SUNVESTA, INC. (Form: 10-Q, Received: 12/13/2013 15:11:41)

* Cumulative amounts: January 1, 2005 (date of inception) to September 30, 2013

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

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

CORPORATE INFORMATION AND BASIS OF PREPARATION

On August 27, 2007, SunVesta Inc. (SunVesta) acquired SunVesta Holding AG (SunVesta AG) (collectively the Company). SunVesta AG has as of today 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 Profunda Capital Partners LLC, a US company.

In January 2005 (date of inception of development stage), the Company changed its business focus to the development of holiday resorts and investments in the hospitality and related industry. The Company has not materialized any revenues yet and is therefore a “development stage company”.

These consolidated financial statements are prepared in US Dollars ($) on the basis of generally accepted accounting principles in the United States of America (US GAAP).

The accompanying unaudited interim consolidated financial statements have been prepared by management in accordance with the instructions in Form 10-Q and, therefore, do not include all information and footnotes required by generally accepted accounting principles and should, therefore, be read in conjunction with the Company’s Form 10-K, for the year ended December 31, 2012, filed with the Securities and Exchange Commission. These statements do include all normal recurring adjustments which the Company believes necessary for a fair presentation of the statements. The interim results of operations are not necessarily indicative of the results to be expected for the full year ended December 31, 2013.

Except as indicated in the notes below, there have been no other material changes in the information disclosed in the notes to the financial statements included in the Company’s Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

SIGNIFICANT ACCOUNTING POLICIES

New accounting standards – adopted

In February 2013, the FASB released ASU 2013-02 — Accounting Standards Update 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income. ASU 2013-02. This Update was issued to end the deferral of new presentation requirements for reclassifications out of accumulated other comprehensive income (required by ASU 2011-05 and subsequently deferred by ASU 2011-12) and to resolve certain cost/benefit concerns related to reporting reclassification adjustments. This Update provides entities with two basic options for reporting the effect of significant reclassifications — either 1) on the face of the statement where net income is presented or 2) as a separate footnote disclosure. The adoption did not materially impact the Company’s consolidated financial statements.

New accounting standards – not yet adopted

In July 2013, the FASB released ASU 2013-11 — Accounting Standards Update 2013-11, Income Taxes Topic 740: Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry forward, a similar Tax Loss, or a Tax Credit Carry forward Exists. The amendments in this Update require an entity with net operating losses carry forwards or tax credit carry forwards which are not available or intended to be used, that uncertain tax benefits should not be netted against deferred tax assets for these items. Otherwise, the unrecognized tax benefit should be presented as a reduction to the related deferred tax asset. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. This ASU will be adopted by the Company as of January 1, 2014 and is not expected to materially impact the Company’s consolidated financial statements.

In March 2013, the FASB released ASU 2013-05 — Accounting Standards Update 2013-05, Foreign Currency Matters Topic 830: This Update provides guidance for whether to release cumulative translation adjustments (CTA) upon certain derecognition events. The Update was issued to resolve the diversity in practice about whether Subtopic ASC 810-10, Consolidation-Overall, or ASC 830-30, Foreign Currency Matters-Translation of Financial Statements, applies to such transactions. The accounting for a CTA upon a derecognition event is based on the level at which the foreign investment is held by the parent. Accordingly, the Update requires entities to distinguish between derecognition events of investments within a foreign entity and changes in investments in foreign entity. This Update is effective for fiscal years, and interim periods within those years, beginning after December 31, 2013. This ASU will be adopted by the Company as of January 1, 2014 and is not expected to materially impact the Company’s consolidated financial statements.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

SIGNIFICANT ACCOUNTING POLICIES - C ontinued

New accounting standards – not yet adopted (continued)

In February 2013, the FASB released ASU 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date (a consensus of the FASB Emerging Issues Task Force). This Update provides guidance related to the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount is fixed at the reporting date. Previously, U.S. GAAP did not contain specific guidance on accounting for such obligations which resulted in diversity in practice. The guidance requires an entity to measure the obligation resulting from joint and several arrangements (for which the total amount is fixed at the reporting date) as the sum of: The amount the reporting entity agreed to pay based on the arrangement with its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. When the additional amount the entity expects to pay is within a range of possibilities, the entity should record the amount within the range that is a better estimate than any other amount within the range. If no amount is better than other amounts within the range, the entity should record the minimum amount in the range.

The corresponding journal entry to be recorded is dependent on the facts and circumstances of the obligation. Accordingly, a significant amount of judgment may be necessary to determine the appropriate entry to be recorded. The Update requires certain disclosures for each obligation, or each group of similar obligations, resulting from joint and several liability arrangements. This Update is effective for fiscal years and interim periods within those years, beginning after December 31, 2013. Retrospective application is required for all periods presented. Entities are permitted to use hindsight when determining the appropriate amount to be recorded in prior periods. The ASU will be adopted by the Company as of January 2014 and is not expected to materially impact the Company’s consolidated financial statements.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

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 third quarter of 2015 (see also Note 14). Until the completion of the project, the following expenditures are estimated to be incurred:


	Expenditures	$

a.	Gross project cost	195,000,000
b.	Less: Proceeds from sale of villas	(24,000,000)
c.	Net project cost	171,000,000
d.	Overhead expenses	21,000,000
e.	Less: Recuperated in gross project cost	(12,000,000)
f	Total, excluding other potential projects	180,000,000

Sixty percent (60%) of the “Net project cost” is going to be financed by traditional mortgage loans, for which negotiations have been initiated. The remaining forty percent (40% of the “Net project cost”, as well as “non-recuperated overhead expenses” are going to be financed by the main shareholders or lenders of the project, i.e. Zypam Ltd., shareholder held by Company board member, Mr. Hans Rigendinger, shareholder and Company board member, Mr Max Roessler, majority shareholder of Aires International Investment, Inc. and Company board member, and Mr Josef Mettler, shareholder, Company board member and chief executive officer.

On July 16, 2012, certain principal shareholders of the Company or principal lenders to the project entered into a guaranty agreement in favor of SunVesta AG. The purpose of the guarantee is to ensure that until such time as financing is secured for the entire project that they will act as a guarantor to creditors to the extent of the project’s ongoing capital requirements. The guaranty agreement requires that within 30 days of receiving a demand notice, the guarantors are required to pay to SunVesta AG that amount required for ongoing capital requirements, until such time as financing of the project is secured. The guaranty may not be terminated until such time as SunVesta AG has secured financing for the completion of the project.

Based on this guaranty agreement, management believes that available funds are sufficient to finance cash flows for the twelve months subsequent to September 30, 2013 and the filing date though future anticipated cash outflows for investing activities will continue to depend on the availability of financing and can be adjusted as necessary.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

CASH AND CASH EQUIVALENTS

Cash and cash equivalents are available to the Company without any restriction or limitation on withdrawal and/or use of these funds. The Company’s cash equivalents are placed with financial institutions that maintain high credit ratings. The carrying amounts of these assets approximate their fair value.


Cash & cash equivalents	USD ($)	EURO	CHF	CRC	Total September 30, 2013	Total December 31, 2012
original currency	859,170	8,267	63,578	493,000	-	-
in $	859,170	10,206	69,558	956	939,890	260,520

USD ($)

US Dollar

EURO

Euro

CHF

Swiss Francs

CRC

Costa Rican Colon

RESTRICTED CASH

As of September 30, 2013 the Company has the following restricted cash positions:


Restricted Cash	September 30, 2013 $	December 31, 2012 $
Credit Suisse in favor of BVK Personalvorsorge des Cantons Zürich	139,954	-
HSBC in favor of Costa Rican Tourism Board	372,205	241,500
Banco Nacional de Costa Rica in favor of the Costa Rican Environmental Agency – SETENA	619,762	-
Banco National de Costa Rica in favor of the Costa Rican Tourism Board	563,350	-
Gross	1,695,271	241,500

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 has been classified as long term.

The restricted cash position in favor of BVK Personalvorsorge des Cantons Zurich is a rental deposit related to a long term lease contract for office space. Due to this fact this restricted cash position is also classified as long term.

The balances as of December 31, 2012 were reclassified to conform to the current presentation.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

PROPERTY & EQUIPMENT


Property & equipment	September 30, 2013 $	December 31, 2012 $

Land	19,700,000	7,000,000
IT Equipment	185,846	185,846
Other equipment and furniture	321,901	284,901
Leasehold improvements	66,617	66,617
Construction in-process	18,188,453	9,591,958
Gross	38,462,817	17,129,322
Less accumulated depreciation	(363,061)	(329,782)
Net	38,099,756	16,799,540
Depreciation expenses for the nine months period ended September 30, 2013	33,279	34,691

Property & 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 whereas $7 million relates to the concession held by Richland (~84,000 m2) and $12.7 million held by Altos del Risco (~120,000 m2). The latter was acquired through the acquisition of the shares of Altos del Risco SA whose only asset is the concession, which does not qualify as a business. Control over Altos del Risco SA was obtained on March 8, 2013. The previous down payments were reclassified to property and equipment.

The Richland concession is a right to use the property for a specific period of time of 20 years, which thereafter will 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 expires in June 2022.

The Altos del Risco concession is also a right to use the property for a specific period of time of 30 years, which thereafter will 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, which was issued in 2006, expires in November 2036.

For both properties concession extension requests have been filed during third quarter 2013. These extensions request have not been answered as of date of this report.

The construction in process amount that was spent up to September 30, 2013, is represented primarily by architectural work related to the hotel and apartments and also to construction work.

Deposit related to construction work

During the nine months ended September 30, 2013, main earthmoving groundwork has started for which work the Company has paid several deposits to contractors. These deposits will be offset against invoices for such groundwork. As of September 30, 2013, the Company has paid deposits of $302,000.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

PROPERTY & EQUIPMENT - Continued

Guaranty Retention

During the nine months ended September 30, 2013 main earthmoving groundwork has started. Due to this the Company received several invoices from contractors. The Company retained some amounts related to construction work. As soon as the corresponding work is officially accepted by the Company the guaranty retention will be paid. As of September 30, 2013, the Company had guaranty retention in the amount of $138,000, which is stated in accrued expenses.

PLEDGES


	September 30, 2013	December 31, 2012
Pledge of shares of Rich Land Investments Ltda. in favor of Zypam Ltd. for Zypam Ltd's liabilities	0% (0 shares)	10% (1 share)

Pledge of shares of Rich Land Investments Ltda. in favor of Meliá Hotels International for bonds of EUR 2 million	0% (0 shares)	20% (2 shares)

The Company pledged the above shares as part of the bond agreement with Meliá Hotels International and corresponding contracts in Zypam Ltd. During nine months September 30, 2013 the share pledges were released back to the Company due to the repayment of the bond due to Meliá and the amendment of the corresponding contracts in Zypam Ltd.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

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 prices 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 all significant inputs or significant value drivers are observable in active markets.
—	Level 3 Model- deroved valuations in which one or more significant inputs or significant value-drivers are unobservable.

When available, we use quoted market prices to determine fair value, and we classify such measurements within Level 1. In some cases where market prices are not available, we make 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 us) 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), our fair value calculations have been adjusted accordingly.

As of September 30, 2013 and December 31, 2012, respectively, there are no financial assets or liabilities measured on a recurring basis at fair value with the exception of “fair value of conversion option”.

In addition to the methods and assumptions we use to record the fair value of financial instruments as discussed above, we used the following methods and assumptions to estimate the fair value of our financial instruments.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

FAIR VALUE MEASUREMENT - Continued

	Cash and cash equivalents – carrying amount approximated fair value.

—	Restricted cash – carrying amount approximated fair value.

—	Receivables from related parties (Quad Equity - 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 nature of the note payable.

—	EUR-bond – 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 8.25% for EUR bonds, which represents the current market rate based on the creditworthiness of the Company. Hence, the carrying values approximate fair value.


—	CHF-bond – The fair values of the bonds payable are classified as level 3 fair values. The fair values of the bonds have been determined by discounting cash flow projections discounted at the respective interest rates of 7.25% for CHF bonds, which represents the current market rate based on the creditworthiness of the Company. Hence, the carrying values approximate fair value.

—	Notes payable to related parties (current) – Rigendinger – carrying amount approximated fair value due to the short term nature of the note payable.

—	Notes payable to related parties (current) – other – carrying amount approximated fair value due to the short term nature of the note payable.

—	Notes payable to related parties – Dr. M. Roessler (current) - carrying amount approximated fair value due to the short term nature of the notes payable and the fair value of the underlying publicly trades shares
—	Notes payable to related parties – Aires – The fair values of the notes payable to Aires International Investments Inc. is classified as level 3 fair values. 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.

—	Fair value of conversion option – The fair value of the conversion option is classified as level 3 fair values. The fair value of the option was determined by using Black Scholes with the following input data: - Stock price $ 0.10 - Exercise price: $ 1.01 - Expected term in years: 2.00 years - Volatility 80% - Annual Rate of quarterly dividends: 0% - Discount Rate 0.330% 16 SUNVESTA, INC. (A Development Stage Company) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2013

FAIR VALUE MEASUREMENT – Continued

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


	EUR-Bond	CHF Bond	EUR-Bond	CHF Bond
	2013	2013	2012	2012
	$	$	$	$
Balances January 1	14,216,707	5,689,364	9,598,537	3,818,898
Cash inflows	792,740	160,537	4,015,549	3,191,888
Cash outflows	(2,661,548)	(52,424)	-	1,474,823
Foreign currency adjustments	387,932	328,927	692,295	463,849
Sub-total (Fair value)	12,735,831	6,126,404	14,306,380	5,999,813
Commissions paid to bondholders	(248,195)	(417,709)	(248,195)	(417,709)
Amortization of such commissions	231,721	187,963	158,522	107,260
Balance September 30, 2013 December 31, 2012 (Carrying value)	12,719,357	5,896,658	14,216,707	5,689,364

Should the refinancing of the EUR bonds not be completed by November 30, 2013, certain principal shareholders of the Company or principal lenders to the project would provide bridge financing according to the guaranty agreement (see Note 3).

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

10.

BONDS - Continued

In addition, on November 6, 2013, the Company commenced an open offering period based on a new private placement memorandum as of even date for a new EUR-Bond with the following main terms:


—	Issuance of maximal EUR 15,000,000
—	Duration December 2, 2013 to December 2, 2016
—	Yearly interest of 7.25%
—	1,500 units with a par value of EUR 10,000

The Company, as of the filing date of this report, has placed bonds in the amount of EUR 6,540,000 of this new EUR-Bond offering identified as ISIN DE000A1HSNJ7 and expects to have the total placement of EUR 15 million completed by end of January 2014.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

11.

PENSION PLAN

The Company maintains a pension plan covering all employees in Switzerland; it is considered a defined benefit plan and accounted 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 to accumulate other comprehensive income. 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 operations. The liabilities and annual income or expense of the pension plan is determined using methodologies that involve several actuarial assumptions, the most significant of which are the discount rate and the long-term rate of asset return (based on the market-related value of assets). The fair values of plan assets are determined based on prevailing market prices.

Actuarial valuation

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


Pension expense	Three months ended September 30, 2013	Nine months ended September 30, 2013	Three months ended September 30, 2012	Nine months ended September 30, 2013
Pension expense	$	$	$	$

Current service cost	13,632	40,670	25,383	76,152
Net actuarial (gain) loss recognized	(268)	(800)	-	-
Interest cost	1,181	3,523	772	2,316
Expected return on assets	(1,208)	(3,602)	(692)	(2,076)
Employee contributions	(5,448)	(16,252)	(10,164)	(30,492)
Net periodic pension cost	7,889	23,539	15,300	45,900

During the three months periods ended September 30, 2013 and September 30, 2012 the Company made cash contributions of $16,500 and $30,000, respectively, to its defined benefit pension plan.

All of the assets are held under the collective contract by the plan’s re-insurer 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 contributions to the pension plan for the year ended December 31, 2013 are $5,500.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

12.

STOCK COMPENSATION

The Company has included share based remuneration based on “SunVesta Inc. Stock Option Plan 2013” as part of the total remuneration in some new employment contracts. Based on this stock option plan the Company has the possibility since January 1, 2013 to issue up to 50,000,000 common stock shares under the plan.

The purpose of these share based remuneration is to advance the interests of the Company by encouraging its employees to remain associated with the Company and assist the Company in building value. Such share based remuneration includes either shares or options to acquire shares of the Company’s common stock.

For all employees fair value is estimated at the grant date. Compensation costs for unvested shares are expensed over the requisite service period on a straight-line-basis.

Share Grants

On January 1, 2013 the Company issued 3,500,000 common shares, valued at $0.08 which has been the share price and therefore the fair value on grant date, to Hans Rigendinger in connection with his employment agreement of even date as so-called signing bonus.

Additionally the Company granted 2,500,000 common shares as a retention award for each completed year of employment (e.g. first time as per January 1, 2014). The employment contract has been concluded for three years with an additional bilateral option for another two years. Therefore in total the Company could be requested to issue maximal 12,500,000 common shares up to January 1, 2018 to Hans Rigendinger related to this retention bonus.

On July 3, 2013 the Company granted 3,000,000 common shares, valued at $0.07 which has been the share price and therefore the fair value on grant date, to Dr. Max Roessler in connection with his election to the board of directors as so-called signing bonus. These shares were officially issued on October 15, 2013.

On July 4, 2013 the Company granted 5,000,000 common shares, valued at $0.07 which has been the share price and therefore the fair value on grant date, to Josef Mettler in connection with his employment agreement as so-called signing bonus. 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 has been concluded for two years with an additional bilateral option for another two x two years periods, but not longer than December 31, 2020. Therefore, in total the Company could be requested to issue maximal 21,000,000 common shares up to December 31, 2020, to Josef Mettler related to his retention bonus.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

12.

STOCK COMPENSATION - Continued

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


Stock-based compensation (shares)	Three months ended September 30, 2013	Three months ended September 30, 2012	Nine months ended September 30, 2013	Nine months ended September 30, 2012

Shares granted	29,000,000 shares	---	45,000,000 shares	---
Fair Value respectively market price on grant date	$0.0700	---	$0.0734	---
Shares vested (signing bonus)	8,000,000 shares	---	11,500,000 shares	---
Unvested shares (retention award)	21,000,000 shares	---	33,500,000 shares	---

As of September 30, 2013 the Company expects to record compensation expense in the future up to $2,267,500 as follows:


Stock-based compensation (shares)	Through December 31, 2013 $	Year ending December 31,
Stock-based compensation (shares)	Through December 31, 2013 $	2014 $	2015 $	2016 $	2017 $	2018 $	2019 $	2020 $

Unrecognized compensation expense	102,500	410,000	410,000	410,000	410,000	210,000	210,000	105,000

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

12.

STOCK COMPENSATION - Continued

Stock options

The Company granted to Hans Rigendinger, in connection with his employment contract, 10,000,000 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.

For installment A, it is required to complete a financing arrangement with a specific counterparty. As of 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 therefore no expense has been recognized for the stock options with installment A up to July 4, 2013. On July 4, 2013, the Company authorized a revised stock option agreement with Hans Rigendinger. This revised agreement does not longer require that the financing arrangement needs to be concluded with a specific counterparty. Therefore the options could be vested if such financing arrangement (so-called main financing arrangement for Paradisus Papagayo Bay Resort & Luxury Villas) has been concluded with any counterparty. As of date of the revised stock option agreement (July 4, 2013) the fair value was $246,000. As per September 30, 2013, the Company expects the completion of the main financing by March 31, 2014. Installment A granted to Mr. Rigendinger 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 will be expensed on a straight line basis over the expected vesting period.

For installment B, it is required that the Company completes the Paradisus Papagayo Bay Resort & Luxury Villas (see Note 14) by the thereinafter mentioned date of July 1, 2015, and Sol Meliá assumes management responsibilities for the property. As of grant date, the fair value was $340,000. As of September 30, 2013, the Company assessed that the probability that this performance condition will be met at 100%.

The Company granted to Dr. Max Roessler, in connection with his election to the board of directors, 10,000,000 options on July 3, 2013. Each option entitles Mr. Roessler 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 (main financing arrangement for Paradisus Papagayo Bay Resort & Luxury Villas). As of grant date, the fair value was $ 249,835. As of September 30, 2013, the Company expects the completion of the main financing by March 31, 2014.

For installment B (5,000,000 options), it is required that the Company completes the Paradisus Papagayo Bay Resort & Luxury Villas (see Note 14) by the thereinafter mentioned date of July 1, 2015 and Sol Meliá assumes management responsibilities for the property. As of grant date the fair value was $258,210. As of date of September 30, 2013, the Company assessed the probability that this performance condition will be met at 100%.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

12.

STOCK COMPENSATION - Continued

Stock Options

The Company granted to Josef Mettler, in connection with his employment contract, 12,000,000 options on July 4, 2013. Each option entitles Mr. Mettler to buy one Company share at a strike price of $ 0.05. These options will be vested in three installments. Installment A includes 3,000,000 options, installment B 4,000,000 options and installment C 5,000,000 options.

For installment A (3,000,000 options), it is required to complete a financing arrangement (bridge financing). As of grant date the fair value was $149,000. As of September 30, 2013, the Company assessed that this financing arrangement (bridge-financing) should be completed by December 31, 2013.

For installment B (4,000,000 options), it is required to complete a financing arrangement (main financing arrangement for Paradisus Papagayo Bay Resort & Luxury Villas). As of grant date the fair value was $200,000. As of September 30, 2013, the Company expects the completion of the main financing by March 31, 2014.

For installment C (5,000,000 options), it is required that the Company completes the Paradisus Papagayo Bay Resort & Luxury Villas (see Note 14) by the thereinafter mentioned date of July 1, 2015 and Sol Meliá assumes management responsibilities for the property. As of grant date the fair value was $258,000. As of date of September 30, 2013, the Company assessed the probability that this performance condition will be met at 100%.

A summary of stock options outstanding as per September 30, 2013 is as follows (during nine-month period ended September 30, 2012, no options were granted):


Options outstanding	Number of Options	Weighted average exercise price	Weighted average remaining contractual life

Outstanding January 1, 2013	0
Granted	32,000,000	$ 0.05	9.67 years
Exercised	0
Forfeited or expired	0
Outstanding September 30, 2013	32,000,000	$ 0.05	9.67 years
Exercisable September 30, 2013	0

The following table depicts the Company’s non-vested options as of September 30, 2013 and changes during the period:


Non-vested options	Shares under Options	Weighted average grant date fair value

Non-vested at December 31, 2012	0
Non-vested-granted	32,000,000	$ 0.052
Vested	0
Non-vested, forfeited or canceled	0
Non-vested at September 30, 2013	32,000,000	$ 0.052

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

12. STOCK COMPENSATION - Continued

Under the provisions of FASB ASC Topic 718, 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 assumption are based on historical and or if available market information. The following assumptions were used to calculate the compensation expense and the calculated fair value of stock options granted:


Assumption	September 30, 2013	September 30, 2012

Dividend yield	None	---
Risk-free interest rate used (average)	1.62 %	---
Expected market price volatility	80.00%	---
Average expected life of stock options	5.625 years	---

The computation of the expected volatility assumption used in the Black-Scholes calculation for new grants is based on historical volatilities of a peer group of similar companies in the same industry. The expected life assumptions are based on underlying contracts.

As of September 30, 2013, 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 December 31, 2013 $	Year ending December 31, 2014	Year ending December 31, 2015
Stock-based compensation (options)	Through December 31, 2013 $	$	$

Unrecognized compensation expense	403,563	620,642	194,331

Summary of share based compensation expense

The Company recorded the following amounts related to stock based compensation expense during the periods ended September 30, 2013:


Summary of share and option based compensation expense	Three months ended September 30, 2013 $	Three months ended September 30, 2012 $	Nine months ended September 30, 2013 $	Nine months ended September 30, 2012 $

Option grants	403,562	---	483,563	---
Share grants	662,500	---	1,042,500	---
Total (recorded under general & administrative expense)	1,066,062	---	1,526,063	---

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

13. INTENTION TO PURCHASE TWO ADDITIONAL CONCESSION PROPERTIES AT POLO PAPAGAYO, GUANACASTE

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 a price of $22,895,806, whereof fifty percent is to be paid in cash and the other fifty percent in ten percent equity of La Punta (the concession properties in Polo Papagayo) and five percent in equity of Paradisus Papagayo Bay Resort & Luxury Villas (currently under construction), both located in Costa Rica. The payment schedule is as follows:


—	$0.5 million is required as a cash payment by May 16, 2012

—	$5.0 million is required as a cash payment by August 31, 2012

—	$5.698 million is required as a cash payment by January 31, 2013

—	Equity is required to be transferred upon final payment

If the Company had elected not to proceed with the purchase, the Company would have been in default and would have lost its funds on deposit.

On November 13, 2012, the above agreement was amended to decrease the total purchase price to $17.2 million with no equity payment. The terms and conditions of the cash payment were still to be defined. Furthermore, all payments by the Company to date and in the future are refundable.

During the second quarter of 2013 the Company entered into a new, revised agreement for the purchase of two additional concession properties at Polo Papagayo, Guanacaste. The original contract as described above was cancelled and replaced by a new contract which includes the following clauses:

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

13.

INTENTION TO PURCHASE TWO ADDITIONAL CONCESSION PROPERTIES AT POLO PAPAGAYO, GUANACASTE - Continued



—	The total purchase price is $17,500,000 of which approximately $1,370,000 has been paid as of date of the new revised agreement and therefore $16,130,000 is outstanding as per date of the new, revised agreement.
—	Since the original seller of these two additional concession properties at Polo Papagayo, Guanacaste owes a third party $8,000,000 the Company has to pay $8,000,000 of the purchase price directly to this third party instead of the original seller. The remaining $8,130,000 will be paid directly to the original seller of the concession properties.
—	The payment schedule for these two additional concession properties at Polo Papagayo Guanacaste is as hereinafter:
	Third Party
—	$300,000 on May 4, 2013 which was paid on May 3, 2013 and is non-refundable
—	$1,000,000 on June 30, 2013, which is refundable and $700,000 of this $1,000,000 was paid on October 29, 2013. The remaining $300,000 has not been paid as of the date of this report.
—	$1,000,000 on July 31, 2013, which is refundable and has not been paid as of the date of this report
—	$1,000,000 on August 31, 2013 which is refundable and has not been paid as of the date of this report
—	$1,500,000 on September 30, 2013, which is refundable and has not been paid as of the date of this report
—	$1,500,000 on October 31, 2013, which is refundable and has not been paid as of the date of this report
—	$1,700,000 on November 30, 2013, which is refundable and has not been paid as of the date of this report
	$8,000,000 in total to Third Party
	Original Seller
—	$1,000,000 on January 31, 2014 and is non-refundable
—	$1,000,000 on February 28, 2014 and is non-refundable
—	$1,000,000 on March 31, 2014 and is non-refundable
—	$1,000,000 on April 30, 2014 and is non-refundable
—	$1,000,000 on May 31, 2014 and is non-refundable
—	$1,000,000 on June 30, 2014 and is non-refundable
—	$1,000,000 on July 31, 2014 and is non-refundable
—	$1,130,000 on August 31, 2014 and is non-refundable
	$8, 130,000 in total to Original Seller

The Company paid down-payments on the purchase of these properties of approximately $1,670,000 and $2,370,000 as of September 30, 2013 and the date of this report respectively, which is included in down payment for property and equipment. As per date of this report the Company has not paid any further amounts and is therefore in default without any penalties or impacts for the Company.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

14.

NOTE PAYABLE

As part of the completion of the purchase of Altos del Risco (refer to Note 6), on March 9, 2013, the parties agreed that the remaining portion of the purchase price of $2,000,000 be converted into a non interest bearing and uncollateralized loan payable, which will be due for payment on March 8, 2014.

15.

OPENING DATE “Paradisus Papagayo Bay Resort & Luxury Villas”

The official opening of the “Paradisius Papagayo Bay Resort & Luxury Villas” will be delayed by a few months due to geological difficulties encountered during earthwork operations in August and September 2013. Due to these geological difficulties some rock demolition became necessary. On September 6, 2013, the Company amended its agreement with Sol Meliá, S.A. (“5 ^th 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 July 1, 2015
—	Should the “Paradisus” not be completed by July 1, 2015, (subject to force majeure) and should an extension date not be agreed, subsequent to July 1, 2015, the Company will be obligated to pay Sol Meliá, S.A. a daily amount of $2,000 as liquidated damages
—	Should the Company be unable to complete the construction of the “Paradisus” by October 1, 2015, Sol Meliá, S.A. can terminate the management agreement obligating the Company to compensate Sol Meliá, S.A. in the amount of $5,000,000 unless the respective parties agree to extend such date.

16.

HOTEL PROJECT ATLANTA

On September 19, 2012, the Company entered into a purchase agreement for a hotel and entertainment complex in Atlanta, Georgia (United States of America). The entire purchase amount of $26 million for the assets has no firm financing commitment. Additionally, an additional amount of approximately $18 million for renovations would need to be invested in the hotel and entertainment complex. The Company has been in negotiations with various parties to finalize a financing package for this project. Should the Company conclude the transaction by October 15, 2013, those amounts paid as deposit will be credited to the purchase price. Otherwise, the Company loses its non-refundable deposits and taxes related to the property of $1,573,932 of which $1,000,000 was paid as of September 30, 2013, and included in the line item “down payments for property and equipment” in the Company’s balance sheet.

In connection with the Hotel Project in Atlanta, the Company concluded, on June 27, 2013, a consultancy agreement with Archipel N.V. for the purpose of securing a financing package for the Hotel Project. Should the services rendered by Archipel N.V. be successful, it will be remunerated with $1,000,000.

Regarding current situation, subsequent to September 30, 2013 refer to Note 18.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

17.

MANGEMENT AGREEMENT WITH MELIA HOTELS & RESORTS

In March 2011, the Company concluded a management agreement for the management of the planned resort in Guanacaste, Costa Rica. This agreement has included a clause saying that if SunVesta AG were not able to conclude the purchase of the related property by November 30, 2011, then a penalty of $1 million would become due to Sol Meliá, S.A. Therefore the Company has recorded a liability in accrued expenses in the full amount as of December 31, 2011, with the corresponding expense, which was recorded in general and administrative expense in the year ended December 31, 2011. On March 3, 2012, the deadline to pay the penalty of $1 million was extended by Sol Meliá, S.A. to June 30, 2012. On June 30, 2012, neither the whole penalty nor a part of the penalty was paid. Therefore the deadline to pay the penalty of $1 million was extended on June 30, 2012, up to August 31, 2012. Neither on August 31, 2012, nor on December 31, 2012, was the whole penalty or a part of the penalty was paid although the deadline of August 31, 2012, to pay the penalty of $1 million was expired. Hence, the penalty of $1 million remained in accrued expenses as of December 31, 2012. On February 5, 2013, the Company extended the deadline to complete the purchase of the property pursuant to the terms of the management agreement with Sol Meliá, S.A., to March 15, 2013, and agreed that the penalty of $1 million would be waived if the purchase was completed by March 15, 2013. The purchase of the property was finally concluded on March 9, 2013. Since the Company concluded the purchase of the property within the extension period the penalty otherwise payable to Sol Meliá, S.A. and the corresponding allowance was eliminated as of March 9, 2013. Therefore, the Company has released the accrual of $1 million related to this transaction in the nine months period ended September 30, 2013.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

18.

EARNINGS PER SHARE

Basic earnings per share are the result of dividing the Company’s net income (or net loss) by the weighted average number of shares outstanding for the contemplated period. Diluted earnings per share are calculated applying the treasury stock method. When there is a net income dilutive effect all stock-based compensation awards or participating financial instruments are considered. When the Company posts a loss, basis loss per share equals diluted loss per share. The following table depicts how the denominator for the calculation of basic and diluted earnings per share was determined under the treasury stock method.


Earnings per share	Three-month period ended			Nine-month period ended
Earnings per share	September 30, 2013	September 30, 2012	September 30, 2013		September 30, 2012

Company posted	Net loss	Net loss	Net loss		Net loss
Basic weighted average shares outstanding	75,541,600	54,092,186	74,111,642		54,092,186
Dilutive effect of common stock equivalents	None	None	None		None
Dilutive weighted average shares outstanding	75,541,600	54,092,186	74,111,642		54,092,186

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	Three-month period ended	Three-month period ended	Nine-month period ended	Nine-month period ended
Earnings per share	September 30, 2013	September 30, 2012	September 30, 2013	September 30, 2012

Conversion feature loan to Aires International Investment Inc.	10,818,437	---	10,818,437	---
Shares to Hans Rigendinger (retention bonus)	12,500,000	---	12,500,000	---
Options to Hans Rigendinger	10,000,000	---	10,000,000	---
Shares to Josef Mettler (retention bonus)	21,000,000	---	21,000,000	---
Options to Josef Mettler	12,000,000	---	12,000,000	---
Options to Dr. M. Roessler	10,000,000	---	10,000,000
Total	76,318,437	---	76,318,437	---

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

19.

RESTATEMENT

During the year ended December 31, 2012, the Company determined that the interest capitalized was understated in the quarter ended September 30, 2012. The Company capitalized interest costs on the carrying value of the construction in progress during the contraction period based on the contractual rate. However, interest cost as defined in ASC 835-20 includes stated interest, imputed interest (ASC 835-30), and interest related to a capital lease in accordance with ASC 840-30, as well as amortization of discount, premium and issue costs on debt.

Management has concluded that the impact of the error is not material to the previously filed quarterly report for the quarter ended September 30, 2012, and therefore has not filed any amendments to this quarter. The table below summarizes the impact of the restatement, which has been reflected in the quarterly report for the period ended September 30, 2013:



Three months ended September 30	2012 as reported	2012 as restated

Property and equipment, net	$14,200,751	$14,699,751
Shareholders' equity (deficit)	$(8,366,250)	$(7,867,250)
Total assets	$26,417,764	$26,916,764
Amortization of debt issuance costs and commissions	$(291,894)	$(150,894)
Net loss	$(1,436,099)	$(1,295,099)
Basic and diluted loss per share	$(0.03)	$(0.02)


Nine months ended September 30	2012 as reported	2012 as restated

Property and equipment, net	$14,200,751	$14,699,751
Shareholders' equity (deficit)	$(8,366,250)	$(7,867,250)
Total assets	$26,417,764	$26,916,764
Amortization of debt issuance costs and commissions	$(789,929)	$(290,929)
Net loss	$(4,971,677)	$(4,472,677)
Basic and diluted loss per share	$(0.09)	$(0.08)

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

20.

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:

Hotel Project Atlanta

The Company was neither able to complete a financing package for this project by October 15, 2013, nor to extend the deadline until October 15, 2013. Therefore, the Company will expense its deposits and taxes related to this project of $1,573,932 on October 16, 2013.

On October 28, 2013 the Company concluded a further amendment (sixth-amendment) with the counterparty. This sixth amendment includes the following clauses:


—	The Company has to pay $2,500,000 by November 12, 2013, to the counterparty as initial installment and to pay the remaining purchase price of $22,500,000 by January 31, 2014. As of the date of this report the Company has not paid the $2,500,000 and is in default without any further impacts for the Company
—	Since November 12, 2013, the Company is obligated to pay 6% interest on the remaining, outstanding purchase price, which interest is also payable on January 31, 2014.
—	If the Company does not close this transaction in accordance with the provisions in this sixth amendment, the Company will be entitled to a refund of those purchase price installments timely received by the counterparty.
—	The deposit, the three extension fees and the 2013 taxes paid, with all interest payments as noted above, shall be deemed non-refundable. However, the deposit and the three extension fees in the total amount of $ 1,000,000 will be credited to the purchase price in the event of a successful closing.

As of September 30, 2013 the Company has paid $1,000,000 and as of date of this report $1,573,932 to the counterparty, which is included in Down payment for property and equipment.

EUR Bond Offering

The Company initiated a EUR bond offering on December 1, 2010, of up to EUR 25,000,000 in units of EUR 1,000 that bear 8.25 % interest per annum payable each November 30 over the term of the bonds due November 30, 2013.

A cumulative amount of EUR 9.44 million ($11.65 million) has been realized by the Company from the initial date up to the date of this filing.

CHF Bond Offering

The Company initiated a CHF bond offering on September 1, 2011 of up to CHF 15,000,000 in units of CHF 50,000 that bear 7.25 % interest per annum payable each August 31 over the term of the bonds due August 31, 2015.

A cumulative amount of CHF 6.00 million ($6.56 million) has been realized by the Company from the initial date up to the date of this filing.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

20.

SUBSEQUENT EVENTS - Continued

Loan Aires International Investment Inc.

As described in Note 9, the Company has been negotiating with Aires International Investment Inc. (“Aires’) regarding rearrangement of those amounts borrowed. On October 31, 2013, the Company and Aires signed a new loan agreement that include the following main terms:


—	All existing loan agreements including possible amendments between the SunVesta Holding AG and Aires International Investment Inc. will be cancelled and superseded by the new agreement, signed on October 31, 2013.
—	The loan shall not be due for repayment before December 31, 2015 but at the latest on December 31, 2020.
—	Both parties have the possibility, despite of the scheduled repayment dates, to resign the loan agreement with a notice period of 90 days subject to the subordination noted in the following.
—	The complete loan amount including further additions is subordinated.
—	Yearly interest on the loan is 7.25% and will be credited to the loan account on a quarterly basis, i.e. on March 31, June 30, September 30 and December 31.

In addition, the terms of the loan amounting to CHF 10,044,370 that was transferred from SunVesta Holding AG to SunVesta, Inc. as of December 31, 2012 were clarified in a promissory note in October 2013 with the main terms being:


—	The effective date is December 31, 2012. However, since the promissory note was only signed in October 2013 this is the relevant date for accounting purposes.
—	The principal amount together with any interest will be payable on December 31, 2015 (the maturity date)
—	The interest rate is 7.25%
—	Any amount of principal or interest which is not paid when due shall bear interest at the rate of 10% per year from the due date until it is paid
—	The conversion option as stated in the previous agreements and in note 9 was removed
—	The following covenants have been agreed:
	(A) So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether in cash, property or other securities) on shares of capital stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect of its capital stock. (B) So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the Borrower or any warrants, rights or options to purchase or acquire any such shares

Due to the transfer of the loan from SunVesta Holding AG to SunVesta Inc. the foreign exchange gains or losses will be reflected through the income statement rather than in the comprehensive income (cumulative translation adjustment).

As of the date of this report the Company has borrowed CHF 28.32 million (approximately $30.97 million) from Aires.

SUNVESTA, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

20.

SUBSEQUENT EVENTS - Continued

Loan contract with QuadEquity Costa Rica Ltd

As of date of this report, the Company had loaned $750,000 pursuant to a loan agreement to Quad Equity Costa Rica Ltd. Despite the stipulated repayment date of October 31, 2013, QuadEquity Costa Rica Ltd. had not repaid the loan as of date of this report. The Company is in discussions with QuadEquity Costa Rica Ltd and expects repayment not later than December 31, 2013. If he loan amount does not get repaid until December 31, 2013, the loan will be reclassified to non-current.

ITEM 2 .

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this quarterly report contain forward-looking statements that involve risks and uncertainties. Forward-looking statements can be identified by words such as “anticipates,” “expects,” “believes,” “plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include but are not limited to those discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition below. The following discussion should be read in conjunction with our financial statements and notes hereto included in this report. All information presented herein is based on our three and nine month periods ended September 30, 2013 and September 30, 2012. Our fiscal year end is December 31.

Discussion and Analysis

Business Overview

We are in the process of developing high-end luxury hotels and resorts in emerging tourist destinations. We are initially concentrating on offering luxury hotel products located in attractive, top-class coastal vacation destinations in countries such as Costa Rica, Vietnam, and Turkey that are fast emerging as popular tourist destinations. Country specific conditions are taken into account when properties are considered for development. General considerations as to where to develop properties include the stability of local political conditions, geologically useful cultivability, and the types of destinations that attract a five-star clientele. Each potential investment is first compared against a validation checklist and then, if warranted, subjected to a substantial due diligence process. Since location is the key to the success of any tourist based luxury real estate project, each development will be carefully considered during the eligibility process.

Initial Development

Our initial real estate development, 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 scheduled to open in July 2015 subject to requisite financing.

Specifications

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


—	eco-luxury all-inclusive resort
—	381-keys
—	direct beach access
—	five restaurants and five bars
—	Yhi Spa and Health Club
—	Paradisus’ adults-only “Royal Service” level of accommodations
—	Paradisus’ “Family Concierge” program
—	19,000 square feet of meeting facilities with the business traveler in mind

Royal Service

Our Royal Service will include an extensive range of services such as butler service, private pools for each Garden Villa and/or a Jacuzzi in every suite.

The Royal Service area will include:


—	112 Junior Suites Grand Deluxe	(53-60* square meters)
—	3 Junior Suites Grand Deluxe for Handicapped Guests	(53* square meters)
—	6 Grand Master Suites	(82* square meters)
—	1 Grand Presidential Suite (4 bedrooms)	(145* square meters)
—	20 one or two bedroom Garden Villas	(91 – 117* 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.

Family Concierge

The Family Concierge will be the family orientated part of the Paradisus Papagayo Bay Resort & Luxury Villas. The accommodations will be designed to satisfy the needs of the modern family.


—	166 Junior Suites Deluxe	(47* square meters)
—	34 Suites Deluxe	(87* square meters)
—	34 Suites Premium	(93* square meters)
—	6 Handicapped Junior Suites Deluxe	(47* square meters)
—	1 Presidential Suite	(189* 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 will have a full view of the sea. Family Concierge guests will furthermore have access to restaurants, bars, and lounges. The intended Onyx Night Club and the Gabi Club will be located near the beach.

The Paradisus Papagayo Bay Resort & Luxury Villa’s will feature other highlights including:


—	over 65 private, swim up and resort pools including the world’s second largest Infinity Pool all within idyllic landscaped grounds
—	a wedding chapel with a stunning ocean view
—	rain forest walkways that permit guests to experience the flora and fauna of the rain forest
—	a multipurpose convention hall with over 2,000 square meters of space that can be utilized as a whole or divided to create smaller meeting rooms
—	a full service spa committed to providing for the wellbeing of our guests. The spa will be located with a 180 degree sea view within approximately 1,000 square meters that will include 12 large treatment rooms, a hairdresser, relaxation areas, pools, saunas and steam rooms
—	the 20 private villas will be located within the Royal Service area of the resort. The present intention being that these villas will be sold to individuals who will then let them back to the resort when not occupied by the owners. 41

Management

Overall project development is led by Josef Mettler, our chief executive officer, Charles Fessel, project director Paradisus Papagayo Bay Resort & Luxury Villas, Hans Rigendinger, our chief operating officer and Ernst Rosenberger, our corporate controller. The lead architect is Ossenbach, Pendones & Bonilla, one of Costa Rica’s largest architectural offices with over 45 architects and designers. Civil engineering services are provided by DEHC Engineers and structural engineering services by IEAC. Landscape architects are TPA and interior designers are led by Concreta Srl.

Resort management is to be provided by Meliá Hotel International, S.A. (“Sol Meliá”). “Paradisus” is Sol Meliá’s five star all-inclusive luxury hotel brand that is well recognized in the hospitality industry around the world. Sol Meliá was founded in 1956 in Palma de Mallorca, Spain and is today one of the world’s largest resort hotel chains, as well as Spain’s leading hotel chain for business or leisure. The company currently offers more than 300 hotels in 26 countries over four continents under its Gran Sol Meliá, Sol Meliá, ME by Sol Meliá, Innside by Sol Meliá, Tryp, Sol Meliá, Sol Meliá Vacation Club, and Paradisus brands. The Paradisus brand represents all-inclusive luxury resorts with hotels in Mexico and the Dominican Republic, including:

Paradisus Palma Real (Dominican Republic):


—	496 oversized suites
—	numerous pools and whirlpools, five tennis courts, casino, beach, golf, meeting space, five restaurants, two buffets, nine bars, etc.

The Reserve at Palma Real (Dominican Republic):

—

184

rooms “Residential Concierge Suites”

—

private beach, swimming pools, 7800 sq ft “Kids Zone”, 24,000 sq. ft. Yhi Spa, three restaurants, two buffets, two bars, etc.

Paradisus Punta Cana (Dominican Republic):


—	884 oversized suites (500 - 1000+ sq ft)
—	seven pools, four tennis courts, casino, beach, “Kids Zone”, Yhi Spa and fitness, meeting rooms, 12 restaurants, eight bars, etc.

The Reserve at Punta Cana (Dominican Republic):


—	132 residential suites
—	pools (with partially underwater pool beds, water features, etc), private beach, spa, cabanas, etc.

La Esmeralda at Playa del Carmen


—	512 suites including 56 swim-up suites
—	spas, meeting spaces, 11 restaurants, 10 bars, etc. (partially shared with La Perla at Playa del Carmen).

La Perla at Playa del Carmen


—	394 suites including 60 swim-up suites
—	Paradisus’ adults-only “Royal Service” level of accommodations
—	spas, meeting spaces, 11 restaurants, 10 bars, etc. (partially shared with La Esmeralda at Playa del Carmen)

Our Paradisus Papagayo Bay Resort & Luxury Villas development is intended to replace Paradisus Resorts’ former Paradisus Playa Conchal in Guanacaste, Costa Rica which property was operated by Sol Meliá until April 30, 2011. Our project is part of Sol Meliá’s master expansion plan, which includes the opening of two resorts in Playa del Carmen, Mexico in November of 2011. Sol Meliá aims to solidify Paradisus Resorts as a leader in the luxury all-inclusive market segment with the new properties in Playa del Carman and our own Paradisus Papagayo Bay Resort & Luxury Villas project.

Additional Concession Properties

On April 20, 2012, SunVesta AG entered into an agreement with Meridian IBG (“Meridian”) to purchase two additional concession properties in Polo Papagayo, Gunacaste with a total surface of approximately 230,000 square meters, on terms, for a total of $22,895,806. The agreement with Meridian was amended on November 13, 2012 to do away with the agreed equity payment, decrease the total purchase price to $17.2 million and to provide that all payments for the purchase of the property were refundable in the event SunVesta AG determines not to complete the purchase. SunVesta AG had paid down-payments of approximately $2,370,000 as of date of this report.

On May 7, 2013, SunVesta AG entered into a new agreement with Meridian that replaced the original contract, with a new total purchase price of $17,500,000 and a remaining amount due of $16,130,000 (as per date of this report $15,130,000). The terms of the new agreement include a payment plan for the remainder due to be divided amongst Meridian and a third party as follows:


	Third Party

—	$300,000 on May 4, 2013 which was paid on May 7, 2013, is non-refundable
—	$1,000,000 on June 30, 2013, which is refundable, of which amount $700,000 was paid On October 29, 2013. The remaining amount of $300,000 has not been paid as of the date of this report
—	$1,000,000 on July 31, 2013, which is refundable and has not been paid as of the date of this report
—	$1,000,000 on August 31, 2013, which is refundable and has not been paid as of the date of this report
—	$1,500,000 on September 30, 2013, which is refundable and has not been paid as of the date of this report
—	$1,500,000 on October 31, 2013, which is refundable and has not been paid as of the date of this report
—	$1,700,000 on November 30, 2013, which is refundable and has not been paid as of the date of this report
	$8,000,000 in total to Third Party


	Original Seller

—	$1,000,000 on January 31, 2014
—	$1,000,000 on February 28, 2014
—	$1,000,000 on March 31, 2014
—	$1,000,000 on April 30, 2014
—	$1,000,000 on May 31, 2014
—	$1,000,000 on June 30, 2014
—	$1,000,000 on July 31, 2014
—	$1,130,000 on August 31, 2014
	$8,130,000 in total to Original Seller

As per date of this report the Company has not paid any further amounts and is therefore in default without any penalties or impacts for the Company.

Hotel and Entertainment Complex (Atlanta, Georgia, U.S.A)

On September 19, 2012, SunVesta AG entered into an agreement with Fundus America (Atlanta) Limited Partnership (“Fundus”) to purchase a hotel and entertainment complex in Atlanta, Georgia, U.S.A. for $26 million that anticipated additional investment of $18 million for renovations to remediate the complex. The Company entered into a series of negotiations to finalize a financing package but was unable to procure such financing. On February 6, 2013 SunVesta paid $250,000 to Fundus.

A second amendment and reinstatement agreement was entered into on March 12, 2013, pursuant to which SunVesta AG remitted an additional non-refundable closing extension fee to Fundus in the amount of $250,000 to extend the closing date for the transaction to April 1, 2013.

On May 17, 2013, SunVesta AG entered into a third amendment and reinstatement agreement with Fundus pursuant to which it remitted an additional non-refundable closing extension fee in the amount of $250,000 in order to extend the closing date for the transaction to July 10, 2013.

On June 27, 2013, SunVesta AG entered into an agreement with Archipel N.V., business consulting company for the purpose of securing a financing package to purchase the Atlanta hotel and entertainment complex. Should the services rendered by Archipel N.V. be successful, it will be remunerated with $1,000,000.

On July 30, 2013, a fourth amendment and reinstatement agreement was entered into with Fundus pursuant to which SunVesta AG was required to remit another deposit of $250,000 on or before August 16, 2013 and to pay the taxes on the property in the amount of $573,932 by August 30, 2013 in order to extend the closing date to September 30, 2013. SunVesta AG delivered the additional deposit of $250,000 but paid but did not pay the taxes due on the property as of September 30, 2013. Subsequent to period end, the $573,932 due in property taxes was paid to Fundus.

On September 26, 2013, SunVesta AG entered into a fifth amendment and reinstatement agreement with Fundus pursuant to which SunVesta AG extended the closing deadline to October 15, 2013, and permitted the application of all deposits to the purchase price. Otherwise, SunVesta AG would lose the deposits made against the agreement in the amount of $1,000,000 and the taxes paid on the property.

Subsequent to period end, on October 28, 2013, SunVesta AG entered into a sixth amendment and reinstatement agreement with Fundus which includes the following terms and conditions:


—	SunVesta AG has to pay $2,500,000 by November 12, 2013, to Fundus as initial an initial installment on the purchase price and pay the remainder of the $22,500,000 due by January 31, 2014. As of the date of this report SunVesta AG not paid the $2,500,000 and is in default.
—	SunVesta AG is obligated to pay 6% interest on the outstanding purchase price, from November 12, 2013, which interest is also payable on January 31, 2014.
—	Should SunVesta AG not close the purchase in accordance with the provisions in this amendment, it will be entitled to a refund of any purchase installments timely paid.
—	The initial deposit, the three extension fees and the 2013 taxes paid, with interest payments as noted above, are non-refundable. However, the deposit and extension fees in the total amount of $ 1,000,000 will be credited to the purchase price in the event of a successful closing.

Finance

The completion of the Paradisus Papagayo Bay Resort & Luxury Villas will require an investment of approximately $180 million of which approximately $38 million has been spent as of September 30, 2013. We expect to realize a minimum of $80 million in new funding over the next twelve months, though our actual financing requirements may be adjusted to suit that amount realized, and an additional ($62 million in funding by the time the development is completed. New funding over the next twelve months is expected to be raised from debt financing through bonds, construction financing, shareholder loans, equity placements and, if deemed necessary, the guaranty agreement as described herein.

Bonds

The Company has completed the offering of fixed-income Euro denominated bonds and continues to offer fixed income CHF denominated bonds up to an aggregate amount of CHF 15,000,000 to fund the development of the Paradisus Papagayo Bay Resort & Luxury Villas.

The Euro bonds are unsecured, have a three year term, bear interest at 8.25% per annum payable each November 30 over the term and are due on November 30, 2013. The Company has raised $15,380,905 in connection with the Euro bond offering of which $2,661,548 had been repaid as of September 30, 2013, for a total of $12,719,357 as of September 30, 2013.

The CHF bonds are unsecured, have a three year term, bear interest at 7.25% per annum payable each August 31 over the term due August 31, 2015. The Company has raised $7,423,905 of which $1,527,247 had been repaid as of September 30, 2013, for a total of $5,896,658 as of September 30, 2013in connection with the CHF bond offering.

Subsequent to period end, on November 6, 2013, the Company commenced a new offering based on a new private placement memorandum as of even date for a new EUR-Bond offering with the following main terms:


—	Issuance of maximal EUR 15,000,000
—	Duration December 2, 2013 to December 2, 2016
—	Yearly interest of 7.25%
—	1,500 units with a par value of EUR 10,000

Aires International Investment, Inc.

On July 27, 2011, SunVesta AG entered into a line of credit agreement with Aires, a company owned by a board member of the Company, as amended to include the following provisions:


—	Aires grants SunVesta AG a terminable, interest bearing and non-secured line of credit up to a maximum amount of CHF 10,000,000.
—	the conversion right to convert the balance of the line of credit into a 10% ownership interest in Rich Land was cancelled.
—	once the maximum amount has been drawn down, Aires has the right to convert that amount into 20% shares of the Company (instead of Richland).
—	the repayment of the line of credit is due on September 30, 2015, until such time Aires can exercise its conversion option subject to the subordination noted in the following.
—	CHF 10,000,000 of this line of credit is subordinated in favour of other creditors.
—	the interest rate is 7.25% and interest is due on September 30 of each year.

Subsequent to period end, on October 31, 2013, the Company and Aires signed a new loan agreement that includes the following main clauses:


—	All existing loan agreements including possible amendments between the SunVesta Holding AG and Aires International Investment Inc. will be cancelled and superseded by the new agreement, signed on October 31, 2013.
—	The loan shall not be due for repayment before December 31, 2015 but at the latest on December 31, 2020.
—	Both parties have the possibility, despite of the scheduled repayment dates, to resign the loan agreement with a notice period of 90 days.
—	The complete loan amount including further additions is subordinated.
—	Yearly interest on the loan is 7.25% and will be credited to the loan account on a quarterly basis, i.e. on March 31, June 30, September 30 and December 31.


—	The effective date is December 31, 2012. However, since the promissory note was only signed in October 2013 this is the relevant date for accounting purposes.
—	The principal amount together with any interest will be payable on December 31, 2015 (the maturity date)
—	The interest rate is 7.25%
—	Any amount of principal or interest which is not paid when due shall bear interest at the rate of 10% per year from the due date until it is paid
—	The conversion option as stated in the previous agreements and in note 9 was removed

The Company had borrowed $20,561,277 from Aires for the nine month period ended September 30, 2013, and $10,407,764 as of December 31, 2012, for a total of $30,969,041 as of September 30, 2013. The Company has borrowed $30,969,041 from Aires as of the filing date of this report.

Dr. Max Roessler

During the second half of 2012 up to the current nine month period, SunVesta AG entered into a series of interest free loans with Dr. Max Roessler, a director of the Company and a principal of Aires. The loans were originally due either on predetermined dates or on demand, in cash or in a fixed number of shares of certain publically traded entities. Since the predetermined due dates have now passed the loans have been extended by verbal agreement on undetermined terms, as follows:

Dia S.A.

On March 8, 2013, SunVesta AG entered into an interest free loan agreement with DIA S.A. in the amount of $2,000,000 payable on March 8, 2014. The loan was made payable in connection with the closing of SunVesta AG’s purchase of land adjacent to the Paradisus Papagayo Bay Resort & Luxury Villas from Altos held in the name of Altos del Risco S.A.

Timeline

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


—	commence onsite (Altos del Risco property) earthwork in the 2 ^nd quarter of 2013
—	complete architectural plans in the 3 ^rd quarter of 2013
—	obtain final building permits in the 3 ^rd quarter of 2013
—	secure construction loan in the 4 ^th quarter of 2013
—	commence onsite vertical construction in the 4 ^th quarter of 2013
—	complete construction in the 1 ^st quarter of 2015
—	handover to Sol Meliá on July 1 ^st of 2015

Results of Operations

During the three and nine month periods ended September 30, 2013, our operations were focused on (i) completing the purchase of an additional 12 hectares contiguous with our existing property in Guanacaste Province, Costa Rica in connection with the development of the Paradisus Papagayo Bay Resort & Luxury Villas;(ii) appointing Mr. Rigendinger and Mr. Roessler to the board of directors and engaging Mr. Rigendinger as chief operating officer; (iii) obtaining building permits for the development of the Paradisus Papagayo Bay Resort & Luxury Villas property; (iv) commencing earth work excavations on the Paradisus Papagayo Bay Resort & Luxury Villas property; (v) discussions with prospective project development partners; (vi) pursuing additional debt and equity financing arrangements including a CHF bond offering through SunVesta AG in Europe and loans from related parties; and (vii) repaying a portion of the Euro and CHF bonds outstanding.

The Company has been funded since inception from debt or equity placements and by shareholders or partners in the form of loans. All of the capital raised to date has been allocated to the development of the Costa Rican property including the purchase of the land and general and administrative costs.

Comprehensive Losses

For the period from the date of inception of development stage on January 1, 2005, until September 30, 2013, the Company had incurred comprehensive losses of $36,518,594.

Comprehensive loss for the three month period ended September 30, 2013, was $5,026,039 as compared to a comprehensive loss of $1,802,538 for the three month period ended September 30, 2012. The increase in comprehensive losses over the comparative three month periods can be primarily attributed to an increase in general and administrative expenses to $2,214,880 in the current three month period as compared to $748,958 in the corresponding prior three month period, which increase can be attributed to share based remuneration costs and additional personnel costs of approximately $1,250,000, general increase in dues and fees of approximately $215,000 of which $50,000 are related to increased business activities in Costa Rica due to construction and losses due to foreign currency translation which increased to $1,743,672 in the current three month period as compared to $507,439 in the corresponding prior three month period which change is due to volatility between Swiss Francs and US Dollars and the related foreign currency translation difference on intercompany loans which is classified as a permanent investment and the translation of the balance sheet and results of operations of our foreign subsidiaries. Other contributing factors to the increase in comprehensive loss over the comparative three month periods can be attributed to the increase in interest expense from $421,173 to $715,894, due to interest accruing on bonds and notes, the decrease in interest income from $68,793 to $29,190, the result of decreased cash balances, the increase in losses to $349,567 from losses of $5,869, due to currency exchange differences, and the change in the fair value conversion feature related to the loans from Aires that resulted in a loss of $12,296 as compared to zero, offset by a decrease in the amortization of debt issuance costs and commissions from $150,894 to zero, and a decrease in other expenses to $18,920 from $36,998.

Comprehensive loss for the nine month period ended September 30, 2013, was $6,650,650 as compared to a comprehensive loss of $4,564,678 for the nine month period ended September 30, 2012. The increase in comprehensive losses over the comparative nine month periods can be primarily attributed to an increase in general and administrative expenses to $4,714,583 in the current nine month period as compared to $3,204,381 in the corresponding prior nine month period, which increase can be attributed to share based remuneration costs of approximately $1,525,000 in the actual nine month period (refer to note 12) , and the increase in interest expense to $1,751,906 in the current nine month period as compared to $1,051,926 in the corresponding prior nine month period. Other contributing factors to the increase in comprehensive loss over the comparative nine month periods can be attributed to the decrease in interest income to $35,927 from $76,063, the result of decreased cash balances, the change to a losses of $437,626 from a gain of $162,018, due to currency exchange differences, the change in the fair value conversion feature related to the loans from Aires that resulted in a loss of $26,170, the increase in other expenses to $60,101 from $23,386, and the increase in losses due to foreign currency translation which increased to $562,384 from $92,003, due to volatility between Swiss Francs and US Dollars and the related foreign currency translation difference on intercompany loans which is classified as a permanent investment and the translation of the balance sheet and results of operations of our foreign subsidiaries, offset by a decrease in amortization of debt issuance costs and commissions from $290,929 to $133,806, the zero effect of income taxes as compared to $140,136 associated with prospective penalties for late tax filings, and a gain of $1,000,000 related to the release of a prior period accrual to satisfy what was to be a penalty payable to Sol Meliá, S.A. based on the delayed purchase of the Paradisus Papagayo Bay Resort & Luxury Villas property.

We did not generate revenue during this period and we expect to continue to incur losses through the year ended December 31, 2013.

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 January 1, 2005 to September 30, 2013, in connection with the purchase of land that includes a hotel concession in Costa Rica and expects to incur future cash outflows on capital expenditure as discussed in the "Liquidity and Capital Resources" and the "Going Concern" paragraphs below.

Liquidity and Capital Resources

The Company has been in the development stage since inception and has experienced significant changes in liquidity, capital resources, and stockholders’ equity.

As of September 30, 2013, we had a working capital deficit of $21,780,578. We had current assets of $1,535,700 and total assets of $45,951,876. Our current assets consisted of $939,890 in cash, $94,577 in other assets and $501,233 in receivables from related parties. Our total assets consisted of property of $38,099,756 (mainly land and capitalized project costs for Paradisus Papagayo Bay Resort & Luxury Villas), deposits related to construction work of $302,000, net debt issuance costs of $1,075,376, down payments for property and equipment of $3,243,773 and restricted cash of $1,695,271. We had current liabilities of $23,316,278 and total liabilities of $60,282,294. Our current liabilities consisted of $3,716,539 in accounts payable, $3,016,452 in accrued expenses, $2,095,844 in a note payable, $1,768,086 in notes payable to related parties and $12,719,357 in Euro bond debt. Our total non-current liabilities consisted of CHF bond debt of $5,896,658, notes payable to related parties of $30,969,041, fair value conversion feature of $26,170 and pension liabilities of $74,147. Total stockholders’ deficit in the Company was $14,330,419 at September 30, 2013.

For the period from January 1, 2005 to September 30, 2013, net cash used in operating activities was $20,141,475.

Net cash used in operating activities for the nine months ended September 30, 2013, was $2,523,548 as compared to $2,884,693 for the nine months ended September 30, 2012, which differences reflect the increase in general and administrative expenses and changes in working capital. Net cash used in operating activities in the current nine month period is comprised of general and administrative expenses that include but are not limited to, personnel costs, accounting fees, consulting expenses, finder’s fees and professional fees, such as for auditing purposes and legal consultation, changes in other assets, accounts payable and accrued expenses. Net cash used in operating activities in the prior nine month period can also be primarily attributed to general and administrative expenses and changes in other assets, accounts payable and accrued expenses.

We expect to use net cash in operating activities until such time as net losses transition to net income which transition is not anticipated until we complete the Paradisus Papagayo Bay Resort & Luxury Villas project.

For the period from January 1, 2005 to September 30, 2013, net cash used in investing activities was $41,544,363.

Net cash used in investing activities for the nine months ended September 30, 2013, was $13,032,959 as compared to $8,738,172 for the nine months ended September 30, 2012. Net cash used in investing activities in the current nine month period can be attributed to receivables from related parties $463,833, the purchase of property and equipment $7,795,254, deposits related to construction $302,000, down payments for property $3,050,045 and restricted cash $1,421,827. Net cash used in investing activities in the prior nine month period ended September 30, 2012 can be attributed to receivables from related parties $1,598,031, the purchase of property or equipment $2,845,162 and down payments for property $4,639,979, offset by net cash provided by investing activities that can be attributed to short term investments $75,000.

We expect negative net cash in investing activities while in the process of developing the Paradisus Papagayo Bay Resort & Luxury Villas and looking to additional projects.

For the period January 1, 2005 to September 30, 2013, net cash provided by financing activities was $63,243,625.

Net cash provided by financing activities for the nine months ended September 30, 2013, was $16,195,937 as compared to $11,165,977 for the nine months ended September 30, 2012. Net cash provided by financing activities in the current nine month period can be attributed to proceeds from notes payable to related parties 18,519,824 and proceeds from SunVesta AG’s bond issuance $953,277, offset by net cash used in financing activities that can be attributed to the repayment of bonds $2,713,972 and the payment of debt issuance costs $563,192. Net cash provided by financing activities in the prior nine month period can be attributed to proceeds from notes payable to related parties $7,930,926, and proceeds from SunVesta AG’s bond issuance $4,220,317, offset by net cash used in financing activities that can be attributed to the payment of debt issuance costs $985,266.

We expect net cash flow provided by financing activities in future periods from those debt and equity infusions necessary to complete the development of the Paradisus Papagayo Bay Resort & Luxury Villas.

Management believes that our cash on hand in addition to short term related party loans and the guaranty agreement in place as described in the going concern paragraph below are sufficient for us to conduct operations over the next twelve months. Current debt financing efforts consist of a new Euro bond offering in progress, and short term related party loans that have permitted us to draw capital as necessary to meet ongoing operational requirements.

We had no lines of credit or other bank financing arrangements as of September 30, 2013.

We have commitments for executed purchase orders and agreements in the amount of $5.7 million as of September 30, 2013, in connection with the development of the Paradisus Papagayo Bay Resort & Luxury Villas, which commitments are included in the required financing of $180 million to complete the project. Most material commitments were not contractually agreed as of the end of the period.

The fifth addendum (dated September 6, 2013) to the management agreement with Sol Meliá stipulates that should the completion of the construction not occur by July 1, 2015, and should an extension date not be agreed, subsequent to July 1, 2015, Sol Meliá will be entitled to receive a daily amount of $2,000 as liquidated damages. Should the completion of the construction not occur by October 1, 2015 Sol Meliá will be entitled to terminate the management agreement and to receive a termination amount of $5 million unless the parties agree in writing to extend such date.

We have cancellable commitments that are not included in the required financing for the development of the Paradisus Papagayo Bay Resort & Luxury Villas of approximately $39.5 million including approximately $15 million to third parties for the purchase of two additional concession properties in Polo Papagayo, Guanacaste, Costa Rica and approximately $24.5 million to Fundus for the purchase of a hotel and entertainment complex in Atlanta, Georgia, U.S.A.

We maintain a defined benefit plan that covers all of our Swiss employees and have an employment agreement with our chief executive officer and chief financial officer as of September 30, 2013.

We have no current plans for significant purchases or sales of plant or equipment, except in connection with the planned construction of the Paradisus Papagayo Bay Resort & Luxury Villas and discussed above.

We have no current plans to make any changes in the number of our employees as of September 30, 2013.

Future Financings

We will continue to rely on debt or equity sales of our shares of common stock to fund our business operations and may rely on a guaranty agreement to bridge traditional financing for the Paradisus Papagayo Bay Resort & Luxury Villas.

Off-Balance Sheet Arrangements

As of September 30, 2013, 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 $180 million.

The project is expected to open in the third quarter of 2015. Until the completion of the project, the following expenditures are estimated to be incurred:



a.	Gross project cost	$	195,000,000
b.	Less: Proceeds from sale of villas		(24,000,000)
c.	Net project cost		171,000,000
d.	Overhead expenses		21,000,000
e.	Less: Recuperated in gross project cost		(12,000,000)
f	Total, excluding other potential projects	$	180,000,000

Sixty percent (60%) of “Net Project Cost is expected to be financed by traditional mortgage loans, for which negotiations have been initiated. The remaining forty percent (40%) of the “Net Project Cost”, as well as non-recuperated overhead expenses are expected to be financed by the main shareholders of the project, i.e. Zypam Ltd., shareholder, Mr. Hans Rigendinger, shareholder, director and officer, Mr. Max Roessler, shareholder, director and majority shareholder of Aires, Mr. Josef Mettler, shareholder, director and officer.

On July 16, 2012, certain principal shareholders of the Company or principal lenders to the project entered into a guaranty agreement in favour of SunVesta AG. The purpose of the guarantee is to ensure that until such time as financing is secured for the entire project that they will act as a guarantor to creditors to the extent of the project’s ongoing capital requirements. The guaranty agreement requires that within 30 days of receiving a demand notice, the guarantors are required to pay to SunVesta AG that amount required for ongoing capital requirements, until such time as financing of the project is secured. The guaranty may not be terminated until such time as SunVesta Holding AG has secured financing for the completion of the project.

Based on this guaranty agreement, management therefore believes that available funds are sufficient to finance cash flows for the twelve months subsequent to September 30, 2013 and the filing date though future anticipated cash outflows for investing activities will continue to depend on the availability of financing and can be adjusted as necessary.

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

The statements contained in the section titled Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this current report, with the exception of historical facts, are forward-looking statements. We are ineligible to rely on the safe-harbor provision of the Private Litigation Reform Act of 1995 for forward looking statements made in this current report. Forward-looking statements reflect our current expectations and beliefs regarding our future results of operations, performance, and achievements. These statements are subject to risks and uncertainties and are based upon assumptions and beliefs that may or may not materialize. These statements include, but are not limited to, statements concerning:


—	our anticipated financial performance and business plan
—	the sufficiency of existing capital resources
—	our ability to raise additional capital to fund cash requirements for future operations
—	uncertainties related to our future business prospects
—	our ability to generate revenues to fund future operations
—	the volatility of the stock market
—	general economic conditions

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. We also wish to advise readers not to place any undue reliance on the forward-looking statements contained in this report, which reflect our beliefs and expectations only as of the date of this report. We assume no obligation to update or revise these forward-looking statements to reflect new events or circumstances or any changes in our beliefs or expectations, other than as required by law.

Recent Accounting Pronouncements

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

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this quarterly report, an evaluation was carried out by the Company’s management, with the participation of the chief executive officer and chief financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)). Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to management, including the chief executive officer and chief financial officer, to allow timely decisions regarding required disclosures.

Based on that evaluation, the Company’s management concluded that due to a lack of independent oversight, failure to segregate duties, insufficient accounting resources and lack of US GAAP knowledge, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were ineffective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s rules and forms, and such information was not accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

During the period ended September 30, 2013, there has been no change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

None.

ITEM 1A.

RISK FACTORS

Not required of smaller reporting companies.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On July 3, 2013, the Company authorized the issuance of 3,000,000 shares of restricted common shares, valued at $0.05 a share and on July 4, 2013, granted to Max Roessler 10,000,000 stock options from the SunVesta, Inc. 2013 Stock Option Plan, that vest on the date that Sol Meliá S.A. assumes management responsibilities for the Paradisus Papagayo Bay Resort & Luxury Villas, in connection his appointment 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).

The Company complied with the exemption requirements of Section 4(2) of the Securities Act based on the following factors: (1) the issuance and grant were isolated private transactions by the Company which did not involve a public offering; (2) the offeree had access to the kind of information which registration would disclose; and (3) the offeree was financially sophisticated.

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 an offeree who was outside the United States at the time of the offering, and ensuring that the offeree to whom the securities were offered and authorized was a non-U.S. offeree with an address in a foreign country.

On July 4, 2013, the Company authorized the issuance of 5,000,000 shares of restricted common shares, valued at $0.07 a share, and granted 12,000,000 stock options from the SunVesta, Inc. 2013 Stock Option Plan, that vest in three parts on the satisfaction of certain criteria tied to the development of the Paradisus Papagayo Bay Resort & Luxury Villas, to Josef Mettler in connection his employment agreement of even date in reliance upon the exemptions from registration provided by Section 4(2) and Regulation S of the Securities Act.

ITEM 3.

DEFAULTS ON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS

Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page 57 of this Form 10-Q, and are incorporated herein by this reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SunVesta, Inc.

Date

/s/ Josef Mettler

December 13, 2013

Josef Mettler

Chief Executive Officer, Chief Financial Officer,

Principal Accounting Officer and Director

/s/ Hans Rigendinger

December 13, 2013

Hans Rigendinger

Chief Operating Officer and Director

INDEX TO EXHIBITS

Exhibit

Description

3.1.1*

Articles of Incorporation (incorporated by reference from the Form 10-SB filed with the Commission on December 31, 1999).

3.1.2*

Amended Articles of Incorporation (incorporated by reference from the Form 10-KSB filed with the Commission on April 9, 2003).

3.1.3*

Amended Articles of Incorporation (incorporated by reference from the Form 10-QSB filed with the Commission on November 17, 2003).

3.1.4*

Amended Articles of Incorporation (incorporated by reference from the Form 8-K filed with the Commission on September 27, 2007).

3.2.1*

Bylaws (incorporated by reference from the Form 10-SB filed with the Commission on December 31, 1999).

3.2.2*

Amended Bylaws (incorporated by reference from the Form 10-QSB filed with the Commission on November 17, 2003).

10.1*

Securities Exchange Agreement and Plan of Exchange dated June 18, 2007 between the Company and SunVesta AG (formerly ZAG Holdings AG) (incorporated by reference from the Form 8-K filed with the Commission on June 21, 2007).

10.2*

Purchase and Sale Agreement between ZAG Holding AG and Trust Rich Land Investments, Mauricio Rivera Lang dated May 1, 2006 for the acquisition of Rich Land Investments Limitada.

10.3*

Debt Settlement Agreement dated March 1, 2010 between the Company and Zypam, Ltd. (incorporated by reference from the Form 8-K filed with the Commission on March 10, 2010).

10.4*

Debt Settlement Agreement dated March 1, 2010 between the Company and Hans Rigendinger (incorporated by reference from the Form 8-K filed with the Commission on March 10, 2010).

10.5*

Guaranty Agreement dated July 16, 2012 between SunVesta AG, Josef Mettler, Hans Rigendinger and Max Roessler.

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.

10.9

Debt Settlement Agreement dated December 31, 2012 between the Company and Hans Rigendinger.

10.10

Loan Agreement dated October 31, 2013 between SunVesta AG and Aires International Investments, Inc.

14*

Code of Ethics adopted March 1, 2004 (incorporated by reference from the 10-KSB filed with the Commission on April 14, 2004).

21*

Subsidiaries of the Company (incorporated by reference from the Form 10-K filed with the Commission on June 20, 2013).

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14 of the Securities and Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99*

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

101. INS

XBRL Instance Document ^†

101. PRE

XBRL Taxonomy Extension Presentation Linkbase ^†

101. LAB

XBRL Taxonomy Extension Label Linkbase ^†

101. DEF

XBRL Taxonomy Extension Label Linkbase ^†

101. CAL

XBRL Taxonomy Extension Label Linkbase ^†

101. SCH

XBRL Taxonomy Extension Schema ^†

Incorporated by reference to previous filings of the Company.

^†

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and

not “filed” or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.

Exhibit 10.8

ASSIGNMENT OF DEBT AGREEMENT

THIS ASSIGNMENT OF DEBT AGREEMENT, dated effective the 31 ^st day of December 31, 2012,

AMONG:

SUNVESTA, INC., of Seestrasse 97, Oberrieden, Switzerland CH-8942

(the "PARENT") and parent company of Subsidiary

AND:

SUNVESTA HOLDING AG., of Seestrasse 97, Oberrieden, Switzerland CH-8942

(the "SUBSIDIARY") and subsidiary company of Parent

AND:

AIRES INTERNATIONAL INVESTMENTS, INC., of Quatisky Building, 3 ^rd Floor, Post

Office Box 905, Road Town, Tortola, British Virgin Islands.

(the "CREDITOR")

WHEREAS:

A. Subsidiary is indebted to the Creditor in the amount of Swiss Francs Ten Million and Forty Four Six

Thousand Three Hundred and Seventy (CHF 10’044’370), exchanged with an exchange rate of

1.0642 equal to Ten Million Six Hundred and Ninety Thousand and Forty Nine ($10,690,049)

dollars in U.S. funds as of December 31, 2012 (the "Debt") pursuant to the terms of a Loan

Agreement dated July 27, 2011, as amended, between the Subsidiary and the Creditor.

B. Parent wishes to assume, and the Subsidiary and Creditor wish to grant, assign, transfer and set over

unto Parent the entire right, title, obligation and interest in and to the Debt upon the terms and

conditions contained in this Assignment of Debt Agreement.

C. Parent and Subsidiary wish to treat Parent’s assumption of the Debt as an investment in a subsidiary

company, in the form of a deemed cash contribution into capital surplus, provided to Subsidiary by

Parent, in an amount equal to the Debt and not as an intercompany obligation.

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and

the mutual promises, covenants, conditions, representations and warranties hereinafter contained and the

sum of Ten ($10.00) Dollars now paid by the Subsidiary to the Parent and for other good and valuable

consideration, the receipt of which are acknowledged, and subject to the terms and conditions

hereinafter set out, the parties agree as follows:

1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SUBSIDIARY

1.1 Subsidiary represents, warrants and covenants to Parent that:

(a) the above premises are true and complete, and that the Creditor has been given notice of and agreed

to this assignment of the Debt by the Subsidiary to Parent;

(b) the full amount of the Debt is owed by the Subsidiary to the Creditor; and

interest in and to the Debt, pursuant to the Agreement dated December 31, 2012 between Subsidiary,

Creditor and Parent, in the manner set out in Article 2 hereof according to the true intent and meaning of

this Debt Assignment Agreement.

Exhibit 10.8

1.2 The representations, warranties and covenants contained in Section 1.1 are provided for the

exclusive benefit of Parent and a breach of any one or more thereof may be waived by Parent in whole or

in part at any time without prejudice to its rights in respect to any other breach of the same or

any other representation or warranty or covenant. Any representations, warranties and covenants

contained in Article 1 will survive the signing of this Debt Assignment Agreement.

2. ASSIGNMENT OF THE DEBT AND RESTRUCTURING OF TERMS

2.1 Subsidiary grants, assigns, transfers and sets over unto Parent his entire right, title, obligation and

interest in and to the Debt, including, without limitation, all rights, benefits and advantages of the

Subsidiary to be derived therefrom and all burdens, obligations and liabilities to be derived thereunder,

in consideration of the premises and the consideration set out in Section 2.3.

2.2 The Creditor, Subsidiary and Parent agree to restructure the terms of the Debt by causing Parent to

execute a Promissory Note to reflect the Debt, in consideration of the premises and the consideration set

out in Section 2.3.

2.3 In consideration of the assignment of the Debt and the restructuring of the repayment terms pursuant

to the Promissory Note, Parent will sign and deliver the Promissory Note as evidence of the restructured

terms of the Debt. (Attached hereto as Exhibit A)

3. CONSENT AND WARRANTY OF CREDITOR

3.1 The Creditor agrees and consents to the assignment of Subsidiary’s interests in the Debt to Parent

pursuant to the terms and conditions of this Debt Assignment Agreement.

3.2 The Creditor represents, warrants and covenants to Parent that (a) the full amount of the Debt,

includes principal and accrued interest as of December 31, 2012, evidenced by the Promissory Note of

even date, (b) the Debt has not been prepaid in full or in part, and (c) the Debt assigned to Parent is the

sole responsibility of Parent with no right of recourse against Subsidiary.

4. PARENT’S ASSUMPTION OF DEBT AND CAPITAL CONTRIBUTION TO SUBSIDIARY

4.1 Parent agrees and consents to assume Subsidiary’s interests in the Debt pursuant to the terms and

conditions of this Debt Assignment Agreement and Promissory Note.

4.2. Parent agrees to waive any debt obligation incumbent on Subsidiary as the result of its assumption

of the Debt owed to Creditor and does hereby characterize the effect of the transaction as a deemed cash

contribution into capital surplus of the subsidiary company.

5. COUNTERPART

5.1 This Debt Assignment Agreement may be signed in one or more counterparts, each of which when

so signed will be deemed an original, and such counterparts together will constitute one in the same

instrument.

Exhibit 10.8

IN WITNESS WHEREOF this agreement was signed in Oberrieden, Switzerland by the parties hereto

effective as of the day and year first above written.

SUNVESTA, INC.

/s/ Josef Mettler

/s/ Hans Rigendinger

By: Josef Mettler

By: Hans Rigendinger

Chief Executive Officer

Chief Operating Officer

AUTHORIZED SIGNATORY

SUNVESTA HOLDING AG

/s/ Josef Mettler

/s/ Hans Rigendinger

By: Josef Mettler

By: Hans Rigendinger

Chief Executive Officer

AUTHORIZED SIGNATORY

AIRES INTERNATIONAL INVESTMENTS, INC.

/s/ Greorg Nigg

By: Greorg Nigg

AUTHORIZED SIGNATORY

/s/ Roland Rohrer

By: Roland Rohrer

AUTHORIZED SIGNATORY

Exhibit A

Exhibit 10.8

THE ISSUANCE AND SALE OF THE SECURITY REPRESENTED BY THIS NOTE HAS NOT

BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED

(“SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS SINCE SAME IS

BELIEVED TO BE EXEMPT FROM REGISTRATION UNDER REGULATION “ S ” THERETO.

THIS SECURITY MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR

ASSIGNED TO US PERSONS (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION

STATEMENT FOR THE SECURITY UNDER THE SECURITIES ACT, OR (B) AN OPINION

OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT

REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE

144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THIS SECURITY MAY

BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER

LOAN OR FINANCING ARRANGEMENT SECURED BY THIS SECURITY.

P ROMISSORY N OTE

Principal Amount: CHF (Swiss Francs) 10,044,370

Issue Date: December 31, 2012

FOR VALUE RECEIVED , SUNVESTA, INC. , a Florida corporation (hereinafter called the

“ Borrower ”), hereby promises to pay to the order of Aires International Investments, Inc. , a British

Virgin Islands company, or registered assigns (the “ Holder ”) the sum of CHF 10,044,370 together with

any interest as set forth herein, on December 31, 2015 (the “ Maturity Date ”), and to pay interest on the

unpaid principal balance hereof at the rate of seven and one half percent (7 ½%) (the “ Interest Rate ”) per

annum from the date hereof (the “ Issue Date ”) until the same becomes due and payable, whether at

maturity or upon acceleration or by prepayment or otherwise. This Promissory Note (the “Note” ) may be

prepaid in whole or in part. Any amount of principal or interest on this Note which is not paid when due

shall bear interest at the rate of ten percent (10%) per annum from the due date thereof until the same is

paid (“ Default Interest ”). Interest shall commence accruing on the date that the Note is issued and shall

be computed on the basis of a 365-day year and the actual number of days elapsed. All payments due

hereunder shall be made in lawful money of Switzerland. All payments shall be made at such address as

the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions

of this Note. Alternatively, the interest may be added to the principal amount.

Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a

business day, the same shall instead be due on the next succeeding day which is a business day and, in the

case of any interest payment date which is not the date on which this Note is paid in full, the extension of

the due date thereof shall not be taken into account for purposes of determining the amount of interest due

on such date. As used in this Note, the term “business day” shall mean any day other than a Saturday,

Sunday or a day on which commercial banks in the city of Zurich , Switzerland are authorized or required

by law or executive order to remain closed.

This Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall

not be subject to preemptive rights or other similar rights of shareholders of the Borrower and will not

impose personal liability upon the holder thereof. This Note has been issued by the Borrower pursuant to

the Assignment of Debt Agreement, dated effective December 31, 2012 (the “ Assignment Agreement ”),

by and among the Borrower, SunVesta Holding AG. (Borrower’s subsidiary), and the Holder.

The following additional terms shall apply to this Note:

Exhibit 10.8

ARTICLE I. CERTAIN COVENANTS

1.1

Distributions on Capital Stock . So long as the Borrower shall have any obligation under

this Note, the Borrower shall not without the Holder’s written consent (a) pay, declare or set apart for

such payment, any dividend or other distribution (whether in cash, property or other securities) on shares

of capital stock or (b) directly or indirectly or through any subsidiary make any other payment or

distribution in respect of its capital stock.

1.2

Restriction on Stock Repurchases. So long as the Borrower shall have any obligation

under this Note, the Borrower shall not without the Holder’s written consent redeem, repurchase or

otherwise acquire (whether for cash or in exchange for property or other securities or otherwise) in any

one transaction or series of related transactions any shares of capital stock of the Borrower or any

warrants, rights or options to purchase or acquire any such shares.

ARTICLE II. EVENTS OF DEFAULT

If any of the following events of default (each, an “Event of Default”) shall occur:

2.1

Failure to Pay Principal or Interest. The Borrower fails to pay the principal hereof or

interest thereon when due on this Note, whether at maturity, upon acceleration or otherwise and the

Holder has not agreed to add the interest to the principal amount.

2.2

Breach of Covenants . The Borrower breaches any material covenant or other material

term or condition contained in this Note and any collateral documents including but not limited to the

Assignment Agreement and such breach continues for a period of ten (10) days after written notice

thereof to the Borrower from the Holder.

2.3

Breach of Representations and Warranties. Any representation or warranty of the

Borrower made herein or in any agreement, statement or certificate given in writing pursuant hereto or in

connection herewith (including, without limitation, the Assignment Agreement), shall be false or

misleading in any material respect when made and the breach of which has (or with the passage of time

will have) a material adverse effect on the rights of the Holder with respect to this Note or the Assignment

Agreement.

2.4

Receiver or Trustee . The Borrower or any subsidiary of the Borrower shall make an

assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee

for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be

appointed.

2.5

Bankruptcy . Bankruptcy, insolvency, reorganization or liquidation proceedings or other

proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of

debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.

2.6

Liquidation . Any dissolution, liquidation, or winding up of Borrower or any substantial

portion of its business.

2.7

Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it

is otherwise generally unable to pay its debts as such debts become due, provided, however, that any

Exhibit 10.8

disclosure of the Borrower’s ability to continue as a “going concern” shall not be an admission that the

Borrower cannot pay its debts as they become due.

2.8

Maintenance of Assets . The failure by Borrower to maintain any material intellectual

property rights, personal, real property or other assets which are necessary to conduct its business

(whether now or in the future).

Upon the occurrence and during the continuation of an Event of Default specified in this Article II, the

Note shall become immediately due and payable and the Borrower shall pay to the Holder, an amount

equal to the Default Amount (as defined below) effective on the delivery of written notice to the

Borrower by the Holder (the “ Default Notice ”), in full satisfaction of its obligations hereunder, an

amount equal to (x) the sum o f the then outstanding principal amount of this Note plus ( y) accrued and

unpaid interest on the unpaid principal amount of this Note to the date of payment plus ( z) Default

Interest, if any (the amounts referred to in clauses (x), (y) and (z) shall collectively be known as the

“ Default Amount ”) and all other amounts payable hereunder shall immediately become due and payable,

all without demand, presentment or notice, all of which hereby are expressly waived, together with all

costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled

to exercise all other rights and remedies available at law or in equity.

ARTICLE III. MISCELLANEOUS

3.1

Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the

exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single

or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of

any other right, power or privileges. All rights and remedies existing hereunder are cumulative to, and

not exclusive of, any rights or remedies otherwise available.

3.2

Subordination . Holder acknowledges that its interest in the properties and assets of the

Borrower, on the occurrence and continuation of an Event of Default, is subordinate to those additional

amounts, if any, due by Borrower to non-affiliated third party creditors.

Notices. All notices, demands, requests, consents, approvals, and other communications required

or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally

served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii)

delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery,

telegram, or facsimile, addressed as set forth below or to such other address as such party shall have

specified most recently by written notice. Any notice or other communication required or permitted to be

given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate

confirmation generated by the transmitting facsimile machine, at the address or number designated below

(if delivered on a business day during normal business hours where such notice is to be received), or the

first business day following such delivery (if delivered other than on a business day during normal

business hours where such notice is to be received) or (b) on the second business day following the date

of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of

such mailing, whichever shall first occur. The addresses for such communications shall be:

If to the Borrower, to:

SunVesta, Inc.

Exhibit 10.8

Seestrasse 97

Oberriden

Switzerland CH-8942

Attn: Josef Mettler, Chief Executive Officer

facsimile: 011 41 43 388 40 60

e-mail: josef.mettler@sunvesta.com

If to the Holder:

Aires International Investments, Inc.

Quatisky Building, 3 ^rd Floor

Post Office Box 905

Road Town

Tortola, British Virgin Islands

Attn:

facsimile:

e-mail:

3.2

Amendments . This Note and any provision hereof may only be amended by an

instrument in writing signed by the Borrower and the Holder. The term “Note” and all reference thereto,

as used throughout this instrument, shall mean this instrument as originally executed, or if later amended

or supplemented, then as so amended or supplemented.

3.3

Assignability . This Note shall be binding upon the Borrower and its successors and

assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of

this Note must not be a “US Person” (as that term is defined in Rule 902 of Regulation S, and is not

acquiring the securities for the account or benefit of any U.S. person; as defined in Rule 501(a) of the

Securities Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as

collateral in connection with a bona fide margin account or other lending arrangement.

3.4

Cost of Collection . If default is made in the payment of this Note, the Borrower shall pay

the Holder hereof costs of collection, including reasonable attorneys’ fees.

3.5

Governing Law . This Note shall be governed by and construed in accordance with the

laws of the Switzerland without regard to principles of conflicts of laws. The parties to this Note hereby

irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not

assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens . The

Exhibit 10.8

Borrower and Holder waive trial by jury. The prevailing party shall be entitled to recover from the other

party its reasonable attorney's fees and costs. In the event that any provision of this Note or any other

agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or

rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith

and shall be deemed modified to conform with such statute or rule of law. Any such provision which may

prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other

provision of any agreement. Each party hereby irrevocably waives personal service of process and

consents to process being served in any suit, action or proceeding in connection with this Note by mailing

a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such

party at the address in effect for notices to it under this Agreement and agrees that such service shall

constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be

deemed to limit in any way any right to serve process in any other manner permitted by law.

3.6

Certain Amounts . Whenever pursuant to this Note the Borrower is required to pay an

amount in excess of the outstanding principal amount (or the portion thereof required to be paid at that

time) plus accrued and unpaid interest plus Default Interest on such interest, the Borrower and the Holder

agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult

to determine and the amount to be so paid by the Borrower represents stipulated damages and not a

penalty.

3.7

Assignment Agreement . By its acceptance of this Note, each party agrees to be bound by

the applicable terms of the Assignment Agreement.

3.8

Remedies . The Borrower acknowledges that a breach by it of its obligations hereunder

will cause irreparable harm to the Holder, by vitiating the intent and purpose of the transaction

contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach of its

obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by

the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other

available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction

or injunctions restraining, preventing or curing any breach of this Note and to enforce specifically the

terms and provisions thereof, without the necessity of showing economic loss and without any bond or

other security being required.

IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized

officer this December 31, 2012.

SUNVESTA, INC.

By: /s/ Josef Mettler

Josef Mettler, Chief Executive Officer


TABLE OF CONTENTS PART 1- FINANCIAL INFORMATION
Item1.	Financial Statements:	3
	Consolidated Balance Sheets as of September 30, 2013 (Unaudited) and December 31, 2012	4
	Unaudited Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2013 and September 30, 2012 and cumulative amounts	5
	Unaudited Consolidated Statements of Stockholders’ Equity (deficit)	6
	Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and September 30, 2012 and cumulative amounts	7
	Notes to Unaudited Consolidated Financial Statements	8
Item 2 .	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	52
Item 4.	Controls and Procedures	53
	PART II-OTHER INFORMATION
Item 1.	Legal Proceedings	54
Item 1A .	Risk Factors	54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3.	Defaults Upon Senior Securities	54
Item 4.	Mine Safety Disclosures	55
Item 5.	Other Information	55
Item 6.	Exhibits	55
	Signatures	56
	Index to Exhibits	57


		September 30, 2013		December 31, 2012
		(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	939,890	$	260,520
Other assets		94,577		39,238
Receivable from related parties		501,233		-
Total current assets		1,535,700		299,758
Non-current assets
Property and equipment - net		38,099,756		16,799,540
Deposits related to construction work		302,000		-
Debt issuance costs - net		1,075,376		1,649,216
Down payment for property and equipment		3,243,773		10,320,144
Restricted cash		1,695,271		241,500
Total non-current assets		44,416,176		29,010,400
Total assets	$	45,951,876		29,310,158
Liabilities and stockholders' equity (deficit)
Current liabilities
Accounts payable		3,716,540		827,102
Accrued expenses		3,016,452		3,868,914
Note payable		2,095,844		-
Notes payable to related parties		1,768,086		3,432,064
EUR-Bond		12,719,357		14,216,707
Total current liabilities		23,316,279		22,344,787
Non-current liabilities
CHF-Bond		5,896,658		5,689,364
Notes payable to related parties		30,969,041		11,125,741
Fair value of conversion feature		26,170		-
Pension liabilities		74,147		74,075
Total non-current liabilities		36,966,016		16,889,180
Total liabilities		60,282,295		39,233,967
Stockholders' equity (deficit)
Preferred stock, $0.01 par value;
50,000,000 share authorized no shares issued
and outstanding		-		-
Common stock, $0.01 par value;
200,000,000 shares authorized; 75,541,603 and
54,092,186 shares issued and outstanding		755,416		540,922
Additional paid-in capital		21,475,913		19,446,367
Accumulated other comprehensive loss		(1,664,792)		(1,102,408)
Retained earnings prior to development stage		1,602		1,602
Deficit accumulated during the development stage		(34,874,803)		(28,786,537)
Treasury stock, 157,220 and 157,220 shares		(23,755)		(23,755)
Total stockholders' equity (deficit)		(14,330,419)		(9,923,809)
Total liabilities and stockholders' equity (deficit)	$	45,951,876		29,310,158


Three months ended September 30,		Nine months ended September 30,		Cumulative
2013	2012	2013	2012	amounts
(unaudited)	(unaudited & restated	(unaudited)	(unaudited & restated	(unaudited)


Revenues
Revenues, net	$	-	-	-	-	-
Cost of revenues		-	-	-	-	-
Gross profit		-	-	-	-	-

Operating expenses
General and administrative expenses	$	(2,214,880)	(748,958)	(4,714,583)	(3,204,381)	(25,923,840)
Sales and marketing		-	-	-	-	(480,872)
Impairment on property and equipment		-	-	-	-	(1,311,000)
Release of accrual for penalty to Meliá Hotels & Resorts		-	-	1,000,000	-	1,000,000
Total operating expenses		(2,214,880)	(748,958)	(3,714,583)	(3,204,381)	(26,715,712)
Loss from operations	$	(2,214,880)	(748,958)	(3,714,583)	(3,204,381)	(26,715,712)

Other income/expenses
Loss on disposal of assets	$	-	-	-	-	(3,258)
Loss on sale of investments		-	-	-	-	(1,137,158)
Loss on extinguishment of debt		-	-	-	-	(1,806,758)
Interest income		29,190	68,793	35,927	76,063	203,894
Interest expense		(715,894)	(421,173)	(1,751,906)	(1,051,926)	(4,226,889)
Amortization of debt issuance costs and commissions		-	(150,894)	(133,806)	(290,929)	(938,043)
Exchange differences		(349,567)	(5,869)	(437,626)	162,018	(61,569)
Change in fair value of conversion feature		(12,296)	-	(26,170)	-	(26,170)
Other income/expenses		(18,920)	(36,998)	(60,101)	(23,386)	(23,002)
Total other income/expenses	$	(1,067,487)	(546,141)	(2,373,683)	(1,128,159)	(8,018,954)

Loss before income taxes	$	(3,282,367)	(1,295,099)	(6,088,266)	(4,332,539)	(37,734,666)
Income taxes		-	-	-	(140,136)	(140,136)
Net loss	$	(3,282,367)	(1,295,099)	(6,088,266)	(4,472,677)	(34,874,802)

Comprehensive loss
Foreign currency translation		(1,743,672)	(507,439)	(562,384)	(92,003)	(1,643,792)
Comprehensive loss	$	(5,026,039)	(1,802,538)	(6,650,650)	(4,564,678)	(36,518,594)

Loss per common share
Basic and diluted	$	(0.04)	(0.02)	(0.08)	(0.08)

Weighted average common shares
Basic and diluted		75,541,603	54,092,186	74,122,156	54,092,186


		Common Stock		Additional Paid in Capital		Accumulated Other Comprehensive Income (Loss)		Prior Earnings		Deficit Accumulated During Development Stage		Treasury Stock		Total Stockholders’ Equity (Deficit)
January 1, 2005	$	210,000	$	281,521	$	128	$	1,602	$	-	$	-	$	493,251
Net loss		-		-		-		-		(807,118)		-		(807,118)
Translation adjustments		-		-		23,149		-		-		-		23,149
December 31, 2005		210,000		281,521		23,277		1,602		(807,118)		-		(290,718)
Net loss		-		-		-		-		(3,575,713)		-		(3,575,713)
Translation adjustments		-		-		(163,151)		-		-		-		(163,151)
December 31, 2006		210,000		281,521		(139,874)		1,602		(4,382,831)		-		(4,029,582)
Net loss		-		-		-		-		(2,912,578)		-		(2,912,578)
Translation adjustments		-		-		35,580		-		-		-		35,580
Acquisition of OpenLimit, Inc.		14,000		(63,080)		-		-		-		-		(49,080)
Issuance of stock for debt		64,312		10,742,025		-		-		-		-		10,806,337
December 31, 2007		288,312		10,960,466		(104,294)		1,602		(7,295,409)		-		3,850,677
Net loss		-		-		-		-		(1,188,377)		-		(1,188,377
Translation adjustments		-		-		(367,601)		-		-		-		(367,601)
Issuance of stock for compensation		417		61,852		-		-		-		-		62,269
Issuance of stock for debt		18,182		2,709,091		-		-		-		-		2,727,273
December 31, 2008		306,911		13,731,409		(471,895)		1,602		(8,483,786)		-		5,084,241
Net loss		-		-		-		-		(2,471,845)		-		(2,471,845)
Translation adjustments		-		-		401,460		-		-		-		401,460
Issuance of stock for compensation		600		44,400		-		-		-		-		45,000
Issuance of stock for cash		10,000		290,000		-		-		-		-		300,000
Issuance of stock for debt		77,259		3,785,668		-		-		-		-		3,862,927
Purchase of treasury stock		-		-		-		-		-		(12,200)		(12,200)
December 31, 2009		394,770		17,851,477		(70,435))		1,602		(10,955,631)		(12,200)		7,209,583
Net loss		-		-		-		-		(1,173,292)		-		(1,173,292)
Translation adjustments		-		-		10,983		-		-		-		10,983
Issuance of stock for debt		146,152		876,914		-		-		-		-		1,023,066
Purchase of treasury stock		-		-		-		-		-		(11,555)		(11,555)
December 31, 2010		540,922		18,728,391		(59,452)		1,602		(12,128,923)		(23,755)		7,058,785
Net loss		-		-		-		-		(10,382,930)		-		(10,382,930)
Translation adjustments		-		-		21,575		-		-		-		21,575
December 31, 2011		540,922		18,728,391		(37,877)		1,602		(22,511,853)		(23,755)		(3,302,570)
Net loss		-		-		-		-		(6,274,684)		-		(6,274,684)
Translation adjustments		-		-		(1,064,531)		-		-		-		(1,064,531)
Issuance of stock for debt		-		717,976		-		-		-		-		717,976
December 31, 2012		540,922		19,466,367		(1,102,408)		1,602		(28,786,537)		(23,755)		(9,923,809)
Net loss		-		-		-		-		(6,088,266)		-		(6,088,266)
Translation adjustments		-		-		(562,384)		-				-		(562,384)
Issuance of stock for compensation		35,000		1,491,063		-		-		-		-		1,526,063
Issuance of stock for debt		179,494		538,483		-		-		-		-		717,977
September 30, 2013	$	755,416	$	21,475,913	$	(1,664,792)	$	1,602	$	(34,874,803)	$	(23,755)	$	(14,330,419)


		January 1 to	January 1 to	Cumulative Amounts*
		September 30, 2013	September 30, 2012	Cumulative Amounts*
		Unaudited	Unaudited & restated	Unaudited
Cash flows from operating activities
Net loss	$	(6,088,266)	(4,472,677)	(34,874,803)
Adjustments to reconcile net loss to net cash
Depreciation and amortization		33,278	34,691	353,363
Other income / expenses		-	(60,701)	(60,701)
Release of accrual for penalty to Mélia Hotels & Resorts		(1,000,000)	-	(1,000,000)
Impairment of property and equipment		-	-	1,311,000
Amortization of debt issuance cost and commissions		133,806	290,929	945,742
Stock compensation expense		1,526,063	-	2,351,308
Unrealized exchange differences		437,626	(162,018)	61,569
Loss on securities acquired as deposit on stock		-	-	1,008,324
Loss on disposal of assets		-	-	3,258
Loss on extinguishment of debt		-	-	1,806,758
Change in fair value of conversion feature		26,170	-	26,170
Increase in pension fund commitments		72	10,326	74,147
*Increase / decrease in:*
Other current assets		(55,340)	(36,368)	(105,217)
Accounts payable		2,315,505	287,218	3,678,425
Accrued expenses		147,538	1,223,907	4,279,182
Net cash used in operating activities		(2,523,548)	(2,884,693)	(20,141,475)
Cash flows from investing activities
Proceeds from securities available-for-sale		-	-	1,740,381
Short term investments		-	75,000	-
Other receivables from related parties		(463,833)	(1,598,031)	(2,636,167)
Purchase of property and equipment		(7,795,254)	(2,845,162)	(25,563,062)
Deposits related to construction		(302,000)	-	(302,000)
Down payments for property and equipment		(3,050,045)	(4,369,979)	(13,694,120)
Other non-current assets		-	-	(241,500)
Restricted cash		(1,421,827)	-	(1,421,827)
Net cash used in investing activities		(13,032,959)	(8,738,172)	(41,544,363)
Cash flows from financing activities
Net proceeds from deposit on stock		-	-	3,664,417
Proceeds from stock issuance		-	-	300,000
Proceeds from notes payable related parties		18,519,824	7,930,926	45,739,545
Repayment of notes payable related parties		-	-	(778,243)
Advances from third parties		-	-	700,000
Note payable		-	-	(714,819)
Proceeds from bond issuance, net of commissions		953,277	4,220,317	22,376,078
Repayments of bonds		(2,713,972)	-	(4,188,795)
Payment for debt issuance costs		(563,192)	(985,266)	(3,830,803)
Purchase of treasury stock		-	-	(23,755)
Net cash provided by financing activities		16,195,937	11,165,977	63,243,625
Effect of exchange rate changes		39,940	15,060	(618,453)
Net increase in cash		679,370	(441,828)	939,335
Cash, beginning of period		260,520	505,500	555
Cash, end of period	$	939,890	63,672	939,890
Additional information
Interest paid		-	84,000
Income taxes paid		-	-
Conversion of note payable to Mr. Rigendinger to stockholders' equity (non-cash)		717,977	-
Purchase of property and equipment through a note payable (non-cash)		2,000,000	-
Reclassification of down payment for property and equipment to property and equipment		10,200,000	-
Capitalized interest and debt issuance costs for construction (non-cash)		1,422,000	499,000
Reclassification loan from Dr. M. Roessler to AIRES loan		1,740,796	-


Receivables from and notes to related parties		Receivables		Payables
		September 30,	December 31,	September 30,	December 31,
		2013 $	2012 $	2013 $	2012 $

01	Hans Rigendinger	-	-	585,110	600,000
02	Josef Mettler	-	-	223,976	-
03	Adrian Oehler	-	-	37,976	37,380
04	Sportiva	-	-	-	31,948
05	Aires International		-	30,969,041	10,407,764
06	Dr. Max Roessler		-	921,024	2,682,736
07	Hans Rigendinger	-	-	-	717,977
08	Akyinyi Interiors	-	-	-	80,000
09	Quad Equity	501,233	-	-	-
	Total excluding interest	501,233	-	32,737,127	14,557,805
	Accrued interest	-	-	1,191,060	566,093
	Total	501,233	-	32,928,187	15,123,898
	of which non-current	-	-	30,969,041	11,125,741


No	Related party	Capacity	Interest Rate	Repayment Terms	Security

01	Hans Rigendinger	Shareholder, Company director and chief operating officer (COO)	0.00%	none	none
02	Josef Mettler	Shareholder, Company director and chief executive officer (CEO)	3.00%	none	none
03	Adrian Oehler	Shareholder and SunVesta AG board member	0.00%	none	none
04	Sportiva	Entity owned by one of the Company’s directors and CEO	3.00%	none	none
05	Aires International	* see hereinafter*
06	Dr. Max Roessler	Shareholder and Company Director	* see hereinafter *
07	Hans Rigendinger	Shareholder, Company Director and COO	* see hereinafter *
08	Akyinyi Interiors	Entity owned by a Company director’s wife	0.00%	01/31/13	none
09	Quad Equity Costa Rica Ltda.	Entity owned by two of the Company’s directors acting respectively as CEO and COO	* see hereinafter *

—	The lender grants the Company a terminable, interest bearing and non-secured loan in the maximum amount of CHF 10,000,000.
—	The conversion right granted in the original contract to convert the balance of the line of credit into a 10% ownership interest in Rich Land was cancelled.
—	Once the entire amount of CHF 10,000,000 has been drawn down, Aires now has the right to convert its entire loan of CHF 10,000,000 into 20% shares of the Company (instead of Richland) whereas 20% shares reflect the number of shares at the time when the entire amount of CHF 10,000,000 has been drawn down.
—	In principle, the loan will become due in September 30, 2015, being the latest date on which Aires can exercise its conversion option
—	CHF 10,000,000 of this line of credit is subordinated in favour of other creditors.
—	The interest rate is 7.25% and interest is due on September 30 of each year.


—	The Company granted QuadEquity a short term, interest bearing and secured loan in the maximum amount of $1,000,000 to be repaid on October 31, 2013.
—	The Company agreed to accept $30,000 in interest for the period of September 22, 2013, until October 31, 2013, regardless of the effective loan amount withdrawn by QuadEquity up to the maximum amount. Therefore, the effective interest rate will vary depending on the effective loan amount withdrawn and on which date these withdrawals are made.
—	The Company obtained from QuadEquity, as security, the right to undertake the contract for which this loan will be used by QuadEqutity. The underlying contract is the right to buy a specific piece of land in San José, Costa Rica.

	The Company issued 17,949,417 shares of its common stock ($0.01 par value) at a conversion price of $0.04 to Hans Rigendinger for the purposes of this debt settlement.
—	The difference between the carrying value of this debt and the fair value of the common stock issued amounted to $717,976. The difference has been recorded as stock compensation expense in general and administrative expenses in the year ended December 31, 2012.
—	To determine the fair value of the common stock issued the quoted market price as of December 31, 2012 was used.
—	The shares were not formally issued as of December 31, 2012, and therefore, the note payable was not eliminated as of December 31, 2012. The satisfaction of the note payable was recorded on the issuance of the shares as of January 8, 2013.


Description	EUR ( € ) bond	CHF bond
Issuer:	SunVesta Holding AG	SunVesta Holding AG
Type of securities:	Bond in accordance with Swiss law	Bond in accordance with Swiss law
Approval by SunVesta AG BOD	May 12, 2010	June 3, 2011
Volume:	Up to € 25,000,000	Up to CHF 15,000,000
Units:	€ 1,000	CHF 50,000
Offering period:	11/10/2010 – 04/30/2011	09/01/2011 – 02/28/2012
Due date:	November 30, 2013	August 31, 2015
Issuance price:	100 %	100%
Issuance day::	December 1, 2010	September 1, 2011
Interest rate:	8.25% p.a.	7.25% p.a.
Interest due dates:	November 30 of each year, the first time 30 November 2011	August 31 of each year, the first time August 31, 2012
Applicable law:	Swiss	Swiss


Loan Date		Amount	Shares	Public Entity
July 24, 2012	$	467,179	10,000	Schindler Holding AG
August 8, 2012	$	401,838	700	Zug Estates Holding AG
March 1, 2013	$	52,007	52,500	Datewyler Holding AG