Company Quick10K Filing
International Land Alliance
Price-0.00 EPS-0
Shares19 P/E0
MCap-0 P/FCF0
Net Debt0 EBIT-0
TEV0 TEV/EBIT-0
TTM 2019-06-30, in MM, except price, ratios
10-Q 2020-09-30 Filed 2020-11-20
10-Q 2020-06-30 Filed 2020-08-21
10-Q 2020-03-31 Filed 2020-05-22
10-K 2019-12-31 Filed 2020-04-14
10-Q 2019-09-30 Filed 2020-01-03
10-Q 2019-06-30 Filed 2019-08-15
10-Q 2019-03-31 Filed 2019-05-17
10-K 2018-12-31 Filed 2019-04-24
10-Q 2018-09-30 Filed 2018-11-30
10-Q 2018-06-30 Filed 2018-08-20
10-Q 2018-03-31 Filed 2018-05-15
10-K 2017-12-31 Filed 2018-04-02
8-K 2019-09-25
8-K 2019-05-06
8-K 2019-04-30
8-K 2018-09-21

ILAI 10Q Quarterly Report

Part I &Mdash; Financial Information
Item 1. Financial Statements
Note 1 - Nature of Operations and Going Concern
Note 2 - Summary of Significant Accounting Policies
Note 3 - Asset Purchase and Title Transfer
Note 4 - Land, Building, Net and Construction in Process
Note 5 - Related Party Transactions
Note 6 - Notes Payable
Note 7 - Commitments and Contingencies
Note 8 - Stockholders' Equity
Note 9 - Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II &Mdash; Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 ex31-1.htm
EX-31.2 ex31-2.htm
EX-32.1 ex32-1.htm
EX-32.2 ex32-2.htm

International Land Alliance Earnings 2020-09-30

Balance SheetIncome StatementCash Flow
1.81.30.80.2-0.3-0.82016201720182020
Assets, Equity
0.50.30.20.0-0.1-0.32016201720182020
Rev, G Profit, Net Income
0.90.60.30.0-0.3-0.62016201720182020
Ops, Inv, Fin

10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2020

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______________ to _______________

 

Commission file number: 000-56111

 

INTERNATIONAL LAND ALLIANCE, INC.
(Exact name of registrant as specified in its charter)

 

Wyoming   46-3752361

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

350 10th Avenue, Suite 1000, San Diego, California 92101
(Address of principal executive offices) (Zip Code)

 

(877) 661-4811
(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Exchange Act: None

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large-accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large-accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

  Large-accelerated filer [  ] Accelerated filer [  ]
  Non-accelerated filer [X] Smaller reporting company [X]
      Emerging growth company [X]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

 

As of November 20, 2020, the registrant had 23,200,654 shares of common stock, $0.001 par value per share, outstanding.

 

 

 

 
 

 

TABLE OF CONTENTS

 

Part I. Financial Information  
Item 1. Consolidated Financial Statements (Unaudited) 3
Consolidated Balance Sheets – As of September 30, 2020 (unaudited) and December 31, 2019 3
Consolidated Statements of Operations – for the three and nine months ended September 30, 2020 and 2019 (unaudited)

4

Consolidated Statements of Changes in Stockholders Equity (Deficit) for the three and nine months ended September 30, 2020 and 2019 (unaudited) 5
Statements of Cash Flows – for the nine months ended September 30, 2020 and 2019 (unaudited) 6
Notes to Consolidated Financial Statements 7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 20
Item 3. Quantitative and Qualitative Disclosures about Market Risk 23
Item 4. Controls and Procedures 23
   
Part II. Other Information 24
Item 1. Legal Proceedings 24
Item 1A. Risk Factors 24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 24
Item 3. Defaults upon Senior Securities 25
Item 4. Mine Safety Disclosures 25
Item 5. Other Information 25
Item 6. Exhibits 25
   
Signatures 26

 

2

 

 

PART I — FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

INTERNATIONAL LAND ALLIANCE, INC.

CONSOLIDATED BALANCE SHEETS

 

   September 30, 2020   December 31, 2019 
   (unaudited)     
ASSETS          
Current assets          
Cash  $16,221   $172,526 
Prepaid and other current assets   85,425    - 
Total current assets   101,646    172,526 
           
Land   271,225    271,225 
Land Held for Sale   647,399    647,399 
Buildings, net   846,446    880,789 
Construction in Process   250,000    250,000 
Other non-current assets   42,158    10,540 
Total assets  $2,158,874   $2,232,479 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
Current liabilities          
Accounts payable and accrued liabilities  $515,601   $100,159 
Contract liability   76,267    50,000 
Deposits   101,000    82,580 
Promissory notes, net of debt discounts   633,516    391,543 
Promissory notes, net of debt discounts– Related Party   356,453    361,466 
Total current liabilities   1,682,837    985,748 
           
Promissory Notes, net of current portion   1,077,023    1,076,937 
           
Total liabilities   2,759,860    2,062,685 
           
Commitments and Contingencies (Note 7)          
Temporary Equity   293,500    293,500 
           
Stockholders’ deficit          
Preferred stock; $0.001 par value; 2,000,000 shares authorized; 28,000 Series A shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively   28    28 
1,000 and 1,000 Series B shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively   1    1 
Common stock; $0.001 par value; 100,000,000 shares authorized; 22,430,654 and 20,614,289 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively   22,431    20,615 
Additional paid-in capital   8,297,930    6,702,750 
Stock (receivable) payable   (251,288)   127,858 
Accumulated deficit   (8,963,588)   (6,974,958)
Total stockholders’ deficit   (894,486)   (123,706)
           
Total liabilities and stockholders’ deficit  $2,158,874   $2,232,479 

 

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

 

3

 

 

INTERNATIONAL LAND ALLIANCE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

   For the Three months ended   For the Nine months ended 
   September 30,
2020
   September 30,
2019
   September 30,
2020
   September 30,
2019
 
Revenues, net  $14,076   $8,493   $39,908   $463,799 
                     
Cost of revenues   -    779    -    21,042 
                     
Gross profit   14,076    7,714    39,908    442,757 
                     
Operating expenses                    
Sales and marketing   14,860    -    431,682    - 
General and administrative expenses   600,609    426,024    1,325,154    1,094,737 
Total operating expenses   615,469    426,024    1,756,836    1,094,737 
                     
Loss from operations   (601,393)   (418,310)   (1,716,928)   (651,980)
                     
Other income (expense)                    
Gain on settlement   -    -    -    8,406 
Loss on derivative liability   -    (33,921)   -    (33,921)
Interest expense   (77,577)   (61,490)   (271,702)   (246,440)
Total other income (expense)   (77,577)   (95,411)   (271,702)   (271,955)
                     
Net loss  $(678,970)  $(513,721)  $(1,988,630)  $(923,935)
                     
Loss per common share - basic and diluted  $(0,03)  $(0.03)  $(0.09)  $(0.06)
                     
Weighted average common shares outstanding - basic and diluted   22,307,719    19,210,253    21,187,461    16,672,181 

 

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

 

4

 

 

INTERNATIONAL LAND ALLIANCE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

For the three and nine months ended September 30, 2020 and 2019

(unaudited)

 

   Series A
Preferred Stock
   Series B
Preferred Stock
   Common Stock   Additional
Paid-in
   Stock
Payable
   Accumulated   Total
Stockholders’
 
   Shares   Amount   Shares   Amount   Shares   Amount   Capital   (receivable)   Deficit   Deficit 
Balance, December 31, 2018   28,000   $28    -   $-    15,927,901   $15,928   $4,762,547   $35,420   $(5,378,872)  $(564,949)
Common stock and warrants sold for cash   -    -    -    -    -    -    -    10,000    -    10,000 
Common stock, warrants and plots promised for cash, net   -    -    -    -    50,000    50    15,445    17,500    -    32,995 
Common stock issued for warrant exercise   -    -    -    -    -    -    -    46,000    -    46,000 
Net loss   -    -    -    -    -    -    -    -    (234,518)   (234,518)
Balance, March 31, 2019   28,000   $28    -   $-    15,977,901   $15,978   $4,777,992   $108,920   $(5,613,390)  $(710,472)
Consideration for title transfer of Oasis Park Resort   -    -    -    -    -    -    670,000    (670,000)   -    - 
Common stock, warrants sold for cash   -    -    -    -    90,000    90    42,410    (10,000)   -    32,500 
Common stock, warrants and plots promised for cash, net   -    -    -    -    389,200    389    141,845    (52,920)   -    89,314 
Common stock issued for warrant exercise   -    -    -    -    768,000    768    129,232    (46,000)   -    84,000 
Common stock issued for services   -    -    -    -    1,656,000    1,656    163,944    -    -    165,600 
Transfer of title for Oasis Park Resort   -    -    -    -    -    -    -    670,000    -    670,000 
Net loss   -    -    -    -    -    -    -    -    (175,696)   (175,696)
Balance, June 30, 2019   28,000   $28    -    $    18,881,101   $18,881   $5,925,423   $-   $(5,789,086)  $155,246 
Common stock, warrants and plots promised for cash, net   -    -    -    -    50,000    50    13,957    -    -    14,007 
Common stock and warrants sold for cash   -    -    -    -    270,000    270    121,230    30,000    -    151,500 
Stock issuable upon execution of convertible debts   -    -    -    -    -    -    -    10,625    -    10,625 
Common stock, warrants, and land issued for services   -    -    -    -    132,000    132    126,416    420    -    126,968 
Net loss   -    -    -    -    -    -    -    -    (513,721)   (513,721)
Balance September 30, 2019   28,000   $28    -   $-    19,333,101   $19,333   $6,187,026   $41,045   $(6,302,807)  $(55,375)
                                                   
Balance, December 31, 2019   28,000   $28    1,000   $1    20,614,289   $20,615   $6,702,750   $127,858   $(6,974,958)  $(123,706)
Stock options granted for services   -    -    -    -    -    -    173,951    -    -    173,951 
Common stock issued for warrant exercise   -    -    -    -    120,000    120    59,880    18,808    -    78,808 
Common stock issued for services   -    -    -    -    50,000    50    236,698    -    -    236,748 
Common stock to be issued and plots promised for cash   -    -    -    -    -    -    -    120,668    -    120,668 
Net loss   -    -    -    -    -    -    -    -    (846,133)   (846,133)
Balance, March 31, 2020   28,000   $28    1,000   $1    20,784,289   $20,785   $7,173,279   $267,334   $(7,821,091)  $(359,664)
Stock issued in connection with debts   -    -    -    -    171,923    171    126,889    (97,858)   -    29,202 
Common stock and warrants sold for cash   -    -    -    -    214,282    215    86,093    (3,808)   -    82,500 
Common stock to be issued and plots promised for cash   -    -    -    -    500,160    500    152,516    (120,668)   -    32,348 
Net loss   -    -    -    -    -    -    -    -    (463,527)   (463,527)
Balance, June 30, 2020   28,000   $28    1,000   $1    21,670,654   $21,671   $7,538,777   $45,000   $(8,284,618)  $(679,141)
Stock and warrants issued for services   -    -    -    -    400,000    400    686,216    (268,788)   -    417,828 
Common stock and warrants sold for cash   -    -    -    -    210,000    210    52,290    (27,500)   -    25,000 
Common stock to be issued and plots promised for cash   -    -    -    -    150,000    150    20,647    -    -    20,797 
Net loss   -    -    -    -    -    -    -    -    (678,970)   (678,970)
                                                   
Balance, September 30, 2020   28,000   $28    1,000   $1    22,430,654   $22,431   $8,297,930   $(251,288)  $(8,963,588)  $(894,486)

 

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

 

5

 

 

INTERNATIONAL LAND ALLIANCE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   For the nine months ended 
   September 30, 2020   September 30, 2019 
         
Cash Flows from Operating Activities          
Net loss  $(1,988,630)  $(923,935)
Adjustments to reconcile net loss to net cash used in operating activities:          
Stock based compensation   828,527    266,842 
Gain on settlement of liability payable   -   (8,406)
Value of land issued for services in excess of cost   -    25,726 
Loss on derivative liabilities   -    33,921 
Depreciation and amortization   34,343    27,461 
Amortization of debt discount   106,161    33,531 
Changes in assets and liabilities          
Prepaid and other current assets   (85,425)   (15,642)
Accounts payable and accrued liabilities   

415,442

    (283,512)
Other non-current assets   (31,618)   - 
Contract liability   26,267    63,000 
Land held for sale   -    (17,925)
Deposits   18,420    - 
Net cash used in operating activities   (676,513)   (798,939)
           
Cash Flows from Investing Activities          
Asset acquisition   -    (476,525)
Net cash used in investing activities   -    (476,525)
           
Cash Flows from Financing Activities          
Common stock and warrants sold for cash   186,308    194,000 
Common stock, warrants and plots promised for cash, net   173,813    136,316 
Common stock issued from warrant exercise   -    130,000 
Cash payments on promissory notes   (21,554)   (984,362)
Cash proceeds from promissory notes   257,641    1,730,851 
Cash proceeds from convertible debt   -    75,000 
Cash payment on convertible debt   -    (7,000)
Cash payments on promissory notes   (76,000)   - 
Net cash provided by financing activities   520,208    1,274,805 
           
Net decrease in Cash   (156,305)   (659)
           
Cash, beginning of period   172,526    971 
           
Cash, end of period  $16,221   $312 
           
Supplemental disclosure of cash flow information          
Cash paid for interest  $63,396   $46,504 
Cash paid for income tax  $-   $- 
           
Non-Cash investing and financing transactions          
Lot obligation satisfied for land  $-   $20,191 
Original issue discount on note payable  $28,500   $- 
Debt discount issued on notes payable  $29,202   $75,000 
Title transfer for Oasis Park Resort  $-   $670,000 
Acquisition and mortgage assumed as part of asset purchase  $-   $605,000 

 

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

 

6

 

 

INTERNATIONAL LAND ALLIANCE, INC.

Notes to Financial Statements

September 30, 2020

 

NOTE 1 – NATURE OF OPERATIONS AND GOING CONCERN

 

Nature of Operations

 

International Land Alliance, Inc. (the “Company”) was incorporated under the laws of the State of Wyoming on September 26, 2013 (inception). The Company is a residential land development company with target properties located in the Baja California, Norte region of Mexico and Southern California. The Company’s principal activities are purchasing properties, obtaining zoning and other entitlements required to subdivide the properties into residential and commercial building plots, securing financing for the purchase of the plots, improving the properties infrastructure and amenities, and selling the plots to homebuyers, retirees, investors and commercial developers.

 

On March 5, 2019, the Company received its trading symbol “ILAL” from FINRA. On April 4, 2019, the Company was approved to have its common stock traded on the OTCQB. On April 12, 2019, the Company became eligible for electronic clearing and settlement through the Depository Trust Company (“DTC”) in the United States. The DTC is a subsidiary of the Depository Trust & Clearing Corporation and manages the electronic clearing and settlement of publicly traded companies. Securities that are eligible to be electronically cleared and settled through DTC are considered “DTC eligible.” This electronic method of clearing securities creates efficiency of the receipt of stock and cash, and thus accelerates the settlement process for investors and brokers, enabling the stock to be traded over a much wider selection of brokerage firms by coming into compliance with their requirements. Being DTC eligible is expected to greatly simplify the process of trading and transferring the Company’s common shares on the OTCQB.

 

The unaudited financial statements herein have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). The accompanying interim unaudited financial statements have been prepared under the presumption that users of the interim financial information have either read or have access to the audited financial statements for the latest year ended December 31, 2019. Accordingly, note disclosures which would substantially duplicate the disclosures contained in the December 31, 2019 audited financial statements have been omitted from these interim unaudited financial statements.

 

Certain information and note disclosures included in the financial statements prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP” or “GAAP”) have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2020, are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. For further information, refer to the audited financial statements and notes for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the SEC on April 14, 2020.

 

Going Concern

 

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

 

Management evaluated all relevant conditions and events that are reasonably known or reasonably knowable, in the aggregate, as of the date the consolidated financial statements were available to be issued and determined that substantial doubt exists about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on the Company’s ability to generate revenues and raise capital. The Company has faced significant liquidity shortages as shown in the accompanying financial statements. As of September 30, 2020, the Company’s current liabilities exceeded its current assets by $1,581,191. The Company has recorded a net loss of $1,988,630 for the nine months ended September 30, 2020 and has an accumulated deficit of $8,963,588 as of September 30, 2020. Net cash used in operating activities for the nine months ended September 30, 2020 was $676,513. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

7

 

 

Management anticipates that the Company’s capital resources will significantly improve if its plots of land gain wider market recognition and acceptance resulting in increased plot sales. If the Company is not successful with its marketing efforts to increase sales and weak demand for purchase of plots continues, the Company will experience a shortfall in cash and it will be necessary to further reduce its operating expenses in a manner or obtain funds through equity or debt financing in sufficient amounts to avoid the need to curtail its future operations subsequent to December 31, 2019. Given the liquidity and credit constraints in the markets, the business may suffer, should the credit markets not improve in the near future. The direct impact of these conditions is not fully known. However, there can be no assurance that the Company would be able to secure additional funds if needed and that if such funds were available on commercially reasonable terms or in the necessary amounts, and whether the terms or conditions would be acceptable to the Company. In such case, the reduction in operating expenses might need to be substantial in order for the Company to generate positive cash flow to sustain the operations of the Company.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

These consolidated financial statements are presented in United States dollars. The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q. All adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein.

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, ILA Fund I, LLC (the “ILA Fund”), a company incorporated in the State of Wyoming and International Land Alliance, S.A. de C.V., a company incorporated in Mexico (“ILA Mexico”); the Company has a 100% equity interest in ILA Mexico. ILA Fund includes cash as its only assets with minimal expenses as of September 30, 2020. The sole purpose of this entity is strategic funding for the operations of the Company. ILA Mexico has lots held for sale for the Oasis Park Resort, no liabilities, and minimal expenses as of September 30, 2020. All intercompany balances and transactions are eliminated in consolidation.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management regularly evaluates estimates and assumptions related to the valuation of assets and liabilities. Management bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from management’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. The Company did not have any cash equivalents as of September 30, 2020 and 2019, respectively.

 

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Fair value of Financial Instruments and Fair Value Measurements

 

Accounting Standards Codification (“ASC”) 820 Fair Value Measurements and Disclosures, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

 

Level 1

 

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

 

Level 2

 

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

 

Level 3

 

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities

 

As defined by ASC 820, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale, which was further clarified as the price that would be received to sell an asset or paid to transfer a liability (“an exit price”) in an orderly transaction between market participants at the measurement date.

 

The reported fair values for financial instruments that use Level 2 and Level 3 inputs to determine fair value are based on a variety of factors and assumptions. Accordingly, certain fair values may not represent actual values of the Company’s financial instruments that could have been realized as of September 30, 2020 and December 31, 2019 or that will be recognized in the future, and do not include expenses that could be incurred in an actual settlement. The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts payable, accrued liabilities, and related party and third-party notes payables approximate fair value due to their relatively short maturities.

 

Cost Capitalization

 

The cost of buildings and improvements includes the purchase price of the property, legal fees, and other acquisition costs. Costs directly related to planning, developing, initial leasing and constructing a property are capitalized and classified as Buildings in the Consolidated Balance Sheets. Capitalized development costs include interest, property taxes, insurance, and other direct project costs incurred during the period of development.

 

A variety of costs are incurred in the acquisition, development and leasing of properties. After determination is made to capitalize a cost, it is allocated to the specific component of a project that is benefited. Determination of when a development project is substantially complete, and capitalization must cease, involves a degree of judgment. Our capitalization policy on development properties is guided by ASC 835-20 Interest – Capitalization of Interest and ASC 970 Real Estate - General. The costs of land and buildings under development include specifically identifiable costs. The capitalized costs include pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and related costs and other costs incurred during the period of development. We consider a construction project as substantially completed and held available for occupancy or sale upon the receipt of certificates of occupancy, but no later than one year from cessation of major construction activity. We cease capitalization on the portion (1) substantially completed and (2) occupied or held available for occupancy, and we capitalize only those costs associated with the portion under construction.

 

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Land Held for Sale

 

The Company considers properties to be assets held for sale when (1) management commits to a plan to sell the property; (2) the property is available for immediate sale in its present condition and (3) the property is actively being marketed for sale at a price that is reasonable given our estimate of current market value. Upon designation of a property as an asset held for sale, we record the property’s value at the lower of its carrying value or its estimated net realizable value.

 

Land and Buildings

 

Land and buildings are stated at cost. Depreciation is provided by the use of the straight-line and accelerated methods for financial and tax reporting purposes, respectively, over the estimated useful lives of the assets. Buildings will have an estimated useful life of 20 years. Land is an indefinite lived asset that is stated at fair value at date of acquisition.

 

Revenue Recognition

 

On January 1, 2018, the Company adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606.

 

Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance.

 

The Company determines revenue recognition through the following steps:

 

identification of the agreement, or agreements, with a buyer and/or investor;
identification of the performance obligations in the agreement for the sale of lots including delivering title to the property being acquired from ILA;
determination of the transaction price;
allocation of the transaction price to the lots purchased when issued with equity or warrants to purchase equity in the Company; and
recognition of revenue when, or as, we satisfy a performance obligation such as delivering title to lots purchased.

 

Revenue is measured based on considerations specified in the agreements with our customers. A contract exists when it becomes a legally enforceable agreement with a customer. The contract is based on either the acceptance of standard terms and conditions as stated in our agreement of lot sales or the execution of terms and conditions contracts with third parties and investors. These contracts define each party’s rights, payment terms and other contractual terms and conditions of the sale. Consideration was historically paid prior to transfer of title as stated above and in future land sales, the Company plans to transfer title to buyers at the time consideration has been transferred if the acquisition of the property has been completed by the Company. The Company applies judgment in determining the customer’s ability and intention to pay; however, collection risk is mitigated through collecting payment in advance or through escrow arrangements. A performance obligation is a promise in a contract or agreement to transfer a distinct product or item to the customer, which for us is transfer of title to our buyers. Performance obligations promised in a contract are identified based on the property that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract, whereby the transfer of the property is separately identifiable from other promises in the contract. We have concluded the sale of property and delivering title is accounted for as the single performance obligation.

 

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The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. The transaction price is determined based on the consideration to which we will be entitled to receive in exchange for transferring title to the customer.

 

The Company recognizes revenue when it satisfies a performance obligation in a contract by transferring control over property to a customer when land title is legally transferred by the Company. The Company’s principal activities in the real estate development industry which it generates its revenues is the sale of developed and undeveloped land.

 

Stock-Based Compensation

 

The fair value of stock options is estimated on the grant date using the Black-Scholes option pricing model, based on weighted average assumptions. Expected volatility is based on historical volatility of our common stock. The Company has elected to use the simplified method described in the Securities and Exchange Commission Staff Accounting Bulletin Topic 14C to estimate the expected term of employee stock options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The value of restricted stock awards is determined using the fair value of the Company’s common stock on the date of grant. The Company accounts for forfeitures as they occur. Compensation expense is recognized on a straight-line basis over the requisite service period of the award.

 

Income Taxes

 

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Income Taxes. The asset and liability method provide that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

 

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Management makes estimates and judgments about our future taxable income that are based on assumptions that are consistent with our plans and estimates. Should the actual amounts differ from our estimates, the amount of our valuation allowance could be materially impacted. Any adjustment to the deferred tax asset valuation allowance would be recorded in the income statement for the periods in which the adjustment is determined to be required. Management does not believe that it has taken any positions that would require the recording of any additional tax liability nor does it believe that there are any unrealized tax benefits that would either increase or decrease within the next year.

 

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Loss Per Share

 

The Company computes loss per share in accordance with ASC 260 – Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the consolidated statements of operations. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible notes payable using the if-converted method. Diluted EPS excludes all dilutive potential shares if their effect is antidilutive. During periods of net loss, all common stock equivalents are excluded from the diluted EPS calculation because they are antidilutive.

 

At September 30, 2020 and December 31, 2019, there were a total of 360,000 and 50,000 warrants issued and outstanding convertible into common stock, respectively, and all warrants are considered anti-dilutive.

 

At September 30, 2020 and December 31, 2019, there were a total of 1,200,000 and 0 options to purchase an equivalent number of the Company’s common stock, respectively, under the Company’s equity incentive plan. All options are considered anti-dilutive.

 

Concentration of Credit Risk

 

The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts through September 30, 2020.

 

Recent Accounting Pronouncements

 

In August 2020, the FASB issued “ASU 2020-06, Debt with Conversion and Other Options (Subtopic 47020) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)” which simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments. Either a modified retrospective method of transition or a fully retrospective method of transition is permissible for the adoption of this standard. Update No. 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted no earlier than the fiscal year beginning after December 15, 2020. The Company is currently evaluating the potential on its financial statements.

 

NOTE 3 – ASSET PURCHASE AND TITLE TRANSFER

 

Emerald Grove Asset Purchase

 

On July 30, 2018, Jason Sunstein, the Chief Financial Officer, entered into a Residential Purchase Agreement (“RPA” or “the Agreement”) to acquire real property located in Hemet, California, which included approximately 80 acres of land and a structure for $1.1 million from an unrelated seller. The property includes the main parcel of land with an existing structure along with three additional parcels of land which are vacant lots to be used for the purpose of development “vacant lots”. The purpose of the transaction was as an investment in real property to be assigned to the Company subsequent to acquisition. The property was acquired by Mr. Sunstein since it was required by the seller to transfer the property for consideration from an individual versus a separate legal entity. The transaction closed on March 18, 2019 and the consideration included a loan financed in the amount of $605,000 (see Note 6 - PrideCo) in addition to cash consideration of $524,613 which came from a portion of funds loaned by investors of the Company to be repaid as interest bearing notes payable (see Note 6). On March 18, 2019, Mr. Sunstein assigned the deed of the property to the Company. The mortgage obligation was assumed by the Company, as approved by the Board of Directors in March 2019. The mortgage loan was not assigned to the Company by the lender; however, the lender acknowledged that the transfer of the property to the Company did not trigger an event of default. Mr. Sunstein remained a guarantor on the mortgage until the debt was paid in full during the year ended December 31, 2019 through a refinancing transaction (see Note 6 – Velocity). The Company recorded the assets acquired and liabilities assumed at fair value on the date of assignment and assumption.

 

The Company has included all allowed acquisition costs of $22,050 in the value of the capitalized assets. The building and land asset values were assigned using a purchase price allocation based on the appraised land values. The total of the consideration plus acquisition costs assets of $1,122,050 was allocated to land and building in the following amounts: $271,225 – Land; $850,826 – Building. The land is an indefinite long-lived asset that was assessed for impairment as a grouped asset with the building on a periodic basis.

 

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Oasis Park Title Transfer

 

On June 18, 2019, Baja Residents Club SA de CV (“BRC”), a related party with common ownership and control by our CEO, Robert Valdes , transferred title to the Company for the Oasis Park property which was part of a previously held land project consisting of 497 acres to be acquired and developed into Oasis Park resort near San Felipe, Baja. It was previously subject to approval by the Mexican government in Baja, California which was finalized in June 2019. As consideration for the promise to transfer title, the Company previously issued 7,500,000 shares of founder’s common stock that was valued at $750,000 or $0.10 per common share. No prior accounting was recorded for this issuance pending resolution of the contingency to transfer title, which was resolved during the year ended December 31, 2019. A portion of this value was allocated to the Oasis Park resort and a portion was allocated to other properties as the Company continues to receive transfer of title. ILA recorded the property held for sale on its balance sheet in the amount of $670,000 and accordingly reduced the value as lots are sold. As of September 30, 2020, the Company reported a balance for assets held for sale of $647,399.

 

NOTE 4 – LAND, BUILDING, NET AND CONSTRUCTION IN PROCESS

 

Land and buildings, net as of September 30, 2020 and December 31, 2019:

 

   Useful life  September 30,
2020
   December 31,
2019
 
Land – Emerald Grove     $271,225   $271,225 
              
Land held for sale – Oasis Park     $647,399   $647,399 
              
Construction in Process     $250,000   $250,000 
              
Building – Emerald Grove  20 years   917,496    917,496 
Less: Accumulated depreciation      (71,050)   (36,707)
              
Building, net     $846,446   $880,789 

 

Depreciation expense was $11,531 and $34,343 for the three and nine months ended September 30, 2020. Depreciation expense was $11,769 and $27,461 for the three and nine months ended September 30, 2019.

 

NOTE 5 – RELATED PARTY TRANSACTIONS

 

The Company entered into an employment agreement with the Chief Executive Officer on January 1, 2020 to perform duties and responsibilities as may be assigned. The base salary is in the amount of $120,000 per annum, a $500 monthly auto stipend, and four weeks of paid vacation. The Company paid to its Chief Executive Officer consulting and payroll fees for services directly related to continued operations of $5,000 and $21,000 for the nine months ended September 30, 2020 and 2019, respectively.

 

The Company entered into an employment agreement with the Chief Financial Officer on January 1, 2020 to perform duties and responsibilities as may be assigned. The base salary is in the amount of $120,000 per annum, a $500 monthly auto stipend, and four weeks of paid vacation. The Company paid its Chief Financial Officer consulting and payroll fees of $92,308 and $62,749 for the nine months ended September 30, 2020 and 2019, respectively.

 

The Company’s Chief Financial Officer, Jason Sunstein, also facilitated the Emerald Grove asset purchase as described in Note 3.

 

On October 25, 2019, the Company issued a promissory note to RAS, LLC “RAS”, a company controlled by Lisa Landau, a former officer and related party to an officer of the Company, for $440,803. The proceeds of the note were largely used to repay shareholder loans and other liabilities. The loan bears interest at 10%. The loan matures on June 25, 2020 and is secured by 2,500,000 common shares and a Second Deed of Trust for property in Hemet, CA (Emerald Grove). Additionally, as in incentive to the note holder, the Company is required to issue to the holder 132,461 shares of common stock valued at $97,858, which was recorded as a debt discount as of December 31, 2019. As of September 30, 2020, the discount has been fully amortized, and the note is shown less amortized discount of $0. The shares were issued on May 1, 2020. Interest expense for the nine months ending September 30, 2020 and 2019 was $26,758 and $0, respectively.

 

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NOTE 6 – NOTES PAYABLE

 

   September 30, 2020   December 31, 2019 
Note payable, due August 2020 – in default  $36,606   $46,660 
Note payable, 10% interest, due March 2020 – in default   1,500    1,500 
Note payable, secured, 10% interest, due October 2021   975,000    975,000 
Note payable, 15% interest, due December 2020   50,000    50,000 
Note payable, 15% interest, due December 2020   50,000    50,000 
Note payable, 15% interest, due December 2020   100,000    100,000 
Note payable, 15% interest, due December 2020   100,000    100,000 
Note payable, 15% interest, due December 2020   20,000    20,000 
Note payable, 15% interest, due December 2020   25,000    25,000 
Note payable, 13% interest, due December 2021   117,500    129,000 
Note Payable, 12% interest, due June 2021   285,000    - 
Note Payable, 0% interest, due October 2020   11,400    - 
Total Notes Payable  $1,772,006   $1,497,160 
Less discounts   (61,467)   (28,680)
           
Total Notes Payable   1,710,539    1,468,480 
           
Less current portion   (633,516)   (391,543)
           
Total Notes Payable - long term  $1,077,023   $1,076,937 

 

Interest expense including amortization of the associated debt discount for the nine months ended September 30, 2020 and 2019 was $272,702 and $313,412, respectively.

 

NOTE 7 – COMMITMENTS AND CONTINGENCIES

 

Commitment to Purchase Land

 

There is one remaining land project consisting of 20 acres to be acquired and developed into Valle Divino resort in Ensenada, which is subject to approval by the Mexican government in Baja, California. The Company has promised to transfer title to the plots of land to the investors who have invested in the Company once the Company receives an approval of change in transfer of title to the Company. The Company has promised to transfer title to the plots of land to the investors who have invested in the Company once the Company receives an approval of change in transfer of title to the Company. As of September 30, 2020, the Company has entered into nine contracts for deed agreements to sell ten lots of land.

 

Land purchase- Costa Bajamar

 

On September 25, 2019, the Company, entered into a definitive Land Purchase Agreement with Valdeland, S.A. de C.V., a Company controlled by our CEO Roberto Valdes, to acquire approximately one acre of land with plans and permits to build 34 units at the Bajamar Ocean Front Golf Resort located in Ensenada, Baja California. Pursuant to the terms of the Agreement, the total purchase price is $1,000,000, payable in a combination of preferred stock ($600,000); common stock ($250,000/250,000 common shares at $1.00/share); a promissory note ($150,000); and an initial construction budget of $150,000 payable upon closing. A recent appraisal valued the land “as is” for $1,150,000. The closing is subject to obtaining the necessary approval by the City of Ensenada and transfer of title, which includes the formation of a wholly owned Mexican subsidiary. As of September 30, 2020, the agreement has not closed.

 

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Commitment to Sell Land

 

On September 30, 2019, the Company entered into a contract for deed agreement “Agreement” with IntegraGreen whose principal is also a creditor. Under the agreement the Company agreed to the sale of 20 acres of vacant land and associated improvements located at the Emerald Grove property in Hemet, California for a total purchase price of $630,000, $63,000 was paid upon execution and the balance is payable in a balloon payment on October 1, 2026 with interest only payments of $3,780 due on the 1st of each month beginning April 1, 2020. During the duration of the Agreement the Company retains title and is allowed to encumber the property with a mortgage at its discretion; however, IntegraGreen has the right to use the property. The Company may also evict IntegraGreen from the premises in the case of default under the agreement.

 

During the nine months ended September 30, 2020, the Company received an additional payment of $32,000. Due to the nature of the Agreement, the Company’s management deemed that there was an embedded lease feature in the agreement in accordance with ASC 842. As a result, the received payments of $95,000 were classified as a deposit. Upon an event of default the payment is non-refundable, and the Company no longer has any obligation to provide access to the land. The interest payments will be recognized monthly as lease income. During the nine months ended September 30, 2020, the Company recognized $31,618 in lease income.

 

On October 10, 2019, the Company entered into a contract for deed agreement with a third-party investor. Under the contract the Company agreed to the sale of 1 lot of vacant land and associated improvements located at the Valle Divino property in Ensenada, Mexico and 100,000 shares of common stock for a total purchase price of $50,000. $25,000 was paid upon execution and the balance was paid on October 7, 2019. The total cash proceeds of $50,000 was allocated based upon the relative fair value of the shares and one (1) promised plot of land in the following amounts: shares were valued at $39,282; and plot of land was valued at $10,718.

 

Due to the nature of the agreement, management deemed that there was a customer contract. As a result, the $10,718 value of the land was classified as a contract liability under ASC 606, and it will be recognized as revenue when the Company fulfills its performance obligation to provide title to the lot.

 

On November 6, 2019, the Company entered into a contract for deed agreement with a third-party investor. Under the contract the Company agreed to the sale of 1 lot of vacant land and associated improvements located at the Valle Divino property in Ensenada, Mexico and 70,160 shares of common stock for a total purchase price of $35,080.$10,000 was paid upon execution, $9,580 was paid on December 23, 2019, and the balance was paid on February 4, 2020. The total cash proceeds of $35,080 was allocated based upon the relative fair value of the shares and one (1) promised plot of land in the following amounts: shares were valued at $25,258; and plot of land was valued at $9,822, which was classified as a contract liability on the balance sheet as of September 30, 2020.

 

On January 13, 2020, the Company entered into a contract for deed agreement with a third-party investor. Under the contract the Company agreed to the sale of 2 lots of vacant land and associated improvements located at the Valle Divino property in Ensenada, Mexico for a total purchase price of $40,000, paid upon execution. The total cash proceeds of $40,000 was allocated based upon the relative fair value of the shares and two (2) promised plots of land in the following amounts: shares were valued at $23,780; and plot of land was valued at $16,220, which was classified as a contract liability on the balance sheet as of September 30, 2020.

 

On January 24, 2020, the Company entered into a contract for deed agreement with a third-party investor. Under the contract the Company agreed to the sale of 1 lot of vacant land and associated improvements located at the Valle Divino property in Ensenada, Mexico for a total purchase price of $25,000, paid upon execution. The total cash proceeds of $25,000 was allocated based upon the relative fair value of the shares and one (1) promised plot of land in the following amounts: shares were valued at $16,174; and plot of land was valued at $8,826, which was classified as a contract liability on the balance sheet as of September 30, 2020.

 

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On March 25, 2020, the Company entered into a contract for deed agreement with a third-party investor. Under the contract the Company agreed to the sale of 1 lot of vacant land and associated improvements located at the Valle Divino property in Ensenada, Mexico for a total purchase price of $25,000, paid upon execution. The total cash proceeds of $25,000 was allocated based upon the relative fair value of the shares and one (1) promised plot of land in the following amounts: shares were valued at $16,174; and plot of land was valued at $8,826, which was classified as a contract liability on the balance sheet as of September 30, 2020.

 

On April 28, 2020, the Company entered into a contract for deed agreement with a third-party investor. Under the contract the Company agreed to the sale of 1 lot of vacant land and associated improvements located at the Valle Divino property in Ensenada, Mexico for a total purchase price of $25,000, paid upon execution. The total cash proceeds of $25,000 was allocated based upon the relative fair value of the shares and one (1) promised plot of land in the following amounts: shares were valued at $16,174; and plot of land was valued at $8,826, which was classified as a contract liability on the balance sheet as of September 30, 2020.

 

On June 19, 2020, the Company entered into a contract for deed agreement with a third-party investor. Under the contract the Company agreed to the sale of 1 lot of vacant land and associated improvements located at the Valle Divino property in Ensenada, Mexico for a total purchase price of $25,000, paid upon execution. The total cash proceeds of $25,000 was allocated based upon the relative fair value of the shares and one (1) promised plot of land in the following amounts: shares were valued at $16,174; and plot of land was valued at $8,826, which was classified as a contract liability on the balance sheet as of September 30, 2020.

 

On July 14, 2020, the Company entered into a contract for deed agreement with a third-party investor. Under the contract the Company agreed to the sale of 1 lot of vacant land and associated improvements located at the Valle Divino property in Ensenada, Mexico for a total purchase price of $25,000, paid upon execution. The total cash proceeds of $25,000 was allocated based upon the relative fair value of the shares and one (1) promised plot of land in the following amounts: shares were valued at $20,797; and plot of land was valued at $4,203, which was classified as a contract liability on the balance sheet as of September 30, 2020

 

Litigation Costs and Contingencies

 

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business. Management is currently not aware of any such legal proceedings or claims that could have, individually or in the aggregate, a material adverse effect on our business, financial condition, or operating results.

 

Employment Agreements

 

The Company entered into an employment agreement with the Chief Executive Officer on January 1, 2020 to perform duties and responsibilities as may be assigned. The base salary is in the amount of $120,000 per annum, a $500 monthly auto stipend, and four weeks of paid vacation.

 

The Company entered into an employment agreement with the Chief Financial Officer on January 1, 2020 to perform duties and responsibilities as may be assigned. The base salary is in the amount of $120,000 per annum, a $500 monthly auto stipend, and four weeks of paid vacation.

 

The Company entered into an employment agreement with the Sales and Marketing Director on January 1, 2020 to perform duties and responsibilities as may be assigned. The base salary is in the amount of $80,000 per annum, a $500 monthly auto stipend, and four weeks of paid vacation.

 

NOTE 8 – STOCKHOLDERS’ EQUITY

 

The Company’s equity at September 30, 2020 consisted of 75,000,000 authorized common shares and 2,000,000 authorized preferred shares, both with a par value of $0.001 per share. As of September 30, 2020, and December 31, 2019, there were 22,430,654 and 20,614,299 shares of common stock issued and outstanding, respectively.

 

As of September 30, 2020, and December 31, 2019, 28,000 shares of Series A Preferred Stock were issued and outstanding and 1,000 shares of Series B Preferred Stock were issued and outstanding, respectively.

 

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On August 26, 2020, the Company amended its Articles of Incorporation to increase the authorized common stock, par value $0.001, from 75,000,000 shares to 100,000,000 shares and the holders of a majority of the Company’s outstanding voting securities approved the Company’s 2020 Equity Plan and the grant of 1,700,000 stock options. These service-based stock options were issued with a strike price of $0.33 and a term of five years. The Company has reserved a total of 3,000,000 shares of the authorized common stock for issuance under the 2020 Equity Plan.

 

Common Stock Issued for Services

 

On January 1, 2020, the Company issued 50,000 shares of common stock and 150,000 warrants to be issued for services valued at $50,000 and $186,748, respectively.

 

On July 6, 2020, the Company agreed to issued 400,000 shares of common stock for services valued at $192,000.

 

On July 1, 2020, the Company issued 1,200,000 performance-based stock options to purchase an equivalent number of common shares to one consultant. The grant date fair value of these options was $348,954, of which $174,228 was recognized as performance was either met or probable of achievement in the three months ended September 30, 2020.

 

On September 25, 2020, the Company agreed to issue 100,000 shares of common stock valued at $51,000 to renew a service agreement. As of September 30, 2020, the shares had not been issued and were recorded as stock payable.

 

Common Stock Issued for Cash

 

On August 12, 2019, the Company received cash proceeds of $30,000 for 66,667 shares of common stock. These shares were issued on May 1, 2020.

 

On January 21, 2020, the Company received cash proceeds of $20,000 for 40,000 shares of common stock.

 

On February 26, 2020, the Company received cash proceeds of $20,000 for 40,000 shares of common stock.

 

On February 28, 2020, the Company received cash proceeds of $20,000 for 40,000 shares of common stock.

 

On March 2, 2020, the Company received cash proceeds of $8,807 for 17,615 shares of common. These shares were issued on May 19, 2020.

 

On March 12, 2020, the Company received cash proceeds of $10,000 for 20,000 shares of common stock. These shares were issued on May 1, 2020.

 

On May 4, 2020, the Company received cash proceeds of $9,000 for 20,000 shares of common.

 

On May 5, 2020, the Company received cash proceeds of $10,000 for 40,000 shares of common from warrant exercise. The shares were issued on August 3, 2020.

 

On May 16, 2020, the Company received cash proceeds of $16,000 for 40,000 shares of common

 

On May 18, 2020, the Company received cash proceeds of $20,000 for 80,000 shares of common. The shares were issued on August 3, 2020.

 

On May 18, 2020, the Company received cash proceeds of $15,000 for 60,000 shares of common. The shares were issued on August 3, 2020.

 

On June 20, 2020, the Company received cash proceeds of $12,500 for 50,000 shares of common stock.

 

On July 23, 2020, the Company received cash proceeds of $7,500 for 30,000 shares of common stock from a warrant exercise by a third-party investor.

 

On August 26, 2020, the Company received cash proceeds of $10,000 for 40,000 shares of common stock. As of September 30, 2020, the shares had not been issued and were recorded as stock payable.

 

On September 18, 2020, the Company received cash proceeds of $7,500 for 30,000 shares of common stock from a warrant exercise. As of September 30, 2020, the shares had not been issued and were recorded as stock payable.

 

Common Stock sold with a Promise to Deliver Title to Plot of Land and Warrants

 

On October 10, 2019, the Company received cash proceeds of $50,000 for 100,000 shares of common stock to be issued to a third-party investor. In conjunction with this sale of shares, the Company also attached one (1) plot of land. The total cash proceeds of $50,000 was allocated based upon the relative fair value of the shares and one (1) promised plot of land in the following amounts: shares were valued at $39,282; and plot of land was valued at $10,718. The shares were issued on May 1, 2020.

 

17

 

 

On November 6, 2019, the Company received cash proceeds of $35,080 for 70,160 shares of common stock to be issued to a third-party investor. In conjunction with this sale of shares, the Company also attached one (1) plot of land. The total cash proceeds of $35,080 was allocated based upon the relative fair value of the shares and one (1) promised plot of land in the following amounts: shares were valued at $25,258; and plot of land was valued at $9,822. The shares were issued on May 1, 2020.

 

On January 13, 2020, the Company received cash proceeds of $40,000 for 80,000 shares of common stock to be issued to a third-party investor. In conjunction with this sale of shares, the Company also attached two (2) plots of land. The total cash proceeds of $40,000 was allocated based upon the relative fair value of the shares and two (2) promised plots of land in the following amounts: shares were valued at $23,780; and plot of land was valued at $16,220. The shares were issued on May 1, 2020.

 

On January 24, 2020, the Company received cash proceeds of $25,000 for 50,000 shares of common stock to be issued to a third-party investor. In conjunction with this sale of shares, the Company also attached one (1) plot of land. The total cash proceeds of $25,000 was allocated based upon the relative fair value of the shares and one (1) promised plot of land in the following amounts: shares were valued at $16,174; and plot of land was valued at $8,826. The shares were issued on May 1, 2020.

 

On March 25, 2020, the Company received cash proceeds of $25,000 for 50,000 shares of common stock to be issued to a third-party investor. In conjunction with this sale of shares, the Company also attached one (1) plot of land. The total cash proceeds of $25,000 was allocated based upon the relative fair value of the shares and one (1) promised plot of land in the following amounts: shares were valued at $16,174; and plot of land was valued at $8,826. The shares were issued on April 3, 2020

 

On April 01, 2020, the Company received cash proceeds of $25,000 for 50,000 shares of common stock to be issued to a third-party investor. In conjunction with this sale of shares, the Company also attached one (1) plot of land. The total cash proceeds of $25,000 was allocated based upon the relative fair value of the shares and one (1) promised plot of land in the following amounts: shares were valued at $16,174; and plot of land was valued at $8,826.

 

On June 25, 2020, the Company received cash proceeds of $25,000 for 100,000 shares of common stock and 100,000 one year warrants to be issued to a third-party investor. In conjunction with this sale of shares, the Company also attached one (1) plot of land. The total cash proceeds of $25,000 was allocated based upon the relative fair value of the shares and one (1) promised plot of land in the following amounts: shares and warrants were valued at $16,174; and plot of land was valued at $8,826.

 

On July 14, 2020, the Company received cash proceeds of $25,000 for 150,000 shares of common stock to be issued to a third-party investor. In conjunction with this sale of shares, the Company also attached one (1) plot of land. The total cash proceeds of $25,000 was allocated based upon the relative fair value of the shares and one (1) promised plot of land in the following amounts: shares and warrants were valued at $20,797; and plot of land was valued at $4,203.

 

Common Stock Issued in Relation to Debt

 

On October 25, 2019, the Company agreed to issue 132,461 shares of common stock valued at $97,858 in connection with securing a loan from a third-party. These shares were issued on May 1, 2020.

 

On June 4, 2020, the Company issued 39,462 shares valued at $29,202 in connection with securing a loan from a third- party.

 

Preferred Stock

 

The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is authorized to fix the number of shares of any series of Preferred Stock and to determine the designation of any such series. The Board of Directors is also authorized to determine or alter the rights, preferences, privileges, and restrictions granted to or imposed upon any wholly unissued series of Preferred Stock and, within the limits and restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series, to increase or decrease (but not below the number of shares of such series than outstanding) the number of shares of any such series subsequent to the issue of shares of that series.

 

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On October 1, 2013, the Company authorized and issued 28,000 shares of Series A Preferred Stock to Grupo Valcas, a related party which provides consulting services on project development, in exchange for services. Grupo Valcas is a master planner and real estate development firm owned by the Valdes family. Roberto Valdes, the Company President and Chief Executive Officer, was a minority owner of Valcas until December 2018 when he left the family company to focus 100% on International Land Alliance. The 28,000 shares grant the holder to have the right to vote on all shareholder matters equal to 100 votes per share. The Series A shares were valued according to the additional voting rights assigned. The value assigned to the voting rights was derived from a model utilizing control premiums to value the voting control of the preferred stock which was prepared by an independent valuation specialist. The value assigned to the Series A Preferred Stock was $2,260,496 and was recorded on the grant date as stock-based compensation.

 

At September 30, 2020 and December 31, 2019, 28,000 shares of Series A Preferred Stock were issued and outstanding.

 

Warrants

 

A summary of the Company’s warrant activity during the nine months ended September 30, 2020 is presented below:

 

       Weighted  

Weighted
Average
Remaining

Contract

 
  

Number of

Warrants

  

Average

Exercise Price

  

Term

(Year)

 
Outstanding at December 31, 2019   50,000   $0.50    0.75 
Granted   310,000    0.40    0.96 
Exercised   

(20,000

)   

0.50

    

0.60

 
Forfeit/Canceled   -    -    - 
Outstanding at September 30, 2020   340,000   $0.41    0.94 
                
Exercisable at September 30, 2020   340,000           

 

At September 30, 2020, 360,000 warrants were exercisable into common stock. The exercise price of outstanding warrants for common stock was between $0.25 - $0.50 per warrant, and the term of exercise of the outstanding warrants was one - two years from the date of issuance. The aggregate intrinsic value as of September 30, 2020 and December 31, 2019 was approximately $66,000 and $33,000, respectively.

 

Options

 

A summary of the Company’s option activity during the nine months ended September 30, 2020 is presented below:

 

       Weighted  

Weighted
Average
Remaining

Contract

 
  

Number of

Options

  

Average

Exercise Price

  

Term

(Year)

 
Outstanding at December 31, 2019   -   $-    - 
Granted   2,900,000    0.49    3.56 
Exercised   -    -    - 
Forfeit/Canceled   -    -    - 
Outstanding at September 30, 2020   2,900,000   $0.49    3.56 
                
Exercisable at September 30, 2020   400,000           

 

At September 30, 2020, 400,000 options were exercisable into common stock. The exercise price of outstanding options for common stock was between $0.25 - $1.00 per option, and the term of exercise of the outstanding options was two years from the date of issuance. The aggregate intrinsic value as of September 30, 2020 and December 31, 2019 was approximately $180,000 and $0, respectively.

 

NOTE 9 – SUBSEQUENT EVENTS

 

Subsequent to September 30, 2020, the Company issued 70,000 shares for $17,500 cash, which was received during the nine-month period ended September 30, 2020 and recorded as stock payable.

 

Subsequent to September 30, 2020, the Company issued 250,000 shares pursuant to a land purchase agreement.

 

Subsequent to September 30, 2020, the Company issued 450,000 restricted stock of common stock.

  

Management has evaluated subsequent events pursuant to the issuance of the interim unaudited consolidated financial statements and has determined that, other than listed above, no other reportable subsequent events exist through the date of these condensed consolidated financial statements.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Overview of Our Company

 

International Land Alliance, Inc. (the “Company”) was incorporated pursuant to the laws of the State of Wyoming on September 26, 2013. We are based in San Diego, California. We are a residential land development company with target properties located primarily in the Baja California Norte region of Mexico and southern California. Our principal activities are purchasing properties, obtaining zoning and other entitlements required to subdivide the properties into residential and commercial building lots, securing financing for the purchase of the lots, improving the properties’ infrastructure and amenities, and selling the lots to homebuyers, retirees, investors and commercial developers. We offer the option of financing (i.e. taking a promissory note from the buyer for all or part of the purchase price) with a guaranteed acceptance on any purchase for every customer.

 

Overview

 

As of September 30, 2020, we had:

 

  Continued our research and marketing efforts to identify potential home buyers in the United States, Canada, Europe, and Asia. Through the formation of a partnership with a similar development company in the Baja California Norte Region of Mexico, we have been able to leverage additional resources with the use of their established and proven marketing plan which can help us with sophisticated execution and the desired results for residential lot sales and development.
     
  Completed development of our interactive website for visitors to view condominium and villa options and allow customization.
     
  Assumed title of the Oasis Park Resort in San Felipe. As progress continues on the development of the Oasis Park Resort, we are expecting the transfer of title on the Villas del Enologo in Rancho Tecate, Valle Divino in Ensenada, Baja California and Costa Bajamar in Ensenada, Baja California in the near future as it continues to follow the necessary steps to complete this legal process.
     
  Continued our efforts to secure the proper financing and capital by exploring various options that will help achieve our goals of advanced development and additional investment opportunities.

 

  We engaged a Director of Sales, Mexico Division, Mauricio Bustamante.
     
  The portion of the funding over the last 9 months has gone to start the construction of the model homes which is expected to enhance sales.

 

Results of Operations for the Three and Nine Months Ended September 30, 2020 compared to the Three and Nine Months Ended September 30, 2019

 

Revenues

 

Our total revenue reported for the three months ended September 30, 2020 was $14,076, compared with $8,493 for the three months ended September 30, 2019. Such increase in our revenues is not deemed to be material.

 

Our total revenue reported for the nine months ended September 30, 2020 was $39,908, compared with $463,799 for the nine months ended September 30, 2019. The change is a result of assuming title of Oasis Park Resorts in June 2019 and recognizing associated revenue related to satisfying performance obligations regarding the sale of Oasis Park Resort lots in that period.

 

Cost of Revenues

 

Our total cost of revenues for the three months ended September 30, 2020 was $0 compared with $779 for the three months ended September 30, 2019. Such decrease in our cost of revenues is not deemed to be material.

 

Our total cost of revenues for the nine months ended September 30, 2020 was $0 compared with $21,042 for the nine months ended September 30, 2019. The change is a result of assuming title of Oasis Park Resorts in June 2019 and recognizing associated costs revenue related to satisfying performance obligations regarding the sale of Oasis Park Resort lots in that period.

 

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Operating Expenses

 

Operating expenses increased to $615,469 for the three months ended September 30, 2020 from to $426,024 for the three months ended September 30, 2019. The detail by major category is reflected in the table below.

 

Operating expenses increased to $1,756,836 for the nine months ended September 30, 2020 from to $1,094,737 for the nine months ended September 30, 2019. The detail by major category is reflected in the table below.

 

   Three Months Ended
September 30
   Nine Months Ended
September 30
 
   2020   2019   2020   2019 
Sales and marketing  $14,860   $-   $431,682   $- 
General and administrative   600,609    426,024    1,325,154    1,094,737 
                     
Total Operating Expenses  $615,469   $426,024   $1,756,836   $1,094,737 

 

Sales and marketing costs increased by $14,860 for the three months ended September 30, 2020 primarily due to the increased operations of the Company and options granted for services. As the Company obtained title to the Oasis Park property in the second quarter of 2019 and has begun to sell plots for the Valle Divino and Costa Bajamar project commencing in our third fiscal quarter of 2019, the Company has spent significant amounts on website development, marketing and other efforts to generate interest in these projects to potential buyers. As the Company was not positioned to sell these properties in the prior comparable period, there were no expenditures for sale and marketing in the period ended September 30, 2019.

 

Sales and marketing costs increased by $431,682 for the nine months ended September 30, 2020 primarily due to the increased operations of the Company and options granted for services. As the Company obtained title to the Oasis Park property in the second quarter of 2019 and has begun to sell plots for the Valle Divino and Costa Bajamar project commencing in the third fiscal quarter of 2019, the Company has spent significant amounts on website development, marketing and other efforts to generate interest in these projects to potential buyers. As the Company was not positioned to sell these properties in the prior comparable period, there were no expenditures for sale and marketing in the period ended September 30, 2019.

 

General and administrative costs increased by $174,585 for the three months ended September 30, 2020 primarily due to an increase in share-based compensation for consulting services and professional fees, offset by $150,000 reversal of marketing expense accrual following settlement of a litigation.

 

General and administrative costs increased by $230,417 for the nine months ended September 30, 2020 primarily due to increased salaries, stock-based payments for consulting services, and professional fees, offset by $150,000 reversal of marketing expense accrual following settlement of a litigation.

 

Net Loss

 

We finished the three months ended September 30, 2020 with a net loss of $678,970, as compared to a loss of $513,721 for the three months ended September 30, 2019. Such increase in the Company’s net loss is primarily the result of increased general and administrative costs, specifically stock-based payments from consulting services and professional fees, offset by a $150,00 gain on settlement of existing liability payable.

 

We finished the nine months ended September 30, 2020 with a net loss of $1,9888,630, as compared to a loss of $923,935 for the nine months ended September 30, 2019, which is primarily the result of the increased professional, marketing, and consulting fees incurred during 2020 and well as increased interest expense associated with the increase in debt financing during 2020 .

 

The factors that will most significantly affect future operating results will be:

 

  The acquisition of land with lots for sale;
  The sale price of future lots, compared to the sale price of lots in other resorts in Mexico;
  The cost to construct a home on the lots to be transferred, and the quality of construction;
  The quality of our amenities; and
  The global economy and the demand for vacation homes
  The effects of COVID-19 on the US and Global economy
  The negotiations to extend or refinance our debt in default

 

Other than the foregoing we do not know of any trends, events or uncertainties that have had, or are reasonably expected to have, a material impact on our revenues or expenses.

 

Capital Resources and Liquidity

 

Cash was $16,221 and $172,526 at September 30, 2020 and December 31, 2019, respectively. As shown in the accompanying financial statements, we recorded a loss of $678,970 and $1,988,630, respectively, for the three and nine months ended September 30, 2020 and $513,721 and $923,935, respectively, for the three and nine months ended September 30, 2019. Our working capital deficit at September 30, 2020 was $1,581,191 and net cash flows used in operating activities for nine months ended September 30, 2020 were $676,513. These factors and our ability to raise additional capital to accomplish our objectives, raises substantial doubt about our ability to continue as a going concern. We expect our expenses will continue to increase during the foreseeable future as a result of increased operations, increased construction activity and the development of current and future projects which include our current business operations.

 

We anticipate generating continued revenues over the next twelve months as we continue to market the sale of lots held for sale at our Oasis Park Resort. Consequently, we are dependent on the proceeds from future debt or equity investments to sustain our operations and implement our business plan. If we are unable to raise sufficient capital, we will be required to delay or forego some portion of our business plan, which would have a material adverse effect on our anticipated results from operations and financial condition. There is no assurance that we will be able to obtain necessary amounts of capital or that our estimates of our capital requirements will prove to be accurate.

 

21

 

 

We presently do not have any significant credit available, bank financing or other external sources of liquidity. Due to our operating losses, our operations have not been a significant source of liquidity. We will need to acquire other profitable properties or obtain additional capital in order to expand operations and become profitable. In order to obtain capital, we may need to sell additional shares of our common stock or borrow funds from private lenders. There can be no assurance that we will be successful in obtaining additional funding.

 

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to existing stockholders. If additional funds are raised through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of common stock and the terms of such debt could impose restrictions on our operations. Regardless of whether our cash assets prove to be inadequate to meet our operational needs, we may seek to continue to compensate providers of services by issuance of stock in lieu of cash, which may also result in dilution to existing shareholders. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing.

 

No assurance can be given that sources of financing will be available to us and/or that demand for our equity/debt instruments will be sufficient to meet our capital needs, or that financing will be available on terms favorable to us. If funding is insufficient at any time in the future, we may not be able to take advantage of business opportunities or respond to competitive pressures or may be required to reduce the scope of our planned development, any of which could have a negative impact on our business and operating results. In addition, insufficient funding may have a material adverse effect on our financial condition, which could require us to:

 

  Curtail our operations significantly, or
  Seek arrangements with strategic partners or other parties that may require us to relinquish significant rights to our development of resorts and correlated services, or
  Explore other strategic alternatives including a merger or sale of our Company.

 

Operating Activities

 

Net cash flows used in operating activities for the nine months ended September 30, 2020 was $676,513 which resulted primarily due to the loss of $1,988,630 offset by non-cash share-based compensation of $828,527, and an increase in accounts payable and accrued liabilities of $565,442. Net cash flows used in operating activities for the nine months ended September 30, 2019 was $798,939 which primarily resulted due to the loss of $923,935 and a decrease in accounts payable and accrued expenses of $283,512.

 

Investing Activities

 

Net cash flows used in investing activities was $0 for the nine months ended September 30, 2020. Net cash flows used in investing activities was $476,425 for the nine months ended September 30, 2019. The funds were used for the acquisition of an investment property.

 

Financing Activities

 

Net cash flows provided by financing activities for the nine months ended September30, 2020 was $520,208 primarily from cash proceeds from sale of common stocks and warrants of $186,308, cash proceeds from sale of common stock, warrants and plots of land promised to investors, net of expenses of $173,813, net cash proceeds from notes payable of approximately $257,641 , and offset by repayment on a promissory note to a related party of $76,000.

 

Net cash flows provided by financing activities for the nine months ended September 30, 2019 was $1,274,805 primarily from cash proceeds from sale of common stocks and warrants of $194,000, and cash proceeds from sale of common stock, warrants and plots of land promised to investors, net of expenses of $136,316, cash proceeds from warrant exercise of $130,000 and cash proceeds from note payable of $1,730,851, offset by cash payments on convertible debt and promissory notes of $984,362.

 

As a result of these activities, we experienced a decrease in cash and cash equivalents of $156,305 for the nine months ended September 30, 2020 and a decrease in cash and cash equivalents of $659 for the nine months ended September 30, 2019, respectively.

 

Our ability to continue as a going concern is still dependent on our success in obtaining additional financing from investors or from sale of our common shares.

 

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Critical Accounting Polices

 

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

 

There have been no material changes to our critical accounting policies as compared to the critical accounting policies and significant judgments and estimates disclosed in our Annual Report on Form 10-K/A for the year ended December 31, 2019, filed with the SEC on April 14, 2020.

 

Off-balance Sheet Arrangements

 

During the period ended September 30, 2020, we have not engaged in any off-balance sheet arrangements.

 

Recent Accounting Pronouncements

 

The recent accounting pronouncements that are material to our financial statements are disclosed in Note 1 of our consolidated audited financial statements included in the Form 10-K filed with the SEC and in Note 1 of our unaudited consolidated financial statements included herein.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Not required under Regulation S-K for “smaller reporting companies.”

 

Item 4. Controls and Procedures

 

The Company’s Principal Executive Officer and Principal Financial Officer (the Certifying Officers) are responsible for establishing and maintaining disclosure controls and procedures for the Company. An evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934) was carried out by us under the supervision and with the participation of our Certifying Officers. Based upon that evaluation, our Certifying Officers have concluded that as of September 30, 2020, our disclosure controls and procedures, that are designed to ensure (i) that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) that such information is accumulated and communicated to management, including our Certifying Officers, in order to allow timely decisions regarding required disclosure, were not effective.

 

As of September 30, 2020, based on evaluation of these disclosure controls and procedures, management concluded that our disclosure controls and procedures were not effective. We will be required to expend time and resources hiring and engaging additional staff and outside consultants with the appropriate experience to remedy the weaknesses described below. We cannot assure you that management will be successful in locating and retaining appropriate candidates or that newly engaged staff or outside consultants will be successful in remedying material weaknesses thus far identified or identifying material weaknesses in the future.

 

A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Management has identified the following two material weaknesses which have caused management to conclude that as of September 30, 2020 our disclosure controls and procedures were not effective at the reasonable assurance level:

 

  inadequate internal controls relating to the authorization, recognition, capture, and review of transactions, facts, circumstances, and events that could have a material impact on the Company’s financial reporting process.
     
  inadequate controls over maintenance of records.

 

Changes in Internal Control over Financial Reporting

 

There has been no change to our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Management expects to strengthen internal control further during 2020 and in 2021, subject to available financial resources by developing stronger business and financial processes for accounting for transactions such as warrant/stock issuances, which will enhance internal control for the Company.

 

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PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

 

Item 1A. Risk Factors

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

Common Stock Issued for Services

 

On July 1, 2020, the Company issued 1,200,000 performance-based stock options to purchase an equivalent number of common shares to one consultant. The grant date fair value of these options was $348,954, of which $174,228 was recognized as performance was either met or probable of achievement in the three months ended September 30, 2020.

 

On September 25, 2020, the company agreed to issue 100,000 shares of common stock valued at $51,000 to renew a service agreement. As of September 30, 2020, the shares had not been issued and were recorded as stock payable

 

Common Stock Issued for Cash

 

On July 23, 2020, the Company received cash proceeds of $7,500 for 30,000 shares of common stock from a warrant exercise by a third-party investor.

 

On August 26, 2020, the Company received cash proceeds of $10,000 for 40,000 shares of common stock. As of September 30, 2020, the shares had not been issued and were recorded as stock payable.

 

On September 18, 2020, the Company received cash proceeds of $7,500 for 30,000 shares of common stock to be issued in a warrant exercise. As of September 30, 2020, the shares had not been issued and were recorded as stock payable.

 

Between October 1, 2020 and November 20, 2020, the Company received cash of $20,000 for 80,000 shares of common stock and 100,000 shares of common stock for consulting agreement.

 

Contract for deed agreement with common stock grant

 

On July 14, 2020, the Company received cash proceeds of $25,000 for 150,000 shares of common stock to be issued to a third-party investor. In conjunction with this sale of shares, the Company also attached one (1) plot of land. The total cash proceeds of $25,000 was allocated based upon the relative fair value of the shares and one (1) promised plot of land in the following amounts: shares and warrants were valued at $20,797; and plot of land was valued at $4,203.

 

On September 30, 2020, the Board approved the issuance of 250,000 shares pursuant to a land purchase agreement.

 

24

 

 

All of the securities set forth above were sold pursuant to exemptions from registration under Regulation D and/or Section 4(a)(2) of the Securities Act of 1933, as amended, as transactions by an issuer not involving any public offering and/ or under Regulation S, as promulgated under the Securities Act of 1933. No general advertising or solicitation was used. And the investors were purchasing the Shares for investment purposes only, without a view to resale. All issued securities were affixed with appropriate legends restricting sales and transfers.

 

Item 3. Defaults upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not Applicable.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

 

25

 

 

SIGNATURES

 

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

 

Dated: November 20, 2020   International Land Alliance, Inc.
         
      By: /s/ Roberto Jesus Valdes
        President, Principal Executive Officer and a Director
         
      By: /s/ Jason Sunstein
        Principal Financial and Accounting Officer and a Director

 

26