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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended March 31, 2024

 

 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 ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

 

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

 

  Large-accelerated filer Accelerated filer
  Non-accelerated filer Smaller reporting company
      Emerging growth company

 

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 

 

As of July 8, 2024, the registrant had 86,759,195 shares of common stock, $0.001 par value per share, outstanding.

 

 

 

 

 

 

TABLE OF CONTENTS

 

Part I. Financial Information 3
Item 1. Consolidated Financial Statements 3
Consolidated Balance Sheets – As of March 31, 2024 (unaudited) and December 31, 2023 (audited) 3
Consolidated Statements of Operations – For the three months ended March 31, 2024, and 2023 (unaudited) 4
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three months ended March 31, 2024, and 2023 (unaudited) 5
Consolidated Statements of Cash Flows for the three months ended March 31, 2024, and 2023 (unaudited) 7
Notes to Consolidated Financial Statements 8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 32
Item 3. Quantitative and Qualitative Disclosures about Market Risk 36
Item 4. Controls and Procedures 36
   
Part II. Other Information 37
Item 1. Legal Proceedings 37
Item 1A. Risk Factors 37
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 37
Item 3. Defaults upon Senior Securities 37
Item 4. Mine Safety Disclosures 37
Item 5. Other Information 37
Item 6. Exhibits 37
   
Signatures 38

 

 2 

 

 

PART I — FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

INTERNATIONAL LAND ALLIANCE, INC.

CONSOLIDATED BALANCE SHEETS

 

   March 31, 2024   December 31, 2023 
ASSETS          
Current assets          
Cash  $136,856   $140,247 
Accounts receivable   1,505,712    1,652,086 
Prepaid and other current assets   16,815    16,815 
Total current assets   1,659,383    1,809,148 
           
Land   15,776,526    15,551,526 
Buildings, net   1,802,161    1,818,825 
Furniture and equipment, net   2,677    2,677 
Other non-current assets   55,767    53,468 
Goodwill   11,118,187    11,118,187 
           
Total assets  $30,414,701   $30,353,831 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities          
Accounts payable and accrued liabilities  $1,931,617   $1,431,676 
Accounts payable and accrued liabilities related parties   361,223    361,223 
Deferred revenue   -    4,521,222 
Accrued interest   1,264,035    1,756,937 
Contract liability   143,382    93,382 
Deposits   20,500    20,500 
Derivative liability   804,672    781,924 
Convertible notes, net of debt discounts   620,074    652,077 
Convertible note RCVD acquisition   -    8,900,000 
Promissory notes, net of debt discounts   2,744,762    2,674,762 
Promissory notes, net discounts – Related Parties   53,232    104,498 
Other loans   7,436,657    7,358,600 
Total current liabilities   15,380,153    28,656,801 
           
Total liabilities   15,380,153    28,656,801 
           
Commitments and Contingencies (Note 11)   -    - 
           
Preferred Stock Series B (Temporary Equity)   293,500    293,500 
Preferred Stock Series C (Temporary Equity)   310,000    310,000 
Total Temporary Equity   603,500    603,500 
           
Stockholders’ Equity          
           
Preferred stock; $0.001 par value; 2,000,000 shares authorized; 117,000 and 28,000 Series A shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively   117    28 
1,000 Series B shares issued and outstanding as of March 31, 2024 and December 31, 2023   1    1 
3,100 Series C shares issued and outstanding as of March 31, 2024 and December 31, 2023   3    3 
17,000 Series D shares issued and outstanding as of March 31, 2024 and December 31, 2023   17    17 
Common stock; $0.001 par value; 150,000,000 shares authorized; 85,064,195 and 82,064,195 shares issued and outstanding as of March 31, 2024, respectively, and 79,658,165 and 76,658,165 shares issued and outstanding as of December 31, 2023, respectively   85,064    79,658 
Additional paid-in capital   38,190,434    28,476,622 
Common stock payable   -    31,939 
Treasury stock (3,000,000 shares as of March 31, 2024 and December 31, 2023)   (300,000)   (300,000)
Accumulated deficit   (23,544,588)   (27,194,738)
Total stockholders’ equity   14,431,048    1,093,530 
           
Total liabilities and stockholders’ equity  $30,414,701   $30,353,831 

 

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

 

 3 

 

 

INTERNATIONAL LAND ALLIANCE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

   March 31, 2024   March 31, 2023 
   For the three months ended 
   March 31, 2024   March 31, 2023 
Net revenues and lease income  $5,088,874   $240,932 
           
Cost of revenues   183,588    3,001 
           
Gross profit   4,905,286    237,931 
           
Operating expenses          
Sales and marketing   167,689    260,084 
Impairment loss   189,369    245,674 
General and administrative expenses   295,001    610,180 
Total operating expenses   652,059    1,115,938 
           
Income (loss) from operations   4,253,228    (878,007)
           
Other income (expense)          
Loss from debt extinguishment   -    (49,329)
Change in fair value derivative liability   (22,748)   (397,678)
Interest expense   (580,329)   (583,547)
Total other expense   (603,077)   (1,030,554)
           
Net income (loss)  $3,650,150   $(1,908,561)
           
Deemed dividend from RCVD acquisition   -    (25,354,976)
           
Net income (loss) applicable to common shareholders  $3,650,150   $(27,263,537)
           
Earnings (loss) per common share - basic and diluted  $0.05   $(0.45)
           
Weighted average common shares outstanding - basic and diluted   79,308,430    60,159,088 

 

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 Months Ended March 31, 2024 and 2023

(unaudited)

 

Activity for the Three Months Ended March 31, 2024

 

   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Stock   Capital   Payable   Deficit   Equity 
  

Series A

Preferred Stock

  

Series B

Preferred Stock

  

Series C

Preferred Stock

  

Series D

Preferred Stock

   Common Stock   Treasury   Additional Paid-in   Common Stock   Accumulated   Total Stockholders’ 
   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Stock   Capital   Payable   Deficit   Equity 
                                                             
Balance, December 31, 2023   28,000   $28    1,000   $1    3,100    3    17,000   $17    79,658,165   $79,658   $(300,000)  $28,476,622   $31,939   $(27,194,738)  $1,093,530 
Dividend on Series C Preferred   -    -    -    -    -    -    -    -    94,827    95    -    (95)   -    -    - 
Common shares issued for exercise of warrants   -    -    -    -    -    -    -    -    2,484,832    2,485    -    (2,485)   -    -    - 
Common shares issued pursuant to promissory notes   -    -    -    -    -    -    -    -    50,000    50    -    34,915    (31,939)   -    3,026 
Stock-based compensation   -    -    -    -    -    -    -    -    -    -    -    78,047    -    -    78,047 
Common stock issued for consulting services   -    -    -    -    -    -    -    -    1,552,595    1,553    -    99,367    -    -    100,919 
Common stock issued from debt conversion   -    -    -    -    -    -    -    -    1,223,776    1,224    -    47,902    -    -    49,126 
Series A Preferred shares issued for the conversion of related party debt   89,000    89    -    -    -    -    -    -    -    -    -    9,456,161    -    -    9,456,250 
Net income   -    -    -    -    -    -    -    -    -    -    -    -    -    3,650,150    3,650,150 
Balance, March 31, 2024   117,000   $117    1,000   $1    3,100    3    17,000   $17    85,064,195   $85,064   $(300,000)  $38,190,434   $-   $(23,544,588)  $14,431,048 

 

 5 

 

 

Activity for the Three Months Ended March 31, 2023

 

   Shares   Amount   Shares   Amount   Shares   Amount   Stock   Capital   Deficit   Deficit 
  

Series A

Preferred Stock

  

Series B

Preferred Stock

   Common Stock   Treasury   Additional Paid-in   Accumulated   Total Stockholders’ 
   Shares   Amount   Shares   Amount   Shares   Amount   Stock   Capital   Deficit   Deficit 
                                         
Balance, December 31, 2022   28,000   $28    1,000   $1    43,499,423   $43,500    -   $20,233,446   $(25,121,457)  $(4,844,482)
Common shares issued from related party acquisition   -    -    -    -    20,000,000    20,000    -    1,780,000    -    1,800,000 
Fair value common shares warrants issued from related party acquisition   -    -    -    -    -    -    -    2,674,976    -    2,674,976 
Deemed dividend from related party acquisition   -    -    -    -    -    -    -    (24,913,097)   (441,875)   (25,354,972)
Reciprocal interest in business acquisition   -    -    -    -    -         (300,000)   -    -    (300,000)
Common stock issued from debt conversion   -    -    -    -    1,077,164    1,077    -    146,728    -    147,805 
Common stock issued for consulting services   -    -    -    -    100,000    100    -    14,900    -    15,000 
Stock-based compensation   -    -    -    -    -    -    -    78,047    -    78,047 
Dividend on Series B Preferred   -    -    -    -    -    -    -    (15,000)   -    (15,000)
Net loss   -    -    -    -    -    -    -    -    (1,908,561)   (1,908,561)
Balance, March 31, 2023   28,000   $28    1,000   $1    64,676,587   $64,677   $(300,000)  $-   $(27,471,893)  $(27,707,187)

 

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

 

 6 

 

 

INTERNATIONAL LAND ALLIANCE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   March 31, 2024   March 31, 2023 
   For the three months ended 
   March 31, 2024   March 31, 2023 
         
Cash Flows from Operating Activities          
Net income (loss)  $3,650,150   $(1,908,561)
Adjustments to reconcile net income (loss) to net cash used in operating activities:          
Stock based compensation   213,931    78,047 
Impairment loss   189,369    245,674 
Fair value equity securities issued for services   -    15,000 
Loss on debt extinguishment   -    49,329 
Depreciation and amortization   51,531    29,748 
Amortization of debt discount   -    160,830 
Excess Fair Value of derivative   -    36,062 
Change in fair value of derivative liability   22,748    397,678 
Changes in operating assets and liabilities          
Accounts Receivable   146,374    31,280 
Prepaid and other current assets   -    40,363 
Other non-current assets   (282,543)   (5,070)
Accounts payable and accrued liabilities   608,001    (15,754)
Accounts payable and accrued liabilities related parties   -    154,462 
Deferred revenue   (4,521,222)   303,713 
Accrued interest   63,348    294,346 
Contract liability   50,000    129,830 
Net cash provided by operating activities   191,688    36,978 
           
Cash Flows from Investing Activities          
Cash acquired from RCVD acquisition   -    321,919 
Additional expenditures on land   (259,867)   (215,266)
Building and Construction in Progress payments   -    (179,700)
Net cash used in investing activities   (259,867)   (73,047)
           
Cash Flows from Financing Activities          
Common stock, warrants and options sold for cash        - 
Cash payments on promissory notes- related parties   (51,267)   (100,850)
Cash payments on promissory notes   (5,000)   (63,058)
Cash payments on convertible notes   (32,003)   - 
Cash proceeds from convertible notes   -    100,000 
Cash proceeds other loans   78,058    23,776 
Cash proceeds from promissory notes   75,000    226,220 
Net cash provided by financing activities   64,788    186,088 
           
Net (decrease) increase in Cash   (3,392)   150,019 
           
Cash, beginning of period   140,247    49,374 
           
Cash, end of period  $136,856   $199,393 
           
Supplemental disclosure of cash flow information          
Cash paid for interest  $13,456   $47,285 
Cash paid for income tax  $-   $- 
           
Non-Cash investing and financing transactions          
Dividend on Series B  $-   $15,000 
Common shares issued with convertible debt  $49,126   $- 
Series A shares issued for the conversion of related party notes payable  $9,456,250   $- 
Debt discount from issuance of new promissory notes  $-   $104,250 
Common shares issued for services  $213,931    15,000 

 

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

 

 7 

 

 

INTERNATIONAL LAND ALLIANCE, INC.

Notes to the Consolidated Financial Statements

For the three months ended March 31, 2024

 

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. The Company is a residential land development company with target properties located in the Baja California, Northern 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.

 

In May 2021, the Company acquired a 25% investment in Rancho Costa Verde Development LLC (“RCVD”). RCVD is a 1,100-acre master planned second home, retirement home and vacation home real estate community located on the east coast of Baja California. RCV is a self-sustained solar powered green community that takes advantage of the advances in solar and other green technology. On January 3, 2023, the Company completed the acquisition of the remaining 75% interest in RCVD for a contractual price of $13.5 million, paid through a combination of a promissory note, common stock and common stock purchase warrants. As a result of the transaction, RCVD became a wholly owned subsidiary of the Company. The transaction was accounted for as a business acquisition pursuant to ASC 805 Business Combinations.

 

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 months ended March 31, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. For further information, refer to the audited financial statements and notes for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K filed with the SEC on June 27, 2024.

 

Liquidity and Going Concern

 

The accompanying consolidated unaudited 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 March 31, 2024, the Company’s current liabilities exceeded its current assets by approximately $13.7 million. The Company has recorded net income of $3.65 million for the three months ended March 31, 2024 and has an accumulated deficit of approximately $23.5 million as of March 31, 2024. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company continues to raise additional capital through the issuance of debt instruments and equity to fund its ongoing operations, which may have the effect of potentially diluting the holdings of existing shareholders.

 

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 and house construction. If the Company is not successful with its marketing efforts to increase sales, the Company will continue to experience a shortfall in cash, and it will be necessary to obtain funds through equity or debt financing in sufficient amounts or to further reduce its operating expenses in a manner to avoid the need to curtail its future operations subsequent to March 31, 2024. 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. (See Note 13 regarding subsequent events).

 

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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The Company maintains its accounting records on an accrual basis in accordance with GAAP. 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, International Land Alliance, S.A. de C.V., a company incorporated in Mexico (“ILA Mexico”), and Emerald Grove Estates LLC, incorporated in the State of California, Plaza Bajamar, LLC, incorporated in State of Wyoming, Plaza Valle Divino, LLC, incorporated in the State of Wyoming and Rancho Costa Verde Development, LLC incorporated in State of Nevada.

 

ILA Fund includes cash as its only assets with minimal expenses as of March 31, 2024. The sole purpose of this entity is strategic funding for the operations of the Company. ILA Mexico has plots held for sale for the Oasis Park Resort, no liabilities, and minimal expenses as of March 31, 2024. As of March 31, 2024, Emerald Grove Estates LLC, Plaza Bajamar LLC, and Plaza Valle Divino LLC have no operations. All intercompany balances and transactions are eliminated in consolidation.

 

The Company’s consolidated subsidiaries and/or entities were as follows:

 

SCHEDULE OF CONSOLIDATED SUBSIDIARIES AND ENTITY

Name of Consolidated Subsidiary or Entity 

State or Other

Jurisdiction of

Incorporation or

Organization

 

Attributable

Interest

 
ILA Fund I, LLC  Wyoming   100%
International Land Alliance, S.A. de C.V. (ILA Mexico)  Mexico   100%
Emerald Grove Estates, LLC  California   100%
Oasis Park Resort LLC  Wyoming   100%
Plaza Bajamar LLC  Wyoming   100%
Plaza Valle Divino, LLC  Wyoming   100%
Rancho Costa Verde Development, LLC  Nevada   100%

 

On January 1, 2023, the Company executed a securities purchase agreement pursuant to which the Company acquired all of the issued and outstanding units of Rancho Costa Verde Development, LLC. for a total contractual consideration of $13,500,000, paid through a combination of a promissory note, common stock and common stock purchase warrants.

 

Reclassification

 

Certain numbers from 2023 have been reclassified to conform with the current year presentation.

 

Investments - Equity Method

 

The Company accounts for equity method investments at cost, adjusted for the Company’s share of the investee’s earnings or losses, which are reflected in the consolidated statements of operations. The Company periodically reviews the investments for other than temporary declines in fair value below cost and more frequently when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. On January 3, 2023, the Company acquired a controlling financial interest in its previous equity method investment, which resulted in the consolidation pursuant to ASC 805 Business Combinations of such entity on the effective date.

 

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. Significant estimates include:

 

  Liability for legal contingencies.

 

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  Useful life of buildings.
  Assumptions used in valuing equity instruments.
  Deferred income taxes and related valuation allowances.
  Going concern.
  Assessment of long-lived assets for impairment.
  Significant influence or control over the Company’s investee.
  Revenue recognition.

 

Segment Reporting

 

The Company operates as one reportable segment under ASC 280, Segment Reporting. The Chief Operating Decision Maker (“CODM”) regularly reviews the financial information of the Company at a consolidated level in deciding how to allocate resources and in assessing performances.

 

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 March 31, 2024, and December 31, 2023, respectively.

 

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: uses quoted market prices in active markets for identical assets or liabilities.

 

Level 2: uses observable market-based inputs or unobservable inputs that are corroborated by market data.

 

Level 3: uses unobservable inputs that are not corroborated by market data.

 

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 any balance sheet dates presented 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 receivable, prepaid, and other current assets, accounts payable and accrued liabilities, contracts liability, deposits, promissory notes, net of debt discounts and promissory notes related party, deferred revenue, other notes approximate fair value due to their relatively short maturities. Equity-method investment is recorded at cost, which approximates its fair value since the consideration transferred includes cash and a non-monetary transaction, in the form of the Company’s common stock, which was valued based on a combination of a market and asset approach.

 

The fair value of the Company’s recorded derivative liability is determined based on unobservable inputs that are not corroborated by market data, which require a Level 3 classification. A Black-Sholes option valuation model was used to determine the fair value. The Company records derivative liability on the consolidated balance sheets at fair value with changes in fair value recorded in the consolidated statements of operation.

 

The following table presents balances of the liabilities with significant unobservable inputs (Level 3) as of March 31, 2024:

 

SCHEDULE OF LIABILITIES WITH SIGNIFICANT UNOBSERVABLE INPUTS

   Fair Value Measurements at March 31, 2024 Using 
   Quoted Prices
in Active
Markets for Identical
Assets
   Significant
Other
Observable
Inputs
   Significant
Unobservable
Inputs
     
   (Level 1)   (Level 2)   (Level 3)   Total 
                 
Derivative liability  $-   $-   $804,672   $804,672 
Total  $-   $-   $804,672   $804,672 

 

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The following table presents changes of the liabilities with significant unobservable inputs (Level 3) for the three months ended March 31, 2024:

 

SCHEDULE OF CHANGES IN LIABILITIES WITH SIGNIFICANT UNOBSERVABLE INPUTS

   Derivative 
   Liability 
Balance December 31, 2023  $781,924 
      
Change in estimated fair value   22,748 
Balance March 31, 2024  $804,672 

 

Derivative Liability

 

As of March 31, 2024, the Company has variable rate convertible promissory notes, which contained variable conversion rates based on unknown future prices of the Company’s common stock. This resulted in the recognition of a derivative liability as the conversion feature failed the scope exception for derivative accounting due to the variability of its conversion price. The Company measures the derivative liability using the Black-Scholes option valuation model using the following assumptions:

 

SCHEDULE OF DERIVATIVE LIABILITY

  

For the Three Months Ending

March 31,

   2024  2023
       
Expected term  1 month – 1 year  1 month – 1 year
Exercise price  $0.03 - $0.13  $0.05 - $0.10
Expected volatility  176% - 232 %  139% - 163%
Expected dividends  None  None
Risk-free interest rate  5.03% - 5.55 %  4.74% - 5.09%
Forfeitures  None  None

 

The assumptions used in determining fair value represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors change, including changes in the market value of the Company’s common stock, managements’ assessment, or significant fluctuations in the volatility of the trading market for the Company’s common stock, the Company’s fair value estimates could be materially different in the future.

 

The Company computes the fair value of the derivative liability at each reporting period and the change in the fair value is recorded as non-cash expense or non-cash income. The key component in the value of the derivative liability is the Company’s stock price, which is subject to significant fluctuation and is not under its control, and the assessment of volatility. The resulting effect on net loss is therefore subject to significant fluctuation and will continue to be so until the Company’s variable convertible notes, which the convertible feature is associated with, are converted into common stock or paid in full with cash. Assuming all other fair value inputs remain constant, the Company will record non-cash expense when its stock price increases and non-cash income when its stock price decreases.

 

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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 are also capitalized.

 

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.

 

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.

 

Construction in progress (“CIP”)

 

A CIP asset reflects the cost of construction work undertaken, but not yet completed on land not currently owned by the Company. For construction in progress assets, no depreciation is recorded until the asset is placed in service. When construction is completed, the assets should be reclassified as building, building improvement, infrastructure or land improvement and should be capitalized and depreciated. The land is currently owned by companies controlled by our Chief Executive Officer. The Company fully impaired the construction in progress on land currently owned by the Companies controlled by our Chief Executive Officer due to the uncertainty in title transfer as of March 31, 2024.

 

Fixed Assets

 

Fixed assets are stated at cost, less accumulated depreciation, and amortization. Depreciation is computed using the double declining balance method over the estimated useful lives of the respective assets:

 

SCHEDULE OF DEPRECIATION ESTIMATED USEFUL LIVES

Classification  Life
Buildings  20 years
Furniture and equipment  5 years

 

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Revenue Recognition

 

The Company determines revenue recognition pursuant to Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, through the following steps:

 

  Identification of the contract, or contracts, with a customer.
  Identification of the performance obligations in the agreement(s) for the sale of plots or house construction.
  Determination of the transaction price.
  Allocation of the transaction price to the performance obligation(s) in the contract.
  Recognition of revenue when, or as the Company satisfies a performance obligation.

 

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 plot sales or house construction with customers. These contracts define each party’s rights, payment terms and other contractual terms and conditions of the sale. 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 which we will expect to receive in exchange for execution of the performance obligation(s).

 

The Company applies judgment in determining the customer’s ability and intention to pay the consideration to which the Company is entitled to. A performance obligation is a promise in a contract or agreement to transfer a distinct product or item to the customer. 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. Management considers the retention of title as merely a protective right, which would not disallow revenue recognition for the full consideration to which the Company is entitled upon the execution of a contract for deed.

 

Currently, upon execution of each contract for deed, the Company has not developed sufficient controls and procedures to provide reasonable assurance that collection of the consideration, which the Company is entitled to, is probable. In addition, the title of the land for the various projects (Bajamar and Divino) is held by an entity that is controlled by the Company’s Chief Executive Officer.

 

The Company’s principal activities in the real estate development industry which it generates its revenues from are the sale of developed and undeveloped land and house construction.

 

Rancho Costa Verde Development or RCVD generates revenue from the following sources: (1) lot sales, (2) home construction calculated as a set percentage of builders’ costs, (3) administrative income for loan servicing, (4) interest income resulting from monthly payments from financed loans made to customers on lot sales, (5) resale income as commission for selling homes for owners that have purchased lots at RCVD and (6) utilities revenue from waste water systems and solar systems.

 

The Company identified the following performance obligations related to the operations of RCVD: (1) subdivision of the developer parcel, (ii) casita free week for each customer allowing them to enjoy a free week to a casita per year. The Company determined that there was a significant financing component in most arrangements with customers, which results in the recognition of interest income.

 

The Company recognized $5,088,874 and $240,932, respectively, of net revenue during the three months ended March 31, 2024.

 

Advertising costs

 

The Company expenses advertising costs when incurred. Advertising costs incurred amounted to $167,589 and $260,084 for the three months ended March 31, 2024 and 2023, respectively.

 

Debt issuance costs and debt discounts

 

Debt issuance costs and debt discounts are being amortized over the term of the related financings on a straight-line approach, which approximates the effective interest method. Costs and discounts are presented as a reduction of the related debt in the accompanying consolidated balance sheets.

 

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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 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. Any compensation cost previously recognized for an unvested award that is forfeited because of a failure to satisfy a service condition is reversed in the period of the forfeiture. Compensation expense is recognized on a straight-line basis over the requisite service period of the award. Stock-based compensation includes the fair value of options, warrants and restricted stocks issued to employees, directors, and non-employees.

 

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.

 

Net Earnings (Loss) Per Share

 

The Company computes earnings (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 income (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.

 

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Securities that are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been antidilutive are:

 

SCHEDULE OF POTENTIALLY DILUTIVE SHARES

  

For the three months

ended

March 31, 2024

  

For the three months

ended

March 31, 2023

 
         
Options   6,000,000    6,000,000 
Warrants   38,107,500    36,867,500 
Total potentially dilutive shares   44,107,500    42,867,500 

 

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 March 31, 2024.

 

Impairment of Long-lived Assets

 

The Company reviews its long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. If impairment is indicated, the asset is written down to its estimated fair value. The Company fully impaired its long-lived assets due to the uncertainty in title transfer of the land not currently owned by the Company and the estimated fair value of its construction in progress during the three months ended March 31, 2024.

 

Accounts Receivable

 

The Company uses the specific identification method for recording the provision for doubtful accounts, which was $0 at December 31, 2023 and 2022. Account receivables are written off when all collection attempts have failed.

 

Convertible Promissory Note

 

The Company accounts for convertible promissory notes in accordance with ASC 470-20, Debt with Conversion and Other Options. The Company evaluates embedded conversion features within convertible debt to determine whether the embedded conversion feature should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in the Income Statement. If the conversion feature does not require recognition of a bifurcated derivative, the convertible debt instrument is evaluated for consideration of any beneficial conversion feature (“BCF”) requiring separate recognition. When the Company records a BCF, the intrinsic value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument with an offset to additional paid-in capital and amortized to interest expense over the life of the debt using the effective interest method.

 

Recent Accounting Pronouncements

 

In August 2020, the FASB issued ASU No. 2020-06 (“ASU 2020-06”) “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” ASU 2020-06 simplifies the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. In addition, ASU 2020-06 amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. The Amendments also affects the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments. The amendments are effective for public entities excluding smaller reporting companies for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods. Management has evaluated this update and has concluded it will not have a material impact on its financial statements.

 

The Company has evaluated all the recent accounting pronouncements and determined that there are no other accounting pronouncements that will have a material effect on the Company’s consolidated 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) 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 plots to be used for the purpose of development “vacant plots”. 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 that the seller transfer the property for consideration to an individual versus a separate legal entity. On March 18, 2019, Mr. Sunstein assigned the deed of the property to the Company. 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; $850,825 – 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. The Company completed the refinancing of its existing first and second mortgage loans on the 80 acres of land and existing structure of its Emerald Grove property for aggregate principal amount of $1,787,000, which provided a net funding of approximately $387,000 during the first fiscal quarter of 2021.

 

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. ILA recorded the property held for sale on its balance sheet in the amount of $670,000 and accordingly reduced the value as plots are sold. As of September 30, 2022, the Company reported a balance for assets held for sale of $647,399.

 

The Company transferred title to individual plots of land to the investors since the Company received this approval of change in transfer of title to ILA.

 

During the three months ended March 31, 2024, the Company did not enter into any new contract to sell plots of land.

 

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On September 29, 2021, the Company entered into a house construction contract for total consideration of $99,000, of which $43,967 was funded as of December 31, 2023, and presented under Contract Liability in the consolidated balance sheets. The Company has not received any payments during the three months ended March 31, 2024.

 

During the year ended December 31, 2021, the Company sold three (3) lots to an affiliate of a related party of the Company for a total purchase price of $120,000, of which $61,440 was funded as of December 31, 2023. The Company has not received any payments during the three months ended March 31, 2024.

 

The remaining unpaid amount owed to the Company was $58,560 as of March 31, 2024, and December 31, 2023.

 

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

 

Land, buildings, net and construction in process as of March 31, 2024, and December 31, 2023:

 

   Useful life  March 31, 2024   December 31, 2023 
Land – Emerald Grove     $203,419   $203,419 
              
Land – Rancho Costa Verde Development     $15,573,107   $15,348,107 
              
Furniture & equipment, net  5 years  $2,677   $2,677 
              
Building  20 years   2,626,288    2,591,421 
Less: Accumulated depreciation      (824,127)   (772,596)
              
Building, net     $1,802,161   $1,818,825 

 

Depreciation expense was approximately $51,531 and $29,748 for the three months ended March 31, 2024, and 2023, respectively.

 

Valle Divino

 

The Valle Divino is the Company’s premier wine country development project in Ensenada, Baja California. This land project consists of 20 acres to be acquired from Baja Residents Club, a Company controlled by our Chief Executive Officer and developed into Valle Divino resort. The acquisition of title to the land for this project is subject to approval from the Mexican government in Baja, California. The Company broke ground of the Valle Divino development in July 2020 and has commenced site preparation for two model homes including a 1-bedroom and 2- bedroom option. The first Phase of the development includes 187 homes. This development will also have innovative microgrid solutions by our partner to power the model home and amenities.

 

There was no activity during the three months ended March 31, 2024. The construction contractor is also an entity controlled by our Chief Executive Officer. Construction began during the year ended December 31, 2020. The balance of construction in process for Valle Divino was $0 as of March 31, 2024 and December 31, 2023. The Company fully impaired the accumulated costs related to its Valle Divino project due to the uncertainty pertaining to the title transfer for a total amount of $457,275 during the year ended December 31, 2023.

 

Plaza Bajamar

 

The Plaza Bajamar community is an 80-unit development located within the internationally renowned Bajamar Ocean Front Hotel and Golf Resort. The Bajamar Ocean Front Golf Resort is an expertly planned, well-guarded, and gated wine and golf community located 45 minutes South of the San Diego-Tijuana Border along the scenic toll road to Ensenada on the Pacific Ocean.

 

Phase I will include 22 “Merlot” 1,150 square-foot single-family homes that feature two bedrooms and two baths. The home includes two primary bedroom suites – one on the first floor and one upstairs, as well as fairway and ocean views from a rooftop terrace. The Merlot villas will come with the installation of solar packages construction in mind. Planned amenities include a pool, wellness and fitness center and available office space.

 

The Company has not yet taken title to this property, which is currently owned by Valdeland, S.A. de C.V. (“Valdeland”), an entity controlled and 100% owned by Roberto Valdes, the Company’s Chief Executive Officer. In September 2019, the Company executed a land purchase agreement with Valdeland, under which the Company is to acquire from Valdeland the Plaza Bajamar property free of liens and encumbrances for a total consideration of $1,000,000.

 

 16 

 

 

In November and December 2019, $250,000 was paid to the Company’s Chief Executive Officer, Roberto Valdes, of which $150,000 was used for the construction of two model Villas at our planned Plaza Bajamar development and $100,000 as a down payment towards the acquisition of the land from Valdeland. As of March 31, 2024 and December 31, 2023 the Company has issued 250,000 shares of the Company’s common stock for a total amount of $150,000 reported under Prepaid and other current assets in the consolidated balance sheets towards the purchase of the land. The balance was fully impaired during the year ended December 31, 2022.

 

Valdeland has completed a two-bedroom model home, an enhanced entrance, and interior roads as well as site preparation for four (4) new homes adjacent to the model home. It has commenced construction on four residential lots following the payment of the required minimum deposits from buyers.

 

The Company funded the construction by an additional $179,700 during the year ended December 31, 2023. Valdeland is the construction contractor is also an entity controlled and owned by Roberto Valdes.

 

The balance of construction in process for Plaza Bajamar totaled $0 as of March 31, 2024 and December 31, 2023. During the year ended December 31, 2023, the Company fully impaired the accumulated costs related to Plaza Bajamar, due to the uncertainty pertaining to title transfer for a total amount of $179,700.

 

Within the “restricted zone,” a foreigner can purchase the beneficial interest in real property through a bank trust or “fideicomiso.” Indeed, a bank trust must be used when acquiring property within the restricted zone. In this bank trust, the buyer of the property is designated as the “fideicomisario” or the beneficiary of the trust. While legal title is held by the bank, (specifically the trustee of the trust or the “fiduciario,”) the trustee must administer the property in accordance with the instructions of the buyer (the beneficiary of the trust). The property is not an asset of the bank, and the trustee is obligated to follow every lawful instruction given by the beneficiary to perform legal action. The Company has not yet established the bank trust, which is anticipated to occur before the end of the fiscal year 2024.

 

As of March 31, 2024, Valdeland sold six (6) house constructions on residential lots for estimated price of $1.5 million, of which $0.5 million has been paid and collected by the Company and initially presented under contract liability in the consolidated balance sheet. However, the Company offset the balance of construction in process with the contract liability with the net balance written off due to the uncertainty pertaining to the transfer of title.

 

Rancho Costa Verde Development (“RCVD”)

 

RCVD is a 1,000 acre, 1,200 lot master planned community in Baja, California, located few miles from the Company’s Oasis Park resort on the sea of Cortez. To date, RCVD has sold over 1,000 residential lots and built 55 single-family homes with approximately 30 under construction. This is in addition to a completed boutique hotel and clubhouse.

 

NOTE 5 – RELATED PARTY TRANSACTIONS

 

Chief Executive Officer – Roberto Valdes

 

Effective January 1, 2020, the Company executed an employment agreement with its Chief Executive Officer.

 

The Company has not accrued or paid any salary to its Chief Executive Officer for the three months ended March 31, 2024. The balance owed is $66,846 as of March 31, 2024 and December 31, 2023, respectively.

 

As of March 31, 2024, the Company funded an aggregate amount of $1.4 million for construction on residential lots, projects amenities and towards the acquisition of land to companies controlled by the Company’s Chief Executive Officer. The land for the Plaza Bajamar and Valle Divino is currently owned by two entities controlled by the Chief Executive Officer (Valdeland S.A de C.V. and Valdetierra S.A de C.V) and all parties executed land purchase agreement for each project to transfer title of the land to a bank trust or “fideicomiso”, in which the Company will be named the beneficiary of the trust (“fideicomisario”).

 

During the year ended December 31, 2023, the Company funded an aggregate amount of approximately $251,000 to the construction companies owned by the Company’s Chief Executive Officer for the two projects in Ensenada, Baja California. The Company has not yet established the bank trust, which is anticipated to occur before the end of the fiscal year 2024. The properties at Valle Divino and Plaza Bajamar have executed promise to purchase agreements between the Company and Roberto Valdes, which require the transfer of titles of the land free of liens and encumbrances to the Company. There can be no assurance as to what and if any profit might have been received by our Chief Operating Officer, in his separate company as a result of these transactions.

 

On December 1, 2022, the Company issued 465,834 stock options under the 2022 Plan with a strike price of $0.20, vesting 25% on grant date and the remaining 75% monthly over a twelve-month period from grant date with an estimated fair value of approximately $90,188. The Company recognized approximately $16,900 of stock-based compensation related to these stock options during the three months ended March 31, 2024.

 

 17 

 

 

Chief Financial Officer – Jason Sunstein

 

Effective January 1, 2020, the Company executed an employment agreement with its Chief Financial Officer.

 

The Company has not paid or accrued any salary to its Chief Financial Officer for the three months ended March 31, 2024. The balance owed is $66,846 as of March 31, 2024 and December 31, 2023, respectively.

 

On December 1, 2022, the Company issued 465,834 stock options under the 2022 Plan with a strike price of $0.20, vesting 25% on grant date and the remaining 75% monthly over a twelve-month period from grant date with an estimated fair value of approximately $90,188. The Company recognized approximately $16,900 of stock-based compensation related to these stock options during the three months ended March 31, 2024.

 

The Company’s Chief Financial Officer is also the managing member of Six Twenty Management LLC, an entity that has been providing ongoing capital support to the Company (See Note 8).

 

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

 

President – Frank Ingrande

 

In May 2021, the Company executed an employment agreement with its President.

 

The Company has not accrued or paid any salary to its President for the three months ended March 31, 2024. The balance owed is $66,846 as of March 31, 2024, and December 31, 2023, respectively.

 

Frank Ingrande was the co-founder and owner of 33% of the Company’s equity-method investee RCVD. During the year ended December 31, 2023, the Company acquired the remaining 75% interest in RCVD, which became the Company’s wholly owned subsidiary as of January 2023 (Note 9).

 

On December 1, 2022, the Company issued 465,834 stock options under the 2022 Plan with a strike price of $0.20, vesting 25% on grant date and the remaining 75% monthly over a twelve-month period from grant date with an estimated fair value of approximately $90,188. The Company recognized approximately $16,900 of stock-based compensation related to these stock options during the three months ended March 31, 2024.

 

International Real Estate Development, LLC. (“IRED”)

 

Frank Ingrande was an owner of 33% of IRED at the time of the 25% initial investment in RCVD in May 2021 and subsequent to this transaction became a shareholder and President of the Company. As of the date the remaining 75% interest was acquired by the Company and as of March 31, 2024 and December 31, 2023, Mr. Ingrande was still the President of the Company and a 33% owner in IRED. As such, any transactions with IRED are deemed to be related party transactions.

 

On January 1, 2023, the Company issued a convertible promissory note pursuant to the acquisition of RCVD for a total principal of $8,900,000, carrying a 5% coupon and maturing on March 31, 2024. The convertible note is payable in quarterly installment of $2,225,000 starting on March 31, 2023. The convertible note includes a twelve percent (12%) default interest. Although, this convertible promissory note payable is part of the consideration to the business combination in stages (Note 9) which is not deemed a related party transaction, the convertible promissory note payable is with a related party and deemed a related party convertible promissory note payable. During the three months ended March 31, 2024, the Company convertible the entire principal and interest balance of the promissory note into 89,000 Series A Preferred Shares. See Note 7 and Note 9 for additional information related to this convertible promissory note.

 

NOTE 6 – PROMISSORY NOTES

 

Promissory notes consisted of the following at March 31 2024 and December 31, 2023:

 

   March 31, 2024   December 31, 2023 
         
Cash Call note payable, due August 2020 – past maturity  $   $ 
Cash Call note payable, due August 2020 – past maturity  $24,785   $24,785 
Elder note payable, 10% interest, due March 2020 – past maturity   1,500    1,500 
Elder note payable, 15% interest, due March 2021- past maturity   76,477    76,477 
Griffith note payable, 15% interest, due May 2024   250,000    250,000 
Banker note payable, 15% interest, due October 2023 – past maturity   92,500    97,500 
Robles note payable, 10% interest, due November 2023 – past maturity   37,500    37,500 
Kitchner note payable, 10% interest, due July 2024   75,000    - 
Victrix note payable, 20% interest, due March 2024   400,000    400,000 
Redwood Trust note payable, 12% interest, due January 2024 – past maturity   1,787,000    1,787,000 
Total Notes payable  $2,744,762   $2,674,762 
Less discounts   -    - 
           
Total Promissory notes, net of discount   2,744,762    2,674,762 
           
Less current portion   (2,744,762)    (2,674,762)
           
Total Promissory notes, net of discount - long term  $-   $- 

 

Redwood Trust

 

On January 21, 2021, the Company refinanced its existing first and second mortgage loans on the 80 acres of land and the structure located at Sycamore Road in Hemet, California for aggregate amount of $1,787,000, carrying coupon at twelve (12) percent, payable in monthly interest installments of $17,870 starting on September 1st, 2021, and continuing monthly thereafter until maturity on February 1st, 2023, at which time all sums of principal and interest then remaining unpaid shall be due and payable. The balloon payment promissory note is secured by deed of trust. The refinanced amount paid off the first and second mortgage loans with a net funding to the Company of approximately $387,000, net of finders’ fees. On June 27, 2023, the Company, through Emerald Grove Estates, LLC, its wholly owned company, executed a modification agreement, under which the maturity date was extended to January 1, 2024, and the payment of all unpaid interest, late fees, charges. The Company incurred $254,648 of interest expense and paid $263,377 of interest during the three months ended March 31, 2024. Accrued interest was $649 and $649 as of March 31, 2024 and December 31, 2023, respectively.

 

Victrix LLC

 

On December 6, 2023, the Company took out a second financing on its 80 acres of land and the structure located at Sycamore Road in Hemet, California for aggregate amount of $400,000 carrying coupon at twenty (20) percent and continuing monthly thereafter until maturity on March 31, 2024, at which time all sums of principal and interest then remaining unpaid shall be due and payable. The balloon payment promissory note is secured by deed of trust and collateralized by 2,000,000 shares of common stock to be held in escrow until the debt is satisfied in full.

 

Cash Call, Inc. – In default

 

On March 19, 2018, the Company issued a promissory note to CashCall, Inc. for $75,000 of cash consideration. The note bears interest at 94%, matures on August 1, 2020. The Company also recorded a $7,500 debt discount due to origination fees due at the beginning of the note, which was fully amortized as of December 31, 2023. There was no activity during the three months ended March 31, 2024.

 

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On August 2, 2022, the Company and Cash Call settled for an aggregate principal of $23,641 payable in one lump sum or a series of 9 installments of $3,152. No payment was made under this settlement agreement.

 

As of March 31, 2024 and December 31, 2023, the remaining principal balance was $24,785, respectively. The Company has not incurred any interest expense related to this promissory note during the three months ended March 31, 2024 due to the agreed upon settlement amount.

 

Christopher Elder – In default

 

On December 15, 2020, the Company entered into a promissory note pursuant to which the Company borrowed $126,477. Interest under the promissory note in default is 18%, and the principal and all accrued but unpaid interest is due on March 15, 2021. The note is in technical default as it is past maturity date and the Company failed to repay the outstanding principal and accrued interest.

 

There was no activity during the three months ended March 31, 2024. As of March 31, 2024 and December 31, 2023, the remaining principal balance was $76,477, respectively.

 

The Company incurred approximately $2,868 of interest during the three months ended March 31, 2024. Accrued interest was $37,839 and $34,971 as of March 31, 2024 and December 31, 2023, respectively.

 

Bobbie Allen Griffith

 

On September 5, 2023, the Company entered into a promissory note pursuant to which the Company borrowed $215,000. Interest under the promissory note is 15% per annum, and the principal and all accrued but unpaid interest is due on September 8, 2023.

 

The Company repaid the note in full during the year ended December 31, 2023. During the year ended December 31, 2023, the Company was advanced an additional $250,000 due in May 2024. As of March 31, 2024 and December 31, 2023, the remaining principal balance was $250,000.

 

The Company incurred approximately $3,875 of interest during the three months ended March 31, 2024, respectively. Accrued interest was $19,375 and $15,500 as of March 31, 2024 and December 31, 2023, respectively.

 

The Company initially recognized a debt discount and stock payable on this note of $20,777, which was fully amortized as of December 31, 2023.

 

George Banker – In Default

 

On August 11, 2023, the Company entered into a promissory note pursuant to which the Company borrowed $150,000. Interest under the promissory note is 15% per annum, and the principal and all accrued but unpaid interest was due on October 11, 2023. The note is in technical default as it is past maturity date and the Company failed to repay the outstanding principal and accrued interest.

 

Accrued interest was $22,500 as of March 31, 2024 and December 31, 2023, respectively. As of December 31, 2023, the remaining principal balance was $92,500.

 

The Company initially recognized a debt discount and stock payable on this note of $5,769, which was fully amortized as of December 31, 2023.

 

George Robles – In Default

 

On September 1, 2023, the Company entered into a promissory note pursuant to which the Company borrowed $100,000. Interest under the promissory note is 5% per month with a default rate of 10% per month, and the principal and all accrued but unpaid interest was due on November 1, 2023. The note is in technical default as it is past maturity date and the Company failed to repay the outstanding principal and accrued interest.

 

Accrued interest was $7,500 as of March 31, 2024 and December 31, 2023, respectively. As of March 31, 2024 and December 31, 2023, respectively, the remaining principal balance was $37,500.

 

The Company initially recognized a debt discount and stock payable on this note of $5,393, which was fully amortized as of December 31, 2023.

 

Kitchner

 

During the three months ended March 31, 2024, the Company entered into a promissory note pursuant to which the Company borrowed $75,000. Interest under the promissory note is 10% per annum, and the principal and all accrued but unpaid interest is due in July 2024.

 

19
 

 

Accrued interest was $7,500 as of March 31, 2024. As of March 31, 2024, the remaining principal balance was $75,000.

 

NOTE 7 – CONVERTIBLE NOTES

 

Convertible notes consisted of the following at March 31, 2024 and December 31, 2023:

 

   March 31, 2024   December 31, 2023 
         
1800 Diagonal convertible note #5, 9% interest, due June 2024   55,000    55,000 
1800 Diagonal convertible note #6, 10% interest, due September 2024   35,211    68,511 
1800 Diagonal convertible note #7, 10% interest, due September 2024   61,600    61,600 
Mast Hill convertible note, 16% interest, due March 2023 (in default)   250,000    250,000 
Blue Lake convertible note, 16% interest, due March 2023 (in default)   250,000    250,000 
International Real Estate Development, 5% interest, due March 2024   -    8,900,000 
Total convertible notes  $651,811   $9,585,111 
Less discounts   (31,737)   (33,034)
           
Total convertible notes, net of discount   620,074    9,552,077 
           
Less current portion   (620,074)   (9,552,077)
           
Total convertible notes, net of discount - long term  $-   $- 

 

Mast Hill Fund, L.P (“Mast note”) - In default

 

On March 23, 2022, the Company issued a convertible promissory note pursuant to which it borrowed gross proceeds of $250,000 for net proceeds of $211,250, net of issuance costs of $13,750 and original issuance discount of $25,000. The interest rate under the convertible promissory note in default is 16%, and the principal and all accrued but unpaid interest are due on March 23, 2023. The note requires eight (8) mandatory monthly installments of $35,000 starting in July 2022.

 

Additionally, as an incentive to the note holder, the securities purchase agreement also provided for the issuance of 225,000 shares of common stock with fair value of approximately $101,000, which were fully earned at issuance, and 343,750 warrants to purchase an equivalent number of shares of common stock at an exercise price of $0.80 and a term of five years. The note is convertible upon an event of default at the noteholder’s option into shares of our common stock at a fixed conversion price of $0.35, subject to standard anti-dilutive rights and down round protection. The conversion price of the convertible debt and the strike price of the warrants should be adjusted to the new effective conversion price following subsequent dilutive issuances.

 

During the year ended December 31, 2023, the Company converted approximately $133,096 of interest and default premium into 1,664,857 shares of common stock.

 

The principal balance owed to Mast Hill Fund was $250,000 as of March 31, 2024 and December 31, 2023. The Company incurred approximately $9,221 of interest during the three months ended March 31, 2024. Accrued interest totaled approximately $18,442 and $9,221, respectively, as of March 31, 2024 and December 31, 2023.

 

The Company is in default as the Company (i) consummated a variable rate transaction with another lender and (ii) failed to make the required installment payment as required under the terms of the agreement. Upon event of default, the Company is required to pay the outstanding principal plus accrued interest and a default penalty which is equal to 25% of the principal and accrued interest.

 

20
 

 

As of March 31, 2024 and December 31, 2023, the default penalty was $13,808 and $6,904, respectively. During the three months ended March 31, 2024, the Company recognized an additional $6,904 of default penalty interest.

 

The Company initially recognized $219,832 of debt discount resulting from the original issue discount, the deferred financing costs, the fair value assigned to the commitment shares and the warrants. The balance of the unamortized debt discount was $0 as of March 31, 2024 and December 31, 2023, respectively.

 

Blue Lake Partners LLC (“Blue Lake note”) – In default

 

On March 28, 2022, the Company issued a convertible promissory note pursuant to which it borrowed gross proceeds of $250,000 for net proceeds of $211,250, net of issuance costs of $13,750 and original issuance discount of $25,000. The interest rate under the convertible promissory note in default is 16%, and the principal and all accrued but unpaid interest are due on March 28, 2023. The note requires eight (8) mandatory monthly installments of $35,000 starting in July 2022. Additionally, as an incentive to the note holder, the securities purchase agreement provided for the issuance of 225,000 shares of common stock with fair value of approximately $101,000, which were fully earned at issuance, and 343,750 warrants for the purchase of an equivalent number of shares of common stock at an exercise price of $0.80 and a term of five years.

 

The note is convertible upon an event of default at the noteholder’s option into shares of our common stock at a fixed conversion price of $0.35, subject to standard anti-dilutive rights and down round provisions. With the issuance of a variable rate transaction with any new investor, the conversion price of the convertible debt and the strike price of the warrants should be adjusted down to the new effective conversion price.

 

The principal balance owed to Blue Lake was $250,000 as of March 31, 2024 and December 31, 2023. The Company incurred approximately $4,467 of interest during the three months ended March 31, 2024. Accrued interest totaled approximately $45,674 and $41,207, respectively, as of March 31, 2024 and December 31, 2023.

 

The Company is in default of the note as the Company (i) consummated a variable rate transaction with another lender and (ii) failed to make the required installment payment as required under the terms of the agreement. The Company has not yet received any default notice from the investor. Upon event of default, the Company is required to pay the outstanding principal plus accrued interest and a default penalty which is equal to 25% of the principal and accrued interest.

 

21
 

 

As of March 31, 2024 and December 31, 2023, the Company accrued $101,662 and $97,195 as default penalty, which is presented in accounts payable and accrued interest in the consolidated balance sheets.

 

The Company initially recognized $219,607 of debt discount resulting from the original issue discount, the deferred financing costs, the fair value assigned to the commitment shares and the warrants. The balance of the unamortized debt discount was $0 as of March 31, 2024 and December 31, 2023.

 

1800 Diagonal Lending Inc. (“Diagonal note”)

 

Diagonal note #5

 

On September 13, 2023, the Company issued a convertible promissory note pursuant to which it borrowed gross proceeds of $55,000 for net proceeds of $50,000, net of issuance costs of $5,000. Interest under the convertible promissory note is 9% per year and a default coupon of 22%.

 

The maturity date of the note is June 15, 2024. At any time after issuance, the note is convertible into shares of our common stock at the greater of a fixed conversion rate or discount to the market price. The note includes a prepayment feature at a premium of up to 25% from the issuance date and up to 180 days. The note includes a 50% penalty premium on unpaid principal and interest upon an event of default.

 

The Company incurred approximately $1,652 of interest expenses during the three months ended March 31, 2024. Accrued interest was $3,304 and $1,652, respectively, as of March 31, 2024 and December 31, 2023.

 

The Company initially recognized $5,000 of debt discount resulting from the original issue discount and the deferred financing costs. The Company amortized $1,527 through interest expenses during the three months ended March 31, 2024. The balance of the unamortized debt discount was $1,946 and $3,473, respectively, as of March 31, 2024 and December 31, 2023.

 

The balance of the Diagonal note #5 was $55,000 as of March 31, 2024 and December 31, 2023.

 

Diagonal note #6

 

On September 6, 2023, the Company issued a convertible promissory note pursuant to which it borrowed gross proceeds of $92,000 for net proceeds of $75,000, net of issuance costs of $17,000. Interest under the convertible promissory note is 10% per year and a default coupon of 22%.

 

The maturity date of the note is September 6, 2024. At any time after issuance, the note is convertible into shares of our common stock at the greater of a fixed conversion rate or discount to the market price. The note includes a prepayment feature at a premium of up to 25% from the issuance date and up to 180 days. The note includes a 50% penalty premium on unpaid principal and interest upon an event of default.

 

Accrued interest was $9,200 as of March 31, 2024 and December 31, 2023. The Company initially recognized $17,000 of debt discount resulting from the original issue discount and the deferred financing costs. The Company amortized $5,668 through interest expenses during the three months ended March 31, 2024. The balance of the unamortized debt discount was $5,664 and $11,332, respectively, as of March 31, 2024 and December 31, 2023.

 

The balance of the Diagonal note #6 was $35,211 and $68,511, respectively, as of March 31, 2024 and December 31, 2023.

 

22
 

 

Diagonal note #7

 

On December 5, 2023, the Company issued a convertible promissory note pursuant to which it borrowed gross proceeds of $61,600 for net proceeds of $55,000, net of issuance costs of $6,600. Interest under the convertible promissory note is 10% per year and a default coupon of 22%.

 

The maturity date of the note is September 15, 2024. At any time after issuance, the note is convertible into shares of our common stock at the greater of a fixed conversion rate or discount to the market price. The note includes a prepayment feature at a premium of up to 25% from the issuance date and up to 180 days. The note includes a 50% penalty premium on unpaid principal and interest upon an event of default.

 

Accrued interest was $6,160 as of March 31, 2024 and December 31, 2023. The Company initially recognized $6,600 of debt discount resulting from the original issue discount and the deferred financing costs. The Company amortized $789 through interest expenses during the three months ended March 31, 2024. The balance of the unamortized debt discount was $3,444 and $5,811, respectively, as of March 31, 2024 and December 31, 2023.

 

The balance of the Diagonal note #7 was $61,600 as of March 31, 2024 and December 31, 2023.

 

International Real Estate Development, LLC. - In default

 

On January 1, 2023, the Company issued a convertible promissory note pursuant to the acquisition of RCVD for a total principal of $8,900,000, carrying a 5% coupon and maturing on March 31, 2024. The convertible note is payable in quarterly installment of $2,225,000 starting on March 31, 2023. The convertible note includes a twelve percent (12%) default interest. The Company failed to make the first installment in accordance with the terms of the agreement.

 

The convertible note is convertible commencing on April 1, 2023 at the option of the holder into shares of common stock at a 10% discount to market price. The Company can prepay the convertible note at any time.

 

The Company incurred $111,250 of interest during the three months ended March 31, 2024. In March 2024, the Company converted the entire principal balance of $8,900,000 and accrued interest of $556,250 into 89,000 shares of Series A Preferred shares. See Note 12 for further discussion.

 

NOTE 8 – PROMISSORY NOTES – RELATED PARTY

 

Related party promissory notes consisted of the following at March 31, 2024, and December 31, 2023:

 

   March 31, 2024   December 31, 2023 
Frank Ingrande – On demand  $-   $10,394 
Lisa Landau – On demand   53,232    94,104 
Total promissory notes, net of discount current  $53,232   $104,498 

 

23
 

 

Lisa Landau

 

Lisa Landau is a relative of the Company’s Chief Financial Officer. During the year ended December 31, 2023, Lisa Landau advanced $71,000 to the Company for general corporate expenses and paid directly $71,000 towards one of the Diagonal convertible notes. The Company repaid $152,065 in cash during the year ended December 31, 2023.

 

The principal balance was $53,232 and $94,104, respectively, as of March 31, 2024 and December 31, 2023, respectively. The advances are on demand but do not carry any interest.

 

NOTE 9 – BUSINESS ACQUISITION IN STAGES

 

On January 3, 2023, the Company completed the acquisition in stages of International Real Estate Development, LLC (“IRED” or the “seller”), for the purchase of the remaining seventy five percent (75%) of the issued and outstanding membership interest in Rancho Costa Verde Development, LLC (“RCVD”) for a total consideration of $13.4 million. The consideration was paid through (i) a secured convertible promissory note in the principal amount of $8,900,000 (Note 5 and 7), (ii) issuance of 20,000,000 shares of common stock with a fair value of $1.8 million and (iii) 33,000,000 common stock warrants to purchase an equivalent number of shares of common stock with a fair value of approximately $2.7 million. The Company issued the 20,000,000 shares of common stock to International Real Estate Development, LLC (“IRED”) on January 3, 2023.

 

Prior to the acquisition of a controlling financial interest in RCVD, the Company held a twenty five percent (25%) interest in RCVD, which was previously acquired and accounted for in May 2021 as an equity method investment under ASC 323 Investments – Equity Method and Joint Ventures (Note 10). It was determined that the Company did not have the power to direct the activities that most significantly impact RCVD’s economic performance, and therefore, the Company was not the primary beneficiary of RCVD and RCVD was not consolidated under the variable interest model. The investment was initially recorded at cost, which was determined to be $2,680,000. The carrying value was fully written down to $0 as of December 31, 2022.

 

As outlined in the letter of intent with IRED and RCVD dated April 2021, in addition to various communications with both parties, the Company had strategized and intended to acquire the remaining 75% of RCVD from the original discussions that began in 2018. The Company’s President and director was the previously the owner of one third of the issued and outstanding interest in International Real Estate Development LLC and has been disclosed as a related party since the acquisition of the initial 25% interest in RCVD.

 

The Company has accounted for this transaction as a business combination in stages under ASC 805 Business Combinations as the Company took control of RCVD in January 2023. Accordingly, and as of January 3, 2023, the assets acquired, and the liabilities assumed were recorded at their estimated fair value as of the closing date of the acquisition. The Company is in the process of finalizing the purchase price allocation and it is to be completed in January 2023.

 

The secured convertible promissory note has a principal amount of $8,900,000 and is payable in quarterly installments of $2,225,000, carries a five percent (5%) coupon with a maturity date of March 31, 2024. The note carries a default coupon of twelve percent (12%) on the unpaid principal after the maturity date. The note includes standard events of default, which will result in the principal and accrued interest to be payable immediately. The note is convertible at any time commencing on April 1, 2023, at the option of the holder, into shares of common stock of the company at a 10% discount to market. The note may be prepaid at any time without penalties. The Company has not made the first installment by December 31, 2023, but the Company obtained a default waiver from IRED. The Company incurred approximately $445,000 of interest during the year ending December 31, 2023. The note and all accrued interest were converted into common stock during the three months ended March 31, 2024 (Note 7).

 

RCVD was originally formed in the State of Nevada. RCVD is a 1,100-acre master planned second home, retirement home, and vacation home real estate community located on the east coast of Baja California, Mexico. It is just south of the small fishing village of San Felipe, where the Oasis Park Resort project of the Company is located.

 

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As of December 31, 2023, the Company finalized its purchase price allocation and valuation for the acquisition of RCVD.

 

The acquisition-date fair value of the consideration transferred is as follows:

 

   January 3, 2023 
     
Fair value of common stock  $1,800,000 
Fair value of common stock warrants   2,674,972 
Promissory notes  $8,900,000 
Fair value of consideration transferred  $13,374,972 

 

The following is the purchase price allocation as of the January 3, 2023, acquisition date:

 

   January 3, 2023 
Cash  $321,916 
Accounts receivable   1,900,388 
Other current assets   342,574 
Fixed Assets   16,213,967 
Accounts payable and accrued expenses   (652,329)
Mortgage loans   (6,576,566)
Related party notes   (16,545)
Deferred revenue   (9,276,620)
Net Assets Acquired  $2,256,785 
Goodwill   11,118,187 
Total consideration  $13,374,972 

 

Pro Forma Financial Information

 

The following unaudited pro forma consolidated results of operations for the years ended December 31, 2023 and 2022 assume the acquisition was completed on January 1, 2022:

 

   2023   2022 
   Years Ended December 31, 
   2023   2022 
Pro forma net revenues   1,090,617    1,516,622 
Pro forma net loss   (1,110,022)   (926,798)

 

Pro forma data does not purport to be indicative of the results that would have been obtained had these events actually occurred at the beginning of the periods presented and is not intended to be a projection of future results.

 

Common Stock warrants

 

At acquisition date, the Company measures the fair value of the common stock warrant using the Black-Scholes option valuation model using the following assumptions as of December 31, 2023:

 

Expected term  5 years