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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 September 30, 2023

 

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 November 22, 2023, the registrant had 75,422,570 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 September 30, 2023 (unaudited) and December 31, 2022 (audited) 3
Consolidated Statements of Operations – For the three and nine months ended September 30, 2023, and 2022 (unaudited) 4
Consolidated Statements of Changes in Stockholders’ Deficit for the three and nine months ended September 30, 2023, and 2022 (unaudited) 5
Consolidated Statements of Cash Flows for the nine months ended September 30, 2023, and 2022 (unaudited) 6
Notes to Consolidated Financial Statements 7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29
Item 3. Quantitative and Qualitative Disclosures about Market Risk 34
Item 4. Controls and Procedures 34
   
Part II. Other Information 34
Item 1. Legal Proceedings 34
Item 1A. Risk Factors 34
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 35
Item 3. Defaults upon Senior Securities 35
Item 4. Mine Safety Disclosures 35
Item 5. Other Information 35
Item 6. Exhibits 35
   
Signatures 36

 

2
 

 

PART I — FINANCIAL INFORMATION

 

Item 1. Financial Statements

INTERNATIONAL LAND ALLIANCE, INC.

CONSOLIDATED BALANCE SHEETS

 

   September 30, 2023   December 31, 2022 
ASSETS          
Current assets          
Cash  $123,117   $49,374 
Accounts receivable   1,652,086    - 
Prepaid and other current assets   16,815    49,198 
Total current assets   1,792,018    98,572 
           
Other non-current assets   50,382    - 
Land   1,206,219    203,419 
Buildings, net   1,815,040    863,745 
Furniture and equipment, net   5,473    1,877 
Goodwill   22,359,972    - 
Total assets  $27,229,104   $1,167,613 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
Current liabilities          
Accounts payable and accrued liabilities  $1,637,713   $675,202 
Accounts payable and accrued liabilities related parties   326,236    189,266 
Deferred revenue   9,351,815    - 
Accrued interest   1,645,687    352,884 
Accrued interest related party   171,825    132,841 
Contract liability   93,382    85,407 
Deposits   20,500    20,500 
Derivative liability   696,460    531,527 
Convertible notes, net of debt discounts   625,210    558,657 
Convertible note RCVD acquisition   8,900,000    - 
Promissory notes, net of debt discounts   2,294,762    1,885,616 
Promissory notes, net discounts – Related Parties   1,491,026    1,286,695 
Other loans   6,957,504    - 
Total current liabilities   34,212,120    5,718,595 
           
Promissory notes, net of current portion   -    - 
           
Total liabilities   34,212,120    5,718,595 
           
Commitments and Contingencies (Note 10)   -    - 
           
Preferred Stock Series B (Temporary Equity)   293,500    293,500 
Preferred Stock Series C (Temporary Equity)   310,000    - 
Total Temporary Equity   603,500    293,500 
           
Stockholders’ Deficit          
           
Preferred stock; $0.001 par value; 2,010,000 shares authorized; 28,000 Series A shares issued and outstanding as of September 30, 2023 and December 31, 2022   28    28 
1,000 Series B shares issued and outstanding as of September 30, 2023 and December 31, 2022   1    1 
3,100 Series C shares issued and outstanding as of September 30, 2023 and 0 shares issued and outstanding as of December 31, 2022.   3    - 
           
Common stock; $0.001 par value; 150,000,000 shares authorized; 75,395,165 and 72,395,165 shares issued and outstanding as of September 30, 2023, respectively, and 43,499,423 shares issued and outstanding as of December 31, 2022.   75,395    43,500 
Common stock payable   31,939    - 
Additional paid-in capital   26,355,164    20,233,446 
Treasury stock (3,000,000 shares as of September 30, 2023)   (300,000)   - 
Accumulated deficit   (33,749,046)   (25,121,457)
Total stockholders’ deficit   (7,586,516)   (4,844,482)
           
Total liabilities and stockholders’ deficit  $27,229,104   $1,167,613 

 

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, 2023   September 30, 2022   September 30, 2023   September 30, 2022 
Net revenues and lease income  $358,129   $16,973   $1,084,641   $50,919 
                     
Cost of revenues   296,680    -    300,680    - 
                     
Gross profit (loss)   61,449   16,973    783,961    50,919 
                     
Operating expenses                    
Sales and marketing   12,000    100,600    300,259    903,283 
Impairment loss   -    -    245,674    - 
General and administrative expenses   1,007,030    432,434    2,316,807    2,506,181 
Total operating expenses   1,019,030    533,034    2,862,740    3,409,464 
                     
Loss from operations   (957,581)   (516,061)   (2,078,779)   (3,358,545)
                     
Other income (expense)                    
Loss from debt extinguishment   (1,091,117)   -    (1,140,446)   - 
Loss on acquisition of RCVD   (2,995,000)   -    (2,995,000)   - 
Change in fair value derivative liability   (588,314)   219,069    (690,091)   219,069 
Loss from equity-method investment   -    (49,752)   -    (231,845)
Interest income   -    -    -    536 
Interest expense   (708,356)   (631,308)   (1,723,273)   (960,496)
Total other expense   (5,382,787)   (461,991)   (6,548,810)   (972,736)
                     
Net loss  $(6,340,368)  $(978,052)  $(8,627,589)  $(4,331,281)
                     
Preferred stock dividends   1,007,822    15,000    1,082,825    45,000 
                     
Net loss applicable to common shareholders  $(7,348,190)  $(993,052)  $(9,710,413)  $(4,376,281)
                     
Loss per common share - basic and diluted  $(0.11)  $(0.03)  $(0.16)  $(0.13)
                     
Weighted average common shares outstanding - basic and diluted   64,441,149    36,394,441    62,191,188    34,917,678 

 

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

 

4
 

 

INTERNATIONAL LAND ALLIANCE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

For the Three and Nine Months Ended September 30, 2023 and 2022

(unaudited)

 

Activity for the Three and Nine Months Ended September 30, 2023

 

                                                                           
   Series A
Preferred Stock
   Series B
Preferred Stock
   Series C
Preferred Stock
   Common Stock   Treasury   Additional
Paid-in
    

Common Stock

    Accumulated   Total Stockholders’ 
   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Stock   Capital     Payable     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)
                                                                     
Common stock issued for warrant exercise   -    -    -    -    -    -    267,310    267    -    (267)    -      -    - 
Warrants issued pursuant to Series C Preferred Stock   -    -    -    -    -    -    -    -    -    18,504     -      -    18,504 
Stock-based compensation   -    -    -    -    -    -    -    -    -    78,047     -      -    78,047 
Series C Preferred Stock issued for cash   -    -    -    -    3,100    3    -    -    -    -     -      -    3,100 
Dividend on Series B Preferred   -    -    -    -    -    -    -    -    -    (60,003)    -      -    (60,003)
Net loss   -    -    -    -    -    -    -    -    -    -     -      (378,660)   (378,660)
Balance, June 30, 2023   28,000   $28    1,000   $1    3,100    3    64,676,587   $64,677   $(300,000)  $36,281   $ -     $(27,850,553)  $(28,049,295)
                                                                     
Reclassification of deemed dividend from related party transaction   -    -    -    -    -    -    -    -    -    24,913,097     -      441,875    25,354,972 
Common shares issued for cash   -    -    -    -    -    -    500,000    500    -    49,500     -      -    50,000 
Common shares issued pursuant to promissory notes   -    -    -    -    -    -    -    -    -    -     31,939      -    31,939 
Stock-based compensation   -    -    -    -    -    -    -    -    -    78,047     -      -    78,047 
Common stock issued for consulting services   -    -    -    -    -    -    2,100,000    2,100    -    134,900     -      -    137,000 
Common stock issued from debt conversion   -    -    -    -    -    -    7,851,268    7,851    -    1,527,123    -      -    1,534,974 
Warrants issued pursuant to Series C Preferred Stock   -    -    -    -    -    -    -    -    -    105,392     -      -    105,392 
Settlement of derivative liability   -    -    -    -    -    -    -    -    -    518,646     -      -    518,646 
Dividends on Series B Preferred Stock   -    -    -    -    -    -    -    -    -    (1,007,822)    -      -    (1,007,822)
Net loss   -    -    -    -    -    -    -    -    -    -     -      (6,340,368)   (6,340,368)
Balance, September 30, 2023   28,000   $28    1,000   $1    3,100    3    75,395,165   $75,395   $(300,000)  $26,355,164   $ 31,939     $(33,749,046)  $(7,586,516)

 

Activity for the Three and Nine Months Ended September 30, 2022

 

   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Equity 
   Series A
Preferred Stock
   Series B
Preferred Stock
   Common Stock   Additional
Paid-in
   Accumulated   Total
Stockholders’
 
   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Equity 
Balance, December 31, 2021   28,000   $28    1,000   $1    31,849,327   $31,850   $15,760,772   $(14,703,818)  $  1,088,833 
Common shares issued pursuant to promissory notes   -    -    -    -    450,000    450    201,825    -    202,275 
Common stock issued for option exercise   -    -    -    -    600,000    600    -    -    600 
Common stock issued for consulting services   -    -    -    -    814,714    815    446,463    -    447,278 
Stock-based compensation   -    -    -    -    -    -    871,688    -    871,688 
Warrants issued in connection with debt financing   -    -    -    -    -    -    159,664    -    159,664 
Dividend on Series B Preferred   -    -    -    -    -    -    (15,000)   -    (15,000)
Net loss   -    -    -    -    -    -    -    (1,492,722)   (1,492,722)
Balance, March 31, 2022   28,000   $28    1,000   $1    33,714,041   $33,715   $17,425,412   $(16,196,540)  $1,262,616 
                                              
Common stock issued with Finders’ Fee agreement   -    -    -    -    88,988    89    40,401    -    40,490 
Common stock issued for option exercise   -    -    -    -    700,000    700    -    -    700 
Common stock issued for consulting services   -    -    -    -    1,635,000    1,635    728,250    -    729,885 
Dividend on Series Preferred   -    -    -    -    -    -    (15,000)   -    (15,000)
Stock-based compensation   -    -    -    -    -    -    410,288    -    410,288 
Net loss   -    -    -    -    -    -    -    (1,860,507)   (1,860,507)
Balance, June 30, 2022   28,000   $28    1,000   $1    36,138,029   $36,139   $18,589,351   $(18,057,047)  $568,472 
                                              
Common stock issued for consulting services   -    -    -    -    333,336    333    133,001    -    133,334 
Dividend on Series Preferred   -    -    -    -    -    -    (15,000)   -    (15,000)
Net loss   -    -    -    -    -    -    -    (978,052)   (978,052)
Balance, September 30, 2022   28,000   $28    1,000   $1    36,471,365    36,472    18,707,352   $(19,035,099)  $(291,246)

 

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

 

5
 

 

INTERNATIONAL LAND ALLIANCE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   September 30, 2023   September 30, 2022 
   For the nine months ended 
   September 30, 2023   September 30, 2022 
         
Cash Flows from Operating Activities          
Net loss  $(8,627,589)  $(4,331,281)
Adjustments to reconcile net loss to net cash used in operating activities:          
Stock based compensation   358,037    1,281,976 
Impairment loss   245,674    - 
Loss on acquisition of RCVD   2,995,000    - 
Fair value equity securities issued for services   152,000    1,310,497 
Penalty on convertible debt   108,096    - 
Loss on debt extinguishment   1,140,446    - 
Depreciation and amortization   89,241    39,708 
Loss from equity-method investment   -    231,845 
Amortization of debt discount   357,376    291,374 
Excess Fair Value of derivative   108,465    356,785 
Change in fair value of derivative liability   475,114    (219,069)
Changes in operating assets and liabilities          
Accounts Receivable   58,764    (25,199)
Prepaid and other current assets   32,383    45,557 
Other non-current assets   (7,808)   - 
Accounts payable and accrued liabilities   310,182    (235,002)
Accounts payable and accrued liabilities - related parties   136,970    411,305 
Deferred revenue   75,195    - 
Accrued interest   579,183    - 
Accrued interest on note receivable   -    (5,919)
Deposits   -    500 
Contract liability   305,909    340,882 
Net cash used in operating activities   (1,107,362)   (506,041)
           
Cash Flows from Investing Activities          
Cash acquired from RCVD acquisition   321,920    - 
Proceeds from disposal of fixed assets   205,096    - 
Additional expenditures on land   (274,846)   - 
Building and Construction in Progress payments   (354,070)   (444,535)
Net cash used in investing activities   (101,900)   (444,535)
           
Cash Flows from Financing Activities          
Common stock issued from options exercise   -    1,300 
Common stock issued for cash   50,000    - 
Series C Preferred Stock issued for cash   250,000    - 
Cash payments on promissory notes- related party   (318,359)   (262,596)
Cash payments on promissory notes   (60,000)   (89,474)
Cash proceeds from convertible notes   225,000    663,250 
Cash payments on convertible notes   (270,414)   - 
Cash proceeds other loans   380,938    - 
Cash proceeds from promissory notes   465,000    - 
Cash proceeds from promissory notes- related party   560,840    677,347 
Net cash provided by financing activities   1,283,005    989,827 
           
Net increase in cash   73,743    39,251 
           
Cash, beginning of period   49,374    56,590 
           
Cash, end of period  $123,117   $95,841 
           
Supplemental disclosure of cash flow information          
Cash paid for interest  $276,963   $115,084 
Cash paid for income tax  $-   $- 
           
Non-Cash investing and financing transactions          
Dividend on Series B  $1,022,822   $45,000 
Dividend on Series C  $60,003   $- 
Common shares issued with convertible debt  $156,310   $- 
Common shares issued with convertible related party  $386,023   $- 
Common stock issued for finder’s fee agreement  $-   $40,490 
Commitment shares issued with convertible note  $-   $202,275 
Debt discount from issuance of new promissory notes  $31,939   $102,200 
Debt discount from bifurcated derivative  $100,000   $140,750 
Debt discount created from warrants embedded in financing  $-   $159,664 
Cashless warrant exercise  $267   $- 
Corporate expenses paid by related party note payable  $-   $49,145 
Convertible debt exchange for related party note payable  $182,594   $- 
Settlement of derivative liability  $518,646   $- 

 

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

 

6
 

 

INTERNATIONAL LAND ALLIANCE, INC.

Notes to the Consolidated Financial Statements

September 30, 2023

 

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 and nine months ended September 30, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. For further information, refer to the audited financial statements and notes for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K filed with the SEC on July 6, 2023.

 

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 September 30, 2023, the Company’s current liabilities exceeded its current assets by approximately $32.4 million. The Company has recorded a net loss of $8.6 million for the nine months ended September 30, 2023 and has an accumulated deficit of approximately $33.7 million as of September 30, 2023. 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 September 30, 2023. 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).

 

7
 

 

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 September 30, 2023. 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 September 30, 2023. As of September 30, 2023, 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:

 

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%
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 2022 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. As of December 31, 2022, management believes the carrying value of its equity method investments was recoverable in all material respects. 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.

 

8
 

 

  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 September 30, 2023, and December 31, 2022, 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 September 30, 2023:

 

   Fair Value Measurements at September 30, 2023 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  $-   $-   $696,460   $696,460 
Total  $-   $-   $696,460   $696,460 

 

9
 

 

The following table presents changes of the liabilities with significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2023:

 

   Derivative 
   Liability 
Balance December 31, 2022  $531,527 
      
New derivative from convertible notes   208,464 
Settlement by debt extinguishment   (297,566)
Change in estimated fair value   480,268 
Balance March 31, 2023  $922,693 
Change in estimated fair value   (295,901)
Balance June 30, 2023  $626,792 
Settlement by debt extinguishment   (221,080)
Change in estimated fair value   290,748 
Balance September 30, 2023  $696,460 

 

Derivative Liability

 

As of September 30, 2023, 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:

 

   For the Three and Nine Months Ending
September 30,
 
    2023    2022 
         
Expected term   1 month – 1 year     - 
Exercise price  $ 0.03 - $0.13    - 
Expected volatility   176% - 232 %   - 
Expected dividends   None    - 
Risk-free interest rate   5.03% - 5.55 %   - 
Forfeitures   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. The Company fully impaired of the land held for sale as of September 30, 2023.

 

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 September 30, 2023.

 

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:

 

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 lost 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 $358,129 and $1,084,641, respectively, of net revenue during the three and nine months ended September 30, 2023.

 

Advertising costs

 

The Company expenses advertising costs when incurred. Advertising costs incurred amounted to $12,000 and $100,600 for the three months ended September 30, 2023, and 2022, respectively. For the nine months ended September 30, 2023 and 2022, the total advertising costs amounted to $300,259 and $903,283, 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.

 

Stock Options Plan – 2019 Equity Incentive Plan

 

On February 11, 2019, the Company’s Board of Directors approved the 2019 Equity Incentive Plan (the “2019 Plan”). In order for the 2019 Plan to grant “qualified stock options” to employees, it requires approval by the Company’s shareholders within 12 months from the date of the 2019 Plan. The 2019 Plan was never approved by the shareholders. Therefore, any options granted under the 2019 Plan prior to shareholders’ approval will be “non-qualified”. Pursuant to the 2019 Plan, the Company has reserved a total of 3,000,000 shares of the Company’s common stock under the Plan. The Company has a total of 2,150,000 options issued and outstanding under the 2019 Plan as of September 30, 2023. The Company did not issue any stock options during the three and nine months ended September 30, 2023.

 

Stock Options Plan – 2020 Equity Incentive Plan

 

On August 26, 2020, the Company’s Board of Directors approved the 2020 Equity Incentive Plan (the “2020 Plan”). The Company has reserved a total of 3,000,000 shares of the Company’s authorized common stock for issuance under the 2020 Plan. The 2020 Plan enables the Company’s board of directors to provide equity-based incentives through grants of awards to the Company’s present and future employees, directors, consultants, and other third-party service providers. The Company has a total of 1,700,000 options issued and outstanding under the 2020 Plan as of September 30, 2023.

 

Stock Options Plan – 2022 Equity Incentive Plan

 

On December 1, 2022, the Company’s Board of Directors approved a 2022 Equity Incentive Plan (the “2022 Plan”). The 2022 Plan enables the Board of Directors to provide equity incentives through grants of awards to the Company’s present and future employees, directors, consultants, and other third-party service providers.

 

Pursuant to the 2022 Plan, the Company has reserved a total of 5,000,000 shares of the Company’s common stock to be available under the 2022 Plan.

 

The Company did not issue any stock options during the three and nine months ended September 30, 2023. The Company has a total of 2,150,000 options issued and outstanding under the 2022 Plan as of September 30, 2023

 

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.

 

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.

 

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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:

 

  

For the nine months

ended

September 30, 2023

  

For the nine months

ended

September 30, 2022

 
         
Options   6,000,000    3,850,000 
Warrants   38,107,500    3,867,500 
Total potentially dilutive shares   44,107,500    7,717,500 

 

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 September 30, 2023.

 

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 and nine months ended September 30, 2023.

 

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 is currently evaluating the potential impact of the Update on its financial statements.

 

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In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 provides guidance for estimating credit losses on certain types of financial instruments, including trade receivables, by introducing an approach based on expected losses. The expected loss approach will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. The guidance requires a modified retrospective transition method and early adoption is permitted. In November 2019, FASB issued ASU No. 2019-10, Financial Instruments – Credit Losses, Derivatives and Hedging, and Leases (“ASU 2019-10”), which defers the adoption of ASU 2016-13 for smaller reporting companies until periods beginning after December 15, 2022. The Company has not yet adopted ASU 2016-13 and will continue to evaluate the impact of ASU 2016-13 on its consolidated financial statements.

 

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 provides guidance for estimating credit losses on certain types of financial instruments, including trade receivables, by introducing an approach based on expected losses. The expected loss approach will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. The guidance requires a modified retrospective transition method and early adoption is permitted. In November 2019, FASB issued ASU No. 2019-10, Financial Instruments – Credit Losses, Derivatives and Hedging, and Leases (“ASU 2019-10”), which defers the adoption of ASU 2016-13 for smaller reporting companies until periods beginning after December 15, 2022. The Company has not yet adopted ASU 2016-13 and will continue to evaluate the impact of ASU 2016-13 on its consolidated 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 and nine months ended September 30, 2023, the Company did not enter into any new contract to sell plots of land.

 

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