking 37th,
business environment ranking 47th and air transport infrastructure ranking 47th in the world.
ICT has determined that the most relevant origin markets in terms of demand are the United States,
Canada and Mexico which generated approximately 52% (2015: 50%) of all tourists followed by Central
American countries including Guatemala, El Salvador, Panama and Nicaragua, which generated
approximately 25% of the tourists arriving in Costa Rica in 2015. According to official data, the United
States remains the largest source of tourists to Costa Rica with a total of 1,233,277 in 2016 (2015:
1,077,044 ), representing 42.1% (2015: 40.5%) of all visitors. Tourists visiting Costa Rica from European
countries represented approximately 15% of all tourists in 2016 led by the United Kingdom, Germany,
Spain, France and Italy.
Geography
Costa Ricas Guanacaste Province is bound in the east by a group of vegetated volcanoes and the west
by beaches on the Pacific Ocean. The province contains heavily forested areas and seven national parks,
and includes the Area de Conservación Guanacaste World Heritage Site. Guanacaste is the northern-
most province of Costa Rica, with the Papagayo Bay a 40-minute flight from San Jose and a half hour
car transfer to the beach. Tourism has emerged as the most lucrative revenue source in the province.
Tourists to the Guanacaste Province of Costa Rica are most often motivated by a desire for favorable
weather and beach conditions. Active tourism those activities including canopying, trekking, visiting
volcanoes and flora or fauna watching are secondary considerations.
We believe that our development will be well located as a hospitality property.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements and Labor Contracts
The Company holds no patents, trademarks, licenses, franchises, or concessions other than having
registered its SunVesta trademark in various countries.
The Company is not subject to any labor contracts.
Governmental and Environmental Regulation
Our operations are subject to a variety of national, federal, provincial and local laws, rules and regulations
relating to, among other things, worker safety and the use, storage, discharge and disposal of
environmentally sensitive materials. We believe that we are in compliance in all material respects with all
laws, rules, regulations and requirements that affect our business. Further, we believe that compliance
with such laws, rules, regulations and requirements do not impose a material impediment on our ability to
conduct business.
11
Costa Rican National Environmental Office
The Costa Rican National Environmental Office (SETENA) created by the Organic Environmental
Law is tasked with administering the process of reviewing and evaluating environmental impact
considerations. Local municipal governments often require a ruling from SETENA before issuing
building permits. Any larger project in Costa Rica must apply for an Environmental Impact Statement
from SETENA before development is permitted. Delays associated with this process would have a
negative impact on the Companys project in Guanacaste Province.
The Company is not aware of any existing environmental impact issues that could have a material
effect on the development of the Paradisus Papagayo Bay Resort & Luxury Villas.
Costa Rican Sustainable Development
Costa Rica is considered as being in the forefront of implementing environmental policies. The
countrys national strategies for sustainable development are a broad matrix of policies requiring eco-
friendly practices, such as Agenda 21. The Agenda 21 process as developed by the 1992 and 2002 Earth
Summits is defined as a participative planning tool in which sectors in the government and civil society
concertedly determine the course to be taken by their communities, regions, or countries in pursuit of
sustainable development. This process and other Costa Rican sustainable development policies could
delay or increase the cost of the development of the property.
The Company is not aware of any existing environmental impact issues that could have a material
effect on the development of the Paradisus Papagayo Bay Resort & Luxury Villas.
Climate Change Legislation and Greenhouse Gas Regulation
Many studies over the past couple decades have indicated that emissions of certain gases contribute to
warming of the Earths atmosphere. In response to these studies, many nations agreed to limit
emissions of greenhouse gases or GHGs pursuant to the United Nations Framework Convention
on Climate Change, and the Kyoto Protocol to which Costa Rica is a signatory. Greenhouse gas
legislation in Costa Rica could have a material adverse effect on our business, financial condition, and
results of operations. The Company is not aware of any existing environmental impact issues that
could have a material effect on the development of the Paradisus Papagayo Bay Resort & Luxury
Villas.
Employees
The Company is a development stage company and currently has six employees at December 31, 2016
and five employees as of the reporting date. Our management uses consultants, attorneys, and
accountants to assist in the conduct of our business.
ITEM 1A.
RISK FACTORS
Not required of smaller reporting companies.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
Not applicable.
12
ITEM 2.
Costa Rican Properties
The Company owns the concession rights for approximately 20 hectares of undeveloped prime land in
Guanacaste Province, Costa Rica. The purchase of the original concession of approximately 8 hectares
was completed for a consideration of $7,000,000. The purchase of the additional 12 hectares was based
on an agreement dated March 22, 2010, with Blue Dot SA (formerly DIA SA). The total purchase price
for the concessions was $12,700,000 of which $10,700,000 was paid as of December 31, 2014. The
remaining $2,000,000 of the purchase price was converted into an interest free loan. On September 21,
2016, the Company reached an agreement with Blue Dot SA to pay the $2,000,000 due in four quarterly
installments of $500,000 each, starting on November 21, 2016. The initial quarterly payment has been
made so as of December 31, 2016, the outstanding balance was $1,500,000.
Executive Offices
We maintain our offices at Seestrasse 97, Oberrieden Switzerland CH-8942 on a leasehold basis with an
annual rental expense of $130,000 per annum through December 31, 2017.
The Company recognized lease expenses of $130,000 and $130,000 for the years ended December 31,
2016 and 2015, respectively, for the use of these executive offices. We believe that we have sufficient
office space for the foreseeable future in order to pursue the completion of the project described herein.
ITEM 3.
LEGAL PROCEEDINGS
None.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
13
PART II
ITEM 5.
MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER
MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
The Companys common stock is quoted on the OTCQB, a service maintained by OTC Link under the
symbol SVSA. Trading in the common stock over-the-counter market has been limited and sporadic
and the quotations set forth below are not necessarily indicative of actual market conditions. These prices
reflect inter-dealer prices without retail mark-up, mark-down, or commission, and may not necessarily
reflect actual transactions. The high and low bid prices for the common stock for each quarter of the years
ended December 31, 2016 and 2015 are as follows:
Year
Quarter Ended
High
Low
2016
December 31
$0.14
$0.14
September 30
$0.15
$0.15
June 30
$0.32
$0.32
March 31
$0.35
$0.35
2015
December 31
$0.25
$0.15
September 30
$0.25
$0.24
June 30
$0.25
$0.14
March 31
$0.16
$0.06
Capital Stock
The following is a summary of the material terms of the Companys capital stock. This summary is
subject to and qualified by our articles of incorporation and bylaws.
Common Stock
As of December 31, 2016, there were 91 shareholders of record holding 101,841,603 shares of fully paid
and non-assessable common stock of the 200,000,000 shares of common stock, par value $0.01,
authorized. The Board of Directors believes that the number of beneficial owners is greater than the
number of record holders because a portion of our outstanding common stock is held in broker street
names for the benefit of individual investors. The holders of the common stock are entitled to one vote
for each share held of record on all matters submitted to a vote of stockholders. Holders of the common
stock have no preemptive rights and no right to convert their common stock into any other securities.
There are no redemption or sinking fund provisions applicable to the common stock.
Preferred Stock
As of December 31, 2016, there were no shares issued and outstanding of the 50,000,000 shares of
preferred stock authorized. The par value of the preferred stock is $0.01 per share. Our preferred stock
may have such rights, preferences and designations and may be issued in such series as determined by the
Board of Directors.
Stock Options
As of December 31, 2016, there were 20,000,000 outstanding stock options outstanding, pursuant to the
2013 SunVesta Stock Option Plan, to purchase shares of our common stock at an exercise price of $0.05
per share, none of which have vested as of year-end. The Company had 32,000,000 stock options
outstanding as of December 31, 2015, of which 12,000,000 expired in the current period.
14
Warrants
As of December 31, 2016, we have no outstanding warrants to purchase shares of our common stock.
Dividends
We have not declared any cash dividends since inception and do not anticipate paying any dividends
in the near future. The payment of dividends on our common stock is within the discretion of the
Board of Directors subject to earnings, capital requirements, financial condition, and other relevant
factors including those contractual restrictions related to certain debt obligations and those limitations
generally imposed by applicable state law.
Transfer Agent and Registrar
Our transfer agent and registrar is Standard Register & Company, Inc., located at 12528 South 1840
East, Draper, Utah 84020 and their phone number is (801) 571-8844.
Purchases of Equity Securities made by the Issuer and Affiliated Purchasers
None.
Recent Sales of Unregistered Securities
On November 8, 2016, the Company authorized the issuance of 5,900,000 shares of restricted common
stock valued at $0.15 a share to certain individuals, earned in connection with either employment
agreements or service to the board of directors, in reliance upon the exemptions from registration
provided by Section 4(2) and Regulation S of the Securities Act of 1933, as amended (Securities Act)
as follows:
Name
Shares
Consideration
Value
Exemption
Josef Mettler (deceased)
3,000,000
Services
$0.15
Section 4 (2)/Reg S
Hans Rigendinger
2,500,000
Services
$0.15
Section 4 (2)/Reg S
José Maria Figueres
200,000
Services
$0.15
Section 4 (2)/Reg S
Howard Glicken
200,000
Services
$0.15
Section 4 (2)
The Company complied with the exemption requirements of Section 4(2) of the Securities Act based on
the following factors: (1) the issuances were isolated private transactions based on service agreements
which did not involve a public offering; (2) the offerees had access to the kind of information which
registration would disclose; (3) the offerees was financially sophisticated; and (4) all of the offerees
serve the Company as either officers or directors or both.
The Company complied with the exemption requirements of Regulation S by having directed no offering
efforts in the United States, by offering securities only to offerees who were outside the United States at
the time of the offering, and ensuring that the offerees to whom the securities were offered and authorized
were non-U.S. offerees with an addresses in a foreign country.
ITEM 6.
SELECTED FINANCIAL DATA
Not required.
15
ITEM 7.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This Managements Discussion and Analysis of Financial Condition and Results of Operations and other
parts of this current report contain forward-looking statements that involve risks and uncertainties.
Forward-looking statements can also be identified by words such as anticipates, expects, believes,
plans, predicts, and similar terms. Forward-looking statements are not guarantees of future
performance and our actual results may differ significantly from the results discussed in the forward-
looking statements. Factors that might cause such differences include but are not limited to those
discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future
Results and Financial Condition below. The following discussion should be read in conjunction with our
financial statements and notes thereto included in this current report. Our fiscal year end is December 31.
Discussion and Analysis
Our plan of operation through December of 2018 is to develop the Paradisus Papagayo Bay Resort &
Luxury Villas project, the completion of which will require a total net investment of approximately $192
million (excluding non-recuperated overhead expenses and the anticipated $25 million in net proceeds for
the sale of private villas). We aim to secure a minimum of $140 million in new funding over the next
twelve months, though our actual financing requirements may be adjusted to suit that amount realized.
New funding over the next twelve months is expected to be raised from debt financing through bonds,
shareholder loans and the guaranty agreement if necessary.
Results of Operations
During the year ended December 31, 2016, our operations focused on (i) completing earthwork; (ii)
pursuing additional debt financing; (iii) obtaining government approval to extend the term of the
concessions; and (iv) securing government approval to include beachfront property adjacent to 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 used to develop the Costa Rican property
including for the purchase of the land concessions, earthwork, and general and administrative costs.
16
Comprehensive Losses
The variance in losses over the comparative annual period is reconciled below:
Comprehensive Loss 2015
(19,218,851)
Variances 2016 from 2015
Decrease in general and administrative
906,873 Increase due to higher consulting
expenses
expenses, project-related expenses and
expenses related to considering a public
listing 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 impairment expenses
(2,642,556) Impairment attributed to expenses
related to the purchase of additional
concessions in Costa Rica
Increase in interest income
22,850 Increase in deposits
Decrease in interest expenses
692,764 Higher debt and interest,
over compensated by a decrease in
amortization of deferred financing cost.
Decrease in loss on extinguishment of debt
6,512,812 Less impact from debt extinguishment
in 2016.
Change in fair values of conversion features
2,113,826 Primarily decrease in time value of
conversion feature
Increase in unrealized exchange gains
1,316,508 Currency fluctuations
Increase in other income / (expenses)
(153,346) Increase in expenses
Income Taxes
1,151 No income taxes in 2016
Decrease in foreign currency translation losses
666,078 Currency fluctuations
Decrease in actuarial gains / losses
39,151 Changes to actuarial assumptions
Total variances
9,476,111
Comprehensive Loss 2016
(9,742,739)
We did not generate revenue during this period and we expect to continue to incur losses through the
year ended December 31, 2017.
Income Tax Expense (Benefit)
The Company has a prospective income tax benefit resulting from a net operating loss carry-forward
and startup costs that will offset future operating profits.
Capital Expenditures
The Company expended a significant amount on capital expenditures for the period from inception to
December 31, 2016 and expects to incur future cash outflows on capital expenditure as discussed in
the "Liquidity and Capital Resources" and the "Going Concern" paragraphs below.
17
Liquidity and Capital Resources
The Company has been in the development stage since inception and has experienced significant changes
in liquidity, capital resources, and stockholders equity.
As of December 31, 2016 and 2015, the following were the working capital items:
December 31,
December 31,
2016
2015
Current assets
Cash and cash equivalents
806,440
111,830
Receivable from related parties
49,292
19,945
Other assets
456,099
158,574
Total current assets
1,311,830
290,349
Current liabilities
Bank liabilities
-
179,313
Accounts payable
3,311,512
8,048,608
Accrued expenses
3,160,723
7,831,247
Notes payable
1,500,000
2,736,912
Notes payable to related parties
307,088
1,130,978
Other liabilities
120
-
Bonds
6,687,384
8,347,717
Total current liability
14,966,826
28,274,775
Net working capital
(13,654,996)
(27,984,426)
As of December 31, 2016 and 2015 the following were the items making up the total stockholders
deficit:
December 31,
December 31,
2016
2015
Assets
Current assets
1,311,830
290,349
Non-current assets
68,354,502
67,007,090
Total assets
69,666,332
67,297,439
Liabilities
Current liabilities
14,966,825
28,274,775
Non-current liabilities
105,872,146
80,287,652
Total liabilities
120,838,971
108,562,427
Total stockholders deficit
(51,172,639)
(41,264,988)
The negative working capital of $13,605,935 is of immediate 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 twelve months ended December 31, 2016, was $11,478,901, as
compared to $6,024,873 for the twelve-month period ended December 31, 2015.
The Company expects to use net cash flow in operating activities until the Company completes the
Paradisus Papagayo Bay Resort & Luxury Villas project, which completion is projected for the fourth
quarter of 2018.
Net cash used in investing activities for the twelve months ended December 31, 2016, was $1,737,927 as
compared to $9,178,106 for the twelve-month period ended December 31, 2015. Net cash used in
18
investing activities in the current twelve-month period is comprised of receivables from related parties,
purchase of property and equipment, advance payments to subcontractors, and down payments for
property and equipment, offset by deposits related to construction activities and restricted cash. Net cash
used in investing activities in the prior comparable twelve-month period was comprised of receivables
from related parties, purchase of property and equipment, deposits related to construction and restricted
cash.
We expect to continue to use net cash flow in investing activities while in the process of developing the
Paradisus Papagayo Bay Resort & Luxury Villas.
Net cash provided by financing activities for the twelve-month period ended December 31, 2016, was
$13,994,449 as compared to $15,326,185 for the twelve-month period ended December 31, 2015. Net
cash provided by financing activities in the current twelve-month period is comprised of proceeds from
notes payable to related parties, and proceeds from bond issuances net of commissions, offset by the
repayment of notes payable to related parties, the repayment of bank liabilities, the repayment of
outstanding bonds, and the repayment of notes payable and other debt. Net cash provided by financing
activities in the prior comparable twelve-month period was comprised of bank liabilities, notes payable to
related parties, notes payable, and proceeds from bond issuances net of commissions, offset by the
repayment of bonds.
We expect net cash flow provided by financing activities to continue due to the unrealized 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 December 31, 2016.
We have commitments that include an award letter issued in favor of certain general contractors together
with purchase orders and related agreements for $130 million as of December 31, 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 to complete the project.
We maintain a defined benefit plan that covers all of our Swiss employees as of December 31, 2016.
We have no current plans for significant purchases or sales of plant or equipment as of December 31,
2016, except in connection with the planned construction of the Paradisus Papagayo Bay Resort &
Luxury Villas,
We have no current plans to make any changes in the number of our employees as of December 31, 2016.
Future Financings
The Company is in the process of fulfilling CHF Bond offerings of up to CHF 50,000,000 during the
second quarter of 2017.
The Company will continue to rely on the terms of the Guaranty Agreement as necessary to meet
shortfalls in development financing.
19
Off-Balance Sheet Arrangements
As of December 31, 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 (including overhead
expenses).
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
f
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
commitments, i.e. Zypam Ltd., shareholder and related entity to the late Mr. Josef Mettler, Mr. Hans
Rigendinger, shareholder, 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 projects 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 December 31, 2016, and the filing date, though future
cash outflows for investing activities will continue to depend on the availability of financing.
20
Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition
The statements contained in the section titled Managements Discussion and Analysis of Financial
Condition and Results of Operations and elsewhere in this current report, with the exception of historical
facts, are forward-looking statements. We are ineligible to rely on the safe-harbor provision of the
Private Litigation Reform Act of 1995 for forward looking statements made in this current report.
Forward-looking statements reflect our current expectations and beliefs regarding our future results of
operations, performance, and achievements. These statements are subject to risks and uncertainties and
are based upon assumptions and beliefs that may or may not materialize. These statements include, but
are not limited to, statements concerning:
our anticipated financial performance and business plan
the sufficiency of existing capital resources
our ability to raise additional capital to fund cash requirements for future operations
uncertainties related to our future business prospects
our ability to generate revenues to fund future operations
the volatility of the stock market
general economic conditions
We wish to caution readers that our operating results are subject to various risks and uncertainties that
could cause our actual results to differ materially from those discussed or anticipated elsewhere in this
report. We also wish to advise readers not to place any undue reliance on the forward-looking statements
contained in this report, which reflect our beliefs and expectations only as of the date of this report. We
assume no obligation to update or revise these forward-looking statements to reflect new events or
circumstances or any changes in our beliefs or expectations, other than as required by law.
Recent Accounting Pronouncements
Please see Note 2 to the accompanying consolidated financial statements for recent accounting
pronouncements.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Not required.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our audited financial statements for the years ended December 31, 2016 and 2015 are attached hereto as
F- 1 through F-50.
Due to rounding, the sum of individual positions may be higher or lower than 100%.
21
SUNVESTA, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
Page
Report of Independent Registered Public Accounting Firm
F-2
Consolidated Balance Sheets
F-3
Consolidated Statements of Comprehensive Loss
F-4
Consolidated Statements of Stockholders Deficit
F-5
Consolidated Statements of Cash Flows
F-6
Notes to Consolidated Financial Statements
F-8
F-1
Tel. +41 44 444 35 55
BDO AG
Fax +41 44 444 37 66
Fabrikstrasse 50
8031 Zürich
Switzerland
Report of Independent Registered Public Accounting Firm
Board of Directors and
Shareholders SunVesta, Inc.,
Oberrieden, Switzerland
We have audited the accompanying consolidated balance sheets of SunVesta, Inc. as of December
31, 2016 and 2015 and the related consolidated statements of comprehensive loss, stockholders
deficit, and cash flows for each of the two years in the period ended December 31, 2016. These
financial statements are the responsibility of the Companys management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audits included consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Companys internal control over
financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of SunVesta, Inc. at December 31, 2016 and 2015, and the results of its
operations and its cash flows for each of the two years in the period ended December 31, 2016, in
conformity with accounting principles generally accepted in the United States of America.
Zürich, March 17, 2017
BDO AG
// Andreas Wyss
// Julian Snow
Andreas Wyss
Julian Snow
F-2
SUNVESTA, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2016
December 31, 2015
Assets
Current assets
Cash and cash equivalents
806,440
111,830
Receivable from related parties
49,292
19,945
Other assets
456,099
158,574
Total current assets
$
1,311,830
290,349
Non-current assets
Property and equipment - net
66,216,658
61,271,424
Deposits related to construction work
190,549
798,874
Notes receivable
280,242
280,242
Down payment for property and equipment
0
2,972,083
Restricted cash
1,667,052
1,684,467
Total non-current assets
$
68,354,502
67,007,090
Total assets
$
69,666,332
67,297,439
Liabilities and stockholders' deficit
Current liabilities
Bank liabilities
-
179,313
Accounts payable
3,311,512
8,048,608
Accrued expenses
3,160,723
7,831,247
Note payable
1,500,000
2,736,912
Notes payable to related parties
307,088
1,130,978
Other liabilities
120
-
Convertible CHF-Bond
6,202,921
0
EUR-Bond
484,463
8,347,717
Total current liabilities
$
14,966,826
28,274,775
Non-current liabilities
Convertible CHF-Bond
31,892,613
25,866,148
CHF-Bond
16,384,893
-
Liability related to conversion feature
5,936,378
6,976,322
Notes payable to related parties
51,473,793
47,198,362
Other long-term debts
-
36,140
Pension liabilities
184,469
210,680
Total non-current liabilities
$
105,872,146
80,287,652
Total liabilities
$
120,838,972
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;
959,416
959,416
101,841,603 shares issued and outstanding
Additional paid-in capital
23,238,526
23,403,438
Accumulated other comprehensive income / (loss)
2,997,562
1,778,961
Accumulated deficit
(78,368,143)
(67,406,803)
Total stockholders' deficit
$
(51,172,639)
(41,264,988)
Total liabilities and stockholders' deficit
$
69,666,332
67,297,439
The accompanying notes are an integral part of these consolidated financial statements.
F-3
SUNVESTA, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Years Ended December 31, 2016 and 2015
2016
2015
Revenues
Revenues, net
-
-
Cost of revenues
-
-
Gross profit
$
-
-
Operating Expenses
General and administrative expenses
(5,079,198)
(5,986,071)
Impairment expenses
(2,642,556)
-
Total operating expenses
$
(7,721,754)
(5,986,071)
Income / (loss) from operations
$
(7,721,754)
(5,986,071)
Other income / (expenses)
Interest income
67,808
44,957
Interest expense
(6,883,332)
(7,576,096)
Change in Fair Value of Conversion Feature
2,500,486
386,660
Loss on extinguishment of debt
(1,165,268)
(7,678,080)
Exchange differences
2,502,188
1,185,680
Other income / (expenses)
(261,468)
(108,122)
Total other expenses
$
(3,239,586)
(13,745,000)
Profit/ (loss) before income taxes
(10,961,340)
(19,731,072)
Income Taxes
-
(1,151)
Net income / (loss)
$
(10,961,340)
(19,732,222)
Comprehensive income / (loss)
Foreign currency translation
1,178,721
513,372
Actuarial gains / (losses)
39,880
-
Comprehensive income / (loss)
$
(9,742,739)
(19,218,851)
Earnings / (loss) per common share
Basic and diluted
$
(0.11)
(0.21)
Weighted average common shares
Basic and diluted
100,245,439
94,338,589
The accompanying notes are an integral part of these consolidated financial statements.
F-4
SUNVESTA, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
Years Ended December 31, 2016 and 2015
Common
Additional
Accumulated
Total
Stock
Paid-in
Other
Accumulated
Treasury
Stockholders
Capital
Comprehensive
deficit
Stock
Equity
Income (Loss)
(Deficit)
December 31, 2014
$
835,416
$
22,942,486
$
1,265,590
$
(47,674,581)
$
-
$
(22,631,089)
Translation adjustments
-
-
513,372
0
-
513,372
Net loss
-
-
-
(19,732,222)
-
(19,732,222)
Stock based compensation expense
124,000
460,952
-
-
-
584,952
Actuarial gains & losses
-
-
-
-
-
-
December 31, 2015
$
959,416
$
23,403,438
$
1,778,961
$
(67,406,803)
$
-
$
(41,264,988)
Translation adjustments
-
-
1,178,721
(0)
-
1,178,721
Net loss
-
-
-
(10,961,340)
-
(10,961,340)
Stock based compensation expense
-
(164,912)
-
-
-
(164,912)
Actuarial gains & losses
-
-
39,880
-
-
39,880
December 31, 2016
$
959,416
$
23,238,526
$
2,997,562
$
(78,368,143)
$
-
$
(51,172,639)
The accompanying notes are an integral part of these consolidated financial statements.
F-5
SUNVESTA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2016 and 2015
2016
2015
Cash flows from operating activities
Net loss
$
(10,961,340)
(19,732,223)
Adjustments to reconcile net loss to net cash
Depreciation and amortization
61,771
67,163
Impairment on Down Payment
2,642,555
-
Amortization of debt issuance costs and commissions
2,588,290
3,428,099
Accrued interest on debt
3,713,440
-
Extinguishment of Debt
1,165,268
7,678,080
Unrealized exchange differences
(3,004,224)
(1,925,603)
Stock compensation expense
(164,912)
584,952
Increase in pension fund commitments
18,791
74,833
Expenses (+) / Income (-) related to conversion feature
(2,051,203)
(386,660)
- Cash flow impact of increase / decrease in:
Other current assets
846,413
130,582
Accounts payable
(4,335,084)
1,910,735
Accrued expenses
(1,998,668)
2,145,169
Net cash used in operating activities
$
(11,478,901)
(6,024,873)
Cash flow from investing activities
Notes receivable
-
(280,242)
Receivables from related parties
-
(1,507,128)
Payments to acquire property, plant and equipment
(1,455,760)
(6,801,793)
Proceeds from sale of property, plant and equipment
36,578
-
Deposits related to construction
(641,818)
21,811
Payments for down payments for property and equipment
-
(610,810)
Proceeds from down payments for property and equipment
309,023
-
Restricted cash
14,050
56
Loan receivable and participations
1
(31,424)
Net cash used in investing activities
$
(1,737,927)
(9,178,106)
Cash flows from financing activities
Proceeds from bank liabilities
42,047
25,938
Repayments of bank liabilities
(220,100)
-
Proceeds from notes payable related parties
18,456,316
16,359,360
Repayment of notes payable related parties
(3,286,465)
-
Proceeds from (Repayments of) Notes Payable
-
485,665
Proceeds from bond issuance, net of commissions and debt
issuance costs
7,433,328
8,392,693
Repayment of bonds
(7,786,584)
(9,837,471)
Repayments of note payable and other debt
(644,091)
-
Net cash provided by financing activities
$
13,994,449
15,326,185
Effect of exchange rate changes
(83,009)
(25,723)
Net increase / - decrease in cash
694,612
97,483
Cash and cash equivalents, beginning of period
111,830
14,347
Cash and cash equivalents, end of period
$
806,442
111,830
F-6
SUNVESTA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2016 and 2015
Additional information
2016
2015
Capitalized interest and debt issuance costs for construction (non-cash)
3,694,061
3,335,000
Reversal of capitalized payment obligation for construction (non-cash)
451,816
-
Assumption of payables due from AIRES by Global Care AG (non-cash)
7,621,345
-
Conversion of Loans payable to Global Care AG to CHF convertible bonds
4,635,352
-
Assumption of payables due from Global Care AG by Sportiva (non-cash)
1,533,150
-
Conversion of Loan from third party to CHF-Convertible Bond
599,700
-
Assumption of loan due from Global Care AG by Dr. Max Rössler
1,442,253
-
Conversion of Loan from Dr. Max Rössler to CHF-Bond
15,406,139
-
Transfer from EUR-Bond to CHF-Bond
953,683
-
Repayment of Specogna Holding AG loan by Aires
-
707,428
Interest paid
-
2,395,000
Assumption of receivables from Josef Mettler by AIRES (non-cash)
-
1,507,128
Assumption of loans Dr. Max Rössler by AIRES (non-cash)
-
1,551,669
The accompanying notes are an integral part of these consolidated financial statements
F-7
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
1.
CORPORATE INFORMATION
On August 27, 2007, SunVesta Inc. (SunVesta) 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 were 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 Companys activities are subject to significant risks and uncertainties.
These consolidated financial statements are prepared in US Dollars on the basis of generally
accepted accounting principles in the United States of America (US GAAP).
2.
SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include those of the Company and its subsidiaries. One
hundred percent of assets and liabilities as well as revenues and expenses of all consolidated
companies are included. Receivables, payables, as well as revenues and expenses between
consolidated companies are eliminated. Unrealized intercompany profits, which may be
included in assets as of the end of the respective periods are also eliminated. Certain previously
reported amounts have been reclassified to conform to the current presentation.
Fiscal year
The fiscal year of the Company and all its subsidiaries correspond with the calendar year.
Use of estimates
These consolidated financial statements are prepared in conformity with accounting principles
generally accepted in the United States of America (US GAAP) and require management to
make assumptions and estimates, which have an impact on the reported assets and liabilities as
well as on the disclosure of contingent assets and liabilities at the balance sheet dates. These
considerations also impact reported income statement items. While the effective amounts may
vary from the estimates, management is convinced that all relevant information having an impact
on the estimates have been taken into consideration and are appropriately disclosed.
Management believes that the valuation of property and equipment includes substantial
estimates.
F-8
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
2.
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Cash and cash equivalents
Cash and cash equivalents include petty cash, post and bank accounts as well as time deposits
with maturities of less than three months.
Allowance for Doubtful Accounts
Management makes ongoing estimates relating to the collectability of receivable balances and
maintains a reserve for estimated losses resulting from the inability of counterparties to meet
their financial obligation to us. As of December 31, 2016 and 2015 the Company does not have
any amounts reserved in the consolidated balance sheet nor bad debt expense recorded in the
statement of comprehensive loss.
Other assets
Other assets include items, such as value added tax, withholding tax or similar credits with
maturities less than one year.
Property and equipment
Property and equipment are valued at cost less accumulated depreciation. Repair and
maintenance expenses are charged to the income statement when incurred. The cost of fixed
assets, including leasehold improvements are capitalized and depreciated over the following
useful lives:
Land (concessions)
not depreciated
IT equipment
3 years
Other equipment and furniture
5 years
Leasehold improvements
5 years
Vehicles
5 years
Project in process
not depreciated until project finished
The cost and the related accumulated depreciation are removed from the balance sheet at the
time of disposal.
Project in process relates to costs incurred directly related to the planning and construction of the
hotel in the Papagayo Gulf Tourism Project of Costa Rica and are reasonably recoverable from
future hotel and rental operations or the sale of certain apartments. Once the project in process is
finished the Company will reclassify the capitalized costs to corresponding categories and
determine the depreciation method and depreciation period.
Interest capitalization
Interest expense is capitalized on the carrying value of the construction in progress during the
construction period, in accordance with ASC 835-20, Capitalization of Interest.
F-9
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
2.
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
With respect to the construction in progress, the Company has capitalized a cumulative amount
of $13,059,061 and $9,365,000 of interest expense and debt issuance costs as of December 31,
2016 and December 31, 2015, respectively to property and equipment.
Deposits related to construction work
The Company prepays deposits for construction work, which costs are capitalized initially and
will be amortized once construction has begun.
Debt issuance cost
The Company reclassified debt issuance cost to be presented net with the issued debt as per
ASU 2015-3. This ASU was applied retrospectively for all periods presented
Down payment for property and equipment
Down payments for property and equipment are recorded at cost. Once the corresponding
property and equipment item has been completely purchased, it will be reclassified to a
corresponding subcategory within property and equipment and amortized. The Company
assesses regularly if the down payments are recoverable in accordance with ASC 360 Property,
Plant, and Equipment. Should any down payments due to specific circumstances not be
assessed as recoverable, they will be impaired.
Restricted Cash
Restricted cash includes cash that is not disposable for the Company without third party
permission such as rental deposits or deposits related to the project in process. Based on the
nature of the Companys underlying business it will be determined whether a deposit is
recorded as a current or non-current asset.
Impairment of Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be recoverable. The carrying value of a
long-lived asset or asset group is considered to be impaired when the undiscounted expected
cash flows from the asset or asset group are less than its carrying amount. An impairment loss
is recognized to the extent that the carrying value of the asset exceeds its fair value. Fair value
is determined based on quoted market prices, where available, or is estimated as the present
value of the expected future cash flows from the asset or asset group discounted at a rate
commensurate with the risk involved.
Income taxes
The Company has not incurred material current taxes on income as it has not generated taxable
income in any of the jurisdictions in which it operates.
F-10
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
2.
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Deferred taxes are calculated on the temporary differences that arise between the tax base of an
asset or liability and its carrying value on the balance sheet of the Company prepared
for consolidation purposes, with the exception of temporary differences arising on investments
in foreign subsidiaries where the Company has plans to permanently reinvest profits into the
foreign subsidiaries.
Deferred tax assets on tax loss carry-forwards are only recognized to the extent that it is more
likely than not, that future profits will be available and the tax loss carry-forward can be utilized.
Changes to tax laws or tax rates enacted at the balance sheet date are taken into account in the
determination of the applicable tax rate provided that they are likely to be applicable in the
period when the deferred tax assets or tax liabilities are realized.
The Company is subject to income taxes in the United States of America, Switzerland, Spain
and Costa Rica. Significant judgment is required in determining income tax provisions and in
evaluating tax positions.
The Company recognizes the benefit of uncertain tax positions in the financial statements when
it is more likely than not that the position will be sustained on examination by the tax authorities.
The benefit recognized is the largest amount of tax benefit that is greater than 50 percent likely of
being realized on settlement with the tax authority, assuming full knowledge of the position and
all relevant facts. The Company adjusts its recognition of these uncertain tax benefits in the
period in which new information is available impacting either the recognition or measurement of
its uncertain tax position. Interest and penalties related to uncertain tax positions are recognized
as income tax expense.
Concentration of risks
Financial instruments that potentially subject the Company to concentrations of credit risk are
primarily cash and cash equivalents. Cash and cash equivalents are maintained with several
financial institutions. Deposits held with banks may exceed the amount of insurance provided on
such deposits. Generally, these deposits may be redeemed upon demand. Cash and cash
equivalents are subject to currency exchange rate fluctuations.
Foreign Currency Translation and Transactions
The consolidated financial statements of the Company are presented in US Dollars ($) which
is also the functional currency of the parent company. The financial position and results of
operations of our foreign subsidiaries are determined using the currency of the environment in
which an entity primarily generates and expends cash as the functional currency. Assets and
liabilities of these subsidiaries are translated at the exchange rate in effect at each year-end.
Statement of comprehensive loss accounts are translated at the average rate of exchange
prevailing during the year. Translation adjustments arising from the use of differing exchange
rates from period to period are included in accumulated other comprehensive income (loss) in
stockholders deficit.
F-11
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
2.
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Gains and losses resulting from foreign currency transactions are included in other income and
expenses (exchange differences), except intercompany foreign currency transactions that are of a
long-term-investment nature which are included in accumulated other comprehensive income in
stockholders equity.
Bonds, net of debt issuance costs
Bonds comprise of bonds payable in Euros (EUR) and Swiss Francs (CHF), which bear
fixed interest rates. Bonds are carried at notional value. If a bond becomes repayable within the
next 12 months from the balance sheet date on, such bond or the corresponding portion of this
bond will be categorized as current. Commissions paid to bondholders themselves are reflected as
debt discounts and amortized over the term of the bond, based on the effective interest method.
The amortization expense is reflected in amortization of debt issuance cost.
Bonds are presented net of debt issuance costs, that arise as a result of issuing debt, i.e. the EUR
bonds, CHF bonds, CHF convertible bonds and the loan with Aires International Investments
Inc. These costs are amortized over the life of the debt using the effective interest method. The
costs comprise of finder's fees of generally between three and 12 percent of the amount issued
and costs incurred in connection with issuing the bonds, such as legal and accounting fees, and
stamp duty taxes. The accumulated amortization of debt issuance costs was $1,242,172 and
$797,857 as of December 31, 2016 and December 31, 2015, respectively.
Pension Plan
The Company maintains a pension plan covering all employees in Switzerland; it is considered a
defined benefit plan and accounted for in accordance with ASC 715 Compensation - Retirement
Benefits. This model allocates pension costs over the service period of employees in the plan.
The underlying principle is that employees render services ratably over this period, and
therefore, the statement of comprehensive loss effects of pensions should follow a similar
pattern. ASC 715 requires recognition of the funded status, or difference between the fair value of
plan assets and the projected benefit obligations of the pension plan on the balance sheet, by
recording a corresponding expense in the net loss. If the projected benefit obligation exceeds the
fair value of plan assets, then that difference or unfunded status represents the pension liability.
The Company records a net periodic pension cost in the statement of comprehensive loss. The
liabilities and annual income or expense of the pension plan is determined using methodologies
that involve several actuarial assumptions, the most significant of which are the discount rate
and the long-term rate of asset return (based on the market-related value of assets). The fair
values of plan assets are determined based on prevailing market prices.
Related parties
Parties are considered related if one party directly or indirectly controls, is controlled by, or is
under common control of the other party, if it has an interest in the other party that gives
significant influence, if it has joint control over the party, or if it is an associate or a joint
venture. Senior management or close family members are also deemed to be related parties.
F-12
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
2.
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Earnings per Share
Basic earnings per share are calculated using the Companys weighted-average outstanding
common shares. When the effects are not anti-dilutive, diluted earnings per share is calculated
using the weighted-average outstanding common shares and the dilutive effect of warrants and
stock options, if any, as determined under the treasury stock method.
Additionally, the Company's two convertible CHF-Bonds were issued in October 2015. These
convertible CHF bonds convert into shares of Sunvesta Holding AG, the Company's wholly
owned subsidiary. The resulting common shares assumed to be converted as of the issuance date
are included in the denominator for diluted EPS under the if-converted method to the extent that
their effect is considered dilutive.
Fair Value of Financial Instruments
The Companys financial instruments consist of cash and cash equivalents, restricted cash,
receivables from related parties, bank liabilities, accounts payable to third or related parties, note
payables to third or related parties, bonds as well as the conversion feature of the convertible
bonds. The fair value of these financial instruments approximate their carrying value due to the
short maturities of these instruments, unless otherwise explicitly noted.
ASC 820 Fair Value Measurements establishes a three-tier fair value hierarchy, which
prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as
observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than
quoted prices in active markets that are either directly or indirectly observable; and Level 3,
defined as unobservable inputs in which little or no market data exists, therefore requiring an entity
to develop its own assumptions.
Stock-based compensation
Stock-based compensation costs are recognized in earnings using the fair value based method
for all awards granted. Compensation costs for unvested stock options and awards are
recognized in earnings over the requisite service period based on the fair value of those options
and awards. For employees, fair value is estimated at the grant date and for non-employees fair
value is re-measured at each reporting date as required by ASC 718 Compensation-Stock
Compensation, and ASC 505- 50 Equity-Based Payments to Non-Employees. Fair values of
awards granted under the share option plans are estimated using a Black-Scholes option pricing
model. The models input assumptions are determined based on available internal and external
data sources. The risk-free rate used in the model is based on the US treasury rate for the
expected contractual term. Expected volatility is based on historical volatilities of a peer group
of similar companies in the same industry.
F-13
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
2.
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Derivative Financial Instruments
Derivative financial instruments are initially measured at fair value at the contract date and are
subsequently measured to fair value at each reporting date. The Company's derivative financial
instrument relates to the conversion feature bifurcated from the Company's convertible CHF
Bond
(Note 12), is accounted for under ASC 815 and recorded as Liability related to conversion
feature in the consolidated balance sheets. Changes in the fair value each period (gains or losses)
are reflected in the statement of comprehensive loss as Change in Fair Value of Conversion
Feature.
New accounting standards not adopted
In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Updates (ASU) 2014-15 requiring an entitys management to evaluate whether there
are conditions or events, considered in aggregate, that raise substantial doubt about entitys
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.
In January 2016, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Update 2016-01, Financial InstrumentsOverall (Subtopic 825-10): Recognition and
Measurement of Financial Assets and Financial Liabilities. The update requires several changes
with respect to recognition and measurement as well as disclosure requirements with respect to
financial instruments). The amendments to (ASU) 2016-01 are effective for the annual period
ending after December 15, 2017, and for annual periods and interim periods thereafter. Early
application is permitted. The Company is in the process of evaluating the prospective impact
that (ASU) 2016-01 will have on its balance sheet.
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.
F-14
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
2.
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards
Updates ASU 2016-9, CompensationStock Compensation (Topic 718): Improvements to
Employee Share-Based Payment Accounting, requiring certain changes to recognition and
measurement as well as disclosure of Share-Based Payments. The standard will become
effective for the Company beginning January 1, 2017. The Company 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 June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards
Updates ASU 2016-13, Financial InstrumentsCredit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments, requiring certain changes to the recognition and
measurement as well as disclosure of incurred and expected credit losses. The standard will
become effective for the Company beginning January 1, 2020. The Company is currently
assessing the impact adoption of this standard will have on its consolidated results of operations,
financial condition, cash flows, and financial statement disclosures.
In November 2016, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Updates ASU 2016-18, requiring that restricted cash and restricted cash equivalents
be included with cash and cash equivalents when reconciling the beginning-of-period and end-
of- period total cash amounts shown on the statement of cash flows. Consequently, transfers
between cash and restricted cash will not be presented as a separate line item in the operating,
investing or financing sections of the cash flow statement. The amendments are effective for
public business entities for fiscal years beginning after December 15, 2017, and interim periods
within those fiscal years. The Company considers that ASU 2016-18 will have a limited impact
on the presentation of the statement of cash flows.
3.
GOING CONCERN
The Company is currently working on building a hotel in the Papagayo Gulf Tourism Project
area of Guanacaste, Costa Rica. The project is expected to open in the fourth quarter of 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 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 Chief
Executive Officer, Dr. Max Rӧssler, controlling shareholder of Aires International Investment,
Inc. and Company Director.
F-15
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
3.
GOING CONCERN - CONTINUED
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 projects 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 December 31, 2015 and the filing date, though future anticipated cash
outflows for investing activities continue to depend on the availability of financing.
4.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents are available to the Company without any restriction or limitation on
withdrawal and/or use of these funds. The Companys cash equivalents are placed with financial
institutions that maintain high credit ratings. The carrying amounts of these assets approximate
their fair value.
Cash and cash
USD
CHF
Other
Total
Total
equivalents
December 31, 2016
December 31, 2015
original currency
31,670
778,040
14,260
in $
31,670
763,428
11,342
806,440
111,830
USD ($) =
US Dollar
EURO =
Euro
CHF
=
Swiss Francs
CRC
=
Costa Rican Colón
F-16
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
5.
RESTRICTED CASH
As of December 31, 2016, the Company has the following restricted cash positions:
Restricted Cash
December 31, 2016
December 31, 2015
$
$
Credit Suisse in favor of BVK pension fund
125,400
128,805
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 Tourism Board
933,350
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
-
622,311
Gross
1,667,052
1,684,466
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. Due to this fact this restricted cash position is also classified
as long term.
6.
NOTES RECEIVABLE
On June 15, 2015, the Company granted REP Caribbean Development Corporation, a third
party, a short term advance in the amount of $250,000. The repayment was due on November
30, 2015, with a fixed interest payment of $5,000. The advance is secured by a non-related Swiss
individual. On December 10, 2015, the advance was increased by $25,000. Including accrued
interest, the overdue amount at December 31, 2016 was approximately $280,000.
As this commitment has not been executed, REP Caribbean Development Corporation still owes
these funds to the Company.
F-17
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
7.
PROPERTY & EQUIPMENT
December 31, 2016
December 31, 2015
Land
$
19,700,000
19,700,000
IT Equipment
221,060
185,846
Other equipment and furniture
219,734
278,000
Leasehold improvements
74,004
66,617
Vehicles
74,000
139,000
Construction in-process
46,457,172
41,412,351
Gross
66,745,970
61,781,814
Less accumulated depreciation
(529,312)
(510,390)
Net
$
66,216,658
61,271,424
Depreciation expenses for the period ended December 31,
2016 and 2015
61,771
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 comprised of $7 million related to the concession
formerly held by Rich Land (~84,000 m2) and $12.7 million formerly held by AdR (~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 was initially set to expire in June 2022.
The $12.7 million concession is also a right to use the property for a specific period of time of
initially 30 years from the date of grant, which thereafter can be renewed at no further cost, if the
landholder is up to date with its obligations and if there is no significant change in government
policies. The current concession was initially set to expire in November 2036.
On July 14, 2015 the Consejo del Polo de DesarrolloTuristico Papagayo at ICT (Council of
Papagayo Tourism Development Project), has unanimously approved the extension of both
concessions until 2052.
The construction in process through December 31, 2016 and December 31, 2015, is represented
primarily by architectural work related to the hotel and apartments as well as construction work.
Deposit related to construction work
For the year ended December 31, 2016, the Company had made deposits with several
contractors to initiate earth moving groundwork. These deposits will be offset against invoices
for such groundwork as completed. As of December 31, 2016 and 2015, the Company has
deposits of $190,549 and $798,874 respectively, which have not been set off.
F-18
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
8.
DOWN PAYMENTS FOR PROPERTY & EQUIPMENT
December 31, 2016
December 31, 2015
La Punta (neighbouring piece of land)
2,669,816
2,669,816
Hotel Engadina
-
302,267
Gross
$
2,669,816
2,972,083
Value adjustment on Down Payment La Punta
(2,669,815)
-
Total (net)
$
0
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 $22,895,806, whereof fifty percent was to be paid in
cash and the other fifty percent through a combination of a 10 percent equity share in La Punta
(the concession properties in Polo Papagayo) and five percent in equity of Paradisus Papagayo
Bay Resort & Luxury Villas (currently under development). Both of these 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 were to be
refundable in the event the purchase did not close.
During the second quarter of 2013, the Company entered into a new, revised agreement for the
purchase of the said properties. The original agreement (including amendments) as described
above was cancelled and replaced by a new agreement, which included the following clauses:
- The total purchase price is $ 17,500,000 of which $ 1,369,816 has been paid as of date
of the new revised agreement and therefore $16,130,184 was outstanding as per the date
of the new, revised agreement.
- Since the original seller owes a third party $8,000,000, the Company was to pay
$8,000,000 of the purchase price directly to this third party instead of to the original
seller. The remaining $8,130,184 on the new agreement was to be paid directly to the
original seller. Payment schedules were defined.
F-19
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
8.
DOWN PAYMENTS FOR PROPERTY & EQUIPMENT - CONTINUED
As of this balance sheet date, the following is the situation:
(USD)
(USD)
Total
Description
USD
USD
USD
Total commitment
9,500,000
8,000,000
17,500,000
Payments till 31 December, 2016
1,669,816
1,000,000
2,669,816
Thereof refundable:
-1,669,816
-700,000
-2,369,816
thereof non-refundable
0
300,000
300,000
Total outstanding at 31 December,
7,830,184
7,000,000
14,830,184
Thereof overdue
-7,830,184
-7,000,000
-14,830,184
Thereof not overdue
0
0
0
The Company has not fulfilled the terms of either the agreement with the original seller or the
agreement with the third party seller. Notice of termination of the agreement with the third party
was received on January 4, 2014. Despite attempts to renegotiate a new agreement to purchase
the additional concession properties, the Company noticed cancellation of the agreement with
the original seller on February 24, 2017.
The agreement with the original seller entitled the Company to reimbursement for all amounts
paid as deposits against the purchase of the concessions less a liquidated damages penalty of 5%
in the event that the purchase did not close on providing notice of cancellation to the original
seller.
The agreements with the third party seller entitled the Company to reimbursement for all
amounts paid as deposits minus a non-refundable payment of $300,000 and a liquidated damages
penalty of 5% in the event that the purchase did not close on receiving notice of termination.
All expenses related to the agreements with the original seller and the agreement with the third
party seller, were impaired as of December 31, 2016.
Hotel Engadina
This amount of 0 and $ 302,267 as per December 31, 2016 and December 31, 2015 respectively,
related to a purchase option that was bought by QuadEquity Holdings, a related party during the
year ended December 31, 2016.
F-20
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
9.
FAIR VALUE MEASUREMENT
The guidance on fair value measurements defines fair value as the exchange price that would
be received for an asset or paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between market
participants. This guidance also specifies a fair value hierarchy based upon the observability
of inputs used in valuation techniques. Observable inputs (highest level) reflect market data
obtained from independent sources, while unobservable inputs (lowest level) reflect internally
developed market assumptions. In accordance with this guidance, fair value measurements are
classified under the following hierarchy:
Level 1
Quoted prices for identical instruments in active markets.
Level 2
Quoted process for similar instruments in active markets, quoted prices for identical or similar
instruments in markets that are not active; and model-derived valuations in which significant
inputs or significant value drivers are observable in active markets.
Level 3
Model derived valuations in which one or more significant inputs or significant value-drivers are
unobservable.
When available, the Company uses quoted market prices to determine fair value, and classifies
such measurements within Level 1. In some cases, where market prices are not available, the
Company makes use of observable market based inputs to calculate fair value, in which case
the measurements are classified within Level 2. If quoted or observable market prices are not
available, fair value is based upon internally developed models that use, where possible, current
market-based parameters such as interest rates, yield curves and currency rates. These
measurements are classified within Level 3.
Fair value measurements are classified according to the lowest level input or value-driver that
is significant to the valuation. A measurement may therefore be classified within Level 3 even
though there may be significant inputs that are readily observable.
Fair value measurement includes the consideration of nonperformance risk. Nonperformance
risk refers to the risk that an obligation (either by counterparty or the Company) will not be
fulfilled. For financial assets traded in an active market (Level 1), the nonperformance risk is
included in the market price. For certain other financial assets and liabilities (Level 2 and 3),
the Companys fair value calculations have been adjusted accordingly.
As of December 31, 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.
F-21
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
9.
FAIR VALUE MEASUREMENT - CONTINUED
In addition to the methods and assumptions to record the fair value of financial
instruments as discussed above, the Company used the following methods and
assumptions to estimate the fair value of our financial instruments:
Cash and cash equivalents carrying amount approximated fair value.
Restricted cash carrying amount approximated fair value.
Receivables from related parties (current) carrying amount approximated fair value due to the short term nature of
the receivables.
Accounts Payable carrying amount approximated fair value.
Note payable carrying amount approximated fair value due to the short term nature of the note payable.
Bank liabilities - carrying amount approximated fair value due to the short term nature of bank liabilities.
Notes receivable - carrying amount approximated fair value.
Notes payable to related parties - Dr. M. Rӧssler (current) The fair value was calculated based on
the underlying publically traded shares. However, the Company records the loan at nominal value. The Company does not have
sufficient cash to repurchase the shares as of balance sheet date and hence repay the loans in shares.
Notes payable to related parties (current) carrying amount approximated fair value due to the short term nature
of the notes payable.
EUR bond (old) carrying amount approximated fair value due to its short term nature
EUR- bonds The fair values of the bonds payable are classified as level 3 fair values. The fair values of the bonds
have been determined by discounting cash flow projections discounted at the respective interest rates of 7.25% for
EUR bonds, which represents the current market rate based on the creditworthiness of the Company. Hence, the
carrying values approximate fair value.
CHF-bonds The fair values of the bonds payable are classified as level 3 fair values. The fair values of the bonds
have been determined by discounting cash flow projections discounted at the respective interest rates of 7.25% and
6.5% respectively for CHF bonds, which represented the current market rate based on the creditworthiness of the
Company at the date of issue. Hence, the carrying values approximate fair value.
Notes payable to related parties Aires (non-current) The fair values of the notes payable to Aires International
Investments Inc. are classified as level 3. The fair values of the notes were determined by discounting cash flow
projections discounted at the respective interest rates of 7.25%, which represents the current market rate based on
the creditworthiness of the Company. Hence, the carrying value approximates fair value.
Convertible CHF-bonds The fair values of the convertible bonds payable are classified as level 3 fair values. The
fair values of the convertible bonds have been determined by discounting cash flow projections discounted at the
respective interest rates of 6.00% for convertible CHF bonds, which represents the current market rate based on the
creditworthiness of the Company. Hence, the carrying values approximate fair value.
Liability related to conversion feature - The fair value of the liability related to conversion feature is classified as
level 3 in the fair value hierarchy. The fair value of the liability is determined using a Black Scholes model to calculate
the option value at each reporting date and multiplied by the number of potentially convertible shares. Hence the
carrying value of the obligation approximates the fair value
F-22
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
9.
FAIR VALUE MEASUREMENT - CONTINUED
The fair value of our financial instruments is presented in the table below:
December 31, 2016
December 31, 2015
Carrying
Fair Value $
Carrying
Fair Value $ Fair Value Ref-
Amount $
Amount $
Levels
erence
Cash and cash equivalents
806,440
806,440
111,830
111,830
1
Note 4
Restricted cash
1,667,052
1,667,052
1,684,467
1,684,467
1
Note 5
Receivables from related parties
other (current)
49,292
49,292
19,945
19,945
3
Note 10
Accounts Payable
3,311,512
3,311,512
8,048,608
8,048,608
1
-
Bank liabilities
-
-
179,313
179,313
1
Note 11
Note payable
1,500,000
1,500,000
2,736,912
2,736,912
1
Note 17
Notes payable to related parties
Dr. M. Rӧssler (current)
-
-
-
-
3
Note 10
Notes payable to related parties
Rigendinger (current)
-
-
1,973
1,973
3
Note 10
Notes payable to related parties
other (current)
307,088
307,088
1,129,005
1,129,005
3
Note 10
Notes receivable
280,242
280,242
280,242
280,242
3
EUR-bonds
484,463
484,463
8,488,631
8,488,631
3
Note 12
Convertible CHF-bonds
38,095,533
38,095,533
28,720,443
28,720,443
3
Note 12
CHF-bonds
16,384,893
16,384,893
28,720,443
28,720,443
3
Note 12
Notes payable to related parties
Aires (non-current)
51,473,793
51,473,793
47,198,362
47,198,362
3
Note 10
Liability related to conversion
feature
5,936,378
5,936,378
6,976,322
6,976,322
3
Note 12
The Company's financial liabilities measured at fair value on a recurring basis consisted of the
liability relates to conversion feature as of the following date:
Balance at December 31, 2015
6,976,322
Additions
449,283
Change in Fair Value of Conversion Feature
(2'500'486)
Extinguishment of debt
1,165,268
FX Revaluation
(154,010)
Balance at December 31, 2016
5,936,378
F-23
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
9.
FAIR VALUE MEASUREMENT - CONTINUED
The Company used a Black-Scholes model to value the Liability related to conversion feature as
of December 31, 2016 and December 31, 2015.
The assumptions as of December 31, 2016 are as follows:
Stock Price: CHF 5.08
Annualized Risk Free Rate: .0001% Exercise Price: CHF 8
Annualized Volatility: 80%
Time to Maturity: 1.75 years
The assumptions as of December 31, 2015 were as follows:
Stock Price: CHF 5.08
Annualized Risk Free Rate: .72% Exercise Price: CHF 8
Annualized Volatility: 80% Time to Maturity: 2.75 years
The annualized risk free rate was changed from a US treasury rate to a Swiss treasury rate, as the
underlying basis value are shares in a Swiss company denominated in Swiss Francs.
F-24
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
10.
RELATED PARTY TRANSACTIONS
The advances from (to) related parties are composed as follows:
Receivables
Payables
December 31,
December
December 31,
December 31,
2016
31, 2015
2016
2015
Hans Rigendinger
-
-
-
1,973
Aires International
-
-
51,473,793
47,198,362
Akyinyi Interior and Exterior
-
-
Decoration
290,000
290,000
Global Care AG
-
-
-
240,210
Geoffrey Long
-
19,945
-
-
Sportiva participations ag
-
-
-
528,660
Late Josef Mettler
-
-
17,088
70,135
QuadEquity Holdings
-
-
-
-
4f capital ag
-
-
-
-
Dr. Max Rössler
-
-
-
-
Turan Tokay
49,292
-
-
-
Total excluding interest
49,292
19,945
51,780,881
48,329,340
Accrued interest
-
-
-
6,370,579
Total
49,292
19,945
51,780,881
54,699,919
of which non-current
-
-
51,473,793
47,198,362
Related party
Capacity
Interest Repayment Security
Rate
Terms
1 Hans Rigendinger Shareholder, CEO and Company board member
3%
none
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
none
none
4 Global Care AG
Company owned by Dr. Max Rössler, a board
member
none
none
none
5 Geoffrey Long
Head of Accounting The Americas
none
none
none
6 Sportiva
Participations AG Company formerly owned by the late Josef Mettler
3%
none
none
7 Late Josef Mettler Former shareholder, CEO, CFO and Company board
member
3%
none
none
8 Turan Tokay
Shareholder
3%
none
none
F-25
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
10.
RELATED PARTY TRANSACTIONS - CONTINUED
Loan agreement Aires International Investment Inc.
As of December 31, 2016, the Company owes Aires International Inc. the following:
Borrower
Debt instrument
Amount in CHF
Amount in Annual
Repayment date *
denominated in
USD interest
CHF
rate
SunVesta Inc.
Promissory note
10,044,371
9,855,731 7.25 %
After Dec 31, 2020
SunVesta Inc.
Promissory note
10,000,000
9,812,195 7.25 %
After Dec 31, 2020
SunVesta Inc.
Promissory note
10,000,000
9,812,195 7.25 %
After Dec 31, 2020
SunVesta Inc.
Loan agreement
9,675,972
9,605,602 7.25 %
After Dec 31, 2020
SunVesta Holding
Loan agreement
12,625,177
12,388,070 7.25 %
After Dec 31, 2020
Total
51,473,793
*
The notes may be repaid in whole or in part.
Loan due to Global Care AG
In April 2016, Global Care AG (a related party controlled by Dr. Max Rössler, himself board
member and related party) assumed a liability of CHF 4.5 million from Aires International
Investment Inc., (also a related party controlled by Dr. Max Rössler). This CHF 4.5 million was
subsequently subscribed into bonds of the CHF-Convertible Bond issue. As this conversion
includes a significant conversion option, the exchange is treated as an extinguishment of debt
and an amount of $1,071,317 has been reclassified in the statement of profit or loss from
revaluation of conversion feature to extinguishment of debt. In June 2016, there were the
following changes to the debt structure:
-
A liability of CHF 2,656,083 was transferred from Dr. Max Rössler to Global Care AG
-
A liability of CHF 1.5 million was transferred from Sportiva to Global Care
-
A liability of CHF 1.4 million was transferred from Global Care to Dr. Max Rössler.
In December 2016, Dr. Max Rössler subscribed a loan in the amount of CHF 15.2 million into
bonds of the new CHF-Bond issue 2016-2020. As this conversion did not represent a significant
change of the conditions between the old debt and the new debt, the exchange was not treated as
an extinguishment of debt.
Receivable from and loans to Josef Mettler
During 2016, the payable to Mr. Mettler in the amount of $70,135 was repaid.
During the third quarter 2016 Josef Mettler passed away and companies formerly owned by him
are no longer related parties to the Company.
During the third quarter 2016, $17,775 was advanced to the late Josef Mettler for private
expenses.
F-26
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
10.
RELATED PARTY TRANSACTIONS - CONTINUED
Current account Sportiva Participations AG
During the period ended December 31, 2016 there were the following movements on the current
account of Sportiva Participations AG until the death of the late Josef Mettler. At that point,
Sportiva Participations AG was no longer a related party.
CHF
USD
Balance December 31, 2015
524,695
528,660
Cash paid to SunVesta
870,000
875,780
Cash received from SunVesta
(2,812,911)
(2,867,777)
Transfers from/(to) other related parties
1,502,026
1,545,020
Interest credited to the account
4,801
4,852
Changes in forreign currency
-
1,976
Transfer to third party upon death of the late Josef Mettler
(88,611)
(88,511)
Balance September 12, 2016
-
-
Commissions paid or payable to related parties
During the periods ended December 31, 2016, and December 31, 2015, the Company paid
commissions to 4f Capital AG in the amount of $0 (up to the death of the late Josef Mettler) and
$253,945, respectively, for services related to financing of the Company. These costs were
capitalized as debt issuance costs. 4f Capital AG was a company owned and directed by the late
Josef Mettler that received a commission of 1.5% for new funds that the Company receives based
on consulting services rendered by 4f Capital AG.
Service fees paid or payable to Akyinyi Interior and Exterior Decoration
During the year ended December 31, 2016 there were no payments to Akyinyi Interior and Exterior
Decoration and during the year ended December 31, 2015, $120,000 fees for decoration services
were paid. These costs have been capitalized to property and equipment.
11.
BANK LIABLITIES
The bank liabilities due at December 31, 2016 and 2015 in the amounts of $0 and $153,375
respectively, represented temporary, secured overdraft facilities, bearing an interest rate of 8.9%.
F-27
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
12.
BONDS
Description
EUR () bond new I
EUR () bond new II
Issuer:
SunVesta Holding AG
SunVesta Holding AG
Type of securities:
Bond in accordance with Swiss
Bond in accordance with
Approval by SunVesta AG
October 31, 2013
May 19, 2014
Volume:
Up to EUR15,000,000
Up to EUR 15,000,000
Units:
EUR10,000
EUR 10,000
Offering period:
11/07/2013 03/31/2014
05/01/14 06/30/14
Due date:
December 2, 2016
December 02, 2016
Issuance price:
100%
100 %
Issuance day:
December 2, 2013
December 02, 2013
Interest rate:
7.25% p.a.
7.25 % p.a.
Interest due dates:
December 2, 2013
December 02
Applicable law:
Swiss
Swiss
EURO () Bond new I
EURO
EURO
Bond
Bond
(New)
(New)
2016
2015
$
$
Balances January 1
6,871,630
7,355,572
Cash inflows
-
281'754
Cash outflows
(6,736,255)
-
Foreign currency
adjustments
(103,834)
(765'696)
Sub-total
31,541
6,871,630
Discounts (commissions paid to bondholders) and
debt issuance costs
(588,613)
(588,613)
Accumulated amortization of discounts and
debt issuance costs
563,636
432,128
Total accumulated unamortized discounts and
debt issuance costs
(24,977)
(156,485)
Balances December 31 (Carrying value)
6,564
6,715,145
As per date of this report the Company has realized a cumulative amount of EUR 0 related to the
EURO Bond I. This due to the fact, that certain bondholders have not redeemed their principal
amounts up to the date of this report.
F-28
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
12.
BONDS - CONTINUED
EURO () Bond new II
EUR Bond
EUR Bond
new II
new II
2016
2015
$
$
Balances January 1
1,658,300
1,761,258
Cash inflows
-
-
Cash outflows
(159,950)
-
Reclassification from / to Bond
(953,683)
-
Foreign currency adjustments
(32,862)
(102,958)
Sub-total
511,805
1'658,300
Discounts (commissions paid to bondholders) and
debt issuance costs
(174,660)
(174,660)
Accumulated amortization of discounts and
debt issuance costs
140,754
148,932
Total accumulated unamortized discounts and
debt issuance costs
(33,906)
(25,728)
Balances December 31 (Carrying value)
477,899
1,632,572
During the year ended December 31, 2016, an amount of $953,683 was reclassified to the new
parallel CHF-Bond III. Since the new debt was not significantly different from the old debt, the
exchange was not treated as an extinguishment of debt.
As per date of this report the Company has realized a cumulative amount of EUR 0 related to the
EURO Bond new II. This due to the fact, that certain bondholders have not redeemed their
principal amounts up to the date of this report.
F-29
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
12.
BONDS - CONTINUED
On September 30, 2015, the Company approved the issuance of two new convertible CHF-
bonds. The major terms and conditions are the following:
Description
Convertible CHF Bond I
Convertible CHF Bond II
Issuer:
SunVesta Holding AG
SunVesta Holding AG
Type of securities:
Senior convertible bonds,
Senior convertible bonds,
convertible into shares of
convertible into shares of
the issuer, in accordance
the issuer, in accordance
with Swiss law
with Swiss law
Approval by SunVesta AG BOD:
September 30, 2015
September 30, 2015
Volume:
Up to CHF 45,000,000
Up to CHF 15,000,000
Denomination:
CHF 5,000
CHF 5,000
Offering period:
October 01, 2015
October 01, 2015
Maturity date:
September 30, 2018
September 30, 2018
Issue price:
100 %
100 %
Redemption price:
100 %
100 %
Issuance date:
October 01, 2015
October 01, 2015
Coupon:
6.00 % p.a.
6.00 % p.a.
Interest due dates:
September 30 of each year,
September 30 of each year,
the first time September 30,
the first time September 30,
2016
2016
Reference price:
CHF 6.50
CHF 6.50
Initial conversion price:
CHF 8.00
CHF 8.00
Applicable law:
Swiss
Swiss
In October 2015, Sunvesta Holding AG, a wholly owned subsidiary of the Company settled
approximately $27,300,000 worth of old CHF-Bonds which had matured on August 31, 2015
and were extended through September 30, 2015 (i.e. unpaid). These CHF-Bonds were rolled
forward/ and exchanged for 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.
F-30
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
12.
BONDS - CONTINUED
The nominal and carrying amounts have changed as follows:
CHF Bond
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)
-
-
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
CHF Bond II
CHF BOND II
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.
F-31
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
12.
BONDS - CONTINUED
Convertible CHF BOND I
Convertible
Convertible
CHF Bond I
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
(105,058)
(41,617)
Reclassifications to / from Bond (net)
(34,486)
2,190,675
Sub-total
3,648,383
2,250,048
Discounts (commissions paid to bondholders) and debt issuance costs
(136,722)
(136,219)
Accumulated Amortization of discounts and debt issuance costs
117,652
57,896
Reclassification to CHF Bonds
(104,038)
-
Total Accumulated Unamortized discounts and debt issuance costs
(123,108)
(78,323)
Balances December 31 (Carrying value)
3,525,275
2,171,725
Since the new debt was not significantly different from the old debt, the exchange was not treated
as an extinguishment of debt. Furthermore, $599,700 (CHF 600,000) was converted from a loan.
Since the new debt was significantly different from the old debt, the exchange was treated as
an extinguishment of debt and an amount of $93,950.87 was accounted for as a loss on
extinguishment of debt.
As per date of this report, the Company has realized a cumulative amount of CHF 3.6 million
($3.5 million) related to the Convertible Bond I.
During the year ended December 31, 2016, the Company reclassified $634,186 (CHF 630,000)
from convertible CHF Bond I to convertible CHF Bond II, together with a corresponding
amount of $104,038 of capitalized debt issuance costs.
F-32
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
12.
BONDS - CONTINUED
Convertible CHF BOND II
Convertible
Convertible
CHF Bond
CHF Bond
II 2016
II 2015
$
$
Balances January 1
26,470,395
-
Cash inflows
7,142,850
1,747,122
Cash outflows
(787,371)
-
Foreign currency adjustments
(1,187,441)
(479,315)
Reclassifications to CHF Bonds
5,131,937
25,202,588
Sub-total
36,770,369
26,470,395
Discounts (commissions paid to bondholders) and debt issuance costs
(4,890,690)
(2,977,065)
Accumulated Amortization of discounts and debt issuance costs
2,586,541
201,093
Reclassification to CHF Bonds
104,038
-
Total Accumulated Unamortized discounts and debt issuance costs
(2,200,111)
(2,775,972)
Balances December 31 (Carrying value)
34,570,259
23,694,423
As per date of this report the Company has realized a cumulative amount of CHF 33.20 million
($32.7 million) related to the Convertible Bond II.
During the year ended December 31, 2016, the Company reclassified $634,186 (CHF 630,000)
from convertible CHF Bond I to convertible CHF Bond II, together with a corresponding
amount of $104,038 of capitalized debt issuance costs.
In April 2016, Global Care AG (a related party controlled by Dr. Max Rössler, a Company
board member and related party) assumed a liability of CHF 4.5 million from Aires International
Investment Inc., (also a related party controlled by Dr. Rössler). This CHF 4.5 million was
subsequently subscribed into bonds of the CHF Convertible Bond issue. As the conversion
inclues a significant conversion option, the exchange is treated as an extinguishment of debt and
an amount of $1,071,317 has been reclassified in the statement of profit or loss from revaluation
of conversion feature to extinguishment of debt.
Included in this amount is approximately $6.20 million (CHF 6.32 million), which, by
agreement between the Company and the bondholders and as a deviation from the standard
terms, was repayable as of February 28, 2017. As these amounts were due within 12 months from
the reporting date, these funds are classified within current liabilities on the consolidated balance
sheet.
As per date of this report, approximately $1.1 million have been repaid, the remaining amount
was extended under unchanged conditions and are planned to be converted into a new bond issue
during May 2017.
The Company initiated a new offering of senior unsecured CHF bonds on September 21, 2016,
of up to CHF 20,000,000 in units of CHF 5,000 that bear interest at 6.50% per annum payable
each August 15, over a four-year term that matures on August 15, 2020.
F-33
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
12.
BONDS - CONTINUED
Description
Convertible CHF Bond III
Issuer:
SunVesta Holding AG
Type of securities:
Senior bonds
Approval by SunVesta AG BOD:
July 7, 2016
Volume:
Up to CHF 20,000,000
Denomination:
CHF 5,000
Offering period:
November 30, 2016
Maturity date:
August 15, 2020
Issue price:
100 %
Redemption price:
100 %
Issuance date:
September 21, 2016
Coupon:
6.50 % p.a.
Interest due dates:
August 15 of each year, the
first time August 15, 2017
Applicable law:
Swiss
We had realized $15,547,647 as of the year ended December 31, 2016. Included in this amount
is $15,192,404 (CHF 15.2 million) that was converted from loans from related parties. Since the
new debt was not significantly different from the old debt and did not include a conversion
feature deemed substantive, the exchange was not treated as an extinguishment of debt.
CHF BOND III
CHF
CHF
original
Bond III
Bond III
2016
2015
$
$
Balances January 1
-
Cash inflows
699,650
Cash outflows
-
Foreign currency adjustments
(290,665)
Reclassifications to / from Bonds
15,192,404
Sub-total
15,601,389
Discounts (commissions paid to bondholders) and debt issuance costs
(106,618)
Accumulated Amortization of discounts and debt issuance costs
3,814
Total Accumulated Unamortized discounts and debt issuance costs
(102,804)
Balances December 31 (Carrying value)
15,498,586
As per date of this report the Company has realized a cumulative amount of CHF 16.7 million
($16.5 million) related to the CHF Bond III original. Within the abovementioned facility, the
Company initiated a new parallel offering of senior unsecured CHF bonds on September 21,
2016. An amount of $979,510 was reclassified from EUR Bond II.
F-34
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
12.
BONDS - CONTINUED
Since the new debt was not significantly different from the old debt, the exchange was not treated as
an extinguishment of debt. We had realized a cumulative amount of $886,307 as of the year ended
December 31, 2016.
CHF BOND III
CHF Bond III
CHF Bond III
parallel
2016
2015
$
$
Balances January 1
-
Cash inflows
-
Cash outflows
-
Foreign currency
adjustments
(17,915)
Reclassifications to / from Bonds
979,510
Sub-total
961,595
Discounts (commissions paid to bondholders) and debt issuance costs
(79,289)
Accumulated Amortization of discounts and debt issuance costs
4,001
Total Accumulated Unamortized discounts and debt issuance costs
(75,288)
Balances December 31 (Carrying value)
886,307
As per date of this report the Company has realized a cumulative amount of CHF 0.9 million ($0.9
million) related to the CHF Bond III parallel.
F-35
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
13.
INCOME TAXES
The components of loss before income taxes are as follows:
December 31, 2016
December 31, 2015
Domestic
(1,411,971)
(3,863,810)
Foreign
(9,549,369)
(15,867,262)
Loss before income tax
(10,961,340)
(19,731,072)
Income taxes relating to the Companys operations are as follows:
December 31, 2016
December 31, 2015
Current income taxes
US Federal, state and local
-
-
Foreign
-
(1,151)
Deferred income taxes
-
-
US Federal, state and local
-
-
Foreign
-
-
Income tax expense/recovery
-
(1,151)
Income taxes at the United States federal statutory rate compared to the Companys income tax
expenses as reported are as follows:
December 31, 2016
December 31, 2015
Net loss before income tax
(10,961,340)
(19,731,072)
Statutory rate
35%
35%
Expected income tax recovery
(3,836,469)
(6,905,875)
Impact on income tax expense/recovery from
Change in valuation allowance
3,518,283
4,979,054
Different tax rates in foreign jurisdictions
921,953
697,632
Expiration of unused tax loss carry forwards
502,483
-
Permanent differences
(645,752)
1,803,538
Difference due to tax review / previous year
(317,710)
(633,957)
adjustments
Others
(142,789)
58,457
Income tax expense
0
(1,151)
F-36
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
13.
INCOME TAXES - CONTINUED
The Companys deferred tax assets and liabilities consist of the following:
December 31, 2016
December 31, 2015
Deferred tax assets
Tax loss carry forward
20,370,022
17,321,345
Valuation allowance
(20,370,022)
(17,321,345)
Deferred tax assets/liabilities
-
-
As of December 31, 2016 and 2015, there were no known uncertain tax positions. We have not
identified any tax positions for which it is reasonably possible that a significant change will
occur during the next 12 months.
Pursuant to ASC 740-10-25-3 Income Taxes, an income tax provision has not been made for
U.S. or additional foreign taxes since none of the subsidiaries of the Company are generating
income nor are expected to in the foreseeable future. The company expects that future earnings
will be reinvested, but could become subject to additional tax if they were remitted as dividends
or were loaned to the Company, or if the Company should sell or dispose of its stock in the
foreign subsidiaries. It is not practical to determine the deferred tax liability, if any, that might
be payable on foreign earnings because if the Company were to repatriate these earnings, the
Company believes there would be various methods available to it, each with different U.S. tax
consequences.
The Companys operating loss carry forward of all jurisdictions expire according to the
following schedule:
Domestic
Foreign
2017
-
5,129,934
2018
-
9,083,582
2019
-
6,215,044
2020
-
2,610,044
2021
-
7,707,090
2022
-
7,458,249
2023
392,931
14,899,080
Beyond 2023
21,177,817
-
Total operating loss carry forwards
$
21,570,748
53,103,23
F-37
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
13.
INCOME TAXES - CONTINUED
The following tax years remain subject to examination:
United States of America
Switzerland
Costa Rica*
2008
YES
NO
N/A
2009
YES
NO
N/A
2010
YES
NO
N/A
2011
YES
NO
N/A
2012
YES
NO
N/A
2013
YES
NO
NO
2014
YES
NO
NO
2015
YES
YES
NO
2016
YES
YES
YES
* The Costa Rican companies are taxable since 2013.
F-38
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
14.
PENSION PLAN
The Company maintains a pension plan covering all employees in Switzerland. The plan is
considered a defined benefit plan and accounted for in accordance with ASC 715 Compensation
- Retirement Benefits. This model allocates pension costs over the service period of employees in
the plan. The underlying principle is that employees render services ratably over this period, and
therefore, the income statement effects of pensions should follow a similar pattern. ASC 715
requires recognition of the funded status, or difference between the fair value of plan assets and
the projected benefit obligations of the pension plan on the balance sheet, with a corresponding
adjustment recorded in the net loss. If the projected benefit obligation exceeds the fair value of
plan assets, then that difference or unfunded status represents the pension liability.
The Company records a net periodic pension cost in the statement of comprehensive loss. The
liabilities and annual income or expense of the pension plan is determined using methodologies
that involve several actuarial assumptions, the most significant of which are the discount rate
and the long-term rate of asset return (based on the market-related value of assets). The fair
values of plan assets are determined based on prevailing market prices.
The projected benefit obligation and the fair value of plan assets have changed as follows:
2016
2015
Projected Benefit Obligations beginning of year
$
463,576
352,704
Service cost - current
60,070
56,927
Interest expense
3,698
5,239
Benefit payments and transfers
(102,949)
(12,091)
Actuarial gains/losses
(42,879)
61,864
Currency translation losses
(10,616)
(1,067)
Projected Benefit Obligations end of year
$
370,901
463,576
Fair Asset Values beginning of year
$
252,896
216,271
Expected returns
7,496
6,448
Contributions paid
39,980
46,348
Benefits paid and transfers
(102,949)
(12,091)
Actuarial gains/losses
(5,497)
(3,426)
Currency translation losses
(5,494)
(654)
Fair Asset Value of assets end of year
$
186,432
252,896
Net liabilities
$
(184,469)
(210,680)
F-39
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
14.
PENSION PLAN - CONTINUED
The following were the primary assumptions:
Future benefits, to the extent that they are based on compensation, include salary increases, as
presented above, consistent with past experiences and estimates of future increases in the Swiss
labor market.
December 31, 2016
December 31, 2015
Assumptions at year end
Discount rate
0.60%
0.80%
Expected rate of return on plan assets
3.00%
3.00%
Future salary increases
1.50%
1.50%
Future pension increases
0.00%
0.00%
Net periodic pension costs have been included in the Companys results as follows:
December 31, 2016
December 31, 2015
Current service cost
60,070
56,927
Net actuarial (gain) loss recorded
2,499
-
Interest cost
3,698
5,239
Expected return on assets
(7,496)
(6,448)
For the years ended December 31, 2016 and December 31, 2015 the Company made cash
contributions of $88,312 and $23,000, respectively, to its defined benefit pension plan.
All of the assets are held under the collective contract by the plans re-insurance Company and
are invested in a mix of Swiss and international bond and equity securities within the limits
prescribed by the Swiss Pension Law.
The expected future cash flows to be paid by the Company in respect of employer contribution
to the pension plan for the year ending December 31, 2017 are $20,000.
F-40
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
15.
STOCK COMPENSATION
The Company has included share based compensation under the SunVesta Inc. Stock Option
Plan 2013 (the Plan) as part of the total remuneration in certain employment and Board of
Directors 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
Companys common stock. For all employees, fair value is estimated at the grant date.
Compensation costs for unvested shares are expensed over the requisite service period on a
straight-line basis.
Share Grants Mr. Hans Rigendinger
On January 1, 2013, the Company granted to Hans Rigendinger 3,500,000 common shares,
valued at $0.08 an amount equal to the share price and fair value of the shares on the grant date.
These shares were granted as a signing bonus with the Company. Additionally, the Company
granted 2,500,000 common shares as a retention award due on each anniversary of his signing
with the Company. The employment contract was initially for three years with an additional
bilateral option for an additional two years. Therefore, the Company could be required to issue
up to 12,500,000 common shares through January 1, 2018.
Share Grants Dr. Max Rössler
On July 3, 2013, the Company granted to Dr. Max Rössler 3,000,000 common shares, valued at
$0.07 an amount equal to the share price and fair value of the shares on the grant date. These
were issued in connection with his appointment to the Board of Directors. These shares were
officially issued on October 15, 2013.
Share Grants Mr. Josef Mettler
On July 4, 2013, the Company granted 5,000,000 common shares to Josef Mettler, valued at
$0.07, an amount equal to the share price and fair value of the shares on the grant date, in
connection with his employment agreement. These shares were officially issued on October 15,
2013. Additionally, the Company granted 3,000,000 common shares as a retention award for
each completed year of employment (e.g. first time as per July 4, 2014). The employment
contract is for an initial term of three years with an additional bilateral option for another two,
two-year periods, but a maximum of December 31, 2020. Therefore, in total the Company could
be requested to issue up to 21,000,000 common shares through December 31, 2020 related to the
retention bonus.
Since Josef Mettler passed away during the third quarter 2016, 3,000,000 common shares were
issued to his estate as earned compensation as of July 4, 2016. From after this date, the necessary
accrual up until his passing away has been reversed as of December 31, 2016.
F-41
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
15.
STOCK COMPENSATION - CONTINUED
Share Grants Mr. José María Figueres
On March 10, 2014, the Company authorized the issuance of 500,000 common shares, valued
at $0.10, an amount equal to the share price and therefore the fair value on grant date, and a
retention award of 200,000 common shares for each fully completed year of service to José
María Figueres in connection with his appointment to the Board of Directors.
Share Grants Mr. Howard M. Glicken
On March 10, 2014, the Company authorized the issuance of 500,000 common shares, valued
at $0.10, an amount equal to the share price and therefore the fair value on grant date, and a
retention award of 200,000 common shares for each fully completed year of service to Howard
Glicken in connection with his appointment to the Board of Directors.
Based on these contracts the Company has included the following stock-based compensation in
the Companys results:
Stock-based compensation (shares)
December 31, 2016
December 31, 2015
Shares granted
46,800,000 shares
46,800,000 shares
Fair Value respectively market price on grant date
$0.0746
$0.0744
Total maximal expenses (2013-2020)
$3,490,000
$3,450,000
Shares vested
29,800,000 shares
23,900,000 shares
Shares forfeited
12,000,000 shares
23,900,000 shares
Unvested shares
5,000,000 shares
22,900,000 shares
As of December 31, 2016, the Company expects to record compensation expense in the future
up to $200,000 as follows:
Stock-based
Year ending December 31,
compensation
2017
2018
2019
2020
2021
(shares)
$
$
$
$
$
Unrecognized
compensation
200,000
0
0
0
0
expense
F-42
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
15.
STOCK COMPENSATION - CONTINUED
Stock Options Mr. Hans Rigendinger
The Company granted to Hans Rigendinger, in connection with his employment contract,
10,000,000 stock options on January 1, 2013. Each option entitles Mr. Rigendinger to buy one
Company share at a strike price of $0.05. These options will be vested in two identical
installments (installment A and B) of 5,000,000 options.
Installment A is contingent on obtaining a financing arrangement with a specific counterparty.
As of the grant date, the fair value was $300,000. As of July 4, 2013, the Company assessed that
this financing arrangement with the specific counterparty will not be completed. Therefore, the
Company assessed the probability of completion to be zero and recognized no expense. On July
4, 2013, the Company authorized a revised stock option agreement. This removed the requirement
for financing with a specific counterparty and updated for any counterparty. As of date of the
revised stock option agreement, the fair value was $246,000. Installment A was modified on
July 4, 2013, since the initial performance condition was improbable to be met. Since the
modification changed the expectation that the options will ultimately vest and no expense had
been recognized for the original award, the fair value of the modified award has been expensed
on a straight line basis over the expected vesting period.
For installment B, it is required that Meliá Hotels International (Melía) assumes management
responsibilities for Paradisus Papagayo Bay Resort & Luxury Villas. As of grant date, the fair
value was $340,000 and the Company estimated that Meliá 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 by 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.
F-43
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
15.
STOCK COMPENSATION - CONTINUED
Stock Options Dr. Max Rӧssler
The Company granted to Dr. Max Rӧssler, in connection with his appointment to the Board of
Directors, 10,000,000 stock options on July 3, 2013. Each option entitles Dr. Rӧssler to buy one
Company share at a strike price of $0.05. These options will be vested in two identical
installments (installment A and B) of 5,000,000 options.
For installment A (5,000,000 options), it is required to complete a financing arrangement for the
Project. As of grant date, the fair value was $249,835. The Company expensed the total fair
value on a straight-line basis over the expected vesting period.
For installment B (5,000,000 options), it is required that Meliá assumes management
responsibilities for Paradisus Papagayo Bay Resort & Luxury Villas. As of grant date the fair
value was $258,210 and the Company estimated that Meliá would assume responsibility as of
July 1, 2015. As of March 6, 2014 the Company still assesses the probability that this
performance condition would be met at 100%, but the date by 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 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 abovehave been reversed as of December
31, 2016.
F-44
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
15.
STOCK COMPENSATION - CONTINUED
Summary
A summary of stock options outstanding as per December 31, 2016 is as follows:
Options outstanding
Number of Options
Weighted average
Weighted average
exercise price
remaining
contractual life
Outstanding January 1, 2016
32,000,000
$ 0.05
7.42 years
Granted
0
Exercised
0
Forfeited or expired
(12,000,000)
Outstanding December 31, 2016
20,000,000
$ 0.05
6.38 years
Exercisable December 31, 2016
0
The following table depicts the Companys non-vested options as of December 31, 2016 and
changes during the period:
Non-vested options
Shares under
Weighted average
Options
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 December 31, 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. The following assumptions were used to
calculate the compensation expense and the calculated fair value of stock options granted:
Assumption
December 31, 2016
December 31, 2015
Dividend yield
Risk-free interest rate used (average)
Expected market price volatility
Average expected life of stock options
n.a.
n.a.
The computation of the expected volatility assumption used in the Black-Scholes calculation for
new grants is based on historical volatilities of a peer group of similar companies in the same
industry. The expected life assumptions are based on underlying contracts.
F-45
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
15.
STOCK COMPENSATION - CONTINUED
As of December 31, 2016, the Company had unrecognized compensation expenses related to
stock options currently outstanding, to be recognized in future quarters respectively years as
follows:
Stock-based compensation (options)
Through to December
Through to December
31, 2017
31, 2018
$
$
Unrecognized compensation expense
40,964
30,723
16.
SUMMARY OF STOCK AND OPTION COMPENSATION EXPENSE
The Company recorded the following amounts related to stock based compensation expense
during the periods ended December 31, 2016 and December 31, 2015:
Summary of share and option based compensation expense
December
31,
December 31, 2015
2016
$
$
Expense related to option grants
(509,912)
134,952
Expense related to share grants
345,000
450,000
Total (recorded under general & administrative expense)
(164,912)
584,952
17.
FUTURE LEASE COMMITMENTS
On December 1, 2012, the Company entered into a lease agreement for the premises for its
Swiss office with an unrelated entity. The annual rental expense amounts to approximately
$130,000 on a fixed term expiring on December 31, 2017. The company has been invited by the
landlord to discuss a continuation or termination of the rental agreement. The objective is to come
to decisions before the middle of the calendar year 2017.
December 31,
December 31,
Future lease commitments
2016
2015
$
$
2016
0
130,000
2017
130,000
130,000
F-46
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
18.
NOTES PAYABLE
December 31, 2016
December 31, 2015
$
$
Promissory note
1,500,000
2,000,000
Specogna Holding AG
-
60,'743
R. Weimar (private investor)
-
131,169
Total
1,500,000
2,736,912
Promissory Note
As part of the completion of the purchase of SunVesta Costa Rica SA (former Altos del Risco)
on March 9, 2013, the parties agreed that $2,000,000 of the purchase price would be converted
into a non-interest bearing and uncollateralized loan payable which was originally due for
payment on March 8, 2014, then extended to March 8, 2015. On March 16, 2015, the Company
agreed with the counterparty to extend the due date through 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 Holding AG repayable on February 29, 2016, with an
interest payment of 8 % per annum. The loan was secured personally and jointly by Dr. Max
Rössler, the late Mr. Josef Mettler and Mr. Hans Rigendinger.
During the year ended December 31, 2016, this loan has been converted into convertible bonds.
Since the new debt was significantly different from the old debt, the exchange was treated as an
extinguishment of debt and an amount of $93,950.87 was accounted for as a loss on
extinguishment of debt.
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 the first quarter 2016, $34,015 was transferred to another liability in the
second quarter and $66,946 was repaid in the third quarter of 2016. The agreement does not
stipulate any repercussions for late payments.
On October 4, 2016 the entire amount - including interest - was repaid.
F-47
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
19.
OPENING DATE Paradisus Papagayo Bay Resort & Luxury Villas
On June 2, 2014, the Company amended its agreement with Meliá (Sixth addendum to the
management agreement of March 8, 2011) to postpone the opening date as follows:
- The construction of the Paradisus will be completed by November 15, 2015
- Should the Paradisus not be completed by November 15, 2015, (subject to force
majeure) and should an extension date not be agreed, subsequent to November 15, 2015, the
Company will be obligated to pay Meliá a daily amount of $2,000 as liquidated damages.
- Should the Company be unable to complete the construction of the Paradisus by
February 15, 2016, Meliá, can terminate the management agreement obligating the
Company to compensate Meliá in the amount of $5,000,000 unless the respective parties
agree to extend such date.
Dated April 27, 2016 a seventh addendum was signed between the Company and Melía with the
following major conditions:
a.
New completion date: September 15, 2018 (subject to force majeure)
b.
Should the completion not occur by September 15, 2018 and should the parties not have
agreed in writing an extension to such date, after September 15, 2018, the Company
shall pay Melía a daily amount of $2,000 as liquidated damages.
c.
Should the completion not occur by November 15, 2018, Melía shall be entitled to
terminate the agreement unless the parties agree in writing to extend the completion date
and the Company shall be obliged to pay Melía $5,000,000 as liquidated damages solely
to compensate the Manager.
20.
SEGMENT INFORMATION
The chief operating decision maker (CODM) is the Companys CEO. Neither the CODM nor
the Companys directors receive disaggregated financial information about the locations in
which project development is occurring. Therefore, the Company considers that it has only one
reporting segment.
The following table presents the Companys tangible fixed assets by geographic region:
December 31, 2016
December 31, 2015
Location of tangible assets
Switzerland
$
37,286
76,573
Costa Rica
66,179,372
61,194,851
Total
$
66,216,658
61,271,424
F-48
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
21.
EARNINGS PER SHARE
Basic earnings per share are the result of dividing the Companys net income (or net loss) by the
weighted average number of shares outstanding for the contemplated period. Diluted earnings
per share are calculated applying the treasury stock method. When there is a net income dilutive
effect all stock-based compensation awards or participating financial instruments are considered.
When the Company posts a loss, basic loss per share equals diluted loss per share. The following
table depicts how the denominator for the calculation of basic and diluted earnings per share was
determined under the treasury stock method.
Earnings per share
Year Ended
Year Ended
December 31, 2016
December 31, 2015
Company posted
Net loss
Net loss
Basic weighted average shares outstanding
100,245,439
94,338,589
Dilutive effect of common stock equivalents
None
None
Dilutive weighted average shares outstanding
100,245,439
94,338,589
The following table shows the number of stock equivalents that were excluded from the
computation of diluted earnings per share for the respective period because the effect would
have been anti-dilutive.
Earnings per share
Year Ended
Year Ended
December 31, 2016
December 31, 2015
Options to Hans Rigendinger
10,000,000
10,000,000
Options to Dr. M. Rössler
10,000,000
10,000,000
Options to Josef Mettler
0
12,000,000
Total Options
20,000,000
32,000,000
Shares to Hans Rigendinger
5,000,000
7,500,000
(retention bonus non vested)
Shares to Josef Mettler
0
15,000,000
(retention award non vested)
Shares to Howard Glicken and José Maria Figueres
400,000
400,000
(retention award non vested)
Shares associated with Convertible CHF Bonds
4,358,840
3,558,068
Total Shares
9,758,840
26,458,068
Total Options and Shares
29,758,840
58,458,068
Options related to Convertible CHF bonds: Each bond in the principal amount of CHF 5,000 can
be converted on any business day during the conversion period into 625 common shares of
SunVesta Holding AG at a conversion price equal to CHF 8.
F-49
SUNVESTA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
22.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses according consolidated statement of comprehensive loss
include:
Twelve-month
Twelve-month
period ended
period ended
December 31,
December 31,
2016
2015
$
$
Rental & related expenses
188,094
194,982
Audit
291,218
267'087
Consulting
2,519,305
1,379,976
Marketing, Investor & public relations
92,362
127,458
Travel expenses
332,781
561,803
Personnel costs including social security costs
and share based remuneration
1,017,705
2,636,788
Expense for penalty on management agreement
-
-
Various other operating expenditures
637,731
817,977
Total according statement of
comprehensive loss
$
5,079,198
5,986,072
23.
SUBSEQUENT EVENTS
Management has evaluated subsequent events after the balance sheet date, through the issuance
of the financial statements, for appropriate accounting and disclosure. The Company has
determined that there were no such events that warrant disclosure or recognition in the financial
statements, except for the below:
- Since period end an amount of approximately $6.20 million (CHF 6.32 million) relating to
the Convertible CHF Bonds was repayable as of February 28, 2017. As per date of this
report, approximately $1.1 million has been repaid; the remaining amount was extended
under unchanged conditions and is expected to be converted into a new bond issue during
May 2017.
- Since period end the Company has noticed cancellation of the Meridian Agreement in
connection with the intended purchase of the additional concession properties and is
seeking reimbursement for certain amounts paid as deposits.
- Based on the terms of the Settlement Agreement with Concreta S.R.L., the previous interior design firm engaged for the Paradisus Papagayo Bay Resort & Luxury Villas, the Company will pay $600,000 to Concreta S.R.L. on March 20th, 2017, in full and final settlement of outstanding issues.
F-50
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A.
CONTROLS AND PROCEDURES
Management's Annual Report on Internal Control over Financial Reporting
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this annual report, an evaluation was carried out by the Companys
management, with the participation of the Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) under
the Securities Exchange Act of 1934 (Exchange Act)). Disclosure controls and procedures are designed
to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act
are recorded, processed, summarized, and reported within the time periods specified in the Commissions
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 Companys management concluded, as of the end of the period covered by
this report, that the Companys disclosure controls and procedures were ineffective in recording,
processing, summarizing, and reporting information required to be disclosed, within the time periods
specified in the Commissions rules and forms, and such information was not accumulated and
communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to
allow timely decisions regarding required disclosures.
Managements Report on Internal Control over Financial Reporting
The management of the Company is responsible for establishing and maintaining adequate internal
control over financial reporting. The Companys internal control over financial reporting is a process,
under the supervision of the Chief Executive Officer and the Chief Financial Officer, designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of the Companys
financial statements for external purposes in accordance with United States generally accepted accounting
principles (GAAP). Internal control over financial reporting includes those policies and procedures that:
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the
transactions and dispositions of the Companys assets
provide reasonable assurance that transactions are recorded as necessary to permit preparation of
the financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures are being made only in accordance with authorizations of management
and the Board of Directors
provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Companys assets that could have a material effect on the
financial statements
Due to its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in conditions or that the degree of
compliance with the policies or procedures may deteriorate.
22
The Companys management conducted an assessment of the effectiveness of our internal control over
financial reporting as of December 31, 2016, based on criteria established in Internal Control
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (COSO) of the
Treadway Commission, which assessment identified material weaknesses in internal control over
financial reporting.
A material weakness is a control deficiency, or a combination of deficiencies in internal control over
financial reporting that creates a reasonable possibility that a material misstatement in annual or interim
financial statements will not be prevented or detected on a timely basis. Since the assessment of the
effectiveness of our internal control over financial reporting did identify material weaknesses,
management considers its internal control over financial reporting to be ineffective.
The matters involving internal control over financial reporting that our management considered to be
material weaknesses were:
Lack of Appropriate Independent Oversight. The Board of Directors has not provided an appropriate
level of oversight over the Companys consolidated financial reporting and procedures for internal
control, which oversight might include challenging managements accounting for and reporting of
transactions. Accordingly, we determined that this control deficiency as of December 31, 2016,
constituted a material weakness.
Failure to Segregate Duties. The Board of Directors has not maintained any segregation of duties within
the Companys management, instead relying on a single individual to fill the role of chief executive
officer, chief financial officer and principal accounting officer, responsible for a broad range of duties
that cannot be properly reconciled with a singular management resource. Accordingly, we determined
that this control deficiency as of December 31, 2016, constituted a material weakness.
As a result of the material weaknesses in internal control over financial reporting described above, the
Companys management has concluded that as of December 31, 2016, that the Companys internal
control over financial reporting was not effective based on the criteria in Internal Control Integrated
Framework (2013) issued by the COSO. The Company intends to remedy its material weaknesses by:
Appointing an independent director to complete the composition of the audit committee to
ceonmgapgriinsge aonnliyndniovnid-muaalntaogeseriravledaisrecchtoierfs ftionaonvceirasleeofmficaenragaenmd epnritncipal accounting officer to
segregate the duties of chief executive officer and chief financial officer
Management has initiated a search for an individual that would serve as an independent member of the
board of directors. The intention being that once appointed, the new independent director would also
serve on the Companys audit committee to remedy concerns over the apparent lack of appropriate
oversight over financial reporting and procedures for internal control.
The Company also expects to segregate the duties of chief executive officer and chief financial officer
by appointing an additional individual to management that would serve as chief financial officer and
principal accounting officer alongside our chief executive officer to bolster internal controls.
This annual report does not include an attestation report of our independent registered public accounting
firm regarding internal control over financial reporting. We were not required to have, nor have we,
engaged our independent registered public accounting firm to perform an audit of internal control over
financial reporting pursuant to the rules of the Commission that permit us to provide only managements
report in this annual report.
23
Changes in Internal Controls over Financial Reporting
During the quarter ended December 31, 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.
9B.
OTHER INFORMATION
None.
24
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Officers and Directors
The following table sets forth the name, age and position of the director and executive officers of the
Company:
Name
Age
Year
Positions Held
Appointed
Hans Rigendinger
71
2013
CEO, CFO, COO and Director
Dr. Max Rӧssler
77
2013
Director
José Maria
Figueres
63
2014
Director
Howard Glicken
74
2014
Director
Hans Rigendinger was first appointed as Chief Operating Officer and as a director on January 1, 2013.
He assumed the responsibilities of Chief Executive Officer, Chief Financial Officer and Principal
Accounting Officer on an interim basis at the bequest of the Companys Board of Directors on August
18, 2016, on the death of its former chief executive officer. Mr. Rigendinger was further confirmed by
the Board of Directors as Chief Executive Officer, Chief Financial Officer and Principal Accounting
Officer on December 6, 2016.
Mr. Rigendinger also serves as an officer and director of SunVesta AG.
Business Experience
Since early 1972 to present, Mr. Rigendinger has led his own engineering firm in the planning and
implementation of a variety of commercial projects employing a staff of up to 40 employees. Over this
time span Mr. Rigendinger and his company have been responsible for the planning and implementation
of over 300 bridge structures, approximately 500 buildings and a few dozen large industrial plants. Since
1995, Mr. Rigendinger has been involved in several real estate projects that have included commercial,
residential and tourist properties. He has also spent the last 15 years supporting the development and
expansion of an industrial waste glass recycling company.
Officer and Director Responsibilities and Qualifications
Mr. Rigendingers knowledge, experience and solid know-how in the field of civil engineering and real
estate is extremely valuable to the Companys operations as it moves forward with the development of
the Paradisus Papagayo Bay Resort & Luxury Villas.
Mr. Rigendinger earned a Masters Degree in Civil Engineering, with an emphasis on supporting
structures and foundations (Civil and Structural Engineering) at the Swiss Federal Institute of
Technology in 1969.
Other Public Company Directorships in the Last Five Years
None.
Dr. Max Rӧssler was appointed as a director of the Company on July 3,
25
2013. Dr. Rӧssler also serves as a director of SunVesta AG.
Business Experience
Dr. Rӧssler has lectured and been involved in research as a professor at ETH in the fields of applied
mathematics and operations research. During his tenure with ETH, Dr. Rӧssler began to apply
mathematical methods to problems related to financial investments. Dr. Rӧssler joined Credit Suisse in
1978 as head analyst of the department for fixed income products. Since 1997, Dr. Rӧssler has worked
with SUVA (Swiss National Accident Insurance Fund) as a manager of a portion of their fixed-income
investments and currently holds advisory board mandates for two Swiss private banks.
Officer and Director Responsibilities and Qualifications
Dr. Rösslers knowledge, and experience with fixed income investments is extremely valuable to the
Companys Board of Directors as it moves forward with financing its business model.
Dr. Rössler studied mathematics at the Swiss Federal Institute of Technology Zurich (ETH) and earned
his doctorate at Harvard University.
Other Public Company Directorships in the Last Five Years
None.
José Maria Figueres was appointed as a director of the Company on March 10, 2014.
Business Experience
Following his graduate studies at Harvard, Mr. Figueres was elected as the President of Costa Rica in
1994, a position in which he served for four years. When his service as President came to an end, Mr.
Figueres was appointed to the Board of Directors of Terremark Worldwide, Inc., a global IT company
that provided industry managed services such as cloud computing, collocation and web hosting
solutions for enterprise IT infrastructures. A year after joining Terremark, Mr. Figueres joined the
World Economic Forum in Davos, Switzerland. Five years later, Mr. Figueres undertook a one year
assignment as managing director of the Talal Abu-Ghazaleh Organization, a global consulting group
headquartered in Amman, Jordon. Between 2006 and 2009, Mr. Figueres served on the International
Advisory Board of Abraaj Capital, a private equity firm with over $6 billion in assets under
management. He then went on to join the Advisory Board of Grupo Arcano, a financial services firm
based in Madrid, Spain, a leading boutique for investment banking and asset management services. Mr.
Figueres joined IJ Partners in Geneva, Switzerland, as a managing partner in 2010. Since 2010, Mr.
Figueres has served as the Chairman of the Carbon War Room, an independent non-profit organization
focused on the global transition to a low carbon economy. Mr. Figueres was appointed President of the
Carbon War Room in 2012.
Officer and Director Responsibilities and Qualifications
Mr. Figueress knowledge, experience and business acumen on a global level in addition to his direct
connection to Costa Rica is extremely valuable to the Companys Board of Directors as it moves
forward with its hotel development in Costa Rica.
26
Mr. Figueres completed his undergraduate studies at the United States Military Academy (West Point)
and completed his Masters Degree in Public Administration at the John F. Kennedy School of
Government at Harvard University.
Other Public Company Directorships in the Last Five Years
None.
Howard H. Glicken was appointed as a director of the Company on March 10, 2014.
Business Experience
Between 1972 and 1981 Mr. Glicken served as the Chief Executive Officer and Chairman of the Board
of MGI Industries, which company controlled the design and manufacture of extrusion tools for the
metals industry in Latin America. Mr. Glicken joined Jillians Entertainment Corporation in 1983 to
serve as its Chairman and Chief Executive Officer until 1992. Over this period Jillians became one of
the largest United States purchasers of Latin American gold ore. Following his tenure at Jillians, Mr.
Glicken was appointed Chairman of the Commonwealth Group, a Washington, D.C. public policy and
consulting firm with extensive business activities in Latin America. Mr. Glicken worked with the
Commonwealth Group until 1996 before forming the Americas Group. He currently serves as Chairman
and Chief Executive Officer of the Americas Group, a Miami based consulting/merchant banking firm
focused solely on Latin America, Mexico and the Caribbean.
Officer and Director Responsibilities and Qualifications
Mr. Glicken years of business and political experience in Latin America is extremely valuable to the
Companys Board of Directors as it seeks to garner the attention of those in the region that might assist
in the development of its hotel project in Costa Rica.
Mr. Glicken attended the University of Florida, the American Banking Institute and the Harvard
University Advanced Institute on Negotiation.
Other Public Company Directorships in the Last Five Years
None.
Family Relationships
There are no family relationships between or among the directors or executive officers.
Involvement in Certain Legal Proceedings
During the past ten years there are no events that occurred related to an involvement in legal proceedings
that are material to an evaluation of the ability or integrity of the Companys directors, or persons
nominated to become directors or executive officers.
Term of Office
Our directors were appointed for a one (1) year term to hold office until the next annual meeting of our
shareholders or until removed from office in accordance with our bylaws.
27
Our officers were appointed by our Board of Directors and will hold office until the expiration of their
employment contracts or removal by the board.
No other persons are expected to make any significant contributions to the Companys executive
decisions who are not executive officers or directors of the Company.
Compliance with Section 16(A) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires officers and directors and persons who
own more than ten percent of a registered class of our equity securities to file reports of ownership and
changes in their ownership with the Commission, and forward copies of such filings to us. Based solely
upon a review of Forms 3, 4 and 5 furnished to us, we are unaware of any persons who, during the
period ended December 31, 2016, failed to file reports required by Section 16(a) of the Exchange Act.
Code of Ethics
We have adopted a Code of Ethics within the meaning of Item 406(b) of Regulation S-K of the
Securities Exchange Act of 1934 that applies to directors and senior officers, such as the principal
executive officer, principal financial officer, controller, and persons performing similar functions. The
Company has incorporated a copy of its Code of Ethics as Exhibit 14 to this Form 10-K. Further, our
Code of Ethics is available in print, at no charge, to any security holder who requests such information
by contacting us.
Board of Directors Committees
The Board of Directors has formed an audit committee and adopted an audit charter. The audit
committee is comprised of two independent directors and is presently seeking to identify a third
independent director to complete its composition in order to fulfill its mandate.
An audit committee typically reviews, acts on and reports to the Board of Directors with respect to
various auditing and accounting matters, including the recommendations and performance of
independent auditors, the scope of the annual audits, fees paid to the independent auditors, and internal
accounting and financial control policies and procedures.
The Board of Directors has not established a compensation committee, nominating committee or
compliance and ethics committee.
Director Compensation
Directors are reimbursed for out-of-pocket costs incurred in attending meetings and compensated for
services as directors of the Company in the form of stock options or stock awards. Cash compensation is
also paid in certain instances to directors of the Companys subsidiary companies, including to our Chief
Executive Officer who also serves as a director of SunVesta AG.
The Company has compensated directors in the past and may adopt additional provisions for
compensating directors for their services in the future.
28
ITEM 11.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Chief Executive officer, Chief Financial Officer and Principal Accounting Officer Hans Rigendinger
Our Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer has an
employment agreement dated December 31, 2012, with the Company and an employment agreement
dated January 17, 2013, with SunVesta AG, pursuant to which he receives a base salary and is entitled to
receive a bonus for his service to the Company in addition to certain benefits including per diem
allowances, car allowances, housing allowances, and representation allowances. The employment
agreement with the Company also provides for a signing bonus payable in Company stock, stock options
and an annual retention award. The initial term of the employment agreement expired on December 31,
2015, and has been renewed for two successive one year terms. The compensation package is deemed
appropriate and was approved by the Companys Board of Directors.
For the year ended December 31, 2016, $296,000 was paid to or accrued for our Chief Executive Officer,
of which $240,000 was salary, $36,000 was a car allowance and $20,000 was board of directors fees for
services provided to both SunVesta AG and SunVesta Projects & Management AG.
For the year ended December 31, 2015, $296,000 was paid to or accrued for our Chief Executive
Officer, of which $240,000 was salary, $36,000 was a car allowance and $20,000 was board of
directors fees for service to both SunVesta AG and SunVesta Projects & Management AG.
Former Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer Josef Mettler
Our former chief executive officer had an employment agreement dated July 4, 2013, that included an
addendum dated March 6, 2015, with the Company and an employment agreement dated January 5, 2011,
with SunVesta AG. His employment agreements entitled him to base salaries, bonuses for his service in
addition to certain benefits including per diem allowances, car allowances, housing allowances, and
representation allowances. The employment agreement with the Company also provided for a signing
bonus payable in cash and Company stock, stock options and an annual retention award payable in stock.
The Company employment agreement expired on the death of Mr. Mettler.
For the year ended December 31, 2016, $491,625 was paid or accrued to our former chief executive
officer of which $399,000 was salary and $92,625 was other compensation of which $14,250 was out of
pocket expenses, $38,000 was car allowances, $28,500 was a living away allowance, $0 and $11,875 was
board of directors fees for services provided to both SunVesta AG and SunVesta Projects & Management
AG.
For the year ended December 31, 2015, $1,697,445 was paid or accrued to our chief executive officer of
which $504,000 was salary, $822,500 was a bonus, and $370,945 was other compensation of
which$18,000 was out of pocket expenses, $48,000 was car allowances, $36,000 was a living away
allowance, $253,945 were commissions and $15,000 was board of directors fees for services provided to
both SunVesta AG and SunVesta Projects & Management AG.
Summary
The following table provides summary information for the years ended December 31, 2015 and 2014
concerning cash and non-cash compensation paid or accrued by the Company to or on behalf of (i) the
chief executive officer and (ii) any other employee to receive compensation in excess of $100,000:
29
Executive Summary Compensation Table
Name and
Year
Salary
Bonus
Stock
Option
Non-Equity
Change in
All Other
Total
Principal
($)
($)
Awards
Awards
Incentive Plan
Pension Value
Compensation
($)
Position
($)
($)(1)
Compensation
and
($)
($)
Nonqualified
Deferred
Compensation
($)
Josef Mettler
Former
2016
399,000
-
-
-
-
-
92,625
491,625
CEO, CFO,
2015
504,000
822,500
-
-
-
-
370,945 1,697,445
PAO
Hans
Rigendinger
2016
240,000
-
-
-
-
-
56,000
296,000
CEO, CFO,
2015
240,000
-
-
-
-
-
56,000
296,000
COO
(1) See Note 14 to the audited financial statements included in this Form 10-K for the year ended December 31, 2016, for
further information concerning the Companys reliance on the Black Sholes option-pricing model to calculate the fair
value of stock options
Outstanding Equity Awards
The following table provides summary information for the period ended December 31, 2016, concerning
unexercised options, stock that has not vested, and equity incentive plan awards by the Company to or on
behalf of (i) the chief executive officer and chief financial officer and (ii) the three most highly
compensated individuals whose total compensation exceeds $100,000:
Outstanding Equity Awards at Fiscal Year-End
Option awards
Stock awards
Equity
incentive
plan
Equity
awards:
incentive
Number
Equity
market or
plan
of
incentive plan payout
awards:
shares
Market
awards:
value of
Number of
number of
or units
value of
number of
unearned
securities
Number of
securities
of stock shares or
unearned
shares,
underlying
securities
underlying
that
units of
shares, units or units or
unexercised underlying
unexercised Option
have
stock that other rights
other rights
options
unexercised
unearned
exercise Option
not
have not
that have not that have
(#)
options
options
price
expiration vested
vested(3)
vested
not vested
Name
exercisable (#) exercisable
(#)
($)
date
(#)
($)
(#)
($)
Hans
Rigendinger
0 10,000,000(1)
-
0.05 December
31, 2022
-
0.14 10,000,000(2)
-
(1) Mr. Rigendingers stock options vest on the completion of certain business development milestones as follows:
5,000,000 stock options on that date on which the Company or related entity completes a financing sufficient to complete
the Papagayo Bay Resort & Luxury Villas; and 5,000,000 stock options on that date on which Meliá assumes
management responsibility for the Papagayo Bay Resort & Luxury Villas.
(2) Mr. Rigendingers equity incentive shares are characterized as a retention award of which 2,500,000 shares are earned
on each anniversary of his term of employment over an initial term of three years that will automatically renew for two
successive one year terms to a maximum of 12,500,000 shares subject to earlier termination.
(3) The per share value at December 31, 2016, was $0.14.
30
2013 SunVesta Stock Option Plan
The Board of Directors adopted the 2013 SunVesta Stock Option Plan (Plan) on January 1, 2013, which
provides for the granting and issuance of up to 50,000,000 million shares of the Companys common
stock. The Company granted 32,000,000 stock options from the Plan at a $0.05 exercise price per share
for ten years of which stock options had expired as of December 31, 2016, subsequent to the death of the
Companys former chief executive officer. The Stock Option Plan has therefore 30,000,000 options
available for future grant.
Our Board of Directors administers the Plan, however, it may delegate this authority to a committee
formed to perform the administrative function of the Plan. The Board of Directors or a committee of the
Board has the authority to construe and interpret provisions of the Plan as well as to determine the terms
of an award. Our Board of Directors may amend or modify the Plan at any time. However, no amendment
or modification shall adversely affect the rights and obligations with respect to outstanding awards unless
the holders consent to any amendment or modification.
We have no agreement that provides for payments to our Chief Executive Officer at, following, or in
connection with his resignation or retirement except any accrued obligations and the continuation of
health insurance or pension benefits. However, our Chief Executive Officers employment agreements do
provide for a severance payment in the event of a change of control, or a change in our officers
responsibilities within the Company, either before or after a change in control, and his resignation for
what is defined in his employment agreement as good reason
We do maintain a pension plan covering all employees in Switzerland. Our model allocates pension costs
over the service period of employees eligible for the plan.
The following table provides summary information for the year ended December 31, 2016, concerning
cash and non-cash compensation paid or accrued by the Company to or on behalf of its non-executive
directors.
Director Summary Compensation Table
Name
Fees
Stock
Option
Non-equity
Nonqualified
All other
Total
earned or
awards
Awards
incentive plan
deferred
compensation
($)
paid in
($)
($)
compensation
compensation
($)
cash
($)
($)
($)
Dr. Max Rӧssler
-
-
-
-
-
-
-
Jose Maria Figueres
- 20,000
-
-
-
-
20,000
Howard H. Glicken
- 20,000
-
-
-
-
20,000
31
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information concerning the ownership of the Companys
101,841,603 shares of common stock issued and outstanding as of March 17, 2017 with respect to: (i) all
directors; (ii) each person known by us to be the beneficial owner of more than five percent of our
common stock; and (iii) our directors and executive officers as a group.
Names and Addresses of Managers and
Beneficial Owners
Title of Class
Number of Shares
Note
Percent of Class
Hans Rigendinger
CEO, CFO, PAO and Director
97 Seestrasse, CH-8942
Common
35,078,860
1
34.44%
Oberrieden, Switzerland
Dr. Max Rössler
Director
97 Seestrasse, CH-8942
Common
11,000,000
2
10.80%
Oberrieden, Switzerland
José Maria Figueres
Director
Apartado Postal 1957-1000
Common
900,000
3
0.88%
San Jose, Costa Rica
Howard M. Glicken
Director
441 Palermo Avenue
Common
900,000
4
0.88%
Carol Gables, Florida 33134
Officer and directors (4) as a group
Common
47,878,860
47.01%
Josef Mettler (deceased)
Muhlebachstrasse 20
Common
31,770,446
5
31.20%
6341 Baar, Switzerland
(1) Mr. Rigendinger also holds 10,000,000 unvested stock options granted pursuant to the 2013 SunVesta Stock Option Plan, to
purchase additional shares of the Companys common stock at an exercise price of $0.05, subject to vesting based on the
achievement of certain milestones tied to the development of the Paradisus Papagayo Bay Resort & Luxury Villas and the right
to earn up to an additional 5,000,000 shares as a retention award of 2,500,000 shares issued on each anniversary of his
employment subject to earlier termination.
(2) Dr. Rӧssler also holds 10,000,000 unvested stock options granted pursuant to the 2013 SunVesta Stock Option Plan, to
purchase additional shares of the Companys common stock at an exercise price of $0.05, subject to vesting based on the
achievement of certain milestones tied to the development of the Paradisus Papagayo Bay Resort & Luxury Villas.
(3) José Maria Figueres can earn an additional 200,000 shares on each anniversary of service as a director.
(4) Howard M. Glicken can earn an additional 200,000 shares on each anniversary of service as a director.
(5) Common stock attributed to Mr. Mettlers estate includes 16,264,334 shares held by Zypam Ltd., 175,000 shares held by
Viridium Business Ltd, 405,000 shares held by Kirga Real Estate & Finance (Int.) Ltd,, 77,778 shares held by
HTVAktiengesllschaft, and 75,000 shares held by Chocura Real Estate Inc., all of which are relatedcompanies.
32
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
AND DIRECTOR INDEPENDENCE
Neither our directors or executive officers, nor any proposed nominee for election as a director, nor any
person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights
attached to all of our outstanding shares, nor any members of the immediate family (including spouse,
parents, children, siblings, and in−laws) of any of the foregoing persons has any material interest, direct
or indirect, in any transaction since the beginning of our last fiscal year or in any presently proposed
transaction which, in either case, has or will materially affect us except as follows:
Aires International Investments, Inc.
Over the last fiscal year, the Company increased its loan obligation to Aires International Investments,
Inc., a company owned by Dr. Rӧssler (a director of the Company), to $51,473,793 from $47,198,362 as
of December 31, 2015.
Dr. Max Rössler
Dr. Max Rössler provided financing of approximately $16,700,000 for a total loan balance of
approximately $17.1 million, of which approximately $15.2 million were subscribed into convertible
CHF Bonds during the year ended December 31, 2016.
Global Care AG
During 2016, Global Care AG, a company owned by Dr. Rössler, assumed a liability in the amount of
$4,635,352 (CHF 4,500,000) from Aires that was subsequently converted into convertible CHF Bonds in
a modification of the debt.
Sportiva participations ag
During the period ended December 31, 2016 there were the following movements on the current account
of Sportiva participations ag until the death of Josef Mettler. At that point, Sportiva participations ag was
no longer a related party.
CHF
USD
Balance December 31, 2015
524,695
528,660
Cash paid to SunVesta
870,000
875,780
Cash received from SunVesta
(2,812,911) (2,867,777)
Transfers from/(to) other related parties
1,502,026
1,545,020
Interest credited to the account
4,801
4,852
Changes in forreign currency
-
1,976
Transfer to third party upon death of Josef Mettler
(88,611)
(88,511)
Balance September 12, 2016
-
-
Director Independence
The Company is quoted on the Over the Counter inter-dealer quotation system, which does not have
director independence requirements. However, for purposes of determining director independence, we
have applied the definitions set out in NASDAQ Rule 4200(a)(15) which states that a director is not
considered to be independent if he or she is also an executive officer or employee of the corporation.
Accordingly, as of December 31, 2016, we consider two of our directors independent, neither of whom is
employed by the Company.
33
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Fees and Services
BDO AG (BDO) has provided audits of our annual financial statements and a review of our quarterly
financial statements for the periods ended December 31, 2016 and December 31, 2015 respectively. The
following is an aggregate of fees billed during each of the last fiscal years for professional services
rendered by each of our principal accountants.
BDO Fees and Services
2016
Audit fees
$
288,2101)
Audit-related fees
-
Tax fees - preparation and filing of three major tax-related forms and tax
planning.
-
All other fees - other services provided by our principal accountants.
-
Total fees paid or accrued to our principal accountants
$
288,210
BDO Fees and Services
2015
Audit fees
$
255,114
Audit-related fees
-
Tax fees - preparation and filing of three major tax-related forms and tax
planning.
-
All other fees - other services provided by our principal accountants.
-
Total fees paid or accrued to our principal accountants
$
255,114
1) This amount includes the audit fees for the standalone consolidated financial statements of the
SunVesta Holding AG subgroup and the audit of the standalone Costa Rica subgroup.
Audit Committee Pre-Approval
We do have a standing audit committee, however all services provided to us by BDO, as detailed above,
were pre-approved by our Board of Directors. BDO performed all work with their permanent full-time
employees.
34
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Consolidated Financial Statements
The following documents are filed under Item 8. Financial Statements and Supplementary Data, pages
F-1 through F-50, and are included as part of this Form 10-K:
Financial Statements of the Company for the years ended December 31, 2016 and 2015:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Comprehensive Loss
Consolidated Statements of Stockholders Deficit
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(b) Exhibits
The exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on
page 37 of this Form 10-K, and are incorporated herein by this reference.
(c) Financial Statement Schedules
We are not filing any financial statement schedules as part of this Form 10-K because such schedules are
either not applicable or the required information is included in the financial statements or notes thereto.
ITEM 16.
FORM 10-K SUMMARY
None.
35
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SUNVESTA, INC.
Date
/s/ Hans Rigendinger
March 17, 2017
Hans Rigendinger
Chief Executive Officer, Chief Financial Officer
and Principal Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Hans Rigendinger
Director
March 17, 2017
Hans Rigendinger
/s/ Dr. Max Rössler
Director
March 17, 2017
Dr. Max Rössler
/s/ Howard H. Glicken
Director
March 17, 2017
Howard H. Glicken
37
INDEX TO EXHIBITS
Exhibit
Description
3.1.1 *
Articles of Incorporation (incorporated by reference from the Form 10-SB filed with theCommission on
December 31, 1999).
3.1.2 *
Amended Articles of Incorporation (incorporated by reference from the Form 10-KSB filedwith 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 withthe
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 theCompany and
SunVesta AG (formerly ZAG Holdings AG) (incorporated by reference from the Form 8-K filed with the
Commission on June 21, 2007).
10.2 *
Purchase and Sale Agreement between ZAG Holding AG and Trust Rich Land Investments,Mauricio
Rivera Lang dated May 1, 2006, for the acquisition of Rich Land InvestmentsLimitada.
10.3 *
Debt Settlement Agreement dated March 1, 2010, between the Companyand Zypam, Ltd. (incorporated by
reference from the Form 8-K filed with the Commission on March 10, 2010).
10.4 *
Debt Settlement Agreement dated March 1, 2010, between the Company and Hans Rigendinger
(incorporated by reference from the Form 8-K filed with the Commission on March 10, 2010).
10.5 *
Guaranty Agreement dated July 16, 2012, between SunVesta, Mr. Mettler, Mr. Rigendinger and Dr.Rӧssler.
10.6*
Employment Agreement dated January 1, 2013 between the Company and Hans Rigendinger(incorporated
by reference to the Form 8-K filed with the Commission on February 4, 2013.
10.7 *
Employment Agreement dated July 4, 2013 between the Company and Josef Mettler(incorporated by
reference to the Form 10-Q filed with the Commission on October 10, 2013).
10.8 *
Assignment of Debt Agreement dated December 31, 2012, between the Company, SunVesta AG and Aires
International Investments, Inc. (incorporated by reference to the Form 10-Q filed with the Commission on
December 13, 2013).
10.9 *
Debt Settlement Agreement dated December 31, 2012, between the Company andHans 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
(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 andJosef 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 theForm 10-Q
filed with the Commission on August 19, 2015).
Subsidiaries of the Company
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14 of the
Securities and Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99*
SunVesta, Inc. 2013 Stock Option Plan (incorporated by reference to the Form 10-Qfiled 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 andnot filed
or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of
1933, or deemed furnished and not filed for purposes of Section 18 of the Securities and Exchange Act
of 1934, and otherwise is not subject to liability under these sections.
38
Exhibit 21
SUBSIDIARIES OF SUNVESTA, INC.
SunVesta
Inc.
USA
SunVesta
Holding AG
Switzerland
SunVesta
SunVesta
Projects & Management AG
Holding España SL
Switzerland
Spain
SunVesta
Costa Rica SA
Costa Rica
1
Exhibit 31
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT
OF 2002
I, Hans Rigendinger, certify that:
1. I have reviewed this report on Form 10-K of SunVesta, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and
internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-
15(f) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting
principles;
c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrants internal control over financial reporting
that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the registrant's auditors and the audit committee of the
registrant's Board of Directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal
controls over financial reporting which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant's internal controls over financial reporting.
Date: March 17, 2017
/s/ Hans Rigendinger
Hans Rigendinger
Chief Executive Officer and Chief Financial Officer
1
Exhibit 32
CERTIFICATION OF 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
In connection with the report on Form 10-K of SunVesta, Inc. for the annual period ended December 31,
2016, as filed with the Securities and Exchange Commission on the date hereof, I, Hans Rigendinger, do
hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of
2002, that, to the best of my knowledge and belief:
(1) This report fully complies with the requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(2) The information contained in this report fairly represents, in all material respects, the financial
condition of the registrant at the end of the period covered by this report and results of
operations of the registrant for the period covered by this report.
Date: March 17, 2017
/s/ Hans Rigendinger
Hans Rigendinger
Chief Executive Officer and Chief Financial Officer
This certification accompanies this report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and
shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the
registrant for the purposes of §18 of the Securities Exchange Act of 1934, as amended. This
certification shall not be incorporated by reference into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date
of this report), irrespective of any general incorporation language contained in such filing.
A signed original of this written statement required by §906 has been provided to the registrant and
will be retained by the registrant and furnished to the Securities and Exchange Commission or its
staff upon request.
1