PART I
–
FINANCIAL
INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
As used herein, the terms
“
Company,
”
“
we,
”
“
our,
”
and
“
us
”
refer to SunVesta,
Inc., a Florida
corporation, and its predecessors and subsidiaries, unless otherwise indicated. In the opinion of
management, the accompanying unaudited, consolidated financial statements included in this Form 10-Q
reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of
the results of operations for the periods presented. The results of operations for the periods presented are
not necessarily indicative of the results to be expected for the full year.
3
SUNVESTA, INC.
CONSOLIDATED
BALANCE
SHEETS
June 30, 2015
December 31, 2014
(Unaudited)
Assets
Current assets
Cash and cash equivalents
$
708,828
14,347
Receivable from related parties
23,933
27,163
Other assets
422,183
289,156
Total current assets
1,154,944
330,666
Non-current assets
Property and equipment - net
55,631,164
51,201,352
Deposits related to construction work
817,410
820,565
Debt issuance costs - net
895,750
2,006,849
Down payment for property and equipment
2,669,816
2,369,816
Restricted cash
1,692,549
1,684,934
Total non-current assets
61,706,689
58,083,516
Total assets
$
62,861,633
58,414,182
Liabilities and stockholders' deficit
Current liabilities
Bank liabilities
-
153,375
Accounts payable
5,521,040
6,181,057
Accrued expenses
9,080,204
5,444,514
Note payable
2,167,396
3,023,759
Notes payable to related parties
1,302,236
1,162,100
CHF-Bond
35,947,733
25,511,898
Total current liabilities
54,018,609
41,476,703
Non-current liabilities
EUR-Bond
8,589,905
9,057,986
Notes payable to related parties
32,631,771
30,299,312
Other long term debts
56,413
74,837
Pension liabilities
144,509
136,433
Total non-current liabilities
41,422,598
39,568,568
Total liabilities
$
95,441,207
81,045,271
Stockholders' deficit
Preferred stock, $0.01 par value; 50,000,000 shares
Common stock, $0.01 par value; 200,000,000 shares
authorized; 83,541,603 shares issued and
outstanding
835,416
835,416
Additional paid-in capital
23,222,628
22,942,486
Accumulated other comprehensive income / (loss)
(1,219,573)
1,265,590
Accumulated deficit
(55,418,045)
(47,674,581)
Total stockholders' deficit
(32,579,574)
(22,631,089)
Total liabilities and stockholders' deficit
$
62,861,633
58,414,182
The accompanying notes are an integral part of these consolidated financial statements.
4
SUNVESTA, INC.
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE
LOSS
Three months ended June 30,
Six months ended June 30,
2015
2014
2015
2014
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Revenues
Revenues, net
$
-
-
-
Cost of revenues
-
-
-
Gross profit
-
-
-
Operating expenses
General and administrative
$
expenses
(1,369,582)
(1,371,362)
(3,226,049)
(3,423,354)
Total operating expenses
(1,369,582)
(1,371,362)
(3,226,049)
(3,423,354)
Loss from operations
$ (1,369,582)
(1,371,362)
(3,226,049)
(3,423,354)
Other income / - expenses
Interest income
11,699
6,988
18,483
6,990
Interest expense
(1,309,308)
(840,851)
(2,638,219)
(1,395,477)
Amortization of debt issuance
costs
(695,579)
(251,515)
(1,141,783)
(325,313)
Exchange differences
(1,168,861)
(245,229)
(705,420)
(402,386)
Other income / - expenses
(23,685)
(19,726)
(49,326)
(78,250)
Total other income / - expenses
$ (3,185,734)
(1,350,333)
(4,516,265)
(2,194,436)
Loss before income taxes
$ (4,555,316)
(2,721,695)
(7,742,314)
(5,617,790)
Income Taxes
-
-
(1,152)
-
Net loss
$ (4,555,316)
(2,721,695)
(7,743,464)
(5,617,790)
Comprehensive income /(loss)
Foreign currency translation
(1,434,959)
153,809
(2,485,163)
(51,003)
Comprehensive income / (loss)
$ (5,990,275)
(2,567,886)
(10,228,627)
(5,668,793)
Loss per common share
Basic and diluted
$
(0.05)
(0.03)
(0.08)
(0.06)
Weighted average common shares
Basic and diluted
92,941,603
87,041,603
92,775,305
86,646,575
The accompanying notes are an integral part of these consolidated financial statements.
5
SUNVESTA, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY
(DEFICIT)
Common
Additional
Accumulated
Accumulated
Total
Stock
Paid in
Other
deficit
Stockholders
’
Capital
Comprehensive
Equity
Income (Loss)
(Deficit)
December 31, 2014
$
835,416
$
22,942,486
$
1,265,590
$
(47,674,581)
$
(22,631,089)
Net
loss
-
-
-
(7,743,464)
(7,743,464)
Translation adjustments
-
-
(2,485,163)
-
(2,485,163)
Stock based compensation
-
280,142
-
-
280,142
expense
June 30, 2015
$
835,416
$
23,222,628
$
(1,219,573)
$
(55,418,045)
$
(32,579,574)
The accompanying notes are an integral part of these consolidated financial statements.
6
SUNVESTA, INC.
CONSOLIDATED STATEMENTS OF
CASH
FLOWS
January 1 to
January 1 to June
June 30, 2015
30, 2014
Unaudited
Unaudited
Cash flows from operating activities
Net loss
$
(7,743,464)
(5,617,790)
Adjustments to reconcile net loss to net cash
Depreciation and amortization
33,921
28,580
Amortization of debt issuance cost and commissions
1,025,915
325,313
Unrealized exchange differences
494,736
(88,072)
Stock compensation expense
280,142
765,495
Increase in pension fund commitments
-
660
- Increase / decrease in:
Other current assets
(115,260)
(407,786)
Accounts payable
(898,510)
(710,521)
Accrued expenses
3,115,782
2,561,402
Net cash used in operating activities
(3,806,738)
(3,142,719)
Cash flows from investing activities
Other receivables from related parties
3,988
(966,455)
Receivables from related parties
(1,507,128)
-
Purchase of property and equipment
(2,883,516)
(3,965,275)
Deposits related to construction
3,311
(106,744)
Down payments for property and equipment
(307,841)
-
Restricted cash
16
-
Net cash used in investing activities
(4,691,170)
(5,038,474)
Cash flows from financing activities
Decrease in bank liabilities
(153,375)
-
Proceeds from notes payable related parties
1,344,348
1,567,271
Repayment of notes payable related parties
-
(1,618,935)
Note payable and other long term debts
-
1,609,678
Proceeds from bond issuance, net of commissions
8,865,020
15,095,202
Repayment of bonds
-
(5,729,712)
Payment for debt issuance costs
(689,953)
(2,939,537)
Changes in note payable
(174,760)
-
Purchase/Sale of treasury stock
-
10,300
Net cash provided by financing activities
9,191,280
7,994,267
Effect of exchange rate changes
1,109
(81,183)
Net increase / - decrease in cash
694,481
(268,109)
Cash and cash equivalents, beginning of period
14,347
629,673
Cash and cash equivalents, end of period
$
708,828
361,564
Additional information
Capitalized interest and debt issuance costs for construction (non-cash)
1,574,000
1,376,999
Repayment of Specogna Holding AG loan by Aires
707,428
-
Interest paid
163,523
-
Assumption of receivables from Josef Mettler by AIRES (non-cash)
1,507,128
-
The accompanying notes are an integral part of these consolidated financial statements.
7
SUNVESTA,
INC.
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
1.
CORPORATE INFORMATION
On August 27, 2007,
SunVesta Inc.
(
“
SunVesta
”
) acquired
SunVesta Holding AG
(
“
SunVesta
AG
”
)
(collectively
“
the
Company
”
).
SunVesta
AG
holds
five
wholly-owned
subsidiaries:
SunVesta
Projects
and
Management
AG,
a
Swiss
company;
Rich
Land
Investments
Limitada,
a
Costa
Rican
company
(
“
Rich
Land
”
);
SunVesta
Costa
Rica
Limitada,
a
Costa
Rican
company
(
“
SVCR
”
),
Altos
del
Risco
SA,
a
Costa
Rican
company
(
“
AdR
”
)
and
SunVesta
Holding
Espana
SL.
In
January
2005,
the
Company
changed its
business
focus
to the
development
of holiday
resorts
and
investments
in
hospitality
and
related
industries.
The
Company
has
presently
one
major
project
in
Costa
Rica.
Planning
for
this
project
has
been
fully
completed
and
all
permits
have
been granted, including the permit required under
“
Article 21
”
in connection with access to the
beachfront
associated
with
the
project.
Excavation
work
began
in
March
2013
and
site
work
continues.
The
Company
is
still
in
process
of
completing
the
financing
of
the
project
and
has
not realized revenue to date. Since the financing of the Costa Rican project is not complete, the
Company
’
s activities are subject to significant risks and uncertainties.
These
consolidated
financial
statements
are
prepared
in
US
Dollars
on
the
basis
of
generally
accepted accounting principles in the United States of America (
“
US GAAP
”
).
The accompanying unaudited interim consolidated financial statements have been prepared
by
management
in
accordance
with
the
instructions
in
Form
10-Q
and,
therefore,
do
not
include
all information and footnotes required by generally accepted accounting principles and should,
therefore,
be
read in conjunction with
the
Company
’
s
Form
10-K,
for
the
year ended December
31, 2014, 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, 2015.
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,
2014,
filed
with
the
Securities
and
Exchange
Commission.
2.
SIGNIFICANT ACCOUNTING POLICIES
New
accounting standard updates
In
August
2014,
the
Financial
Accounting
Standards
Board
(FASB)
issued
Accounting
Standards Updates (ASU) 2014-15 requiring an entity
’
s management to evaluate whether there
are
conditions
or
events,
considered
in
aggregate,
that
raise
substantial
doubt
about
entity
’
s
ability
to continue
as
a going
concern
within
one
year
after
the
date
that
the
financial
statements
are
issued
(or
within
one
year
after
the
date
that
the
financial
statements
are
available
to
be
issued when
applicable).
The
amendments
to (ASU)
2014-15
are
effective
for
the
annual
period
ending
after
December
15,
2016,
and
for
annual
periods
and
interim
periods
thereafter.
Early
application
is
permitted.
The
Company
is
in
the
process
of
evaluating
the
prospective
impact
of (ASU) 2014-15 will have on its balance sheet.
8
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
2.
SIGNIFICANT ACCOUNTING POLICIES
-
C
ontinued
In April
2015,
the
Financial Accounting
Standards
Board (FASB)
issued Accounting
Standards
Updates
(ASU)
2015-03
which
requires
that
debt
issuance
costs
be
reported
in
the
balance
sheet
as a direct deduction from
the face amount of
the related
liability,
consistent with
the
presentation of debt discounts. Prior to the amendments, debt issuance costs were presented as
a deferred charge (i.e., an asset) on the balance sheet. The ASU provides examples illustrating
the
balance
sheet
presentation
of
notes
net
of
their
related
discounts
and
debt
issuance
costs.
Further,
the
amendments
require
the
amortization
of
debt
issuance
costs
to
be
reported
as
interest expense. Similarly, debt issuance costs and any discount or premium are considered
in
the
aggregate
when
determining
the
effective
interest
rate
on
the
debt.
The
amendments
to
(ASU)
2015-03
are
effective
for
the
annual
period
ending
after
December
15,
2015,
and
for
annual
periods
and
interim
periods
thereafter.
The
amendments
must
be
applied
retrospectively.
Early
application
is
permitted.
The
Company
expects
this
ASU
to
change
the
presentation
of
its debt issuance costs.
3.
GOING CONCERN
The Company is currently working on building a hotel in the Papagayo Gulf Tourism Project
area of Guanacaste, Costa Rica. The project is expected to open in the third
quarter of 2017.
Until the completion of the project, the following expenditures are estimated to be incurred:
a. Gross project cost
$
208,000,000
b. Less: Proceeds from sale
of villas
(25,000,000)
c. Net project cost
183,000,000
d. Overhead expenses
27,000,000
e. Subtotal
210,000,000
f.
Less: Recuperated in gross project
cost
(12,000,000)
g. Total, excluding other potential projects
$
198,000,000
Sixty
percent
(60%)
of
the
net
project
cost
is
intended
to
be
financed
through
the
issuance
of
secured
bonds,
for which negotiations
have been
initiated.
The remaining forty percent (40%)
of
the
net
project
cost,
as
well
as
non-recuperated
overhead
expenses
are
intended
to
be
financed
by
the
main
shareholders
or
lenders
of the
project
in
the
event
that
alternative
means of
financing
the
remainder
of
the
project
are
not
available,
i.e.
Zypam
Ltd.,
shareholder
and
related
entity
to
Mr.
Josef
Mettler,
Mr.
Hans
Rigendinger,
shareholder,
Company
Director
and
Chief
Operating Officer, Dr. Max R
ӧ
ssler, controlling shareholder of Aires International Investment,
Inc.
and
Company
Director,
Mr.
Josef
Mettler,
shareholder,
Company
Director,
Chief
Executive Officer and Chief Financial Officer.
On
July
16,
2012,
certain
principal
shareholders
of
the
Company
or
principal
lenders
to
the
project
entered into a
guaranty
agreement
in
favor
of 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
requested
funds
are
made
available
by
the
guarantors
to
the
Company.
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
June
30,
2015
and
the
filing
date,
though
future
anticipated
cash
outflows
for
investing
activities
will
continue
to
depend on the availability of financing.
9
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
4.
CASH AND CASH EQUIVALENTS
Cash
and
cash
equivalents
are
available
to
the
Company
without
any
restriction
or
limitation
on
withdrawal
and/or
use
of
these
funds.
The
Company
’
s
cash
equivalents
are
placed
with
financial
institutions
that
maintain
high
credit
ratings.
The
carrying
amounts
of
these
assets
approximate their fair value.
Cash
& cash
USD ($)
EURO
CHF
CRC
Total
Total
equivalents
June 30, 2015
December 31, 2014
original currency
17,773
10,733 633,834,
84,135
in $
17,773
11,908 678,992
155
708,828
14,347
USD ($) =
US Dollar
EURO =
Euro
CHF
=
Swiss Francs
CRC
=
Costa Rican Colón
5.
RESTRICTED CASH
As of June 30, 2015, the Company has the following restricted cash positions:
June 30,
December 31,
Restricted Cash
2015
2014
$
$
Credit Suisse in favor of
BVK
Personalvorsorge
des Cantons Zurich
136,887
129,272
HSBC in favor of
Costa Rican Tourism Board
370,000
370,000
Banco Nacional de Costa Rica in favor of the
Costa Rican Environmental Agency
–
SETENA
622,312
622,312
Banco National de
Costa Rica in favor of the
Costa
Rican Tourism
Board
563,350
563,350
Gross
1,692,549
1,684,934
Restricted cash
positions
in favor
of Costa
Rican
Tourism Board and Costa
Rican
Environmental Agency
–
SETANA are related to the hotel project in Costa Rica and therefore
their
release
is
not
expected
before
finalization
of
the
corresponding
project.
Due
to
this
fact
these restricted cash positions have been classified as long term.
The
restricted
cash
position
in
favor
of
BVK
Personalvorsorge
des
Cantons
Zurich
is
a
rental
deposit
related
to
a
long-term
lease
contract
for
office
space.
Due
to
this
fact,
this
restricted
cash position is also classified as long term.
10
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
6.
PROPERTY & EQUIPMENT
June 30, 2015
December 31, 2014
Land
$
19,700,000
19,700,000
IT Equipment
185,846
185,846
Other equipment and furniture
283,776
277,557
Leasehold improvements
66,617
66,617
Vehicles
139,000
139,000
Construction in-process
35,733,075
31,275,559
Gross
56,108,314
51,644,579
Less accumulated depreciation
(477,148)
(443,227)
Net
$
55,631,166
51,201,352
Depreciation
expenses for the
period ended
June 30, 2015 and 2014
33,921
14,194
Property
and
equipment
is
comprised
primarily
of
land
held
in
Costa
Rica
that
is
currently
being
developed for hotels and capitalized project costs in connection with the Papagayo Gulf
Tourism
project.
The
land
amounts
to
$19.7
million
comprised
of
$7
million
related
to
the
concession held by Rich Land (~84,000 m2) and $12.7 million held by AdR (~120,000 m2).
The Rich Land concession is a right to use the property for a specific period of time of initially
20
years
from
the
date
of
grant,
which
thereafter
can
be
renewed
at
no
further
cost,
if
the
landholder is up to date with its obligations and if there is no significant change in government
policies. The current concession expires in June 2022.
The AdR concession is also
a right to
use the property for a specific period
of
time of initially
30
years
from
the
date
of
grant,
which
thereafter
can
be
renewed
at
no
further
cost,
if
the
landholder is up to date with its obligations and if there is no significant change in government
policies. The current concession expires in November 2036.
On
July
14,
2015
the
Consejo
del
Polo
de
DesarrolloTuristico
Papagayo
at
ICT
(Council
of
Papagayo
Tourism
Development
Project),
unanimously
has
approved
the
extension
of
both
concessions until 2052.
The
construction
in
process
through
December
31,
2014
and
June
30,
2015,
is
represented
primarily by architectural work related
to
the
hotel and
apartments as well
as
site
work on the
respective properties.
Deposit related to
construction work
During
the
quarter
ended
June
30,
2015,
most
of
the
main
earthmoving
groundwork
has
been
completed
for
which
work
the
Company
has
paid
several
deposits
to
contractors.
These
deposits
will
be
offset
against
invoices
for
such
groundwork.
As
of
June
30,
2015
and
December
31,
2014,
the
Company
has
deposits
of
$817,410
and
$820,565
respectively,
which
have
not
yet
been set off.
11
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
7.
DOWN PAYMENTS FOR PROPERTY & EQUIPMENT
June 30, 2015
December 31, 2014
La Punta (adjacent
concession) and close concession
$
2,669,816
2,369,816
Gross
$
2,669,816
2,369,816
Total (net)
$
2,669,816
2,369,816
Agreement to purchase neighboring pieces of land
On April 20, 2012, the Company entered into an agreement to purchase two additional
concession properties located at Polo Papagayo, Guanacaste, Costa Rica with a total surface of
approximately 230,000 square meters for $22,895,806, whereof fifty percent was to be paid
in
cash and the other fifty percent through a combination of a 10 percent equity share in La Punta
(one
of
the
concession
properties
in
Polo
Papagayo)
and
a
five
percent
in
equity
of
Paradisus
Papagayo
Bay
Resort
&
Luxury
Villas
(currently
under
development).
The
payment
schedule
was as follows:
-
$0.5 million is required as a cash payment by
May 16, 2012
-
$5.0 million is required as a cash payment by August 31, 2012
-
$5.698 million is required as a cash payment by
January 31, 2013
-
Equity is required to be transferred upon final payment
On
November
13,
2012,
the above
agreement was
amended to decrease
the total
purchase
price
to
$17.2
million with
no
equity
shares.
The
terms and
conditions of
the
cash payment
were
to
be
defined.
Furthermore,
all
payments
by
the
Company
to
date
and
in
the
future
were
to
be
refundable in the event the Company did not complete the purchase. During the second quarter
of
2013,
the
Company
entered
into
a
new
agreement
for
the
purchase
of
the
two
additional
concession properties. The original contract as described above was cancelled and replaced by
a new contract, which included the following clauses:
-
The
total purchase price
is $17,500,000 of which $1,369,816 has been paid as of date
of the
new agreement
and therefore
$16,130,184
remained outstanding as per date of the new
agreement.
-
Since
the original seller of these
two additional concession properties at Polo Papagayo, Guanacaste owed a
third party
$8,000,000 the
Company was to pay
$8,000,000 of the
purchase
price directly to this third party
instead of the original seller. The
remaining $8,130,184 was to be
paid directly to the original seller of the
concession properties.
-
The
payment schedule
for these two additional concession properties at Polo Papagayo Guanacaste
was as
is detailed
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
12
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
7.
DOWN PAYMENTS FOR PROPERTY & EQUIPMENT -
C
ontinued
Original Seller
-
$1,000,000 on January
31, 2014 which has not been paid as of the date of this report and is non-refundable.
-
$1,000,000 on February 28, 2014 which has not been paid as of the
date of this report and is non-
refundable.
-
$1,000,000 on March 31, 2014 which has not been paid
as of the date
of this report and is
non-refundable.
-
$1,000,000 on April 30, 2014 which has not been paid as of the date
of this report and is
non-refundable.
-
$1,000,000 on May 31, 2014 which has not been paid as of the date of this report and is non-refundable.
-
$1,000,000 on June 30, 2014 which has not been paid as of the date of this report and is non-refundable.
-
$1,000,000 on July
31, 2014 which has not been paid as
of the
date of this report and is non-refundable.
$1,130,184 on August 31, 2014 which has not been paid as of the
date of this report and is non-refundable
.
$8,130,184 in total to Original Seller
The
Company
had
paid
down-payments
on
the
purchase
of
these
properties
of
$2,669,816
as
of
June
30,
2015,
of
which
$300,000
was
paid
in
refundable
payments
during
the
six
months
period ended June 30, 2015. The Company is in discussions with the Original Seller regarding
an
extension
of
the
agreement.
Should
the
Company
not
be
successful
in
obtaining
a
time
extension
for
the
payment
of
the
purchase
price
or
amendment
to
the
purchase
agreement,
it
will have to write-off $300,000 of that purchase price already paid.
13
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
8.
FAIR VALUE MEASUREMENT
The
guidance
on
fair
value
measurements
defines
fair
value
as
the
exchange
price
that
would
be
received
for
an
asset
or
paid
to
transfer
a
liability
(an
exit
price)
in
the
principal
or
most
advantageous market for the asset or liability in an orderly transaction between market
participants. This guidance also specifies a fair value hierarchy based upon the observability of
inputs used in
valuation
techniques. Observable
inputs
(highest
level)
reflect market
data
obtained
from independent sources,
while unobservable inputs (lowest level) reflect internally
developed market assumptions.
In accordance with this guidance, fair value measurements are
classified under the following hierarchy:
Level 1
Quoted prices for identical instruments in active markets.
Level 2
Quoted
process
for
similar
instruments
in
active
markets, quoted
prices
for
identical
or
similar
instruments
in
markets
that
are
not
active;
and
model-derived
valuations
in
which
significant
inputs or significant
value
drivers are observable in active markets.
Level 3
Model
derived
valuations
in
which
one
or
more
significant
inputs
or
significant
value-drivers
are unobservable.
When
available,
the
Company
uses
quoted
market
prices
to
determine
fair
value,
and
classify
such
measurements
within
Level
1.
In
some
cases
where
market
prices
are
not
available,
the
Company
makes
use
of
observable
market
based
inputs
to
calculate
fair
value,
in
which
case
the
measurements
are
classified
within
Level
2.
If
quoted
or
observable
market
prices
are
not
available,
fair
value
is
based upon
internally
developed models
that
use,
where
possible,
current
market-based
parameters
such
as
interest
rates,
yield
curves
and
currency
rates.
These
measurements are classified within Level 3.
Fair value measurements are classified
according to
the lowest level input or value-driver that
is significant to the valuation. A measurement may therefore be classified
within Level 3 even
though there may be significant inputs that are readily observable.
Fair
value
measurement
includes
the
consideration
of
nonperformance
risk.
Nonperformance
risk
refers
to
the
risk
that
an
obligation
(either
by
counterparty
or
the
Company)
will
not
be
fulfilled.
For
financial
assets
traded
in
an
active
market
(Level
1),
the
nonperformance
risk
is
included
in
the
market
price.
For
certain
other
financial
assets
and
liabilities
(Level
2
and
3),
the Company
’
s fair value calculations have been adjusted accordingly.
As
of
June
30,
2015
and
December
31,
2014,
respectively,
there
are
no
financial
assets
or
liabilities measured on a recurring basis at fair value.
In addition to
the methods and
assumptions to
record
the fair value of financial instruments as
discussed above,
the
Company
used the
following
methods
and assumptions
to estimate
the
fair
value of our financial instruments:
14
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
8.
FAIR VALUE MEASUREMENT -
Continued
—
Cash and cash
equivalents
–
carrying amount approximated fair value.
—
Restricted
cash
–
carrying amount approximated fair value.
—
Receivables from
related parties (current)
–
carrying amount approximated fair value
due
to the
short term
nature
of
the
receivables.
—
Accounts Payable
–
carrying amount approximated fair value.
—
Note payable
–
carrying amount approximated fair value due
to the
short term
nature of the note
payable.
—
Bank liabilities -
carrying amount approximated fair value due
to the
short term nature of bank liabilities.
—
Notes
payable to
related
parties
-
Dr.
M.
R
ӧ
ssler (current)
–
The fair
value
was
calculated
based
on
the
underlying
publically
traded
shares.
However,
the
Company
records
the
loan
at
nominal
value.
The
Company
does
not
have
sufficient
cash to repurchase
the
shares as of balance
sheet date
and hence
repay
the loans in shares.
—
Notes
payable to
related
parties
–
(current)
–
carrying
amount
approximated
fair
value due to
the short
term nature
of the
notes payable.
—
EUR
–
bond (old)
–
carrying amount approximated fair value due
to its short term nature
—
EUR- bonds
–
The fair values
of the bonds payable
are classified as
level 3 fair values. The
fair values of the
bonds
have been
determined
by discounting
cash
flow
projections
discounted
at
the respective interest
rates
of
7.25% for
EUR
bonds,
which
represents
the
current
market
rate
based
on
the
creditworthiness
of
the
Company.
Hence,
the
carrying values approximate fair value.
—
CHF-bonds
–
The fair values
of the bonds
payable are classified as
level 3
fair values. The fair
values
of the bonds
have been
determined by discounting
cash
flow projections
discounted
at
the respective interest
rates
of 7.25%
for
CHF
bonds,
which
represents
the
current
market
rate
based
on
the
creditworthiness
of
the
Company.
Hence,
the
carrying values approximate fair value.
—
Notes
payable to
related
parties
–
Aires
(non-current)
–
The fair
values
of
the
notes
payable
to
Aires
International
Investments
Inc.
are
classified
as
level
3.
The
fair
values
of
the
notes
were
determined
by
discounting
cash
flow
projections
discounted
at
the
respective
interest
rates
of
7.25%,
which
represents
the
current
market
rate
based
on
the creditworthiness of the
Company. Hence, the carrying value
approximates fair value.
The fair value of our financial instruments is presented in the table below:
June 30, 2015
December 31, 2014
Carrying
Fair Value Carrying
Fair Value
Fair Value
Amount
Amount
Reference
$
$
$
$
Levels
Cash and cash
equivalents
708,828
708,828
14,347
14,347
1
Note 4
Restricted
cash
1,692,549
1,692,549
1,684,934
1,684,934
1
Note 5
Receivables from
related
parties
–
other (current)
23,933
23,933
27,163
27,163
3
Note 9
Accounts Payable
5,521,040
5,521,040
6,181,057
6,181,057
1
-
Bank liabilities
-
-
153,375
153,375
1
Note11
Note payable
2,167,396
2,167,396
3,023,759
3,023,759
1
Note 17
Notes payable
to related
parties
–
Dr. M. R
ӧ
ssler
850,770
850,770
803,223
765,890
1
Note 9
(current)
Notes payable
to related
parties
–
Rigendinger
2,027
2,027
1,914
1,914
3
Note 9
(current)
Notes payable
to related
parties
–
other (current)
449,439
449,439
356,963
356,963
3
Note 9
EUR-bonds
8,589,905
8,589,905
9,057,986
9,057,986
3
Note 12
CHF-bonds
35,947,733
35,947,733
25,511,898
25,511,898
3
Note 12
Notes payable
to related
parties
–
Aires (non-
32,631,771
32,631,771 30,299,312
30,299,312
3
Note 9
current)
15
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
9.
RECEIVABLES FROM AND PAYABLES TO RELATED PARTIES
The advances from (to) related parties are composed as follows:
Receivables
Payables
June 30, 2015
December 31,
June 30, 2015
December 31,
2014
2014
1
Hans Rigendinger
-
-
2,027
1,914
2
Aires
International
-
-
32,631,771
30,299,312
3
Dr. Max R
ӧ
ssler
-
-
850,770
803,223
4
Akyinyi Interior and
Exterior Decoration
-
-
230,000
170,000
5
Global Care
AG
-
-
219,439
186,963
6
Geoffrey Long
23,933
27,163
-
-
Total excluding
interest
23,933
27,163
33,934,007
31,461,412
Accrued interest
-
-
5,396,199
3,818,494
Total
23,933
27,163
39,330,206
35,279,906
of which non-current
-
-
32,631,771
30,299,312
Related party
Capacity
Interest
Repayment
Rate
Terms
Security
1 Hans Rigendinger
Shareholder, COO and Company board member
3%
none
none
2 Aires
International
*** see hereinafter
***
3 Dr. Max R
ӧ
ssler
*** see hereinafter
***
4 Akyinyi Interior
and Exterior
Company owned by the wife of Josef Mettler
none
none
none
Decoration
5 Global Care
AG
Company owned by Dr. Max Rössler
none
none
none
6 Geoffrey Long
Head of Accounting
“
The Americas
”
none
none
none
Loan agreement Aires International Investment Inc.
As of June 30, 2015, the Company owes Aires International Inc. the following:
Borrower
Debt instrument
Amount in CHF
Amount in
Annual
Repayment
date
denominated in
USD
interest
*
CHF
rate
SunVesta Inc.
Promissory note
10,143,053
10,855,746
7.25 %
Dec 31, 2017
SunVesta Inc.
Promissory note
10,000,000
10,702,627
7.25 %
Dec 31, 2017
SunVesta Inc.
Promissory note
10,000,000
10,702,627
7.25 %
Dec 31, 2017
SunVesta Holding
Loan agreement
346,374
370,771
7.25 %
Dec 31, 2017
Total
32,631,771
*
The notes may be repaid in whole or in part.
16
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
9.
RECEIVABLES FROM AND PAYABLES TO RELATED PARTIES -
Continued
Loans Dr. Max R
ӧ
ssler
As of June 30, 2015 the Company owes Dr. Max Rössler the following:
Debt instrument
Securities
Amount in
Amount in Annual interest Repayment
date
CHF
USD
rate
Securities
10,000 shares
427,048
457,127
*
May 30, 2016
lending
Schindler
Holding
Securities
700 shares Zug
367,741
393,643
*
May 30, 2016
lending
Estates Holding
Total
794,789
850,770
May 30, 2016
*
The Company is not required to pay any interest and can repay the loans either in cash
or with the delivery of the respective shares.
Loan Global Care AG
During
2014,
Global
Care
AG
loaned
the
Company
$191,849
(CHF
185,000),
which
amount
was
repayable
on
October
31,
2014.
The
loan
includes
a
fixed
interest
payment
of
$20,740
(CHF
20,000).
As
of
the
date
of
this
report,
both
amounts
are
overdue.
According
to
the
agreement, there are no penalties for late payment.
Receivable from Josef Mettler
On
June
30,
2015,
Aires
International
Investments,
Inc.
absorbed
the
Company
’
s
receivables
from
Mr.
Mettler
in
the
amount
of
$
1,507,128
(CHF 1,419,412) by
crediting
the
amount
due
to
the Company against the amount due from the Company to
Aires.
There are no
outstanding
receivables from Mr. Mettler as of June 30, 2015.
17
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
10.
RELATED PARTY TRANSACTIONS
Commissions paid or payable to related parties
During
the
three
month
periods
ended
June
30,
2015,
and
June
30,
2014,
the
Company
paid
commissions
to
4f
capital
ag
in
the
amount
of
$803
and
$42,500,
respectively,
for
services
related
to
financing
the
Company.
During
the
six
months
periods
ended
June
30,
2015,
and
June
30,
2014,
the
Company
paid
commissions
to
4f
capital
ag
in
the
amount
of
$29,984
and
$103,000, respectively These costs have been capitalized to debt issuance costs. 4f capital ag is
a company owned and directed by Mr. Mettler (Board Member and CEO of the Company) that
receives
a
commission
of
1.5%
for
new
funds
that
the
Company
receives
based
on
consulting
services rendered by 4f capital ag.
Hans Rigendinger
In 2013, the Company borrowed $600,000 at 3% interest from Hans Rigendinger. The amount
due to Mr. Rigendinger for this loan at June 30, 2015 was $2,027.
Mr.
Rigendinger
also
held
bonds
denominated
in
Euros
and
Swiss
Francs
valued
at
approximately $3,853,000 as of June 30, 2015 and December 31, 2014.
Service fees paid or payable to Akyinyi Interior and Exterior Decoration
During the three months periods ended June 30,
2015,
and June 30,
2014, the Company paid or
accrued
fees
to
Akyinyi
Interior
and
Exterior
Decoration,
which
is
a
company
owned
by
Mr.
Mettler
’
s
wife,
for
services
related
to
interior
design
plans
for
the
Papagayo
Gulf
Tourism
project
in
the
amounts
of
approximately
$30,000
and
$30,000
respectively.
During
the
six
months periods ended
June 30,
2015, and
June 30, 2014,
the Company paid
or accrued
fees
to
Akyinyi
Interior
and
Exterior
Decoration
in
the
amounts
of
approximately
$60,000
and
$60,000
respectively. These costs have been capitalized to property and equipment.
Consulting Fees paid or payable to Cambridge Limited Corp.
During
the
three
months
periods
ended
June
30,
2015,
and
June
30,
2014,
the
Company
paid
fees to Cambridge Limited Corporation, which is a company owned by
Mr.
Mettler
’
s father-in-
law.
These
fees
related
to
accounting
and
consulting
services
rendered
in
Costa
Rica
for
the
Company
in
the
amount
of
$43,500
and
$43,500
respectively.
During
the
six
months
periods
ended June 30, 2015, and June 30, 2014, the Company paid fees to Cambridge Limited
Corporation in the amount of $87,000 and $87,000 respectively.
11.
BANK LIABLITIES
There
is
no
bank
liability
at
June
30,
2015.
The
bank
liability
at
December
31,
2014,
represented
a temporary, secured overdraft facility, bearing an interest rate of 8.9%.
18
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
12.
BONDS
Description
EUR (
€
) bond old (repaid)
CHF bond I
Issuer:
SunVesta Holding AG
SunVesta Holding AG
Type of securities:
Bond in accordance with Swiss law
Bond in accordance with Swiss law
Approval by
SunVesta AG BOD:
May 12, 2010
June 3, 2011
Volume:
Up to
€
25,000,000
Up to CHF 15,000,000
Units:
€
1,000
CHF 50,000
Offering period:
11/10/2010
–
04/30/2011
09/01/2011
–
02/28/2012
Due date:
November 30, 2013
August 31, 2015
Issuance
price:
100 %
100%
Issuance day:
December 1, 2010
September 1, 2011
Interest rate:
8.25% p.a.
7.25% p.a.
Interest due dates:
November 30 of each year,
August 31 of each year,
the
first time November 30, 2011
the
first time August 31, 2012
Applicable law:
Swiss
Swiss
Description
EUR (
€
) bond new I
CHF bond II
(parallel)
Issuer:
SunVesta Holding AG
SunVesta Holding AG
Type of securities:
Bond in accordance with Swiss law
Bond in accordance with Swiss law
Approval by
SunVesta AG BOD:
October 31, 2013
May 19, 2014
Volume:
Up to
€
15,000,000
CHF 15,000,000
Units:
€
10,000
CHF 10,000
Offering period:
11/07/2013
–
03/31/2014
05/01/2014
–
06/30/2014
Due date:
December 2, 2016
August 31, 2015
Issuance
price:
100%
100 %
Issuance day::
December 2, 2013
September 01, 2013 (retroactive)
Interest rate:
7.25% p.a.
7.25 % p.a.
Interest due dates:
December 2, 2013
August 31
Applicable law:
Swiss
Swiss
19
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
12.
BONDS
-
continued
Description
EUR (
€
) bond new II (parallel)
Issuer:
SunVesta Holding AG
Type of securities:
Bond in accordance with Swiss law
Approval by
SunVesta AG BOD:
May 19, 2014
Volume:
Up to EUR 15,000,000
Units:
EUR 10,000
Offering period:
05/01/14
–
06/30/14
Due date:
December 02, 2016
Issuance
price:
100 %
Issuance day::
December 02, 2013 (retroactive)
Interest rate:
7.25 % p.a.
Interest due dates:
December 02
Applicable law:
Swiss
The nominal amounts have changed as follows:
CHF Bond
CHF Bond
CHF BOND I
2015
2014
$
$
Balances January 1
10,802,722
8,558,443
Cash inflows
-
5,542,245
Cash outflows
-
-
Foreign currency adjustments
837,727
(953,513)
Reclassifications to
CHF Bond II
-
(2,147,983)
Sub-total
11,640,449
10,999,192
Discounts (commissions paid to bondholders)
(670,764)
(670,764)
Accumulated amortization of discounts
600,638
474,294
Unamortized discounts
(70,126)
(196,470)
Balances June 30 and
December 31(Carrying
value)
11,570,323
10,802,722
The reclassification was made from CHF bond I to CHF bond II. As CHF bond II has identical
terms as CHF bond I, this reclassification is neither an extinguishment nor a modification.
As per date of this report the Company has realized a cumulative amount of CHF 10.85 million
($11.12 million) related to CHF Bond I.
20
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
12.
BONDS
-
continued
EUR-Bond
EUR-Bond
(new)
(new)
2015
2014
$
$
Balances January 1
7,342,995
6,757,065
Cash inflows
281,752
1,562,402
Cash outflows
-
-
Foreign currency adjustments
(601,127)
(963,896)
Sub-total
7,023,620
7,355,572
Discounts (commissions paid to bondholders)
(23,753)
(17,305)
Amortization of discounts
8,315
4,729
Unamortized discounts
(15,438)
(12,576)
Balances June 30 and December 31(Carrying
value)
7,008,182
7,342,995
As per date of this report the Company has realized a cumulative amount of EUR 6.30 million
($7.02 million) related to the EURO Bond I.
EUR-Bond
EUR-Bond
EURO BOND I
old
old
2015
2014
$
$
Balances January 1
-
5,786,248
Cash inflows
-
-
Cash outflows
-
(5,729,712)
Foreign currency adjustments
-
(56,536)
Sub-total
-
-
Discounts (commissions paid to bondholders)
-
(248,195)
Amortization of discounts
-
248,195
Unamortized discounts
-
-
Balances June 30 and December 31(Carrying
value)
-
-
21
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
12.
BONDS
-
Continued
CHF Bond II
CHF Bond II
CHF BOND II
2015
2014
$
$
Balances January 1
14,709,176
-
Cash inflows
8,583,267
12,912,402
Cash outflows
-
-
Foreign currency adjustments
1,575,334
243,843
Reclassifications from
CHF Bond I
-
2,147,983
Sub-total
24,867,777
15,304,228
Discounts (commissions paid to bondholders)
(1,434,679)
(1,041,917)
Accumulated amortization of discounts
944,312
446,864
Unamortized discounts
(490,367)
(595,052)
Balances June 30 and December 31(Carrying
value)
24,377,410
14,709,176
As
per
date
of
this
report
the
Company
has
realized
a
cumulative
amount
of
CHF 25.04 million ($25.66 million) related to CHF Bond II.
EUR-Bond
EUR-Bond
EURO BOND NEW II
new II
new II
2015
2014
$
$
Balances January 1
1,714,991
-
Cash inflows
-
1,960,226
Cash outflows
-
-
Foreign currency adjustments
(96,789)
(198,968)
Sub-total
1,618,205
1,761,258
Discounts (commissions paid to bondholders)
(59,740)
(59,740)
Amortization of discounts
23,256
13,473
Unamortized discounts
(36,484)
(46,266)
Balances
June
30 and December 31(Carrying
value)
1,581,721
1,714,991
As per date of this report the Company has realized a cumulative amount of EUR 1.44 million
($1.61 million) related to the EURO Bond new II.
22
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
13.
PENSION PLAN
The
Company
maintains
a
pension
plan
covering
all
employees
in
Switzerland.
The
plan
is
considered
a
defined
benefit
plan
and
accounted
for
in
accordance
with
ASC
715
Compensation
- Retirement Benefits
. This model allocates pension costs over the service period of employees
in the plan. The underlying principle is that employees render services ratably over this period,
and
therefore,
the
income
statement
effects
of
pensions
should
follow
a
similar
pattern.
ASC
715
requires
recognition
of the
funded status,
or
difference
between
the
fair
value
of plan
assets
and
the
projected
benefit
obligations
of
the
pension
plan
on
the
balance
sheet,
with
a
corresponding
adjustment
recorded
in
the
net
loss.
If
the
projected
benefit
obligation
exceeds
the
fair
value
of
plan
assets,
then
that
difference
or
unfunded
status
represents
the
pension
liability.
The Company records a net periodic pension cost in the statement of comprehensive loss.
The
liabilities
and annual
income
or
expense
of the pension
plan
is
determined using
methodologies
that
involve
several
actuarial
assumptions,
the
most
significant
of
which
are
the
discount
rate
and
the
long-term
rate
of
asset
return
(based
on
the
market-related
value
of
assets).
The
fair
values of plan assets are determined based on prevailing market prices.
Actuarial valuation
Net periodic pension cost has been included in the Company
’
s results as follows:
Three months
Six months
Three months
Six months
Pension
expense
ended
ended
ended June 30,
ended
June 30, 2015
June 30, 2015
2014
June 30, 2014
$
$
$
$
Current service cost
14,648
29,296
14,147
28,294
Net actuarial (gain) loss recognized
-
-
(169)
(338)
Interest cost
1,348
2,696
1,494
2,987
Expected return on assets
(1,659)
(3,318)
(1,550)
(3,100)
Employee contributions
(5,963)
(11,926)
(5,918)
(11,836)
Net periodic pension
cost
8,374
16,748
8,004
16,007
During
the
three
month
periods
ended
June
30,
2015
and
June
30,
2014
the
Company
made
cash contributions of $6,104 and $5,915, 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, 2015 are $11,926.
23
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
14.
STOCK COMPENSATION
The Company has included
share based
compensation based
on the Company
’
s SunVesta Inc.
Stock
Option
Plan
2013
(
“
the
Plan
”
)
as
part
of
the
total
remuneration
in
certain
new
employment
and
Board
of
Director
’
s
contracts.
The
Company
is
authorized
up
to
50,000,000
shares under the Plan.
The purpose of the Plan is to advance the interests of the Company by encouraging its
employees
to
remain
associated
with
the
Company
and
assist
the
Company
in
building
value.
Such
share
based remuneration
includes either shares or
options
to acquire shares
of the
Company
’
s common stock.
For
all
employees,
fair
value
is
estimated
at
the
grant
date.
Compensation
costs
for
unvested
shares are expensed over the requisite service period on a straight-line basis.
Share Grants
–
Mr. Hans Rigendinger
On
January
1,
2013,
the
Company
granted
to
Hans
Rigendinger
3,500,000
common
shares,
valued at $0.08 which was the share price and
fair value of the shares on the grant date. These
shares were granted as a signing bonus with the Company. Additionally, the Company granted
2,500,000 common shares as a retention award due on each anniversary of his signing with the
Company.
The
employment
contract
was
initially
for
three
years
with
an
additional
bilateral
option
for
an
additional
two
years.
Therefore,
the
Company
could
be
required
to
issue
up
to
12,500,000 common shares through January 1,
2018.
The 5,000,000
retention common shares
vested were issued
subsequent to the reporting date.
Share Grants
–
Dr. Max Rössler
On July 3, 2013 the Company granted to Dr.
Max Rössler 3,000,000 common shares, valued at
$0.07
which
was
the
share
price
and
fair
value
of
the
shares
on
the
grant
date.
These
were
issued
in
connection
with
his
appointment
to
the
Board
of
Directors.
These
shares
were
officially
issued on October 15, 2013.
Share Grants
–
Mr. Josef Mettler
On
July
4,
2013,
the
Company
granted
5,000,000
common
shares
to
Josef
Mettler,
valued
at
$0.07,
which
was
the
share
price
and
fair
value
of
the
shares
on
the
grant
date.
These
shares
were
issued in
connection with
his
employment
agreement..
Additionally
the
Company
granted
3,000,000 common shares as a retention award for
each completed year of employment (e.g. as
per
July
4,
2014
and July
4,
2015).
The
employment contract
is for
an
initial term
of three years
with
an
additional bilateral
option
for
another two, two-year
periods, but
a
maximum of
December 31, 2020. Therefore, in total the Company could be requested to issue up to
21,000,000
common
shares
through
December
31,
2020
related
to
the
retention
bonus.
The
6,000,000 retention common shares vested were issued
subsequent to the reporting date.
24
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
14.
STOCK COMPENSATION -
Continued
Share Grants
–
Mr. José María Figueres Olsen
On March 10, 2014, the Company authorized
the issuance of
500,000
common shares,
valued
at
$0.10
which
was
the
share
price
and
therefore
the
fair
value
on
grant
date,
to
José
María
Figueres Olsen in connection with his appointment to the Board of Directors.
Additionally,
on
March 10, 2014, the Company agreed to a retention award of 200,000 common shares for each
fully
completed
year
of
service.
The
700,000
shares
were
issued
subsequent
to
the
reporting
date.
Share Grants
–
Mr. Howard M. Glicken
On March
10, 2014, the Company authorized
the issuance of
500,000
common shares,
valued
at
$0.10,
which
was
the
share
price
and
therefore
the
fair
value
on
grant
date,
to
Howard
M.
Glicken in connection with his appointment to the Board of Directors.
Additionally, on March
10,
2014,
the
Company
agreed
to
a
retention
award
of
200,000
common
shares
for
each
fully
completed year of service. The 700,000 shares were issued
subsequent to the reporting date.
Based
on
these
contracts
the
Company
has
included
the
following
stock-based
compensation
in the Company
’
s results:
Stock-based compensation
Three months
Six months
Three months
Six months
(shares)
ended June 30,
ended June 30,
ended June 30,
ended June 30,
2015
2015
2014
2014
Shares granted
46,400,000
shares 46,400,000 shares 46,400,000 shares 46,400,000 shares
Fair Value
respectively
$0.0744
$0.0744
$0.0744
$0.0744
market price on grant date
Total maximal
expenses
$3,450,000
$3,450,000
$3,450,000
$3,450,000
(2013-2020)
Shares vested
20,900,000 shares 20,900,000
shares 15,000,000 shares 15,000,000 shares
Unvested shares
25,900,000 shares 25,900,000 shares 31,400,000 shares 31,400,000 shares
A total of 9,400,000 retention common shares vested were not issued as of June 30, 2015.
25
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
14.
STOCK COMPENSATION
–
Continued
As of December 31, 2015, the Company expects to record compensation expense in the future
up to $1,550,000 as follows:
Year ending December 31,
Stock-based
Through
compensation
December 31,
(shares)
2015
2016
2017
2018
2019
2020
$
$
$
$
$
$
Unrecognized
compensation
205,000
410,000
410,000
210,000
210,000
105,000
expense
Stock Options
–
Mr. Hans Rigendinger
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.
Installment
A
is
contingent
on
obtaining
a
financing
arrangement
for
the
Paradisus
Papagayo
Bay
Resort
&
Luxury
Villas
project.
As
of
the
grant
date,
the
fair
value
was
$300,000.
As
of
July
4,
2013,
the
Company
assessed
that
this
financing
arrangement
with
the
specific
counterparty will not be completed. Therefore the Company assessed the probability of
completion to be zero and recognized no expense. On July 4, 2013, the Company authorized a
revised
stock
option
agreement.
This
removed
the
requirement
for
financing
with
a
specific
counterparty
and
updated
for any
counterparty.
As
of
date
of
the
revised
stock
option
agreement, the fair value was $246,000. Installment A was modified on July 4, 2013, since the
initial
performance
condition
was
improbable
to
be
met.
Since
the
modification
changed
the
expectation
that
the
options
will
ultimately
vest
and
no
expense
had
been
recognized
for
the
original award,
the fair value of
the modified award
has been expensed
on a straight line basis
over the expected vesting period.
For installment B, it is required that Meliá Hotels International (
“
Melía
”
) assume management
responsibilities
for
the
Paradisus
Papagayo
Bay
Resort
&
Luxury
Villas
on
the
opening
date.
As
of
the
grant
date,
the
fair
value
was
$340,000
and
the
Company
had
estimated
that
Meliá
would
assume
responsibility
as
of
July
1,
2015.
As
of
March
6,
2014,
the
Company
assessed
the
probability
that
this
performance
condition
wiould
be
met
at
100%,
but
the
actual
date
on
which
this
performance
condition
is
expected
to
be
achieved
has
been
postponed.
As
of
April
14,
2015,
the
estimated
opening
date
was
postponed
to
the
third
quarter
2017.
The
Company
still assesses that the probability that this performance condition will be met at 100% as of the
new
opening date. Hence, the remaining fair value of the award will be expensed on a straight-
line basis over the recalculated expected remaining vesting-period.
26
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
14.
STOCK COMPENSATION
–
Continued
Stock Options
–
Dr. Max R
ӧ
ssler
The Company granted to Dr. Max R
ӧ
ssler, in connection with his appointment to the Board of
Directors,
10,000,000
options
on
July
3,
2013.
Each
option
entitles
Dr.
R
ӧ
ssler
to
buy
one
Company share at a strike price of $0.05. These options will be vested in two identical
installments (installment A and B) of 5,000,000 options.
For
installment
A
(5,000,000
options),
it
is
required
to
complete
a
financing
arrangement
for
the
Paradisus
Papagayo
Bay
Resort
&
Luxury
Villas
project.
As
of
grant
date,
the
fair
value
was
$249,835.
The
Company
expensed
the
total
fair
value
on
a
straight-line
basis
over
the
expected vesting period.
For
installment
B
(5,000,000
options),
it
is
required
that
Meliá
assumes
management
responsibilities for Paradisus Papagayo Bay Resort & Luxury Villas on the opening date. As of
the
grant
date
the
fair
value
was
$258,210
and
the
Company
had
estimated
that
Meliá
would
assume
responsibility
as
of
July
1,
2015.
As
of
March
6,
2014
the
Company
assessed
the
probability
that
this
performance
condition
wiould be
met
at
100%,
but
the
actual
date
on
which
this performance condition
is expected to be achieved was postponed. As of April 14, 2015 the
estimated
opening
date
was
postponed
to
the
third
quarter
2017.
The
Company
still
assesses
the probability that this performance condition will be met at 100% as of the new
opening date.
Hence,
the remaining fair value of the award
will be expensed on a straight-line basis over
the
recalculated expected remaining vesting-period.
Stock Options
–
Mr. Josef Mettler
The
Company
granted
to
Josef
Mettler,
in
connection
with
his
employment
contract,
12,000,000
options
on
July
4,
2013.
Each
option
entitles
Mr.
Mettler
to buy
one
share
at
a
strike
price of $0.05. These options have three different performance conditions.
For
installment
A
(3,000,000
options),
it
is
required
to
complete
a
bridge
financing
arrangement.
As
of
grant
date
the
fair
value
was
$149,000.
The
Company
expensed
the
total
fair value on a straight-line basis over the expected vesting period.
For
installment
B
(4,000,000 options),
it
is required to complete
a
financing
arrangement
(main
financing arrangement for Paradisus Papagayo
Bay Resort &
Luxury Villas).
As of
grant date
the fair value was $200,000.
The Company has expensed
the total fair value on
a straight-line
basis over the expected vesting period.
For
installment
C
(5,000,000
options),
it
is
required
that
Meliá
assumes
management
responsibilities for Paradisus Papagayo Bay Resort & Luxury Villas on the opening date. As of
the grant date, the fair value was $258,000 and the Company had estimated that Meliá assumes
responsibility
as
of
July
1,
2015.
As
of
March
6,
2014
the
Company
assessed
the
probability
that
this
performance
condition
would
be
met
at
100%,
but
the
actual
date
on
which
this
performance
condition
is
expected
to
be
achieved
was
postponed.
As
of
April
14,
2015
the
estimated
opening
date
was
postponed
to
the
third
quarter
2017.
The
Company
still
assesses
the
probability
that
this
performance
condition
will
be
met
at
100%
as
of
the
opening
date.
Hence,
the remaining fair value of the award
will be expensed on a straight-line basis over
the
recalculated expected remaining vesting-period.
27
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
14.
STOCK COMPENSATION
–
Continued
Stock Options
–
Summary
A summary of stock options outstanding as per June 30, 2015 is as follows:
Options outstanding
Number of
Weighted average
Weighted average
Options
exercise price
remaining
contractual life
Outstanding January
1, 2015
32,000,000
$ 0.05
8.42
years
Granted
-
Exercised
-
Forfeited or expired
-
Outstanding June
30, 2015
32,000,000
$ 0.05
7.92
years
Exercisable
June
30, 2015
-
The
following
table
depicts
the
Company
’
s
non-vested options
as
of
June
30,
2015 and changes
during the period:
Non-vested options
Shares under Options
Weighted average grant date
fair value
Non-vested at December 31, 2014
32,000,000
$ 0.053
Non-vested-granted
-
-
Vested
-
-
Non-vested, forfeited or cancelled
-
-
Non-vested at June
30, 2015
32,000,000
$ 0.053
Under
the
provisions
of
ASC
718
Compensation
–
Stock
Compensation,
the
Company
is
required to measure and recognize compensation expense related to any outstanding and
unvested
stock
options
previously
granted,
and
thereafter
recognize,
in
its
consolidated
financial
statements,
compensation
expense
related
to
any
new
stock
options
granted
after
implementation
using
a
calculated
fair
value
based
option-pricing
model.
The
Company
uses
the
Black-Scholes
option-pricing
model
to calculate the
fair value of all
of its
stock
options and
its
assumptions
are
based
on
historical
and
available
market
information.
No
stock
options
were
granted for the periods ended June 30, 2015 and June 30, 2014.
Assumption
June 30, 2015
June 30, 2014
Dividend
yield
Risk-free interest rate used (average)
Expected
market price volatility
Average expected life of stock options
n.a
n.a
The
computation
of
the
expected
volatility
assumption
used
in
the
Black-Scholes
calculation
for
new
grants
is
based
on
historical
volatilities
of
a
peer
group
of
similar
companies
in
the
same industry. The expected life assumptions are based on underlying contracts.
28
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
14.
STOCK COMPENSATION -
Continued
Stock Options
–
Summary - Continued
As
of
June
30,
2015,
the
Company
had
unrecognized
compensation
expenses
related
to
stock
options currently outstanding, to be recognized in future quarters respectively years as follows:
Through
to
Year ending
Year ending
Stock-based compensation
(options)
December 31,
December 31,
December 31,
2015
2016
2017
$
$
$
Unrecognized
compensation expense
67,476
134,956
33,739
15.
SUMMARY OF SHARE AND OPTION COMPENSATION EXPENSE
The
Company
recorded
the
following
amounts
related
to
stock
based
compensation
expense
during the periods ended June 30, 2015 respectively June 30, 2014:
Three
Six months
Three
Summary of
share and option
months June
June 30,
months
Six months
based compensation expense
30, 2015
2015
June 30,
June 30,
$
$
2014
2014
$
$
Share grants (see Note
14 for
102,500
212,666
112,500
317,333
details)
Option grants (see Note
14 for
33,738
67,476
69,404
448,162
details)
Total
(recorded under general &
136,238
280,142
181,904
765,495
administrative expense)
16.
FUTURE LEASE COMMITTMENTS
On
December
1,
2012,
the
Company
entered
into
a
lease
agreement
for
the
premises
for
its
Swiss
office
with
an
unrelated
entity.
The
annual
rental
expense
amounts
to
approximately
$130,000 on a fixed term expiring on December 31, 2017.
December 31,
December 31,
Future lease commitments
2015
2014
$
$
2015
65,000
65,000
2016
130,000
130,000
2017
130,000
130,000
2018
-
-
2019
-
-
29
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
17.
NOTE PAYABLE
June 30, 2015
December 31, 2014
$
$
Promissory note
2,000,000
2,000,000
Specogna Holding AG
-
707,428
R. Weimar (private
investor)
167,396
316,331
Total
2,167,396
3,023,759
Promissory Note
As
part
of
the
completion
of
the
purchase
of
Altos
del
Risco
on
March
9,
2013,
the
parties
agreed
that
$2,000,000
of
the
purchase
price
would
be
converted
into
a
non-interest
bearing
and
uncollateralized
loan
payable,
which
was
originally
due
for
payment
on
March
8,
2014,
then
extended to March
8,
2015.
On
March
16,
2015 the
Company
agreed with
the
counterparty
to extend the due date to March 16, 2016.
Loans Specogna Holding AG
On May
15,
2014
the Company
entered
into
a
short
term
loan
agreement
for CHF 1.0
million
($1.01
million)
with
Specogna
Holding
AG.
This
loan
was
repayable
on
July
31,
2014,
and
bore
a
lump
remuneration
as
interest
of
CHF
30,000
(approximately
$32,100).
This
loan
was
repaid in 2014.
On September 16, 2014, the Company entered into a short term loan agreement for
approximately $736,000 with Specogna Holding AG (
“
Specogna
“
) repayable on October 31,
2014, with a fixed interest payment of approximately $32,000. The loan was secured
personally and jointly by Dr. Max Rössler, Mr. Josef Mettler and Mr. Hans Rigendinger.
The
amounts due to Specogna were repaid on March 24, 2015 by Aires on behalf of SunVesta
AG, with no penalties incurred.
Loan R. Weimar (private investor)
On May 23, 2014, the Company entered into a short term loan agreement for approximately
$376,800 with Roland Weimar. The loan was repayable in five instalments, (four payments of
$84,700, one payment of $38,000), with the initial payment due on June 2, 2014 and the latest
payment due on June 1, 2015. The interest rate is 2 % per annum. The Company had
repaid
approximately $209,000 as of the filing date of this report. The agreement does not stipulate
any repercussions for the late payments.
30
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
18.
OPENING DATE
“
PARADISUS PAPAGAYO BAY RESORT & LUXURY VILLAS
”
On
June
2,
2014,
the
Company
amended
its
agreement
with
Meliá
(
“
Sixth
addendum
to
the
management agreement of March 8, 2011
”
) to postpone the opening date as follows:
-
The construction of the
“
Paradisus
”
will be completed by November 15, 2015
-
Should the
“
Paradisus
”
not be completed by November 15, 2015, (subject to force
majeure) and should an extension date not be agreed, subsequent to November 15,
2015, the Company will be obligated to pay Meliá a daily amount of $2,000 as
liquidated damages.
-
Should the Company be unable to complete the construction of the
“
Paradisus
”
by
February 15, 2016, Meliá, can terminate the management agreement obligating the
Company to compensate Meliá in the amount of $5,000,000 unless the respective
parties agree to extend such date.
Since
the
completion
date
for
the
Paradisus
Papagayo
Bay
Resort
&
Luxury
Villas
development
is
now
anticipated
for
the
third
quarter
of
2017,
the
Company
is
in
discussions
with Meliá regarding another addendum that would allow an extension of the deadlines
stipulated
in
the
Sixth
Addendum.
The
Company
is
confident
that
a
further
addendum
to
its
agreement with Meliá
will be concluded.
However,
should
the Company not be successful,
in
concluding a further addendum, the penalty for not achieving the most recently agreed
completion date would be $5,000,000.
31
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
19.
EARNINGS PER SHARE
Basic
earnings
per
share
are
the
result
of
dividing
the
Company
’
s
net
income
(or
net
loss)
by
the weighted average number of shares outstanding for the contemplated period. Diluted
earnings
per
share
are
calculated
applying
the
treasury
stock
method.
When
there
is
a
net
income
dilutive
effect
all
stock-based compensation
awards
or
participating
financial
instruments are considered. When the Company posts a loss,
basic loss per share equals diluted
loss
per
share.
The
following
table
depicts
how
the
denominator
for
the
calculation
of basic
and
diluted earnings per share was determined under the treasury stock method.
Three-month
Six-month
Three-month
Six-month
Earnings per share
period ended
period ended
period ended
period ended
June 30, 2015
June 30, 2015
June 30, 2014
June 30, 2014
Company
posted
Net
loss
Net
loss
Net
loss
Net
loss
Basic weighted average shares
outstanding
92,941,603
92,775,305
87,041,603
86,646,575
Dilutive effect of common stock
equivalents
None
None
None
None
Dilutive weighted average
shares
outstanding
92,941,603
92,775,305
87,041,603
86,646,575
A
total
of
9,400,000
common
shares
vested
were
not
issued
as
per
balance
sheet
date
and
are
included in the basic weighted average shares outstanding.
The
following
table
shows the number
of stock
equivalents
that were
excluded from the
computation
of
diluted
earnings
per
share
for
the
respective
period
because
the
effect
would
have been anti-dilutive.
Three-month
Six-month
Three-month
Six-month
Earnings per share
period ended
period ended
period ended
period ended
June 30, 2015
June 30, 2015
June 30, 2014
June 30, 2014
Options to Hans Rigendinger
10,000,000
10,000,000
10,000,000
10,000,000
Options to Dr. M. Rössler
10,000,000
10,000,000
10,000,000
10,000,000
Options to Josef Mettler
12,000,000
12,000,000
12,000,000
12,000,000
Total Options
32,000,000
32,000,000
32,000,000
32,000,000
Shares to Hans Rigendinger
7,500,000
7,500,000
10,000,000
10,000,000
(retention bonus
–
non vested)
Shares to Josef Mettler (retention
18,000,000
18,000,000
21,000,000
21,000,000
award)
Shares to Howard Glicken and
400,000
400,000
400,000
400,000
José Maria Figueres (retention
award)
Total Shares
25,900,000
25,900,000
31,400,000
31,400,000
Total Options and Shares
57,900,000
57,900,000
63,400,000
63,400,000
32
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
20.
GENERAL AND ADMINISTRATIVE EXPENSES
General
and
administrative
expenses
according
consolidated
statement
of
comprehensive
loss
include:
Three-month
Six-month
Three-month
Six-month
General and administrative expenses
period ended
period ended
period ended
period ended
June 30, 2015
June 30, 2015
June 30, 2014
June 30, 2014
$
$
$
Rental & related
expenses
49,951
101,629
44,471
89,106
Audit
127,720
177,530
93,289
183,401
Consulting
317,042
592,381
430,775
1,032,883
Marketing, Investor & public relations
29,121
43,762
28,083
35,945
Travel
expenses
112,818
287,751
77,810
182,570
Personnel
costs including
social security
’
s
costs and share based remuneration
509,862
1,711,031
506,603
1,405,081
Various other operating
expenditures
223,068
311,965
190,331
494,368
Total according statements of
comprehensive loss
1,369,582
3,226,049
1,371,362
3,423,534
21.
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:
The status of financing the project is as follows:
On
March
10,
2015,
the
Company
executed
a
letter
of
engagement
with
ISM
Capital
LLP,
a
London
based investment
firm,
for
the
purpose
of conducting
a
$100 million
asset
backed bond
issuance.
Despite
the
firm
’
s
commitment
to
identify
investors,
the
success
of
this
proposed
bond issuance for the amount contemplated or any lesser amount, does not guarantee that all or
part of the amount offered will be subscribed.
In the
context of
the guaranty
agreement
that
is also
mentioned
in Note 3
(
“
Going Concern
”
),
the major shareholders will provide personel guarantees to
investors,
so
that they will be in
a position to secure the necessary funds for the repayment of the CHF bonds, which are due on
August 31, 2015.
33
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 month periods ended June 30, 2015 and June 30, 2014. Our
fiscal year end is December 31.
Discussion and Analysis
Business Overview
We are in the process of developing high-end luxury hotels and resorts worldwide. Our initial focus is
concentrated on offering luxury hotel products located in attractive, top-class coastal vacation
destinations in countries such as Costa Rica that are fast emerging as popular tourist destinations.
Each prospective development takes into consideration country specific conditions and general
considerations that include the stability of local political conditions, geologically useful cultivability,
and the types of destinations that attract a five-star clientele. Once identified as eligible, prospective
developments are compared against a validation checklist and then, if warranted, subjected to a
substantial due diligence process.
Since location is the key to the success of any tourist based luxury
real estate project, each development will be carefully considered during the eligibility process.
Initial Development
Our initial real estate development, to be constructed in two phases as Vista Mar (Family Concierge)
and Vista Bahia (Royal Service), on 20.5 hectares of prime land located in Guanacaste Province,
Costa Rica, is the Paradisus Papagayo Bay Resort & Luxury Villas, a five star luxury hotel.
All
permitting for the project is in place, including permission to incorporate the beachfront adjacent to
the two concessions into the development and all significant site work completed. Vertical
construction is expected to commence in the third quarter of 2015, while the opening of.the Paradisus
Papagayo Bay Resort & Luxury Villas is scheduled for the
third quarter of 2017, subject to the
procurement of the requisite financing.
Specifications
Paradisus Papagayo Bay Resort & Luxury Villas
’
initial specifications are to be as follows:
—
eco-luxury all-inclusive resort
—
382-keys
—
direct beach access
—
five restaurants and five bars
—
Yhi Spa and Health Club
—
Paradisus
’
adults-only
“
Royal Service
”
level of accommodations
—
Paradisus
’
“
Family Concierge
”
program
—
19,000 square feet of meeting facilities with the business traveler in mind
34
Vista Mar
Family Concierge
The Family Concierge will be a family orientated part of the Paradisus Papagayo Bay Resort &
Luxury Villas. The accommodations will be designed to satisfy the needs of the modern family.
The Family Concierge area will include:
—
166 Junior Suites Deluxe
(47* square meters)
—
34 Suites Deluxe
(87* square meters)
—
33 Suites Premium
(93* square meters)
—
6 Handicapped Junior Suites Deluxe
(47* square meters)
—
1 Bridal Suites
(93* square meters)
—
2 Deluxe Suites Presidential
(88* square meters)
—
1 Presidential Suite
(194* square meters)
*
Room size does not include balconies and terraces.
All ground floor suites will have direct access to swim-up pools. Each of the suites and villas will
have a full view of the sea. Family Concierge guests will furthermore have access to restaurants, bars,
and lounges. The planned Onyx Night Club and the Gabi Club will be located near the beach.
Vista Bahia
Royal Service
Our Royal Service will include an extensive range of services such as a butler service, private pools
for each Garden Villa and/or a Jacuzzi in every suite.
The Royal Service area will include:
—
108 Junior Suites Grand Deluxe
(43-60* square meters)
—
2 Junior Suites Grand Deluxe for Handicapped Guests
(53* square meters)
—
6 Grand Master Suites
(87* square meters)
—
2 Deluxe Suites Presidential
(60 square meters)
—
1 Grand Presidential Suite (4 bedrooms)
(145* square meters)
—
20 one or two bedroom Garden Villas
(91
–
212* square meters)
—
Room size does not include balconies and terraces.
* Room size does not include balconies and terraces.
All ground floor suites will have direct access to swim-up pools. Each of the suites and villas will
have a full view of the sea. Royal Service guests will furthermore have access to restaurants, bars,
lounges, fitness equipment, spas and outside massage areas.
The Paradisus Papagayo Bay Resort & Luxury Villa
’
s will feature other highlights including:
—
more than 65 private, swim up and resort pools including the world
’
s second largest Infinity Pool
all within idyllic landscaped grounds
—
a wedding chapel with a stunning ocean view
—
rain forest walkways that permit guests to experience the flora and fauna of the rain forest
—
a multipurpose convention hall with over 2,000 square meters of space that can be utilized as a
whole or divided to create smaller meeting rooms
—
a full service spa committed to providing for the wellbeing of our guests.
The spa will be located
with a 180 degree sea view within approximately 1,000 square meters that will include 12 large
treatment rooms, a hairdresser, relaxation areas, pools, saunas and steam rooms
—
the 20 private villas will be located within the Royal Service area of the resort. The present
intention being that these villas will be sold to individuals who will then lease them back to
the
resort when not occupied by the owners.
35
Management
Overall project development is led by Josef Mettler, our Chief Executive Officer, Charles Fessel,
Project Director Paradisus Papagayo Bay Resort & Luxury Villas, Hans Rigendinger, Chairman of the
Board and Chief Operating Officer of SunVesta AG and Ernst Rosenberger, the Company
’
s
Corporate Controller. The lead architect is Ossenbach, Pendones & Bonilla, one of Costa Rica
’
s
largest architectural offices with over 45 architects and designers. Civil engineering services are
provided by DEHC Engineers and structural engineering services by IEAC. Landscape architects are
TPA and interior designers are led by Concreta Srl.
Resort management is to be provided by Melía Hotels International (
“
Melía
”
).
“
Paradisus
”
is Meliá
’
s
five star all-inclusive luxury hotel brand that is well recognized in the hospitality industry around the
world. Melía was founded in 1956 in Palma de Mallorca, Spain and is today one of the world
’
s largest
resort hotel chains, as well as Spain
’
s leading hotel chain for business or leisure. The company
currently offers more than 300 hotels in 26 countries over four continents under its Gran Sol Melía,
Sol Melía, ME by Sol Melía,
Innside by Sol Melía, Tryp, Sol Melía, Sol Melía Vacation Club, and
Paradisus brands. The Paradisus brand represents all-inclusive luxury resorts with hotels in Mexico
and the Dominican Republic.
Since the completion date for the Paradisus Papagayo Bay Resort & Luxury Villas development is
now anticipated for the third quarter of 2017, the Company is in the process of reaching an agreement
to further amend the management agreement with Meliá dated August 18, 2014. The amended
agreement presently stipulates that if the Papagayo Bay Resort & Luxury Villa
’
s is not completed by
February 15, 2016, and if an extension date is not agreed, then Meliá could terminate the management
agreement and cause the Company to pay a penalty of $5 million. The Company is confident that an
agreement will be reached to extend the completion date to the third quarter of 2017.
Additional Concession Properties
On April 20, 2012, the Company entered into an agreement with Meridian IBG (
“
Meridian
”
), as
amended on November 13, 2012, and replaced on May 7, 2013, to purchase two additional concession
properties in Polo Papagayo, Guanacaste, comprised of approximately 230,000 square meters for
$17,500,000. One of the concessions lies adjacent to the existing concessions (La Punta) and the other
is in close proximity to the Paradisus Papagayo Bay Resort & Luxury Villas development.
The Company had
paid down-payments on the purchase of these properties of $2,669,816 as of June
30, 2015, and is in discussions with Meridian regarding an amendment to the agreement. Should the
Company not be successful in obtaining an amendment to the agreement, it would have to
write-off
$300,000 of that purchase price already paid.
Finance
The anticipated completion of the Paradisus Papagayo Bay Resort & Luxury Villas in the third quarter
of 2017 will require a net investment of approximately $198 million (including non-recuperated
overhead expenses), of which approximately $55 million has been expended as of June 30, 2015. We
expect to realize a minimum of $140 million in new funding over the next twelve months. New
funding over the next twelve months is expected to be raised from debt financing through bonds, a
credit facililty from construction contractors, shareholder loans and, if necessary, the guaranty
agreement borne by certain principal shareholders and participants in management .
Detailed below is a brief description of material debt obligations as of period end.
Bonds
The Company has four bond issues outstanding, denominated in EUR (
€
) or Swiss Francs (CHF).
36
EUR (
€
) Bonds
The Company initiated
an unsecured EUR bond offering on December 2, 2013, of up to
€
15,000,000
in units of
€
10,000 that bear interest at 7.25% per annum payable each December 1 over a three year
term that matures on December 2, 2016. We had realized
$7,342,995 as of the year ended December
31,
2014, and $7,008,182 as of June 30, 2015 (decrease due to foreign currency adjustments), for a
cumulative amount of $7.02 million as of the date of this report.
The Company initiated a parallel offering of unsecured EUR bonds on December 2, 2013, of up to
€
15,000,000 in units of
€
10,000 that bear interest at 7.25% per annum payable each December 2 over
a three year term that matures on December 2, 2016. We had realized $1,714,991 as of the year ended
December 31, 2014 and $1,581,721as of June 30, 2015 (decrease due to foreign currency
adjustments), for a cumulative amount of $1.61 million as of the date of this report.
Swiss Francs (CHF) Bonds
The Company initiated an unsercured CHF bond offering on September 1, 2011, of up to CHF
15,000,000 in units of CHF 50,000 that bear interest at 7.25% per annum payable each August 31
over a four year term that matures on August 31, 2015. We had realized $10,802,722 as of the year
ended December 31, 2014 and $11,570,323 as of June 30, 2015, for a cumulative amount of $11.12 as
of the date of this report (decrease due to foreign currency adjustments).
The Company initiated another offering of unsecured CHF bonds on September 1, 2013, of up
to CHF 15,000,000 in units of CHF 10,000 that bear interest at 7.25% per annum payable each
August 31, over a two year term that matures
on August 31, 2015. We had realized $14,709,176 as of
the year ended December 31, 2014 and $24,377,410 as of June 30, 2015, for a cumulative amount of
$25.66 million as of the date of this report (decrease due to foreign currency adjustments).
Aires International Investment, Inc.
On July 27, 2011, SunVesta AG entered into a line of credit agreement with Aires International
Investments Inc. (
“
Aires
”
), a company owned by Dr. R
ӧ
ssler
(a director of the Company). The loan
agreement was amended on May 11, 2012 and on June 21, 2012 and then replaced by a new loan
agreement on October 31, 2013, that included the following conditions:
—
All existing loan agreements or credit facilities, including amendments, between SunVesta AG
and Aires were cancelled and superseded by the new loan agreement.
—
The loans are due
after December 31, 2017 and before December 31, 2020.
—
Despite the scheduled repayment dates, each party has the option to cancel the loan agreement
with a prior notice period of 90 days, requiring repayment of the loans in full.
—
Loan amounts outstanding including any additional amounts and additions are subordinated.
—
Interest on the loan amounts is 7.25% per annum, which charge is accrued to the loan account.
The Company had
borrowed $32,631,771 from Aires as of June 30, 2015 and
$30,299,312 as of
December 31, 2014.
Dr. Max R
ӧ
ssler
Over the course of 2012 and 2013, the Company entered into a series of interest free loans with Dr.
Max R
ӧ
ssler, a director of the Company and a principal of Aires. The loans were originally due either
on predetermined dates or on demand, repayable in cash or in a fixed number of shares of certain
publically traded entities. On April 19, 2013, the Company and Dr. Rössler transferred amounts due to
him under loans dated June 7, 2012 and March 1, 2013, for $1,810,000 and $50,0000 respectively to
the existing loan agreement with Aires. The due dates of the remaining loans to Dr. R
ӧ
ssler were
extended to May 30, 2016.
37
The Company had borrowed $850,770 from Dr. R
ӧ
ssler as of June 30, 2015 as follows:
Date of Agreement
Amount
Shares
Public Entity
July 24, 2012
$457,127
10,000
Schindler Holding AG
August 8, 2012
$393,643
700
Zug Estates Holding AG
Global Care AG
On September 23, 2014, the Company entered into a short term loan agreement of approximately
$191,849 (CHF 185,000) with Global Care AG (
“
Global Care
”
), a company owned by Dr. R
ӧ
ssler (a
director of the Company), repayable on October 31, 2014, with a fixed interest payment of $20,740
(CHF 20,000). The amounts due to Global Care had not been paid as of the filing date of this report.
According to the agreement, there are no penalties for late payments.
The Company owed Global Care $219,439
as of June 30, 2015 and $186,963 as of December 31,
2014.
DIA S.A.
On March 8, 2013, the Company entered into an interest free loan agreement with DIA S.A.
in the
amount of $2,000,000 payable on March 8, 2014, in connectionwith the purchase of land adjacent to
the Paradisus Papagayo Bay Resort & Luxury Villas from Altos held in the name of Altos del Risco
S.A. The terms of the loan agreement were amended on March 16, 2015, to extend the due date for
said payable until March of 2016.
Specogna Holding AG
On September 16, 2014, the Company entered into a short term loan agreement for approximately
$736,000 with Specogna Holding AG (
“
Specogna
”
) repayable on October 31, 2014, with a fixed
interest payment of approximately $32,000. The loan was secured personally and jointly by Dr. Max
Rössler, Mr. Josef Mettler and Mr. Hans Rigendinger. The amounts due to Specogna were repaid on
March 24, 2015, by Aires on behalf of the Company, with no penalties incurred.
Roland Weimar
On May 23, 2014, the Company entered into a short term loan agreement for approximately $376,800
with Roland Weimar (
“
Weimar
”
). The loan was repayable in five instalments, (four payments of
$84,700, one payment of $38,000), with the initial payment due on June 2, 2014 and the latest
paymentdue on June 1, 2015. The interest rate is 2 % per annum. The Company has repaid
approximately $209,000 as of the filing date of this report. The agreement does not stipulate any
repercussions for the late payments.
The Company owed Weimar $167,396 as of June 30, 2015 and $316,331 as of December 31, 2014.
Timeline
Our expected timeline for developing the Paradisus Papagayo Bay Resort & Luxury Villas is as
follows:
—
commence onsite vertical construction in the third quarter of 2015
—
complete construction in the second quarter of 2017
—
handover to Melía in the third quarter of 2017
38
Results of Operations
During the six
month period ended June 30, 2015, our operations were focused on (i) completing
earth work excavations on the Paradisus Papagayo Bay Resort & Luxury Villas property; (ii)
furthering discussions with prospective project development partners; (iii) pursuing additional debt
financing to fund the construction of the project; (iv) seeking approval to extend the term of the
concessions; (v) pursuing permission for an
“
Article 21
”
concession for beachfront properly adjacent
to the project.; and (vi) commencing the process to create sub-concessions for prospective villa
owners within the development.
The Company has been funded since inception from debt or equity placements and by shareholders or
partners in the form of loans. Capital raised to date has been allocated primarily to the development of
the Costa Rican property, including the purchase of the land and general and administrative costs.
Comprehensive Losses
Comprehensive losses for the three month period ended June 30, 2015 were $5,990,275 as compared
to $2,567,886 for the three month period ended June 30, 2014. The increase in comprehensive losses
over the comparative three month period can be attributed primarily to the transition to foreign
currency translation losses as a result of long term intercompany receivables denominated in Swiss
Francs, the increase in foreign exchange losses due to volatility in the currency markets, the increase
in amotization of debt issuance costs associated with financing activites, and the increase in interest
expenses associated with outstanding debt issues, offset by lower general and administrative expenses
and the increase in interest income. The variance in losses over the comparative three month periods
is reconciled below:
Comprehensive
loss for the three months ended June 30, 2014,
$2,567,886
Variances
Decrease
in general and administrative expenses
(1,780) Decrease
in consulting expenses
Increase
in interest
income
(4,711) Increase
in deposits
Increase
in interest
expense
468,457 Increase
in interest
expensed to outstanding debt
issues.
Increase
in amortization of debt
issuance costs
444,064 Increase
in expenses associated with financing
activities and related expenses (commission).
Increase
in
exchange losses
923,632 Foreign currency
gain on EUR bond due to
strengthening of CHF against
the EUR, offset
by.
foreign currency losses on Aires loan due to strength
of
CHF against
the USD.
Increase
in
other expenses
3,959 Increase
in miscellaneous expenses.
Transition to foreign currency translation losses
1,588,768
Transition to
foreign currency translation losses due to
a
long term intercompany receiveable that
is
denominated
in Swiss Francs.
Total variances
$3,422,389
Comprehensive
loss for the three months ended June 30, 2015
$5,990,275
Comprehensive losses for the six
month period ended June 30, 2015 were $10,228,627 as compared
to $5,668,793 for the six month period ended June 30, 2014. The increase in comprehensive losses
over the comparative six month period can be attributed primarily to the transition to foreign currency
translation losses as a result of long term intercompany receivables denominated in Swiss Francs, the
increase in foreign exchange losses due to volatility in the currency markets, the increase in
amotization of debt issuance costs associated with financing activites, and the increase in interest
expenses associated with outstanding debt issues, offset by lower general and administrative expenses
and the increase in interest income. The variance in losses over the comparative six month periods is
reconciled below:
39
Comprehensive
loss for the six months ended June 30, 2014
$5,668,793
Variances
Decrease in general and administrative expenses
(197,305) Decrease
in consulting expenses
Increase
in interest
income
(11,493) Increase
in deposits
Increase
in interest
expense
1,242,742 Increase
in interest
expensed to outstanding debt
issues.
Increase
in amortization of debt
issuance costs
816,470 Increase
in expenses associated with financing
activities and related expenses (commission).
Increase
in exchange
losses
303,034 Foreign currency
gain on EUR bond due to
strengthening of CHF against
the EUR, offset
by.
foreign currency losses on Aires loan due to strength
of
CHF against
the USD.
Decrease
in other expenses
(28,924) Decrease
in miscellaneous expenses.
Increase
in foreign currency translation losses
2,434,160 Increase
in foreign currency translation losses due to a
long term intercompany receiveable that
is
denominated
in Swiss Francs.
Income taxes
1,150 Tax expense
Total variances
$4,559,834
Comprehensive
loss for the three months ended June 30, 2015
$10,228,627
We did not generate revenue during this period and we expect to continue to incur losses through the
year ended December 31, 2015.
Income Tax Expense (Benefit)
The Company has a prospective income tax benefit resulting from a net operating loss carry-forward
and startup costs that will offset future operating profits.
Capital Expenditures
The Company expended a significant amount on capital expenditures for the period from inception to
June 30, 2015, in connection with the purchase of land that includes a hotel concession in Costa Rica
and expects to incur future cash outflows on capital expenditure as discussed in the "Liquidity and
Capital Resources" and the "Going Concern" paragraphs below.
Liquidity and Capital Resources
Since inception the Company has experienced
significant changes in liquidity, capital resources, and
stockholders
’
equity.
40
As of June 30, 2015 and December 31, 2014, the following were working capital items:
June 30,
December 31,
2015
2014
Current assets
Cash and cash equivalents
708,828
14,347
Receivable
from
related parties
23,933
27,163
Other assets
422,183
289,156
Total
current
assets
1,154,944
330,666
Current liabilities
Bank
liabilities
-
153,375
Accounts payable
5,521,040
6,181,057
Accrued expenses
9,080,204
5,444,514
Notes payable
2,167,396
3,023,759
Notes payable to related parties
1,302,236
1,162,100
CHF-Bond
35,947,733
25,511,898
Total current
liability
54,018,609
41,476,703
Net working capital
(52,863,665)
(41,146,037)
As of June 30, 2015 and December 31, 2014, the following were the items making up the total
stockholders
’
deficit:
June 30,
December 31,
2015
2014
Assets
Current assets
1,154,944
330,666
Non-current
assets
61,706,689
58,083,516
Total
assets
62,861,633
58,414,182
Liabilities
Current
liabilities
54,018,609
41,476,703
Non-current
liabilities
41,422,598
39,568,568
Total liabilities
95,441,207
81,045,271
Total stockholders
’
deficit
(32,579,574)
(22,631,089)
The Company
’
s negative net working capital of $52,863,665 is of immediate concern and will require
significant action to meet anticipated cash needs, including the upcoming maturity on August 31,
2015,
of CHF-bonds in the aggregate amount of $35,947,733. Management is in the process of
initiating a new bond issue as a means to satisfy these bonds.
Net cash flow used in operating activities for the six months ended June 20, 2015, was $3,806,738, as
compared to $3,142,719 for the six months period ended June 30, 2014. The Company expects to
continue to continue to use net cash flow in operating activities until we complete the Paradisus
Papagayo Bay Resort & Luxury Villas project, which completion is projected for the third quarter of
2017.
Net cash used in investing activities for the six months ended June 30, 2015, was $4,691,170 as
compared to $5,038,474 for the six
month period ended June 30, 2014. Net cash used in investing
activities in the current six month period is comprised of recievables from related parties, the purchase
of property and equipment and
down payments for property and equipment, offset by other
receivables from related parties, deposits related to construction activities and restricted cash. Net
cash used in investing activities in the prior comparable six month period was comprised of the
repayment of receivables from related parties, the purchase of property and equipment and deposits
related to construction.
41
We expect negative net cash flow in investing activities to continue while in the process of developing
the Paradisus Papagayo Bay Resort & Luxury Villas.
Net cash provided by financing activities for the six
month period ended June 30, 2015, was
$9,191,280 as compared to $7,994,267
for the six
month period ended June 30, 2014. Net cash
provided by financing activities in the current six month period is comprised of proceeds from bond
issuances net of commissions and proceeds from notes payable from related parties, offset by a
decrease in bank liabilities, the repayment of notes payable to related parties, the payment of debt
issuance costs, changes in other debt.. Net cash provided by financing activities in the prior
comparable six
month period was comprised of proceeds from notes payable from related parties,
proceeds from notes payable, proceeds from bond issuances net of commissions and the sale of
treasury stock, offset by the repayment of notes payable to related parties, the repayment of
outstanding bonds and debt issuance costs.
We expect net cash flow provided by financing activities to continue due to the financing necessary to
complete the development of the Paradisus Papagayo Bay Resort & Luxury Villas.
Management believes that cash on hand, related party loans and the assurance of the Guaranty
Agreement as described in the going concern paragraph below are sufficient for us to conduct
operations over the next twelve months.
We had no lines of credit or other bank financing arrangements as of June 30, 2015.
We have commitments for executed purchase orders and agreements in the amount of $57 million as
of June 30, 2015, in connection with the development of the Paradisus Papagayo Bay Resort &
Luxury Villas, which commitments are included in the required estimated net financing of $198
million to complete the project. Most material commitments are not contractually agreed as of the end
of the period.
We have cancellable commitments to Meridian that are not included in the required
financing for the development of the Paradisus Papagayo Bay Resort & Luxury Villas of
approximately $15,000,000 as of June 30, 2015, for the purchase of two additional concession
properties in Polo Papagayo, Guanacaste, Costa Rica.
We maintain a defined benefit plan that covers all of our Swiss employees and have employment
agreements with our Chief Executive Officer and Chief Operating Officer as of June 30, 2015.
We have no current plans for significant purchases or sales of plant or equipment, except in
connection with the planned construction of the Paradisus Papagayo Bay Resort & Luxury Villas.
We have no current plans to make any changes in the number of our employees as of June 30, 2015.
Future Financings
A letter of engagement was executed with ISM Capital LLP, a London based investment firm, on
March 10, 2015, for the purpose of conducting a $100 million asset backed bond issuance.
Despite the
firm
’
s commitment to identify investors, the success of this proposed bond issuance for the amount
contemplated or any lesser amount, does not guarantee that all or part of the amount offered will be
subscribed.
The major shareholders will provide personal guarantees to investors, in the context of the Guaranty Agreement, so that they will be in a position to secure the necessary funds for the repayment of the CHF bonds, which are due on August 31, 2015.
42
Off-Balance Sheet Arrangements
As of June 30, 2015, we had no significant off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are
material to stockholders.
Going Concern
The Company intends to build a hotel in the Papagayo Gulf Tourism Project area of Guanacaste,
Costa Rica. The total net investment is estimated to be approximately $198 million.
The project is expected to open in the third
quarter of 2017. Until the completion of the project, the
following expenditures are estimated to be incurred:
a.
Gross project cost
$
208,000,000
b. Less: Proceeds from sale of villas
(25,000,000)
c.
Net project cost
183,000,000
d. Overhead expenses
27,000,000
e.
Less: Recuperated in gross project cost
(12,000,000)
f Total, excluding other potential projects
$
198,000,000
Sixty percent (60%) of the
“
Net project cost
”
is intended to be financed through the issuance of
secured bonds, for which negotiations have been initiated. The remaining forty percent (40% of the
“
Net project cost
”
, as well as
“
non-recuperated overhead expenses
”
and the cost of potential
“
other
projects
”
are intended to be financed by the main shareholders or lenders of the project in the absence
of alternative financing committements, i.e. Zypam Ltd., shareholder and related entity to Mr. Josef
Mettler, Mr. Hans Rigendinger, shareholder, Chief Operating Officer and Company Board Member,
Dr. Max Rössler, Company Board Member and controlling shareholder of Aires, Mr Josef Mettler,
shareholder, Director and Chief Executive Officer.
On July 16, 2012, Mr. Mettler, Mr. Rigendinger and Dr. R
ӧ
ssler entered into a Guaranty Agreement
in favour of the Company. 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 the Company 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 the Company 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 June 30, 2015, and the filing date, though future
anticipated cash outflows for investing activities will continue to depend on the availability of
financing.
Forward-Looking Statements and Factors That May Affect Future Results and Financial
Condition
The statements contained in the section titled
Management
’
s Discussion and Analysis of Financial
Condition and Results of Operations
and elsewhere in this current report, with the exception of
historical facts, are forward-looking statements. Forward-looking statements reflect our current
expectations and beliefs regarding our future results of operations, performance, and achievements.
These statements are subject to risks and uncertainties and are based upon assumptions and
beliefs
that may or may not materialize. These statements include, but are not limited to, statements
concerning:
43
—
our anticipated financial performance and business plan
—
the sufficiency of existing capital resources
—
our ability to raise additional capital to fund cash requirements for future operations
—
uncertainties related to our future business prospects
—
our ability to generate revenues to fund future operations
—
the volatility of the stock market
—
general economic conditions
We wish to caution readers that our operating results are subject to various risks and uncertainties that
could cause our actual results to differ materially from those discussed or anticipated elsewhere in this
report. We also wish to advise readers not to place any undue reliance on the forward-looking
statements contained in this report, which reflect our beliefs and expectations only as of the date of
this report. We assume no obligation to update or revise these forward-looking statements to reflect
new events or circumstances or any changes in our beliefs or expectations, other than as required by
law.
Recent Accounting Pronouncements
Please see Note 2 to the accompanying consolidated financial statements for recent accounting
pronouncements.
ITEM 3.
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Not applicable.
ITEM 4.
CONTROLS
AND
PROCEDURES
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this annual report, an evaluation was carried out by the
Company
’
s management,
with the participation of its chief executive officer and chief financial
officer, of the effectiveness of the Company
’
s disclosure controls and procedures (as defined
in Rules
13a-15(e) under the Securities Exchange Act of 1934 (
“
Exchange Act
”
)). Disclosure controls and
procedures are designed to ensure that information required to be disclosed in reports filed or
submitted under the Exchange Act is recorded, processed, summarized, and reported within the time
periods specified in the Commission
’
s rules and forms, and that such information is accumulated and
communicated to management, including the chief executive officer and chief financial officer, to
allow timely decisions regarding required disclosures.
Based on that evaluation, the Company
’
s management concluded, as of the end of the period covered
by this report, that the Company
’
s disclosure controls and procedures were 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 that such information was not accumulated and
communicated to management, including the chief executive officer and the chief financial officer, to
allow timely decisions regarding required disclosures.
Changes in Internal Control over Financial Reporting
During the quarter ended June 30, 2015, there has been no change in internal control over financial
reporting that has materially affected, or is reasonably likely to materially affect our internal control
over financial reporting.
44
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