NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2018
1.
Corporate Information
On
August 27, 2007, SunVesta Inc. (“Company”) acquired SunVesta Holding AG (“SunVesta AG”). SunVesta AG has
three wholly-owned subsidiaries: SunVesta Projects and Management AG, a Swiss company; SunVesta Costa Rica SA, a Costa Rican company
and SunVesta Holding España SL, a Spanish company.
The
Company is focused on the development of a holiday resort in Costa Rica. Planning for this project has been fully completed, all
but one of the required consents have been granted, and excavation work is near completion. The Company is in the process of securing
financing for the project and has not realized revenue to date. Since the financing of the project is not complete, the Company’s
activities are subject to significant risks and uncertainties.
These
consolidated financial statements are prepared in US Dollars on the basis of generally accepted accounting principles in the United
States of America (“US GAAP”).
2.
Significant Accounting Policies
New
accounting standards – not adopted
In
February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-02, Leases (Topic 842).
The standard requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating
leases. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition.
The standard requires lessors to classify leases as either sales-type, finance or operating. A sales-type lease occurs if the
lessor transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards
are conveyed without the transfer of control, the lease is treated as a financing lease. If the lessor does not convey risks and
rewards or control, an operating lease results. The standard will become effective for the Company beginning January 1, 2019.
The Company is currently assessing the impact adoption of this standard will have on its consolidated results of operations, financial
condition, cash flows, and financial statement disclosures.
In
June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2016-13, Financial Instruments—Credit
Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, requiring certain changes to the recognition and measurement
as well as disclosure of incurred and expected credit losses. The standard will become effective for the Company beginning January
1, 2020. The Company is currently assessing the impact adoption of this standard will have on its consolidated results of operations,
financial condition, cash flows, and financial statement disclosures.
SUNVESTA, INC
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
2.
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
New
accounting standards – not adopted
In
July 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2017-11, requiring certain
changes to the presentation and disclosures of changes to liability or equity classification of financial instruments. The amendments
are effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those
fiscal years. The Company is currently assessing the impact adoption of this standard will have on its consolidated results of
operations, financial condition, cash flows, and financial statement disclosures.
New
accounting standard updates - adopted
In
August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2016-15, requiring that cash
payments for debt prepayment or other debt extinguishment costs, including third-party costs, premiums paid, and other fees paid
to lenders that are directly related to the debt prepayment or extinguishment, be classified as financing activities in the statement
of cash flows. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and
interim periods within those fiscal years. The Company considers that ASU 2017-07 has had no material impact on the financial
statements.
In
November 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2016-18, requiring that
restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period
and end-of- period total cash amounts shown on the statement of cash flows. Consequently, transfers between cash and restricted
cash is not presented as a separate line item in the operating, investing or financing sections of the cash flow statement. The
amendments were effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods
within those fiscal years. The Company considers that ASU 2016-18 has had only a limited impact on the presentation of the statement
of cash flows.
In
March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2017-07, requiring certain
changes to the presentation of the expenses related to postretirement benefits accounted for under Topic 715. The amendments are
effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal
years. The Company considers that ASU 2017-07 has had no material impact on the financial statements.
In
May 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2017-09, requiring certain changes
to the presentation and disclosures of changes to share-based payment awards under Topic 718. The amendments are effective for
public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The
Company considers that ASU 2017-09 has had no material impact on the financial statements.
SUNVESTA, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
3.
GOING CONCERN
The
Company is in the process of developing a hotel project in the Papagayo Gulf Tourism Project area of Guanacaste, Costa Rica. The
project is expected to open mid-2020. Until the completion of the project, the following expenditures are estimated to be incurred:
a.
|
Gross project cost
|
|
$
|
240,000,000
|
|
b.
|
Less: Proceeds from sale of villas
|
|
|
(25,000,000
|
)
|
c.
|
Net project cost
|
|
|
215,000,000
|
|
d.
|
Overhead expenses
|
|
|
20,000,000
|
|
e.
|
Total, excluding other potential projects
|
|
$
|
235,000,000
|
|
Sixty
to seventy percent of the net project cost is intended to be financed through the issuance of secured debt facilities, for which
negotiations are in progress. The remaining thirty to forty percent of the net project cost, as well as non-recuperated overhead
expenses are intended to be financed by the main shareholders or lenders of the project, i.e Hans Rigendinger, shareholder, Company
Director and Chief Executive Officer, and Dr. Max Rӧssler, controlling shareholder of Aires International Investment Inc.
and Global Care AG, as well as a Company Director.
On
July 16, 2012, certain principal shareholders of the Company or principal lenders to the project entered into a Guaranty Agreement
in favor of the Company. The purpose of the guaranty is to ensure that until such time as financing is secured for the entire
project that each will act as guarantors to creditors of SunVesta Holding AG.
The
Guaranty Agreement requires that within 30 days of receiving a demand notice, requested funds are made available by the guarantors
to the Company. Based on this guaranty, management believes that available funds are sufficient to finance cash flows for the
twelve months subsequent to March 31, 2018, and the filing date, though future anticipated cash outflows for investing activities
are dependent on the availability of financing.
On
September 22, 2015, the signatories to the guaranty formally agreed to maintain the guaranty, as necessary, until December 31,
2018.
On
October 28, 2016, Hans Rigendinger and Dr. Max Rössler formally agreed to maintain the guaranty, as necessary, until completion
of the construction of Paradisus Papagayo Bay Resort & Luxury Villas, after which date the guaranty will expire.
SUNVESTA, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
4.
CASH AND CASH EQUIVALENTS
Cash
and cash equivalents are available to the Company without any restriction or limitation on withdrawal and/or use of these funds.
The Company’s cash equivalents are placed with financial institutions that maintain high credit ratings. The carrying amounts
of these assets approximate their fair value.
Cash and cash equivalents
|
|
USD
|
|
CHF
|
|
Other
|
|
Total
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
2018
|
|
December 31,
2017
|
original currency
|
|
|
1,341
|
|
|
|
4,138,792
|
|
|
|
12,742
|
|
|
|
|
|
|
|
|
|
in $
|
|
|
1,341
|
|
|
|
4,341,406
|
|
|
|
13,437
|
|
|
|
4,356,184
|
|
|
|
4,058,982
|
|
USD ($) = US Dollar
CHF
= Swiss Francs
5.
RESTRICTED CASH
As
of March 31, 2018, the Company has the following restricted cash positions:
|
|
March 31,
2018
|
|
December 31,
2017
|
|
|
$
|
|
$
|
Credit Suisse in favor of BVK pension fund
|
|
|
133,910
|
|
|
|
130,814
|
|
Banco Lafise in favor of the Costa Rican Tourism Board
|
|
|
933,350
|
|
|
|
933,350
|
|
Banco Lafise in favor Costa Rican Environmental Agency – SETANA
|
|
|
605,753
|
|
|
|
605,753
|
|
Gross
|
|
|
1,673,013
|
|
|
|
1,669,917
|
|
Restricted cash positions in favor of Costa Rican Tourism
Board and Costa Rican Environmental Agency – SETANA are related to the hotel project in Costa Rica and therefore their release
is not expected before finalization of the corresponding project.
The
restricted cash position in favor of BVK pension fund is a rental deposit related to a long term lease contract for office space
(the contract ends as of December 31, 2018, but will most likely be prolonged). Due to this fact this restricted cash position
is classified as long term.
SUNVESTA, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
6.
PROPERTY & EQUIPMENT
|
|
March 31,
2018
|
|
December 31,
2017
|
Concession Land
|
|
$
|
19,700,000
|
|
|
|
19,700,000
|
|
IT Equipment
|
|
|
236,320
|
|
|
|
230,820
|
|
Other equipment and furniture
|
|
|
236,303
|
|
|
|
230,836
|
|
Leasehold improvements
|
|
|
79,112
|
|
|
|
77,271
|
|
Construction in-process
|
|
|
59,425,113
|
|
|
|
56,722,733
|
|
Gross
|
|
|
79,676,848
|
|
|
|
76,961,659
|
|
Less accumulated depreciation
|
|
|
(550,825
|
)
|
|
|
(537,965
|
)
|
Net
|
|
$
|
79,126,022
|
|
|
|
76,423,694
|
|
Depreciation expenses for the period ended March 31, 2018 and December 2017
|
|
|
53
|
|
|
|
39,562
|
|
Property
and equipment is comprised primarily of land in Costa Rica and capitalized project costs incurred as of period end in connection
with the Papagayo Gulf Tourism project. The land amounts to $19.7 million comprised of $7 million related to the concession formerly
held by Rich Land (~84,000 m2) and $12.7 million formerly held by AdR (~120,000 m2).
The
$7 million concession is a right to use the property for a specific period of time of initially 20 years from the date of grant,
which thereafter can be renewed at no further cost, if the landholder is up to date with its obligations and if there is no significant
change in government policies. The current concession was initially set to expire in June 2022.
The
$12.7 million concession is also a right to use the property for a specific period of time of initially 30 years from the date
of grant, which thereafter can be renewed at no further cost, if the landholder is up to date with its obligations and if there
is no significant change in government policies. The current concession was initially set to expire in November 2036.
On
July 14, 2015, the Consejo del Polo de DesarrolloTuristico Papagayo at ICT (Council of Papagayo Tourism Development Project),
unanimously approved the extension of both concessions until 2052.
The
construction in process through March 31, 2018 and December 31, 2017, is represented primarily by architectural work related to
the Papagayo Gulf Tourism project as well as excavation and infrastructure work.
Deposit
related to construction work
The
Company placed deposits with contractors for excavation and infrastructure work to be offset against invoices as work is completed.
As of March 31, 2018 and December 31, 2017, the Company has deposits of $664,391 and $851,665 respectively, which have not yet
been set off.
SUNVESTA, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
7. FAIR
VALUE MEASUREMENT
The
guidance on fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer
a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction
between market participants. This guidance also specifies a fair value hierarchy based upon the observability of inputs used in
valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable
inputs (lowest level) reflect internally developed market assumptions. In accordance with this guidance, fair value measurements
are classified under the following hierarchy:
Level
1
Quoted prices for identical instruments in active markets.
Level
2
Quoted process for similar instruments in active markets, quoted prices for identical or similar instruments in markets
that are not active; and model-derived valuations in which significant inputs or significant value drivers are observable in active
markets.
Level
3
Model derived valuations in which one or more significant inputs or significant value-drivers are unobservable.
When
available, the Company uses quoted market prices to determine fair value, and classifies such measurements within Level 1. In
some cases, where market prices are not available, the Company makes use of observable market based inputs to calculate fair value,
in which case the measurements are classified within Level 2. If quoted or observable market prices are not available, fair value
is based upon internally developed models that use, where possible, current market-based parameters such as interest rates, yield
curves and currency rates. These measurements are classified within Level 3.
Fair
value measurements are classified according to the lowest level input or value-driver that is significant to the valuation. A
measurement may therefore be classified within Level 3 even though there may be significant inputs that are readily observable.
Fair
value measurement includes the consideration of nonperformance risk. Nonperformance risk refers to the risk that an obligation
(either by counterparty or the Company) will not be fulfilled. For financial assets traded in an active market (Level 1), the
nonperformance risk is included in the market price. For certain other financial assets and liabilities (Level 2 and 3), the Company’s
fair value calculations have been adjusted accordingly.
As
of March 31, 2018 and December 31, 2017, respectively, there are no financial assets or liabilities measured on a recurring basis
at fair value with the exception of the liability related to the conversion feature.
SUNVESTA, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
7.
FAIR VALUE MEASUREMENT – CONTINUED
In
addition to the methods and assumptions to record the fair value of financial instruments as discussed above, the Company used
the following methods and assumptions to estimate the fair value of our financial instruments:
—
|
Cash
and cash equivalents – carrying amount approximated fair value.
|
—
|
Restricted
cash – carrying amount approximated fair value.
|
—
|
Accounts
payable – carrying amount approximated fair value.
|
—
|
Notes
receivable - carrying amount approximated fair value.
|
—
|
CHF-bonds
– The fair values of the bonds payable are classified as Level 3 fair values. The fair values of the bonds have been
determined by discounting cash flow projections discounted at the respective interest rates of 6.5% respectively for CHF bonds,
which represented the current market rate based on the creditworthiness of the Company at issuance. Hence, the carrying values
approximate fair value.
|
—
|
Notes
payable to related parties – Aires and Global Care (non-current) – The fair values of the notes payable to Aires
International Investments Inc. and Global Care AG are classified as Level 3. The fair values of the notes were determined
by discounting cash flow projections discounted at the respective interest rates of 7.25%, which represents the current market
rate based on the creditworthiness of the Company. Hence, the carrying value approximates fair value.
|
—
|
Convertible
CHF-bonds – The fair values of the convertible bonds payable are classified as Level 3 fair values. The fair values
of the convertible bonds have been determined by discounting cash flow projections discounted at the respective interest rates
of 6.00% for convertible CHF bonds, which represents the current market rate based on the creditworthiness of the Company.
Hence, the carrying values approximate fair value.
|
—
|
Liability
related to conversion feature - The fair value of the liability related to conversion feature is classified as Level 3 in
the fair value hierarchy. The fair value of the liability is determined using a Black Scholes model to calculate the option
value at each reporting date and multiplied by the number of potentially convertible shares.
|
SUNVESTA, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
7.
FAIR VALUE MEASUREMENT – CONTINUED
The
fair value of our financial instruments is presented in the table below:
|
March 31,
2018
|
|
December 31,
2017
|
|
|
|
|
|
Carrying Amount
$
|
|
Fair Value $
|
|
Carrying Amount
$
|
|
Fair Value $
|
|
Fair Value Levels
|
|
Reference
|
Cash and cash equivalents
|
|
4,356,184
|
|
|
|
4,356,184
|
|
|
|
4,058,982
|
|
|
|
4,058,982
|
|
|
|
1
|
|
|
|
Note 4
|
|
Restricted cash
|
|
1,673,013
|
|
|
|
1,673,013
|
|
|
|
1,669,917
|
|
|
|
1,669,917
|
|
|
|
1
|
|
|
|
Note 5
|
|
Accounts Payable
|
|
1,388,449
|
|
|
|
1,388,449
|
|
|
|
1,796,917
|
|
|
|
1,796,917
|
|
|
|
1
|
|
|
|
—
|
|
Convertible CHF-bonds
|
|
11,382,794
|
|
|
|
11,382,794
|
|
|
|
11,032,145
|
|
|
|
11,032,145
|
|
|
|
3
|
|
|
|
Note 9
|
|
CHF-bonds
|
|
40,070,402
|
|
|
|
40,070,402
|
|
|
|
31,853,298
|
|
|
|
31,853,298
|
|
|
|
3
|
|
|
|
Note 9
|
|
Notes payable to related parties (non-current)
|
|
99,508,712
|
|
|
|
99,508,712
|
|
|
|
99,829,827
|
|
|
|
99,829,827
|
|
|
|
3
|
|
|
|
Note 8
|
|
Liability related to conversion feature
|
|
629,373
|
|
|
|
629,373
|
|
|
|
922,087
|
|
|
|
922,087
|
|
|
|
3
|
|
|
|
Note 7
|
|
The
Company’s financial liabilities measured at fair value on a recurring basis consisted of the liability related to conversion
feature as of the following date:
Balance at December 31, 2017
|
|
|
922,087
|
|
Additions/(Decrease)
|
|
|
—
|
|
Change in Fair Value of Conversion Feature
|
|
|
(316,366
|
)
|
(Gain)/loss on extinguishment of debt (in addition to any recognized gain/loss on extinguishment of the underlying financial instrument)
|
|
|
—
|
|
FX Revaluation
|
|
|
23,652
|
|
Balance at March 31, 2018
|
|
|
629,373
|
|
Total
income related to the conversion feature in the three months up to March 31, 2018, amounts to $629,373. The Company used a Black-Scholes
model to value the liability related to conversion feature as of March 31, 2018, and December 31, 2017. Decrease of the conversion
feature due to a decrease of bond volume are accounted for within interest expense.
The
assumptions as of March 31, 2018 are as follows:
Stock Price: CHF 5.08
|
Annualized Risk Free Rate: 0.001%
|
|
Exercise Price: CHF 8
|
Annualized Volatility: 80%
|
|
Time to Maturity: 0.50 years
|
|
|
The
assumptions as of December 31, 2017 are as follows:
Stock Price: CHF 5.08
|
Annualized Risk Free Rate: 0.001%
|
|
Exercise Price: CHF 8
|
Annualized Volatility: 80%
|
|
Time to Maturity: 0.75 years
|
|
|
SUNVESTA, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
8. RELATED
PARTY TRANSACTIONS
The
advances from (to) related parties are composed as follows:
|
|
|
Receivables
|
|
Payables
|
|
|
|
March 31,
2018
|
|
December
31,
2017
|
|
March 31,
2018
|
|
December 31,
2017
|
1a
|
Aires International subordinated
|
|
|
—
|
|
|
|
—
|
|
|
|
59,982,381
|
|
|
|
57,613,418
|
|
2a
|
Global Care AG subordinated
|
|
|
—
|
|
|
|
—
|
|
|
|
22,646,453
|
|
|
|
21,725,592
|
|
2b
|
Global Care AG not subordinated
|
|
|
—
|
|
|
|
—
|
|
|
|
16,879,878
|
|
|
|
20,490,817
|
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
99,508,712
|
|
|
|
99,829,827
|
|
|
of which non-current
|
|
|
—
|
|
|
|
—
|
|
|
|
99,508,712
|
|
|
|
99,829,827
|
|
|
- therof suboridinated
|
|
|
|
|
|
|
|
|
|
|
82,628,834
|
|
|
|
79,339,011
|
|
|
- therof not suboridinated
|
|
|
|
|
|
|
|
|
|
|
16,879,878
|
|
|
|
20,490,817
|
|
Additional
Details on the Loan due to Aires International Investment Inc.
As
of March 31, 2018, the Company owed Aires International Inc. the following:
Borrower
|
|
Debt instrument denominated in CHF
|
|
Amount in CHF
|
|
Amount in USD
|
|
Annual interest rate
|
|
Repayment date *
|
SunVesta Inc.
|
|
Promissory note
|
|
|
10,044,371
|
|
|
|
10,290,860
|
|
|
|
7.25
|
%
|
|
After Dec 31, 2020
|
SunVesta Inc.
|
|
Promissory note
|
|
|
10,000,000
|
|
|
|
10,245,400
|
|
|
|
7.25
|
%
|
|
After Dec 31, 2020
|
SunVesta Inc.
|
|
Promissory note
|
|
|
10,000,000
|
|
|
|
10,245,400
|
|
|
|
7.25
|
%
|
|
After Dec 31, 2020
|
SunVesta Inc.
|
|
Loan agreement
|
|
|
13,395,300
|
|
|
|
14,713,011
|
|
|
|
7.25
|
%
|
|
After Dec 31, 2020
|
SunVesta Holding
|
|
Loan agreement
|
|
|
13,811,568
|
|
|
|
14,487,710
|
|
|
|
7.25
|
%
|
|
After Dec 31, 2020
|
Total
|
|
|
|
|
57,251,239
|
|
|
|
59,982,381
|
|
|
|
|
|
|
|
Details
on the suborindation clauses: Claims of Aires are subordinated to all other existing and future claims against the Company. In
the event of insolvency proceedings and the execution of a composition agreement with an assignment of assets(default), Aires would waive
its claims to the extent necessary that the claims of all other creditors, and the costs of the liquidation, debt moratorium or
insolvency proceedings, were covered in full by the proceeds of the liquidation of the Company. Further, the claims and interests
of Aires are deferred for the duration of the subordination agreement. None of the claims covered by the subordination agreement
may be paid, settled by offsetting or replacement/novation, or newly secured, either in full or in part. The subordination agreement
can only be terminated under restrictive preconditions.
Additional
Details on the Loan due to Global Care AG
In
2018, Global Care AG, a company owned by Dr. Rӧssler (a director of the Company), provided $2,923,745 in cash. Additionally,
the sale price of $7,381,864 for bonds sold to New Berlin Limited (a related party controlled by Dr. Max Rössler, a Director
and related party) was debited to the non-subordinated loan due to Global Care AG. After a credit for capitalized interest of
7.25% and the recognition of foreign exchange differences (the loans are denominated in Swiss Francs) the respective period end
balances as mentioned above are resulting. The subordination clauses are the same as those detailed above for Aires International
Inc.
SUNVESTA, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
9.
BONDS
Description
|
|
Convertible CHF Bond I
|
|
Convertible CHF Bond II
|
Issuer:
|
|
SunVesta Holding AG
|
|
SunVesta Holding AG
|
Type of securities:
|
|
Senior convertible bonds, convertible into shares of the issuer at the discretion of the bondholder, in accordance with Swiss law
|
|
Senior convertible bonds,
convertible into shares of the issuer at the
discretion of the bondholder, in accordance with Swiss law
|
Approval by SunVesta AG BOD:
|
|
September 30, 2015
|
|
September 30, 2015
|
Volume:
|
|
Up to CHF 45,000,000
|
|
Up to CHF 15,000,000
|
Denomination:
|
|
CHF 5,000
|
|
CHF 5,000
|
Offering period:
|
|
October 01, 2015
|
|
October 01, 2015
|
Maturity date:
|
|
September 30, 2018
|
|
September 30, 2018
|
Issue price:
|
|
100%
|
|
100%
|
Redemption price:
|
|
100%
|
|
100%
|
Issuance date:
|
|
October 01, 2015
|
|
October 01, 2015
|
Coupon:
|
|
6.00 % p.a.
|
|
6.00 % p.a.
|
Interest due dates:
|
|
September 30 of each year, the
first time September 30, 2016
|
|
September 30 of each year, the
first time September 30, 2016
|
Reference price:
|
|
CHF 6.50
|
|
CHF 6.50
|
Initial conversion price:
|
|
CHF 8.00
|
|
CHF 8.00
|
Applicable law:
|
|
Swiss
|
|
Swiss
|
Convertible CHF BOND I
|
|
2018
|
|
2017
|
|
|
$
|
|
$
|
Balances January 1
|
|
|
2,325,707
|
|
|
|
3,648,383
|
|
Cash inflows
|
|
|
—
|
|
|
|
—
|
|
Cash outflows
|
|
|
—
|
|
|
|
—
|
|
Foreign currency adjustments
|
|
|
55,419
|
|
|
|
145,296
|
|
Reclassification from/to bond (net)
|
|
|
—
|
|
|
|
(1,467,971
|
)
|
Sub-total
|
|
|
2,381,126
|
|
|
|
2,325,707
|
|
Discounts (commissions paid to bondholders) and debt issuance costs
|
|
|
(240,760
|
|
|
|
(240,760
|
)
|
Accumulated amortization of discounts and debt issuance costs, including expenses for extinguishment of debt
|
|
|
203,160
|
|
|
|
185,671
|
|
Reclassification from/to bond (net)
|
|
|
—
|
|
|
|
—
|
|
Total accumulated unamortized discounts and debt issuance costs
|
|
|
(37,600
|
|
|
|
(55,089
|
)
|
Balances March 31 and December 31 (Carrying value)
|
|
|
2,343,525
|
|
|
|
2,270,618
|
|
As
per date of this report, the Company has realized a cumulative amount of $2.4 million (CHF 2.3 million) related
to the Convertible Bond I.
SUNVESTA, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
9.
BONDS – CONTINUED
Convertible CHF BOND II
|
|
2018
|
|
2017
|
|
|
$
|
|
$
|
Balances January 1
|
|
|
9,012,791
|
|
|
|
36,770,369
|
|
Cash inflows
|
|
|
—
|
|
|
|
20,079
|
|
Cash outflows
|
|
|
—
|
|
|
|
(1,795,594
|
)
|
Foreign currency adjustments
|
|
|
214,879
|
|
|
|
1,213,824
|
|
Reclassification from/to bond (net)
|
|
|
(21,091
|
)
|
|
|
(27,195,887
|
)
|
Sub-total
|
|
|
9,206,579
|
|
|
|
9,012,791
|
|
Discounts (commissions paid to bondholders) and debt issuance costs
|
|
|
(4,895,604
|
)
|
|
|
(4,895,604
|
)
|
Accumulated amortization of discounts and debt issuance costs
|
|
|
4,728,293
|
|
|
|
4,644,340
|
|
Total Accumulated Unamortized discounts and debt issuance costs
|
|
|
(167,311
|
)
|
|
|
(251,264
|
)
|
Balances March 31 and December 31 (Carrying value)
|
|
|
9,039,267
|
|
|
|
8,761,527
|
|
As
per date of this report the Company has realized a cumulative amount of $9.2 million (CHF 8.8 million) related
to the Convertible Bond II.
The
Company initiated another offering of senior unsecured CHF bonds on September 21, 2016, of up to CHF 20,000,000 in units of CHF
5,000 that bear interest at 6.50% per annum payable each August 15, over a four-year term that matures on August 15, 2020, with
the following conditions:
Description
|
|
CHF Bond III
|
Issuer:
|
|
SunVesta Holding AG
|
Type of securities:
|
|
Senior bonds
|
Approval by SunVesta AG BOD:
|
|
July 7, 2016
|
Volume:
|
|
Up to CHF 20,000,000
|
Denomination:
|
|
CHF 5,000
|
Offering period:
|
|
November 30, 2016
|
Maturity date:
|
|
August 15, 2020
|
Issue price:
|
|
100%
|
Redemption price:
|
|
100%
|
Issuance date:
|
|
September 21, 2016
|
Coupon:
|
|
6.50 % p.a.
|
Interest due dates:
|
|
August 15 of each year, the first
time August 15, 2017
|
Applicable law:
|
|
Swiss
|
SUNVESTA, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
9.
BONDS – CONTINUED
CHF BOND III original
|
|
2018
|
|
2017
|
|
|
$
|
|
$
|
Balances January 1
|
|
|
3,744,697
|
|
|
|
15,601,389
|
|
Cash inflows
|
|
|
—
|
|
|
|
1,374,842
|
|
Cash outflows
|
|
|
—
|
|
|
|
—
|
|
Foreign currency adjustments
|
|
|
50,052
|
|
|
|
927,598
|
|
Reclassification from/to bond (net)
|
|
|
7,381,864
|
|
|
|
(14,159,133
|
)
|
Sub-total
|
|
|
11,176,613
|
|
|
|
3,744,697
|
|
Discounts (commissions paid to bondholders) and debt issuance costs
|
|
|
(248,819
|
)
|
|
|
(248,819
|
)
|
Accumulated amortization of discounts and debt issuance costs, including expenses for extinguishment of debt
|
|
|
173,785
|
|
|
|
167,335
|
|
Total accumulated unamortized discounts and debt issuance costs
|
|
|
(75,034
|
)
|
|
|
(81,484
|
)
|
Balances March 31 and December 31 (Carrying value)
|
|
|
11,101,579
|
|
|
|
3,663,213
|
|
In
the first quarter of 2018, $7,381,864 in bonds were sold to New Berlin Limited (a related party controlled by Dr. Max Rössler,
a Director and related party). The respective amount was debited to the non-subordinated loan due to Global Care AG (a related
party controlled by Dr. Max Rössler). As it was a non-cash transaction, the amount is included in the line-item ‘Reclassification
from/to bonds (net)’ in the table above.
As
per date of this report, the Company has realized a cumulative amount of $11.2 million (CHF 10.7 million) related to
the CHF Bond III original.
Within
the abovementioned facility, the Company initiated a new parallel offering of senior unsecured CHF bonds on September 21, 2016.
An amount of $979,510 of which was reclassified from EUR Bond II in 2016.
CHF BOND III parallel
|
|
2018
|
|
2017
|
|
|
$
|
|
$
|
Balances January 1
|
|
|
1,046,471
|
|
|
|
961,595
|
|
Cash inflows
|
|
|
—
|
|
|
|
—
|
|
Cash outflows
|
|
|
—
|
|
|
|
—
|
|
Foreign currency adjustments
|
|
|
24,936
|
|
|
|
41,861
|
|
Reclassification from/to bond (net)
|
|
|
—
|
|
|
|
43,015
|
|
Sub-total
|
|
|
1,071,408
|
|
|
|
1,046,471
|
|
Discounts (commissions paid to bondholders) and debt issuance costs
|
|
|
(84,021
|
)
|
|
|
(84,021
|
)
|
Accumulated amortization of discounts and debt issuance costs
|
|
|
31,252
|
|
|
|
26,743
|
|
Reclassification from/to bond (net)
|
|
|
—
|
|
|
|
—
|
|
Total accumulated unamortized discounts and debt issuance costs
|
|
|
(52,769
|
)
|
|
|
(57,278
|
)
|
Balances March 31 and December 31 (Carrying value)
|
|
|
1,018,639
|
|
|
|
989,193
|
|
As
per date of this report, the Company has realized a cumulative amount of $1.1 million (CHF 1.0 million) related to
the
CHF Bond III parallel.
SUNVESTA, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
9.
BONDS – CONTINUED
On
March 6, 2017, the Company has approved issuance of a new bond with the following conditions.
Description
|
|
CHF Bond IV
|
Issuer:
|
|
SunVesta Holding AG
|
Type of securities:
|
|
Senior bonds
|
Approval by SunVesta AG BOD:
|
|
March 6, 2017
|
Volume:
|
|
Up to CHF 50,000,000
|
Denomination:
|
|
CHF 1,000
|
Offering period:
|
|
May 1
st
– November 1
st
, 2017
|
Maturity date:
|
|
May 1, 2022
|
Issue price:
|
|
100%
|
Redemption price:
|
|
100%
|
Issuance date:
|
|
May 1, 2017
|
Coupon:
|
|
6.50 % p.a.
|
Interest due dates:
|
|
May 1
st
of each year, the first time May 1
st
, 2018
|
Applicable law:
|
|
Swiss
|
CHF BOND IV
|
|
2018
|
|
2017
|
|
|
$
|
|
$
|
Balances January 1
|
|
|
28,468,904
|
|
|
|
—
|
|
Cash inflows
|
|
|
—
|
|
|
|
1,678,336
|
|
Foreign currency adjustments
|
|
|
678,277
|
|
|
|
372,407
|
|
Reclassification from/to bond (net)
|
|
|
21,091
|
|
|
|
26,418,161
|
|
Sub-total
|
|
|
29,168,271
|
|
|
|
28,468,904
|
|
Discounts (commissions paid to bondholders) and debt issuance costs
|
|
|
(1,454,894
|
)
|
|
|
(1,453,839
|
)
|
Accumulated Amortization of discounts and debt issuance costs
|
|
|
236,807
|
|
|
|
185,828
|
|
Total accumulated unamortized discounts and debt issuance costs
|
|
|
(1,218,087
|
)
|
|
|
(1,268,011
|
)
|
Balances March 31 and December 31 (Carrying value)
|
|
|
27,950,185
|
|
|
|
27,200,893
|
|
As
per date of this report, the Company has realized a cumulative amount of
$29.2
million (CHF 27.8 million) related to the CHF Bond IV.
SUNVESTA, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
10. PENSION
PLAN
The
Company maintains a pension plan covering all employees in Switzerland. The plan is considered a defined benefit plan and accounted
for in accordance with ASC 715
Compensation - Retirement Benefits
. This model allocates pension costs over the service
period of employees in the plan. The underlying principle is that employees render services ratably over this period, and therefore,
the income statement effects of pensions should follow a similar pattern. ASC 715 requires recognition of the funded status, or
difference between the fair value of plan assets and the projected benefit obligations of the pension plan on the balance sheet,
with a corresponding adjustment recorded in the net loss. If the projected benefit obligation exceeds the fair value of plan assets,
then that difference or unfunded status represents the pension liability.
The
Company records a net periodic pension cost in the statement of comprehensive loss. The liabilities and annual income or expense
of the pension plan is determined using methodologies that involve several actuarial assumptions, the most significant of which
are the discount rate and the long-term rate of asset return (based on the market-related value of assets). The fair values of
plan assets are determined based on prevailing market prices.
Actuarial
valuation
Net
periodic pension cost has been included in the Company’s results as follows:
|
|
Three
months ended
March
31,
2018
|
|
Three
months ended
March
31,
2017
|
Pension expense
|
|
|
$
|
|
|
|
$
|
|
Current service cost
|
|
|
14,685
|
|
|
|
14,055
|
|
Net actuarial (gain) loss recognized
|
|
|
—
|
|
|
|
—
|
|
Interest cost
|
|
|
524
|
|
|
|
577
|
|
Expected return on assets
|
|
|
(1,573
|
)
|
|
|
(1,431
|
)
|
Employee contributions
|
|
|
(5,245
|
)
|
|
|
(5,020
|
)
|
Net periodic pension cost
|
|
|
8,392
|
|
|
|
8,182
|
|
During
the three month, periods ended March 31, 2018 and March 31, 2017, the Company made cash contributions of $5,245 and $27,494, respectively,
to its defined benefit pension plan.
All
of the assets are held under a collective contract by the plan’s re-insurance company and are invested in a mix of Swiss
and international fixed-income and equity securities within the limits set out by the Swiss pension law.
The
remaining expected future cash flows to be paid by the Company in respect to employer contributions to the pension plan for the
year ended December 31, 2018, are $15,735.
SUNVESTA, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
11.
STOCK COMPENSATION
The
Company has included share based compensation under the SunVesta Inc. Stock Option Plan 2013 (“Plan”) as part of the
total remuneration in certain employment and Board of Director’s contracts. The Company is authorized to grant up to 50,000,000
stock options under the Plan to acquire shares of its common stock.
The purpose of the Plan is to advance the interests of the
Company by encouraging its employees to remain associated with the Company and to assist it in building value. Such share based
remuneration includes either shares or options to acquire shares of the Company’s common stock. For all employees, fair
value is estimated at the grant date. Compensation costs for unvested shares are expensed over the requisite service period on
a straight-line basis.
Share
Grants – Mr. Hans Rigendinger
On
January 1, 2013, the Company granted 3,500,000 common shares to Hans Rigendinger, valued at $0.08 an amount equal to the share
price and fair value of the shares on the grant date in connection with his employment agreement with the Company. His employment
agreement obligates the Company to issue 2,500,000 common shares as a retention award on each anniversary of the employment agreement.
The employment agreement had an initial term of three years with the option to extend for an additional two years. Mr Rigendinger’s
employment agreement was renewed for additional two years on January 1, 2016. Therefore, the Company may issue up to 16,000,000
common shares, of which all have been earned as of December 31, 2017. As of the date of this report, an extension of Mr. Rigendinger’s
agreement is being negotiated. The specific terms have not yet been agreed upon.
Share
Grants – Mr. José María Figueres
On
March 10, 2014, the Company granted 500,000 common shares to José María Figueres, valued at $0.10, an amount equal
to the share price and therefore the fair value on grant date, in connection with his appointment to the Board of Directors. His
appointment obligates the Company to issue 200,000 common shares for each fully completed year of service. José Maria Figueres
resigned his position on the Company’s Board of Directors on January 10, 2018. Therefore, no more shares will be issued
to José María Figueres in 2018.
Share
Grants –Howard Glicken
On
March 10, 2014, the Company granted 500,000 common shares to Howard Glicken, valued at $0.10, an amount equal to the share price
and therefore the fair value on grant date, in connection with his appointment to the Board of Directors. His appointment obligates
the Company to issue 200,000 common shares for each fully completed year of service. Howard Glicken resigned his position on the
Company’s Board of Directors on December 22, 2017. Therefore, no more shares will be issued to Howard Glicken in 2018.
Share
Grants – Third party
On
November 1, 2016, the Company committed 10,000,000 common shares to a non-related individual, valued at a total of $240,947 (CHF
240,000) the fair value on grant date, in connection with his consulting services for the Company. His appointment obligated the
Company to issue 1,666,667 common shares for each fully completed month of service. From November 1, 2016 to April 30, 2017, the
individual earned a total of 10,000,000 shares, creating an expense for the Company in the amount of $240,947. In the second quarter
of 2017, it was agreed with the third party to replace the shares committed with cash compensation of $240,947 (CHF 240,000).
SUNVESTA, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
11.
STOCK COMPENSATION – CONTINUED
Share
Grants – Summary
Based
on these contracts, the Company has included the following stock-based compensation in the Company’s results:
Stock-based compensation (shares)
|
|
Balances
as of
March 31,
2018
|
|
Balances
as of
December 31,
2017
|
Shares granted
|
|
57,200,000 shares
|
|
57,200,000 shares
|
Fair Value respectively market price on grant date
|
|
$
|
0.0659
|
|
|
$
|
0.0659
|
|
Total maximal expenses (2013-2020)
|
|
$
|
3,770,947
|
|
|
$
|
3,770,947
|
|
Shares vested
|
|
|
35,200,000 shares
|
|
|
|
35,200,000 shares
|
|
Shares forfeited
|
|
|
22,000,000 shares
|
|
|
|
22,000,000 shares
|
|
Unvested shares
|
|
|
0 shares
|
|
|
|
0 shares
|
|
The
following table gives an overview on the unrecognized share based compensation expense as per the end of the reporting period.
|
|
|
|
|
|
|
Year ending
December 31,
|
Stock-based compensation (shares)
|
|
|
Through
December 31, 2018
$
|
|
|
|
2019
$
|
|
|
|
2020
$
|
|
|
|
2021
$
|
|
Unrecognized compensation expense
|
|
|
None
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Stock
Options – Dr. Hans Rigendinger
The
Company granted 10,000,000 stock options to Dr. Hans Rigendinger on January 1, 2013, in connection with his employment contract.
Each option entitles Dr. Rigendinger to buy one Company share at an exercise price of $0.05. These options vest in two identical
installments (Installment A and Installment B) of 5,000,000.
Installment
A vesting was contingent on realizing a financing arrangement with a specific counterparty. As of the grant date, the fair value
was $300,000. As of July 4, 2013, the Company assessed that this financing arrangement with the specific counterparty would not
be completed. Therefore, the Company assessed the probability of completion to be zero and recognized no expense. On July 4, 2013,
the Company authorized a revised stock option agreement that removed the requirement for financing with a specific counterparty
and updated for any counterparty. As of the date of the revised stock option agreement, the fair value was $246,000. Since the
modification changed the expectation that the options would ultimately vest and no expense had been recognized for the original
award, the fair value of the modified award has been expensed on a straight-line basis over the recalculated expected remaining
vesting period.
SUNVESTA, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
11.
STOCK COMPENSATION – CONTINUED
Stock
Options – Dr. Hans Rigendinger - continued
Installment
B vesting is contingent on Meliá Hotels International (“Melía”) assuming management responsibilities
for the Paradisus Papagayo Bay Resort & Luxury Villas. As of the grant date, the fair value was $340,000 and the Company estimated
that Meliá would assume responsibility as of July 1, 2015. As of the date of this report, the estimated opening date has
been postponed to mid-2020, being the required date of the performance condition. The Company has assessed the probability that
this performance condition will be met at 100%. Hence, the remaining fair value of the award has been expensed on a straight-line
basis over the recalculated expected remaining vesting period. The assumption on the probability to meet the performance condition
is currently under review due to the ongoing negotiations with Melía (please refer to Note 14). If the assumption on the
probability to meet the performance condition would be lowered, expenses recognized in the past would be reversed which would
reduce the net loss.
Stock
Options – Dr. Max Rӧssler
The Company granted 10,000,000 stock options to Dr.
Max Rӧssler on July 3, 2013, in connection with his appointment to the Board of Directors. Each option entitles Dr. Rӧssler
to buy one Company share at an exercise price of $0.05. These options vest in two identical installments (Installment A and Installment
B) of 5,000,000 options.
Installment
A vesting is contingent on realizing a financing arrangement to complete the development of the Paradisus Papagayo Bay Resort
& Luxury Villas. As of the grant date, the fair value was $249,835. The Company has expensed the total fair value of the award
on a straight-line basis over the expected vesting period.
Installment
B vesting is contingent on Meliá assuming management responsibilities for the Paradisus Papagayo Bay Resort & Luxury
Villas. As of the grant date the fair value was $258,210 and the Company estimated that Meliá would assume responsibility
as of July 1, 2015. As of the date of this report, the estimated opening date has been postponed to mid-2020, being the required
date of the performance condition. The Company has assessed the probability that this performance condition will be met at 100%.
Hence, the remaining fair value of the award has been expensed on a straight-line basis over the recalculated expected remaining
vesting period. The assumption on the probability to meet the performance condition is currently under review due to the ongoing
negotiations with Melía (please refer to Note 14). If the assumption on the probability to meet the performance condition
would be lowered, expenses recognized in the past would be reversed which would reduce the net loss.
SUNVESTA, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
11.
STOCK COMPENSATION – CONTINUED
Stock
Options – Summary
A
summary of stock options outstanding as per March 31, 2018 is as follows:
Options outstanding
|
|
Number of Options
|
|
Weighted average exercise price
|
|
Weighted average
remaining
contractual
life
|
Outstanding January 1, 2018
|
|
|
20,000,000
|
|
|
$
|
0.05
|
|
|
|
5.38 years
|
|
Granted
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Forfeited or expired
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Outstanding March 31, 2018
|
|
|
20,000,000
|
|
|
$
|
0.05
|
|
|
|
5.13 years
|
|
Exercisable March 31, 2018
|
|
|
—
|
|
|
|
|
|
|
|
|
|
The
following table depicts the Company’s non-vested options as of March 31, 2018 and changes during the period:
Non-vested options
|
|
Shares under Options
|
|
Weighted average grant date fair value
|
Non-vested at January 1, 2018
|
|
|
20,000,000
|
|
|
$
|
0.075
|
|
Non-vested-granted
|
|
|
—
|
|
|
|
—
|
|
Vested
|
|
|
—
|
|
|
|
—
|
|
Non-vested, forfeited or cancelled
|
|
|
—
|
|
|
|
—
|
|
Non-vested at March 31, 2018
|
|
|
20,000,000
|
|
|
$
|
0.075
|
|
Under
the provisions of ASC 718
Compensation
– Stock Compensation, the Company is required to measure and recognize compensation
expense related to any outstanding and unvested stock options previously granted, and thereafter recognize, in its consolidated
financial statements, compensation expense related to any new stock options granted after implementation using a calculated fair
value based option-pricing model. The Company uses the Black-Scholes option-pricing model to calculate the fair value of all of
its stock options and its assumptions are based on historical and available market information. No stock options were granted
for the periods ended March 31, 2018 and March 31, 2017.
Assumption
|
|
|
March 31,
2018
|
|
|
|
March 31,
2017
|
|
Dividend yield
|
|
|
n.a
|
|
|
|
n.a
|
|
Risk-free interest rate used (average)
|
|
|
n.a
|
|
|
|
n.a
|
|
Expected market price volatility
|
|
|
n.a
|
|
|
|
n.a
|
|
Average expected life of stock options
|
|
|
n.a
|
|
|
|
n.a
|
|
The
computation of the expected volatility assumption used in the Black-Scholes calculation for new grants is based on historical
volatilities of a peer group of similar companies in the same industry. The expected life assumptions are based on underlying
contracts.
As
of March 31, 2018, the Company had unrecognized compensation expenses related to stock options currently outstanding, to be recognized
in future quarters or years, respectively as follows:
Stock-based compensation (options)
|
|
As per
March 31,
2018
$
|
|
As per
December 31, 2017
$
|
Unrecognized compensation expense
|
|
|
27,651
|
|
|
|
30,723
|
|
SUNVESTA,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
12.
SUMMARY OF SHARE AND OPTION COMPENSATION EXPENSE
The
Company recorded the following amounts related to stock based compensation expense during the periods ended March 31, 2018 and
March 31, 2017, respectively:
Summary of share and option based compensation expense
|
|
Three
months ended
March 31,
2018
$
|
|
Three
months ended
March 31,
2017
$
|
Share grants (see Note 11 for details)
|
|
|
0
|
|
|
|
260,789
|
|
Option grants (see Note 11 for details)
|
|
|
3,072
|
|
|
|
10,241
|
|
Total (recorded under general & administrative expense)
|
|
|
3,072
|
|
|
|
271,030
|
|
13.
FUTURE LEASE COMMITTMENTS
The
Company entered into a lease agreement for the premises for its Swiss office with an unrelated entity. The annual rental expense
amounts to approximately $130,000 on a fixed term expiring on December 31, 2018.
Future lease commitments
|
|
|
March
31,
2018
$
|
|
|
|
December
31,
2017
$
|
|
Payable in 2018
|
|
|
97,500
|
|
|
|
130,000
|
|
14.
OPENING DATE “Paradisus Papagayo Bay Resort & Luxury Villas”
Dated
April 27, 2016, the Company amended its agreement with Meliá (“Seventh addendum to the management agreement of March
8, 2011”) to postpone the opening date as follows:
a.
|
|
New completion
date: September 15, 2018 (subject to force majeure)
|
b.
|
|
Should the
completion not occur by September 15, 2018 and should the parties not have agreed in writing an extension to such date, after
September 15, 2018, the Company will be obligated to pay Melía a daily amount of $2,000 as liquidated damages.
|
c.
|
|
Should the
completion not occur by November 15, 2018, Meliá will be entitled to terminate the agreement and $5,000,000 in liquidated
damages unless the parties agree in writing to extend the completion date.
|
Since
the Company expects the opening of the Paradisus Papagayo Bay Resort & Luxury Villas by mid-2020, and another addendum has
not yet been secured, it has recognized a provision for liquidated damages of $5,120,000 as of December 31, 2017 and March 31,
2018.
SUNVESTA, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
15.
EARNINGS PER SHARE
Basic
earnings per share are the result of dividing the Company’s net income (or net loss) by the weighted average number of shares
outstanding for the contemplated period. Diluted earnings per share are calculated applying the treasury stock method. When there
is a net income dilutive effect, all stock-based compensation awards or participating financial instruments are considered. When
the Company posts a loss, basic loss per share equals diluted loss per share. The following table depicts how the denominator
for the calculation of basic and diluted earnings per share was determined under the treasury stock method.
Earnings per share
|
|
Three-month period ended
March
31,
2018
|
|
Three-month
period ended March 31,
2017
|
Company posted
|
|
|
Net loss
|
|
|
|
Net loss
|
|
Basic weighted average shares outstanding
|
|
|
107,241,603
|
|
|
|
108,234,104
|
|
Dilutive effect of common stock equivalents
|
|
|
None
|
|
|
|
None
|
|
Dilutive weighted average shares outstanding
|
|
|
107,241,603
|
|
|
|
108,234,104
|
|
A
total of 2,500,000 common shares have vested, that had not been issued, as of the balance sheet date are included in the basic
weighted average of shares outstanding.
The
following table shows the number of stock equivalents of the Company that were excluded from the computation of diluted earnings
per share for the respective period because the effect would have been anti-dilutive.
Earnings per share
|
|
Three-month period ended
March
31,
2018
|
|
Three-month period ended
March
31,
2017
|
Options to Hans Rigendinger
|
|
|
10,000,000
|
|
|
|
10,000,000
|
|
Options to Dr. M. Rössler
|
|
|
10,000,000
|
|
|
|
10,000,000
|
|
Total Options
|
|
|
20,000,000
|
|
|
|
20,000,000
|
|
|
|
|
|
|
|
|
|
|
Shares to Hans Rigendinger
(retention bonus –not vested)
|
|
|
0
|
|
|
|
2,500,000
|
|
Shares to third party
|
|
|
0
|
|
|
|
1,666,665
|
|
Shares to Howard Glicken and José Maria Figueres (retention award)
|
|
|
0
|
|
|
|
400,000
|
|
Total Shares
|
|
|
0
|
|
|
|
4,566,665
|
|
|
|
|
|
|
|
|
|
|
Total Options and Shares
|
|
|
20,000,000
|
|
|
|
24,566,665
|
|
Options
related to Convertible CHF bonds: Each bond in the principal amount of CHF 5,000 can be converted on any business day during the
conversion period into 625 common shares of SunVesta Holding AG at a conversion price equal to CHF 8.
A
number of 1,380,863 stock equivalents of SunVesta Holding AG associated with the Convertible CHF Bond were excluded from the computation
of diluted earnings per share for the three-month period ended March 31, 2018, because the effect would have been anti-dilutive
(3,877,625 for the three-month period ended March 31, 2017).
SUNVESTA, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018
16. GENERAL
AND ADMINISTRATIVE EXPENSES
General
and administrative expenses according to the consolidated statement of comprehensive loss include:
|
|
Three-month period ended
March 31,
2018
|
|
Three-month period ended
March 31,
2017
|
|
|
$
|
|
$
|
Rental & related expenses
|
|
|
33,711
|
|
|
|
39,119
|
|
Audit
|
|
|
59,148
|
|
|
|
99,610
|
|
Consulting
|
|
|
454,102
|
|
|
|
695,751
|
|
Marketing, Investor & public relations
|
|
|
—
|
|
|
|
10,500
|
|
Travel expenses
|
|
|
78,778
|
|
|
|
133,958
|
|
Personnel costs including social security’s costs and share based remuneration
|
|
|
212,803
|
|
|
|
283,533
|
|
Office expenses
|
|
|
4,847
|
|
|
|
203
|
|
Various other operating expenditures
|
|
|
110,113
|
|
|
|
113,295
|
|
Total according statement of comprehensive loss
|
|
|
953,502
|
|
|
|
1,375,970
|
|
17. SUBSEQUENT
EVENTS
Management
has evaluated subsequent events after the balance sheet date, through the issuance of the financial statements, for appropriate
accounting and disclosure. The Company has determined that there are no events that warrant disclosure or recognition in the financial
statements.