UNITED STATES

SECURITIES AND EXCHANGE ~~COMMISSION~~

COMMISSION

Washington, D.C. 20549

FORM 10-K

_{(Mark One)}

~~þ ANNUAL~~FORM ~~REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934~~10-K

~~For~~ þ ANNUAL ~~the~~REPORT ~~fiscal~~PURSUANT ~~year~~TO ~~ended~~SECTION ~~December~~13 ~~31,~~OR ~~2015.~~15(D) OF THE SECURITIES EXCHANGE ACT OF1934

For the fiscal year ended December 31, 2016.

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT ~~OF 1934~~OF1934

For the transition period from

Commission file number: 000-28731

SUNVESTA, INC.

(Exact name of registrant as specified in its charter)

Florida

98-0211356

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

Seestrasse 97, Oberrieden, Switzerland CH-8942

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: +41 43 388 40 60

Securities registered under Section 12(b) of the Act: none.

Securities registered under Section 12(g) of the Act: common stock (title of class), $0.01 par value.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities ~~Act.~~

Act. Yes o No þ

~~Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.~~

~~Yes~~Indicate ~~oNo~~by þcheck mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the

~~Indicate~~Act. byYes ~~check~~o No ~~mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities~~þ

~~Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such~~

~~reports), and~~ Indicate by check mark whether the registrant (21) has ~~been subject~~ filed all reports required to ~~such filing requirements for~~ be filed by Section 13 or 15(d) of the ~~past 90 days. Yes þNo o~~

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 þ No o



Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every

Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) ~~during~~

during the preceding 12 months (or for such shorter period that the registrant was required to submit and post ~~such files~~suchfiles).

Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not

contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements

incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o



Indicate by check mark ~~whether~~if disclosure ~~the~~of delinquent filers ~~registrant is a large accelerated filer, an accelerated~~pursuant ~~filer,~~to Item ~~a non~~405 of Regulation S-~~accelerated~~K (§ ~~filer,~~229.405 ~~or a~~of ~~smaller~~this chapter) is

~~reporting~~not ~~company.~~contained ~~See~~herein, ~~the~~and ~~definitions~~will ofnot ~~“large~~be ~~accelerated filer~~contained,” ~~“accelerated~~to ~~filer”~~the ~~and~~best ~~“smaller~~of ~~reporting~~registrant’s ~~company”~~knowledge, in ~~Rule~~definitive proxy or information

~~12b-2~~statements incorporated by reference in Part III of ~~the~~this ~~Exchange~~Form ~~Act.~~10-K ~~Smaller~~or ~~reporting~~any ~~company~~amendment þto this Form 10-K. o



Indicate by check mark whether the registrant is a ~~shell company (as defined in Rule 12b~~ large accelerated filer, an accelerated filer, a non-~~2 of the Act). Yes oNo þ~~accelerated filer, or a

~~The aggregate market value of the registrant’s common stock, $0~~smaller reporting company.~~01 par value (~~ See the ~~only class~~ definitions of ~~voting stock)~~ “large accelerated filer, ~~held by non-affiliates~~” “accelerated filer” and “smaller reporting

~~52,634,005 shares was approximately $17,369,221 based on~~ company” in Rule 12b-2 of the ~~based on the average closing bid and ask prices ($0~~ Exchange Act.~~33) for the~~ Smaller reporting company þ

~~common stock on May 13, 2016.~~

~~At May 13, 2016,~~ Indicate by check mark whether the ~~number of shares outstanding of the~~ registrant~~’s common stock, $0.01 par value~~ is a shell company (~~the only class~~ as defined in Rule 12b-2 of ~~voting~~ the Act). Yes o No þ

~~stock), was 95,941,603.~~

The aggregate market value of the registrant’s common stock, $0.01 par value (the only class of voting stock), held by non-

affiliates 22,192,297 shares was approximately $2,441,153 based on the based on the average closing bid and ask prices

($0.11) for the common stock on March 17, 2017.

At March 17, 2017, the number of shares outstanding of the registrant’s common stock, $0.01 par value (the only class of

voting stock), was 101,841,603.

TABLE OF CONTENTS

PART I

Item1.

Business

Item 1A.

Risk Factors

Item 1B.

Unresolved Staff Comments

Item 2.

Properties

Item 3.

Legal Proceedings

Item 4.

Mine Safety Disclosures

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of

Equity Securities

Item 6.

Selected Financial Data

Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

1516

Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

Item 8.

Financial Statements and Supplementary Data

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A.

Controls and Procedures

Item 9B.

Other Information

PART III

Item 10.

Directors, Executive Officers, and Corporate Governance

Item 11.

Executive Compensation

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

3332

Matters

Item 13.

Certain Relationships and Related Transactions, and Director Independence

3433

Item 14.

Principal Accountant Fees and Services

3534

PART IV

Item 15.

Exhibits, Financial Statement Schedules Form 10-K Summary

3635

Signatures

3736

PART I

ITEM 1.

BUSINESS

As used herein the terms “Company,” “we,” “our,” and “us” refer to SunVesta, Inc., its predecessors,

and its subsidiaries, unless context indicates otherwise.

Corporate History

The Company was incorporated in the State of Florida on September 12, 1989~~. On August 24~~, ~~2007,~~and ~~the~~acquired SunVesta

~~Company acquired SunVesta~~ Holding AG (~~hereinafter~~ “SunVesta AG”) as a wholly-owned subsidiary on August 24, 2007. SunVesta AG was

~~SunVesta AG was~~ incorporated in Switzerland on December 18, 2001, and is domiciled in the Canton of Zurich,

~~Zurich,~~ Switzerland. SunVesta AG operates through ~~five~~two wholly owned subsidiaries: SunVesta España Holding

~~— SunVesta~~SL ~~Projects~~(Spain) &which ~~Management~~wholly AGowns SunVesta Costa Rica SA (~~Switzerland~~Costa Rica) the result of the May 2016 merger

~~— SunVesta~~of three Costa ~~Rica~~Rican ~~Limitada~~companies ( SunVesta Costa Rica) Limitada, Rich Land Investments Limitada and

~~— Rich~~Altos ~~Land~~del ~~Investments~~Risco ~~Limitada~~SA) (into Altos del Risco SA which was then renamed SunVesta Costa Rica) SA and

~~— Altos~~SunVesta ~~del~~Projects ~~Risco~~& SAManagement ~~(Costa~~AG ~~Rica)~~.

~~— SunVesta~~The ~~Holding~~Company’s ~~España~~principal SLplace ~~(Spain)~~of business is located at Seestrasse 97, Oberrieden, Switzerland CH-8942

~~The~~and ~~Company’s~~its ~~principal~~telephone ~~place~~number ~~of business~~ is ~~located~~+ at41 ~~Seestrasse~~43 ~~97,~~388 ~~Oberrieden,~~40 ~~Switzerland CH-8942~~60.

~~Our~~The ~~telephone~~Company’s ~~number~~registered agent is +Hubco 41Registered 43Agents ~~388~~Services, ~~40 60~~Inc., located at 155 Office Plaza

~~Our~~Drive, ~~registered~~first ~~agent~~Floor, isTallahassee, ~~Hubco Registered Agents Services~~Florida, ~~Inc~~32301., ~~located~~Hubco’s attelephone ~~155~~number ~~Office~~is ~~Plaza~~(800) ~~Drive, first~~443-8177.

Floor, Tallahassee, Florida, 32301. Hubco’s telephone number is (800) 443-8177.

SunVesta

Business Overview

We are in the business of developing high-end luxury hotels and resorts ~~worldwide.~~in ~~Our~~countries ~~intention~~that isare toemerging as

popular tourist destinations. Our intention is to develop luxury hotel products located in countries such as ~~Costa Rica that are emerging as popular tourist~~

~~destinations.~~Costa ~~Any~~Rica ~~prospective~~that ~~development~~are ~~will~~emerging ~~take~~as ~~into~~popular ~~consideration~~tourist ~~country~~destinations. ~~specific~~Our ~~conditions~~first ~~and~~hospitality development, to be

~~general~~constructed ~~considerations~~on ~~applicable~~20.5 tohectares ~~hospitality~~of ~~properties.~~prime ~~Considerations~~land ~~include~~located ~~political~~in ~~stability~~Guanacaste Province, ~~site~~Costa Rica is the Paradisus

~~suitability,~~Papagayo ~~and~~Bay ~~the~~Resort ~~presence~~& ofLuxury ~~the~~Villas, ~~types of attractions that draw~~ a five-star ~~clientele~~luxury hotel. ~~Once~~All ~~identified~~permitting asfor the project is in place,

~~eligible,~~including apermission ~~prospective~~to ~~development~~incorporate isthe ~~compared~~beachfront ~~against~~adjacent ato ~~validation~~the ~~checklist~~two ~~and~~concessions ~~then,~~into ifthe ~~warranted,~~development

~~subjected~~and toall asignificant ~~substantial~~site ~~due~~work ~~diligence inquiry~~completed. ~~Since~~Vertical ~~location~~construction is ~~key~~expected to ~~the~~commence ~~success~~at ofthe ~~any~~beginning ~~luxury~~of

~~hospitality~~the ~~project~~second quarter of 2017, while the ~~site~~opening of ~~any~~the ~~prospective~~Paradisus ~~development~~Papagayo ~~will~~Bay beResort ~~carefully~~& ~~considered~~Luxury ~~during~~Villas ~~our~~is

~~eligibility~~scheduled ~~process~~for the fourth quarter 2018. The estimated commencement of construction and opening dates

~~Paradisus~~are ~~Papagayo~~subject ~~Bay~~to ~~Resort~~securing &sufficient ~~Luxury~~capital ~~Villas~~commitments to complete the development.

Our first hospitality development, to be constructed on 20.5 hectares of prime land located in Guanacaste

Province, Costa Rica is the Paradisus Papagayo Bay Resort & Luxury Villas, a five-star luxury hotel. All

permitting for the project is in place, including permission to incorporate the beachfront adjacent to the two

concessions into the development and all significant site work completed. Vertical construction is expected

to commence no later than during the third quarter of 2016, while the opening of the Paradisus Papagayo

Bay Resort & Luxury Villas is scheduled for the fourth quarter 2017. The estimated commencement of

construction and opening dates are subject to the procurement of sufficient financing to complete the

development.

Specifications

Paradisus Papagayo Bay Resort & Luxury Villas’ initial specifications are to be as follows:

— eco-luxury all-inclusive resort

— 382-keys

— direct beach access

— Nine restaurants and eleven bars and lounges

— Yhi Spa and Health Club

— Paradisus’ adults-only “Royal Service” level of accommodations

— Paradisus’ “Family Concierge” program

— 19,000 square feet of meeting facilities with the business traveler in mind

Vista Mar

Family Concierge

The Family Concierge will be a family orientated part of the Paradisus Papagayo Bay Resort & ~~Luxury~~

Luxury Villas. The accommodations will be designed to satisfy the needs of the modern family.

The Family Concierge area will include:

— 166 Junior Suites Deluxe

(47* square meters)

— 34 Suites Deluxe

(87* square meters)

— 33 Suites Premium

(93* square meters)

— 6 Handicapped Junior Suites Deluxe

(47* square meters)

— 1 Bridal Suites

(93* square meters)

— 2 Deluxe Suites Presidential

(88* square meters)

— 1 Presidential Suite

(194* square meters)

Room size does not include balconies and terraces.

All ground floor suites will have direct access to swim-up pools. Each of the suites and villas will ~~have a full~~

have a full view of the sea. Family Concierge guests will furthermore have access to restaurants, ~~bars, and lounges.~~

bars, and lounges. The planned Night Club and the Gabi Club will be located near the beach.

Vista Bahia

Royal Service

Our Royal Service will include an extensive range of services such as a butler service, private ~~pools for each~~

pools for each Garden Villa and/or a Jacuzzi in every suite.

The Royal Service area will include:

— 108 Junior Suites Grand Deluxe

(43-60* square meters)

— 2 Junior Suites Grand Deluxe for Handicapped Guests

(53* square meters)

— 6 Grand Master Suites

(87* square meters)

— 2 Deluxe Suites Presidential

(60 square meters)

— 1 Grand Presidential Suite (4 bedrooms)

(145* square meters)

— 20 one or two-bedroom Garden Villas

(91–212* square meters)

* Room size does not include balconies and terraces.

All ground floor suites will have direct access to swim-up pools. Each of the suites and villas will

have a full view of the sea. Royal Service guests will furthermore have access to restaurants, bars,

lounges, fitness equipment, spas and outside massage areas.

All ground floor suites will have direct access to swim-up pools. Each of the suites and villas will have a full

view of the sea. Royal Service guests will furthermore have access to restaurants, bars, lounges, fitness

equipment, spas and outside massage areas.

The Paradisus Papagayo Bay Resort & Luxury Villa’s will feature other highlights including:

— more than 65 private, swim up and resort pools including the world’s second largest ~~Infinity Pool~~

Infinity Pool all within idyllic landscaped grounds

— a wedding chapel with a stunning ocean view

— rain forest walkways that permit guests to experience the flora and fauna of the rain forest

— a multipurpose convention hall with over 2,000 square meters of space that can be utilized ~~as a~~

whole or divided to create smaller meeting rooms

— a full service spa committed to providing for the wellbeing of our guests. The spa will ~~be located~~

be located with a 180-degree sea view within approximately 1,000 square meters that ~~will include 12 large~~

will include 12 large treatment rooms, a hairdresser, relaxation areas, pools, saunas and ~~steam rooms~~

— ~~the~~ sthteea2m0rporoivmaste ~~20 private~~ villas will be located within the Royal Service area of the resort. The ~~present~~

present intention being that these villas will be sold to individuals who will then lease ~~them back to the~~

them back to the resort when not occupied by the owners.

Management

Overall project development is led by ~~Josef~~Hans ~~Mettler~~Rigendinger, our ~~Chief~~Chairman ~~Executive~~of ~~Officer,~~the ~~Charles~~Board ~~Fessel,~~and ~~Project~~Chief

Executive Officer, Charles Fessel, Project Director Paradisus Papagayo Bay Resort & Luxury Villas~~, Hans Rigendinger, Chairman of the Board and~~

~~Chief Operating Officer of SunVesta AG~~ and Ernst Rosenberger, the Company’s Corporate Controller. The lead architect is Ossenbach,

~~lead architect is Ossenbach,~~ Pendones & Bonilla, one of Costa Rica’s largest architectural offices with over 45 architects and

~~45 architects and~~ designers. Civil engineering services are provided by DEHC Engineers and structural engineering

~~engineering~~ services by IEAC. Landscape architects are TPA and interior designers are led by ~~Concreta Srl.~~Laboratorio

~~Resort management is to be provided by Melía Hotels International (“Melía”)~~Quattro. ~~“Paradisus” is Meliá’s~~

~~five-star~~Resort ~~all-inclusive~~management ~~luxury hotel brand that~~ is ~~well~~to ~~recognized~~be inprovided ~~the~~by ~~hospitality~~Melía ~~industry~~Hotels ~~around~~International ~~the world~~(“Melía”). “Paradisus” is

~~Melía~~Meliá’s ~~was~~five-star ~~founded~~all-inclusive inluxury ~~1956~~hotel inbrand ~~Palma~~that ~~de Mallorca, Spain and~~ is ~~today~~well ~~one~~recognized ofin the ~~world’s~~hospitality ~~largest resort hotel~~industry

~~chains,~~around asthe ~~well~~world. asMelía ~~Spain’s~~was ~~leading~~founded ~~hotel~~in ~~chain~~1956 ~~for~~in ~~business~~Palma orde ~~leisure.~~Mallorca, ~~The~~Spain ~~company~~and ~~currently~~is ~~offers~~today ~~more~~one of the

~~than~~world’s ~~300~~largest ~~hotels~~resort inhotel 26chains, ~~countries~~as ~~over~~well ~~four~~as ~~continents~~Spain’s ~~under~~leading ~~its~~hotel ~~Gran~~chain ~~Sol~~for ~~Melía,~~business ~~Sol~~or ~~Melía, ME by Sol Melía,~~leisure.

~~Innside~~Melía byoffers ~~Sol~~more ~~Melía,~~than ~~Tryp,~~300 ~~Sol~~hotels ~~Melía,~~in ~~Sol~~26 ~~Melía~~countries ~~Vacation~~over ~~Club,~~four ~~and~~continents ~~Paradisus~~under ~~brands.~~its ~~The~~Gran ~~Paradisus~~Sol ~~brand~~Melía,

~~represents~~Sol ~~all-inclusive~~Melía, ~~luxury~~ME ~~resorts~~by ~~with~~Sol ~~hotels~~Melía, inInnside ~~Mexico~~by ~~and~~Sol ~~the~~Melía, ~~Dominican~~Tryp, ~~Republic.~~Sol Melía, Sol Melía Vacation Club, and

~~Since~~Paradisus ~~the~~brands. ~~completion~~The ~~date for the~~ Paradisus ~~Papagayo~~brand ~~Bay~~represents ~~Resort~~all-inclusive &luxury ~~Luxury~~resorts ~~Villas~~with ~~development~~hotels isin ~~now~~Mexico

~~anticipated~~and ~~for~~ the ~~fourth~~Dominican ~~quarter of 2017, the Company is in the process of reaching an agreement to further~~Republic.

~~amend~~Since the ~~management~~completion ~~agreement~~date ~~with~~for ~~Meliá~~the ~~dated~~Paradisus ~~August~~Papagayo ~~18,~~Bay ~~2014.~~Resort ~~The~~& ~~amended~~Luxury ~~agreement~~Villas ~~presently~~development has

~~stipulates~~been ~~that~~delayed ifto the ~~Papagayo~~fourth ~~Bay~~quarter ~~Resort~~of &2018, ~~Luxury~~the ~~Villa’s~~Company isreached ~~not~~an ~~completed~~agreement bydated ~~February~~April 1528, 2016, ~~and if~~

anto ~~extension~~amend ~~date~~the isoriginal ~~not~~agreement ~~agreed,~~with ~~then~~ Meliá ~~could~~dated ~~terminate~~March ~~the~~8, ~~management~~2011. ~~agreement~~The ~~and~~current ~~cause~~agreement ~~the~~stipulates

~~Company to pay a penalty of $5 million. Even though~~ the ~~anticipated~~following ~~completion~~major ~~date is beyond that agreed~~conditions:

~~in the most recent amended agreement the Company believes that~~ a ~~new agreement will be reached with~~.

~~Meliá~~New ~~to extend the~~ completion date: toSeptember ~~the~~15, ~~fourth~~2018 ~~quarter~~(subject ofto ~~2017.~~force majeure)

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 Owner shall pay

the Manager a daily amount of $ 2,000 as liquidated damages.

Should the completion not occur by November 15, 2018, and should the parties to the

management agreement not agree to an extension, the Company will be obligated to pay

Meliá $5,000,000 as liquidated damages.

~~Dated~~Additional ~~April 27, 2016, a seventh addendum was signed between the Company and Melia with the following~~Concessions

~~major~~The ~~conditions:~~Company entered into a Purchase and Sale Agreement dated April 24, 2013, with Meridian IBG,

aInc. ~~New~~, ~~completion~~(“Meridian”) ~~date:~~to ~~September~~purchase ~~15,~~Marina ~~2018~~Rose Ltda. (~~subject~~“Marina toRose”), ~~force~~a ~~majeure)~~Costa Rican company that held

~~b. Should~~certain ~~the~~concessions ~~completion~~located ~~not~~in ~~occur~~the byGulf ~~September~~of 15Papagayo, ~~2018~~Guanacaste ~~and~~Province, ~~should~~Costa ~~the~~Rica ~~Parties not have agreed in~~(“Meridian

~~writing~~Agreement”) anfor ~~extension~~$17,500,000. toOne ~~such~~of ~~date,~~the ~~after~~concessions ~~September~~lies ~~15,~~adjacent ~~2018~~to the ~~Owner~~SunVesta ~~shall~~Costa ~~pay~~Rica ~~the Manager a~~SA

~~daily~~concessions ~~amount~~(La ofPunta) ~~USD~~and ~~2,000~~the asother ~~liquidated~~is ~~damages~~in close proximity. The Meridian Agreement caused the

~~c. Should~~Company ~~the~~to ~~completion~~enter ~~not~~into ~~occur~~a byPurchase ~~November~~and ~~15,~~Sale ~~2018,~~Agreement ~~the~~dated ~~manager~~April ~~shall~~24, be2013, ~~entitled~~with toRBAT ~~terminate~~Costa Rica

~~the~~LLC, ~~agreement~~an ~~unless~~entity ~~the~~controlled ~~Parties~~by ~~agree~~Varde inInvestment ~~writing~~Partners toLP ~~extend~~(“Varde”) ~~such~~to ~~date.~~pay ~~The~~$8,000,000 ~~owner~~of ~~shall~~the ~~be obliged to~~purchase

~~pay~~price ~~the~~payable ~~manger~~to anMeridian ~~amount~~to ofVarde ~~USD~~(“Varde ~~5,000,000~~Agreement”). asVarde ~~liquidated~~delivered ~~damages~~a ~~solely~~notice toof ~~compensate~~termination of the

~~Manager.~~Varde Agreement to the Company on January 4, 2014, and the Company noticed cancellation of the

~~Additional~~Meridian ~~Concession~~Agreement ~~Properties~~to Meridian on February 24, 2017.

OnThe ~~April~~Meridian ~~20,~~Agreement ~~2012,~~entitled the Company ~~entered~~to ~~into~~reimbursement anfor ~~agreement~~all ~~with~~amounts ~~Meridian~~paid ~~IBG (“Meridian”),~~ as ~~amended~~deposits against

onthe ~~November~~purchase ~~13,~~of ~~2012,~~Marina ~~and~~Rose ~~replaced~~less ona ~~May~~liquidated 7,damages ~~2013,~~penalty toof ~~purchase~~5% ~~two~~on ~~additional~~providing ~~concession~~notice ~~properties~~of incancellation.

~~Polo~~The ~~Papagayo,~~Varde ~~Guanacaste,~~Agreement ~~comprised~~entitled ofthe ~~approximately~~Company ~~230,000~~to ~~square~~reimbursement ~~meters~~ for ~~$17,500,000.~~all ~~One~~amounts ofpaid as deposits minus a

~~the~~non-refundable ~~concessions~~payment ~~lies~~of ~~adjacent~~$300,000 toand ~~the~~a ~~existing~~5% ~~concessions~~liquidated ~~(La~~damages ~~Punta)~~penalty ~~and~~on ~~the~~receiving ~~other~~notice ~~is in close proximity.~~of

termination. The Company ~~had~~has ~~paid~~delivered ~~down-payments~~notice ~~on the purchase~~ of ~~these~~its ~~properties~~claims offor ~~$2,669,816~~reimbursement asto ofthe ~~December~~respective parties.

31, 2015, and is in discussions with Meridian regarding an amendment to the agreement. Should the

Company not be successful in obtaining an amendment to the agreement, it would have to write-off

$300,000 of the purchase price that has already been paid to Meridian in addition to a 5% penalty. The

potential penalty is $50,000 as of December 31, 2015.

Swiss Hospitality Project

~~OnSeptember~~The ~~19, 2016, the~~ Company signed an option agreement ~~for~~dated ~~the~~September ~~acquisition of four existing hotels in the Canton of Graubünden~~19, ~~Switzerland. The properties comprise an aggregate of 141 rooms. The consideration for this down payment is $302~~2015,~~267,~~ ~~which amount was paid on October 25, 2015. Should the transaction not close before a datethat is yet~~ to beacquire ~~renegotiated~~four ~~then~~existing ~~the consideration will not be refundable. In the event that the transaction does close then this consideration will be allocated to the total purchase price for the~~ hotels. in

the Canton of Graubünden, Switzerland. Consideration of CHF 300,000 was paid for the option. On May

10, 2016, the Company, QuadEquity Holdings AG (“QuadEquity”) and the seller concluded an

agreement, by which QuadEquity assumed all of the Company’s rights and obligations from the original

contract, in exchange for which assumption QuadEquity paid the Company the amount of $302,000 (CHF

300,000) on June 1, 2016.

Finance

The anticipated completion of the Paradisus Papagayo Bay Resort & Luxury Villas in the fourth quarter of

~~2017~~of 2018 will require a net investment of approximately $192 million (excluding non-recuperated overhead

expenses), of which approximately $6166 million has been expended as of December 31, ~~2015~~2016. We ~~expect~~aim to

realize a minimum of $140 million in new funding over the next twelve months. New funding over the ~~next~~

next twelve months is expected to be raised from debt financing through bonds, shareholder loans and, if

necessary, the guaranty agreement borne by certain principal shareholders and participants in ~~management.~~

management. Detailed below is a brief description of material debt obligations as of period end.

Bonds

SunVesta AG, has ~~four~~five bond issues outstanding, denominated in either EUR (€) or Swiss Francs (CHF).

EUR (€) Bonds

The Company initiated an unsecured EUR bond offering on December 2, 2013, of up to €15,000,000 in

units of €10,000 that bear interest at 7.25% per annum payable each December 1 over a three-year term ~~that~~

~~matures~~that matured on December 2, 2016. We had realized $76,~~342~~861,~~995~~936 as of ~~the year ended~~ December 31, ~~2014,~~2015 and

$67,~~861~~058,~~936~~966 as of ~~December~~the ~~31,~~maturity ~~2015~~date. ~~(variance~~This ~~due~~bond towas ~~valuation)~~substantially repaid, ~~for~~though aan ~~cumulative~~ amount of $~~6.86 million~~31,541

remained outstanding as of December 31, 2016, pending the ~~date~~receipt of ~~this~~payment ~~report.~~instructions from certain

bondholders. At the date of this report $0 remained outstanding.

The Company initiated a parallel offering of unsecured EUR bonds on December 2, 2013, of up to

€15,000,000 in units of €10,000 that bear interest at 7.25% per annum payable each December 2 over a

three-year term that ~~matures~~matured on December 2, 2016. We had realized $1,~~714~~626,~~991~~695 as of ~~the~~December ~~year ended~~31,

~~December~~2015 ~~31, 2014~~ and $1,~~626~~686,~~695~~789 as of ~~December~~the ~~31,~~maturity ~~2015~~date. ~~(variance~~This ~~due~~bond towas ~~valuation)~~substantially repaid, ~~for~~though aan ~~cumulative~~amount of

~~amount of~~ $~~1.63~~511,805 ~~million~~remained outstanding as of December 31, 2016, pending the ~~date~~receipt of ~~this~~payment ~~report.~~instructions

from certain bondholders. At the date of this report $0 remained outstanding.

Swiss Francs (CHF) Convertible Bonds

The Company initiated a new offering of senior unsecured CHF bonds on October 1, 2015, of up to

CHF 15,000,000 in units of CHF 5,000 that bear interest at 6.00% per annum payable each September

30, over a three-year term that matures on September 30, 2018, which are convertible into shares of

SunVesta Holding AG at CHF 8.00. We had realized $3,015,474 as of December 31, 2016 and

$2,250,048 as of the year ended December 31, 2015.

The Company initiated a parallel offering of senior unsecured CHF bonds on October 1, 2015, of up to

CHF 45,000,000 in units of CHF 5,000 that bear interest at 6.00% per annum payable each September 30,

over a three-year term that matures on September 30, 2018, which are convertible into shares of SunVesta

Holding AG at CHF 8.00. We had realized $34,570,259 as of the year ended December 31, 2016 and

$23,694,423 as of December 31, 2015. Included in these amounts is approximately $6.2 million (CHF

6.32 million), that by agreement with certain bondholders deviated from the standard terms to provide for

repayment by February 28, 2017. As per date of this report, approximately $1.1 million has been repaid,

the remaining amount has been extended until converted into a new planned bond issue during May 2017.

Swiss Francs (CHF) Bonds

The Company initiated ana new offering of senior unsecured CHF ~~bond~~bonds ~~offering~~ on September 121, ~~2011~~2016, of up to ~~CHF 15,000,000 in~~

CHF 20,000,000 in units of CHF 505,000 that bear interest at 76.2550% per annum payable each August ~~31 over a four-year term~~15,

over a four-year term that ~~matured~~matures on August 3115, ~~2015~~2020. We had realized $1015,~~802~~601,~~722~~398 as of the year ~~ended December 31, 2014~~

~~and~~ended ~~$11~~December 31,~~263,765~~ as2016. At the date of this report CHF Bonds in the ~~maturity~~amount ~~date.~~of $16,602,100 were

~~The Company initiated a parallel offering of unsecured CHF bonds on September 1, 2013, of up to CHF~~outstanding.

~~15,000,000~~The inCompany ~~units~~initiated ofa ~~CHF~~new ~~10,000~~parallel ~~that~~offering ~~bear~~of ~~interest~~senior atunsecured ~~7.25%~~CHF ~~per~~bonds ~~annum~~on ~~payable~~September ~~each August 31~~21, ~~over a~~2016,

~~two-year~~of ~~term~~up ~~that~~to ~~matured~~CHF ~~on August 31~~20,000,000 ~~2015.~~in Weunits ~~had~~of ~~realized~~CHF ~~$14~~5,~~709,176~~000 asthat ofbear ~~the~~interest ~~year~~at ~~ended~~6.50% per annum payable each

~~December~~August 3116, ~~2014~~over ~~and~~a four year term that matures on August 15, 2020. We had realized $26961,~~315,110~~595 as of the ~~maturity date.~~

~~The~~year ~~Company~~ended ~~initiated~~December ~~a new offering of senior unsecured CHF bonds on October 1~~31, ~~2015, of up to CHF~~2016.

45,000,000 units of CHF 5,000 that bear interest at 6.00% per annum payable each September 30, over a

three-year term that matures on September 30, 2018 which are convertible into shares of SunVesta Holding

AG at CHF 8.00. We had realized $26,470,395 as of the year ended December 31, 2015.

The Company initiated a new parallel offering of senior unsecured CHF bonds on October 1, 2015, of up to

CHF 15,000,000 units of CHF 5,000 that bear interest at 6.00% per annum payable each September 30, over

a three-year term that matures on September 30, 2018 which are convertible into shares of SunVesta

Holding AG at CHF 8.00. We had realized $2,250,048 as of the year ended December 31, 2015.

Aires International Investment, Inc.

On July 27, 2011, the Company entered into a line of credit agreement with Aires International ~~Investments~~

Investments Inc. (“Aires”), a company owned by Dr. Rӧssler (a director of the Company). The loan ~~agreement was~~

agreement was amended on May 11, 2012 and on June 21, 2012. On October 31, 2013, the line of ~~credit agreement was~~

credit agreement was replaced by a new loan agreement, that included the following conditions:

— All existing loan agreements or credit facilities, including amendments, between the Company

and Aires were cancelled and superseded by a new loan agreement.

— The loans are now due ~~after~~not ~~December 31, 2017 and~~ before December 31, 2020.

— Despite the scheduled repayment date, either party has the option to cancel the loan agreement

with a prior notice period of 90 days, requiring repayment of the loans in full.

— Loan amounts outstanding including any additional amounts and additions are subordinated.

— Interest on the loan amounts is 7.25% per annum, which charge is accrued.

The Company had borrowed $4751,~~198~~473,~~362~~793 from Aires as of December 31, ~~2015~~2016 ~~and~~(including ~~$30,299,312~~accrued ~~as of~~interest

of $4,489,666) and $47,198,362 as of December 31, ~~2014~~2015 (~~both amounts~~ excluding accrued interest) of $6,370,579 that

~~Dr.~~was ~~Max~~recorded ~~Rӧssler~~under accrued expenses as per 31 December, 2015.

~~Over~~Loans ~~the~~from ~~course~~Dr. ofMax ~~2012,~~Rӧssler ~~the~~and ~~Company~~Global ~~entered~~Care ~~into a series of interest free loans that totaled approximately~~AG

~~$800~~During 2016,~~000~~ ~~with~~ Dr. Max ~~Rӧssler,~~Rössler aprovided ~~director~~additional financing of ~~the~~approximately ~~Company~~$16.7 ~~and~~million for a ~~principal of Aires that were initially~~total

~~repayable~~loan inbalance ~~December~~ of ~~2012,~~approximately ~~but were extended through December of 2015~~$17.1 ~~The loans were originally~~million.

~~due~~In ~~either~~April on2016, ~~predetermined~~Global ~~dates~~Care orAG on(a ~~demand,~~related ~~repayable~~party incontrolled ~~cash~~by orDr. inMax aRössler, ~~fixed~~himself ~~number~~board ofmember ~~shares of certain~~and

~~publically~~related ~~traded~~party) ~~entities.~~assumed ~~The~~a ~~Company~~liability ~~had the right~~ of ~~settlement~~CHF ~~and~~4.5 ~~carried~~million ~~the~~from ~~loans~~Aires atInternational ~~their~~Investment ~~fair values~~Inc., (also a

~~which~~related ~~was~~party ~~the~~controlled ~~amount~~by ofDr. ~~cash~~Max ~~paid~~Rössler). inThis ~~without~~CHF ~~consideration~~4.5 ~~for~~million ~~the~~was ~~change~~subsequently insubscribed ~~value of the underlying~~into

~~securities.~~bonds Inof ~~December~~the ~~2015,~~CHF-Convertible DrBond issue. ~~Rössler~~As ~~and~~this ~~the~~conversion ~~Company~~includes ~~settled these loans through~~ a ~~transfer~~significant toconversion aoption,

~~separate~~the ~~debtor~~exchange -is ~~Aires~~treated -as ofan ~~$1,551,669~~extinguishment ~~(CHF~~of ~~1,535,900).~~debt ~~The~~and ~~Company~~an ~~assessed~~amount ~~this~~of ~~debt~~$1,071,317 ~~modification~~has tobeen reclassified

bein anthe ~~extinguishment~~statement ~~under~~of ~~the~~profit ~~guidance~~or ~~prescribed~~loss infrom ~~ASC~~revaluation ~~470-50~~of ~~and~~conversion ~~correspondingly~~feature ~~recognized~~to aextinguishment ~~loss~~of debt.

onIn ~~extinguishment~~June in2016, ~~its~~there ~~statements~~were ofthe ~~comprehensive~~following ~~loss~~changes ~~for~~to ~~$748,466.~~the debt structure:

~~Loan~~- ~~due~~A liability of CHF 2,656,083 was transferred from Dr. Max Rössler to Global Care AG

~~During~~- ~~2014,~~A ~~Global~~liability ~~Care~~of AGCHF ~~loaned~~1.5 ~~the~~million ~~Company~~was ~~$186,398~~transferred ~~(CHF~~from ~~185,000),~~Sportiva ~~which~~participations ~~amount~~ag ~~was~~to ~~repayable~~Global Care AG

on– ~~October~~A ~~31,~~liability ~~2014.~~of ~~The~~CHF ~~loan~~1.4 ~~includes~~million awas ~~fixed~~transferred ~~interest~~from ~~payment~~Global ofCare ~~$20,570~~AG ~~(CHF~~to ~~20,000)~~Dr. AsMax ~~of the date of~~Rössler.

~~this~~In ~~report~~December 2016, ~~both~~Dr. ~~amounts~~Max ~~are~~Rössler ~~overdue.~~subscribed ~~According~~a toloan in the ~~agreement,~~amount ~~there~~of ~~are~~CHF no15.2 ~~penalties~~million ~~for~~into ~~late~~bonds ~~payment.~~of

~~Receivable~~the ~~from~~new ~~and~~CHF-Bond ~~loans~~issue to2016-2020. ~~Josef~~As ~~Mettler~~this conversion did not represent a significant change of the

Onconditions ~~June~~between ~~30,~~the ~~2015,~~old ~~Aires~~debt ~~International~~and ~~Investments,~~the ~~Inc.~~new ~~absorbed~~debt, the ~~Company’s~~exchange ~~receivables~~was ~~from~~not ~~Mr.~~treated as an extinguishment of

~~Mettler of $1,507,128 (CHF 1,419,412) by crediting the amount due to the Company against the amount~~debt.

~~due~~Loans ~~from~~to the ~~Company~~late toJosef ~~Aires. As of December 31, 2015, there is a payable to Mr.~~ Mettler ~~of $70,135~~

~~(CHF~~On 69September 12,~~609).~~ 2016, Josef Mettler, the Company’s former Chief Executive officer, passed away and

~~For~~companies ~~the~~formerly ~~year~~owned ~~ended~~by ~~December~~him ~~31,~~are ~~2014,~~no ~~the~~longer ~~amount~~related ~~borrowed~~parties byto the ~~Company~~company. ~~became~~As aof ~~loan~~December ~~receivable to~~31,

~~the~~2016, ~~Company~~there ofare ~~$1,455,214.~~no Inreceivables and payables to the ~~third~~late ~~and~~Josef ~~fourth~~Mettler. ~~quarters~~As of ~~2014~~December 31, ~~Aires~~2015, ~~absorbed~~there ~~the Company's~~was

~~receivables~~a ~~from~~payable to Mr. Mettler byof ~~crediting~~$70,135 ~~the~~(CHF ~~amount due to the Company against the amount due from the~~69,609).

~~Company~~Current toaccount ~~Aires.~~Sportiva participations ag (a Josef Mettler company)

~~Receivables from 4f capital AG~~For the year ended December 31, 2016, the Company owed nil to Sportiva participations ag. As of

~~For the year ended~~ December 31, ~~2014~~2015, the ~~amount~~payable ~~owed~~balance byamounted ~~the~~to ~~Company~~$528,660 ~~became~~(CHF a524,695). ~~receivable~~The toamount ~~the~~due to

~~Company~~Sportiva ~~for~~Participations ~~$1,142,681~~AG ~~from~~carried 4fan ~~capital~~interest agrate of 3%.

~~During~~Loan ~~the~~from ~~third~~Blue ~~and~~Dot ~~fourth~~SA ~~quarters~~(formerly ofDIA ~~2014, Aires absorbed the Company's receivable from 4f capital ag in~~S.A)

~~the amount of $1~~On March 8,~~142~~ 2013,~~682 by crediting~~ the ~~amount due to the~~ Company ~~against the amount due from the~~ entered into an interest free loan agreement with Blue Dot SA

~~Company~~(formerly toDIA ~~Aires~~SA) in connection with the purchase of the land concession for the Paradisus Papagayo

~~For~~Bay ~~the~~Resort ~~year~~& ~~ended~~Luxury ~~December~~Villas ~~31,~~project ~~2015,~~held ~~there~~by ~~were~~Altos nodel ~~such~~Risco ~~transactions~~SA. The terms of the loan agreement were

~~Current~~amended ~~account~~on ~~Sportiva~~March ~~participations~~16, ag2015, to extend the due date for said payable until March 2016.

~~For~~On April 21, 2016, the ~~year~~Company ~~ended~~signed ~~December~~a ~~31,~~new ~~2015~~agreement, ~~the~~which ~~Company~~stipulated ~~borrowed~~new ~~approximately~~payment $2terms.8 ~~million~~The ~~and repaid~~total

~~approximately~~amount of $2.3,000,000 ~~million~~is ~~resulting~~now repayable in afour ~~payable~~quarterly asinstallments of ~~December 31, 2015, of~~ $~~528~~500,~~660~~000 ~~(CHF 524~~each,~~695)~~ tostarting on

~~Sportiva~~August ~~participations~~21, ag2016. ~~The amount due to Sportiva participations ag carries an interest rate of 3%.~~

~~DIA~~On SSeptember 21, 2016, the Company signed a new agreement, which stipulated new payment terms.A.

OnThe ~~March~~total 8,amount ~~2013~~of $2,000,000 ~~the~~is ~~Company~~now ~~entered~~repayable ~~into~~in anfour ~~interest~~quarterly ~~free~~installments ~~loan~~of ~~agreement with DIA S.A. for~~ $2500,000 each,~~000~~

~~payable~~starting on ~~March~~November 821, ~~2014, in connection with the purchase of land concession being part of the Paradisus~~2016.

~~Papagayo~~As ~~Bay~~of ~~Resort~~December &31, ~~Luxury~~2016, ~~Villas project from Altos held in~~ the ~~name~~outstanding ofbalance ~~Altos~~amounts ~~del~~to ~~Risco S~~$1,500,000.~~A. The~~

terms of the loan agreement were amended on March 16, 2015, to extend the due date for said payable until

March of 2016. The amounts due to Altos had not been paid as of the filing date of this report.

Subsequent to the balance sheet date the parties agreed on new payment terms. They provide for four equal

quarterly payments of USD 500,000 each, the first one being due by August 31, 2016.

Timeline

Our expected timeline for developing the Paradisus Papagayo Bay Resort & Luxury Villas has been

extended due to delays associated with administrative hurdles and securing necessary financing for ~~the~~

the development as follows:

— commence onsite vertical construction inat the ~~third~~beginning of the second quarter of ~~2016~~2017

— complete construction in the fourth quarter of ~~2017~~2018

— handover to Melía in the fourth quarter of ~~2017~~2018

Competition

Three key factors have been taken into consideration when defining our hotel competitors in relation ~~to the~~

to the Paradisus Papagayo Bay Resort & Luxury Villas:

— the proximity of competitors to our location in Guanacaste Province, Costa Rica

— the consumption habits of prospective clientele

— the ability to compete based on product similarity in relation to service standards, ~~facilities,~~

facilities, the availability of equipment and the number or variety of services offered.

Based on our criteria we have determined that our prospective competitors are those characterized as

five- star holiday resorts in geographic proximity to our planned location.

Luxury Hotel Resorts

We distinguish between primary and secondary competitors.

Primary competition in Guanacaste Province is comprised of the following properties:

— Four Seasons Peninsula Papagayo

— JW Marriot Guanacaste

— Hilton Papagayo Costa Rica

— Westin Golf Resort & Spa Playa Conchal

— Andaz Peninsula Papagayo Resort

— Dreams Las Mareas Costa Rica

The closest direct and most prominent competition for our Guanacaste property will be the Four Seasons

Hotel.

All of our primary competitive establishments have common characteristics with a standard vacation ~~resort~~

resort format with much more equipment and many more facilities to offer than hotels based in a city such ~~as:~~

~~— several modules/ lodging buildings around central services~~as:

— ~~ample~~several ~~water~~modules/ ~~areas~~lodging ~~with~~buildings ~~outdoor~~around ~~swimming~~central ~~pools, areas for hammocks and sun bathing~~services

— ~~children~~ample ~~and~~water ~~entertainment~~areas ~~activity~~with outdoor swimming pools, areas for hammocks and sun bathing

— ~~restaurant~~children ~~pool areas with bars~~ and ~~service~~entertainment ~~throughout~~activity ~~the day~~areas

— ~~large~~restaurant ~~lounges~~pool ~~for~~areas ~~breakfast,~~with ~~lunch~~bars and ~~dinner~~service ~~services~~throughout the day

— ~~alternative~~large ~~gastronomic~~lounges orfor ~~theme~~breakfast, ~~restaurants~~lunch and dinner services

— ~~sports~~alternative ~~areas~~gastronomic ~~(basketball~~or ~~court,~~theme ~~tennis courts, golf course, soccer field)~~restaurants

— ~~Fitness~~sports ~~Center~~areas (basketball court, ~~Wellness~~tennis ~~Center~~courts, ~~and~~golf ~~Spa~~course, ~~Areas~~soccer field)

~~Our~~—Fitness ~~competitors~~Center, ~~are~~Wellness ~~managed~~Center byand ~~leading~~Spa ~~international chains or experienced domestic companies.~~Areas

~~Despite~~Our ~~what~~competitors ~~might~~are bemanaged ~~construed~~by asleading ~~obvious~~international ~~obstacles~~chains toor ~~entry,~~experienced ~~including~~domestic ~~robust~~companies. ~~competition within the~~Despite

~~hospitality~~what ~~industry~~might inbe ~~Guanacaste~~construed ~~Province,~~as weobvious ~~believe~~obstacles ~~that~~to ~~our~~entry, ~~development~~including ofrobust ~~the~~competition ~~Paradisus~~within ~~Papagayo~~the hospitality

~~Bay~~industry ~~Resort~~in &Guanacaste ~~Luxury~~Province, ~~Villas~~we ~~will~~believe bethat ~~successful~~our ~~based~~development ~~principally~~of on the ~~following~~Paradisus ~~factors:~~Papagayo Bay Resort

~~— the~~& ~~beach~~Luxury ~~front~~Villas ~~location~~will ofbe successful based principally on the ~~development~~following factors:

— ~~environmental~~the ~~integrity~~beach infront ~~project~~location ~~development~~of ~~and~~the ~~operation~~development

— ~~the~~environmental ~~reputation~~integrity ~~of the Paradisus brand~~ in ~~the~~project ~~region~~development and ~~internationally~~operation

~~Further,~~—the wereputation ~~believe~~of ~~that~~the weParadisus ~~have~~brand ~~certain~~in ~~distinctive~~the ~~competitive~~region ~~advantages~~and ~~over all or many of our~~internationally

Furthermore, we believe that we have certain distinctive competitive advantages over all or many of our

competitors including:

— location in one of the most appealing areas worldwide

— outstanding product with unique features

— superior project development and management agreements that maximize resources and

broaden market penetration

We believe that all of the factors detailed above, in combination with the dedication of our personnel and

partners, will enable us to be competitive in developing the Paradisus Papagayo Bay Resort & Luxury

Villas.

Marketability

Costa Rican Tourism

Costa Rica has a long track record of political stability along with a well-established outward-looking

growth model. The government has adopted a proactive policy of fostering higher-end beach resort ~~tourism,~~

tourism, mainly through fiscal incentives for investors. As such, Costa Rica is benefiting from a ~~burgeoning hotel~~

burgeoning hotel development pipeline and is emerging as a regional hotel investment hot-spot, including ~~the development of~~

the development of upscale and luxury hotels. This environment provides much fertile ground for real ~~estate investors and~~

estate investors and developers to expand their search for profitable growth. Foreign tourism investment ~~is projected to continue~~

is projected to continue this upward trend over the next several years as demand outpaces the existing ~~lodging and tourism services~~

lodging and tourism services supply.

Costa Rica stands as the most visited nation in the Central American region. The Costa Rican Tourism

Institute (“ICT”) is responsible for collecting information on the number and economic impact of tourists

that visit Costa Rica. ICT also collects information related to hotel rooms and the country of origin for

tourists arriving in Costa Rica. Records produced by ICT detail that the number of tourists visiting Costa

Rica reached 2.6693 million in ~~2015~~2016, representing an increase of 510 % over ~~2014~~2015.

The 2015 Travel and Tourism Competitiveness Index (“TTCI”), indicates that Costa Rica reached the

42^ndplace in the world ranking (up 5 places since 2013), classified as the second most competitive among

Latin American countries after Mexico, and ranking sixth in the Americas. Focusing solely on the sub ~~index~~

index measuring natural and cultural resources, Costa Rica ranks 26th worldwide, and 5th when ~~considering just~~

considering just the natural resources criteria. The TTCI report also notes Costa Rica's other attractions ~~such as tourism~~

such as tourism services infrastructure ranking 32nd, qualification of the labour force ranking 37th, ~~business environment~~

business environment ranking 47th and air transport infrastructure ranking 47th in the world.

ICT has determined that the most relevant origin markets in terms of demand are the United States, ~~Canada~~

Canada and Mexico which generated approximately 5052% (~~2014~~2015: 4950%) of all tourists followed by Central ~~American~~

American countries including Guatemala, El Salvador, Panama and Nicaragua, which generated ~~approximately 27%~~

approximately 25% of the tourists arriving in Costa Rica in 2015. According to official data, the United ~~States remains the~~

States remains the largest source of tourists to Costa Rica with a total of 1,~~077~~233,~~044~~277 in ~~2015~~2016 (~~2014~~2015: ~~997,262), representing~~

401,077,044 ), representing 42.51% (~~2014~~2015: 3940.5%) of all visitors. Tourists visiting Costa Rica from European ~~countries represented~~

countries represented approximately 15% of all tourists in ~~2015~~2016 led by ~~Spain~~the United Kingdom, Germany, ~~France Italy.~~

Spain, France and Italy.

Geography

Costa Rica’s Guanacaste Province is bound in the east by a group of vegetated volcanoes and the west by

by beaches on the Pacific Ocean. The province contains heavily forested areas and seven national parks, ~~and~~

and includes the Area de Conservación Guanacaste World Heritage Site. Guanacaste is the northern-~~most~~

most province of Costa Rica, with the Papagayo Bay a 40-minute flight from San Jose and a half hour ~~car transfer~~

car transfer to the beach. Tourism has emerged as the most lucrative revenue source in the province. ~~Tourists to the~~

Tourists to the Guanacaste Province of Costa Rica are most often motivated by a desire for favorable ~~weather and beach~~

weather and beach conditions. Active tourism – those activities including canopying, trekking, visiting ~~volcanoes and flora or~~

volcanoes and flora or fauna watching – are secondary considerations.

We believe that our development will be well located as a hospitality property.

Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements and Labor Contracts

The Company holds no patents, trademarks, licenses, franchises, or concessions other than having

registered its “SunVesta” trademark in various countries.

The Company is not subject to any labor contracts.

Governmental and Environmental Regulation

Our operations are subject to a variety of national, federal, provincial and local laws, rules and regulations

relating to, among other things, worker safety and the use, storage, discharge and disposal of

environmentally sensitive materials. We believe that we are in compliance in all material respects with all

laws, rules, regulations and requirements that affect our business. Further, we believe that compliance ~~with~~

with such laws, rules, regulations and requirements do not impose a material impediment on our ability to

conduct business.

Costa Rican National Environmental Office

The Costa Rican National Environmental Office (“SETENA”) created by the Organic Environmental ~~Law~~

Law is tasked with administering the process of reviewing and evaluating environmental impact ~~considerations.~~

considerations. Local municipal governments often require a ruling from SETENA before issuing ~~building permits. Any~~

building permits. Any larger project in Costa Rica must apply for an Environmental Impact Statement ~~from SETENA before~~

from SETENA before development is permitted. Delays associated with this process would have a ~~negative impact on the~~

negative impact on the Company’s project in Guanacaste Province.

The Company is not aware of any existing environmental impact issues that could have a material ~~effect on~~

effect on the development of the Paradisus Papagayo Bay Resort & Luxury Villas.

Costa Rican Sustainable Development

Costa Rica is considered as being in the forefront of implementing environmental policies. The ~~country’s~~

country’s national strategies for sustainable development are a broad matrix of policies requiring eco-~~friendly~~

friendly practices, such as Agenda 21. The Agenda 21 process as developed by the 1992 and 2002 Earth ~~Summits is~~

Summits is defined as a participative planning tool in which sectors in the government and civil society ~~concertedly~~

concertedly determine the course to be taken by their communities, regions, or countries in pursuit of ~~sustainable~~

sustainable development. This process and other Costa Rican sustainable development policies could ~~delay or increase~~

delay or increase the cost of the development of the property.

The Company is not aware of any existing environmental impact issues that could have a material ~~effect on~~

effect on the development of the Paradisus Papagayo Bay Resort & Luxury Villas.

Climate Change Legislation and Greenhouse Gas Regulation

Many studies over the past couple decades have indicated that emissions of certain gases contribute to

warming of the Earth’s atmosphere. In response to these studies, many nations agreed to limit ~~emissions of~~

emissions of “greenhouse gases” or “GHGs” pursuant to the United Nations Framework Convention ~~on Climate Change,~~

on Climate Change, and the “Kyoto Protocol” to which Costa Rica is a signatory. Greenhouse gas ~~legislation in Costa Rica~~

legislation in Costa Rica could have a material adverse effect on our business, financial condition, and ~~results of operations.~~

results of operations. The Company is not aware of any existing environmental impact issues that ~~could have a material effect on~~

could have a material effect on the development of the Paradisus Papagayo Bay Resort & Luxury ~~Villas.~~

Villas.

Employees

The Company is a development stage company and currently has ~~four~~six employees at December 31, ~~2015 and~~2016

~~six~~and five employees as of the reporting date. Our management uses consultants, attorneys, and ~~accountants to~~

accountants to assist in the conduct of our business.

ITEM 1A.

RISK FACTORS

Not required of smaller reporting companies.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2.

PROPERTIES

Costa Rican Properties

The Company owns the concession rights for approximately 20 hectares of undeveloped prime land in

Guanacaste Province, Costa Rica. The purchase of the original concession of approximately 8 hectares ~~was~~

was completed for a consideration of $7,000,000. The purchase of the additional 12 hectares was based ~~on an~~

on an agreement dated March 22, 2010, with ~~DIA~~Blue ofDot ~~San~~SA ~~Jose,~~(formerly ~~Costa~~“DIA ~~Rica~~SA”). The total purchase price ~~for the~~

for the concessions was $12,700,000 of which $10,700,000 ~~had~~was ~~been~~ paid as of December 31, 2014,. ~~with the~~The

~~remainder~~remaining of $2,000,000 of the purchase price was converted into an interest free loan ~~due by March of 2016~~. ~~The~~On ~~amounts~~September ~~due to~~21,

~~Altos~~2016, ~~had~~the ~~not~~Company ~~been~~reached ~~paid~~an asagreement ofwith Blue Dot SA to pay the ~~filing~~$2,000,000 ~~date~~due ofin ~~this~~four ~~report.~~quarterly

~~Subsequent~~installments toof ~~the~~$500,000 ~~balance~~each, ~~sheet~~starting ~~date the parties agreed~~ on ~~new~~November ~~payment~~21, ~~terms~~2016. ~~They~~The ~~provide~~initial ~~for~~quarterly ~~four~~payment ~~equal~~has been

~~quarterly~~made ~~payments~~so as of ~~USD~~December ~~500~~31,~~000~~ ~~each~~2016, the ~~first~~outstanding ~~one~~balance ~~being~~was ~~due by August 31~~$1, ~~2016~~500,000.

On April 20, 2012, the Company entered into an agreement with Meridian IBG (“Meridian”), as amended

on November 13, 2012 and replaced on May 7, 2013, to purchase two additional concession properties in

Polo Papagayo, Guanacaste comprised of approximately 230,000 square meters, for $17,500,000. The

Company paid down-payments on the purchase of these properties of $2,669,816 as of December 31, 2015.

Despite the delay in satisfying the purchase price, Meridian has confirmed that the agreement for

completing this purchase and sale is in good order.

Executive Offices

We maintain our offices at Seestrasse 97, Oberrieden Switzerland CH-8942 on a leasehold basis with an

annual rental expense of $130,000 per annum through December 31, 2017.

The Company recognized lease expenses of $130,000 and $130,000 for the years ended December 31, ~~2015~~

2016 and ~~2014~~ 2015, respectively, for the use of these executive offices. We believe that we have sufficient ~~office~~

office space for the foreseeable future in order to pursue the completion of the project described herein.

ITEM 3.

LEGAL PROCEEDINGS

None.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5.

MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER ~~MATTERS,~~

MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company’s common stock is quoted on the OTCQB, a service maintained by OTC Link under the

symbol “SVSA.” Trading in the common stock over-the-counter market has been limited and sporadic ~~and~~

and the quotations set forth below are not necessarily indicative of actual market conditions. These prices ~~reflect~~

reflect inter-dealer prices without retail mark-up, mark-down, or commission, and may not necessarily ~~reflect~~

reflect actual transactions. The high and low bid prices for the common stock for each quarter of the years ~~ended~~

ended December 31, ~~2015~~2016 and ~~2014~~2015 are as follows:

Year

Quarter Ended

High

Low

2016

December 31

$0.14

September 30

$0.15

June 30

$0.32

March 31

$0.35

2015

December 31

$0.25

$0.15

September 30

$0.25

$0.24

June 30

$0.25

$0.14

March 31

$0.16

$0.06

2014

December 31

$0.07

$0.05

September 30

$0.06

June 30

$0.05

$0.10

March 31

$0.10

$0.07

Capital Stock

The following is a summary of the material terms of the Company’s capital stock. This summary is ~~subject~~

subject to and qualified by our articles of incorporation and bylaws.

Common Stock

As of December 31, ~~2015~~2016, there were 8991 shareholders of record holding 95101,~~941~~841,603 shares of fully paid ~~and~~

and non-assessable common stock of the 200,000,000 shares of common stock, par value $0.01, ~~authorized.~~

authorized. The Board of Directors believes that the number of beneficial owners is greater than the ~~number of record~~

number of record holders because a portion of our outstanding common stock is held in broker “street ~~names” for the benefit~~

names” for the benefit of individual investors. The holders of the common stock are entitled to one vote ~~for each share held of~~

for each share held of record on all matters submitted to a vote of stockholders. Holders of the common ~~stock have no preemptive~~

stock have no preemptive rights and no right to convert their common stock into any other securities. ~~There are no redemption or~~

There are no redemption or sinking fund provisions applicable to the common stock.

Preferred Stock

As of December 31, ~~2015~~2016, there were no shares issued and outstanding of the 50,000,000 shares of

preferred stock authorized. The par value of the preferred stock is $0.01 per share. Our preferred stock ~~may~~

may have such rights, preferences and designations and may be issued in such series as determined by the ~~Board~~

Board of Directors.

Stock Options

As of December 31, ~~2015~~2016, wethere ~~have~~were ~~granted 32~~20,000,000 outstanding stock options outstanding, pursuant to the ~~2013~~

2013 SunVesta Stock Option Plan, to purchase shares of our common stock at an exercise price of $0.05 ~~that vest~~

~~according~~per ~~to the realization of specific milestones~~share, none of which have vested as of year-end. The Company had 32,000,000 stock options

outstanding as of December 31, 2015, of which 12,000,000 expired in the current period.

Warrants

As of December 31, ~~2015~~2016, we have no outstanding warrants to purchase shares of our common stock.

Dividends

We have not declared any cash dividends since inception and do not anticipate paying any dividends ~~in the~~

in the near future. The payment of dividends on our common stock is within the discretion of the ~~Board of~~

Board of Directors subject to earnings, capital requirements, financial condition, and other relevant ~~factors including~~

factors including those contractual restrictions related to certain debt obligations and those limitations ~~generally imposed by~~

generally imposed by applicable state law.

Transfer Agent and Registrar

Our transfer agent and registrar is Standard Register & Company, Inc., located at 12528 South 1840 ~~East,~~

East, Draper, Utah 84020 and their phone number is (801) 571-8844.

Purchases of Equity Securities made by the Issuer and Affiliated Purchasers

None.

Recent Sales of Unregistered Securities

~~None.~~On November 8, 2016, the Company authorized the issuance of 5,900,000 shares of restricted common

stock valued at $0.15 a share to certain individuals, earned in connection with either employment

agreements or service to the board of directors, in reliance upon the exemptions from registration

provided by Section 4(2) and Regulation S of the Securities Act of 1933, as amended (“Securities Act)

as follows:

Name

Consideration

Value

Exemption

Josef Mettler (deceased)

3,000,000

Services

$0.15

Section 4 (2)/Reg S

Hans Rigendinger

2,500,000

Services

$0.15

Section 4 (2)/Reg S

José Maria Figueres

200,000

Services

$0.15

Section 4 (2)/Reg S

Howard Glicken

200,000

Services

$0.15

Section 4 (2)

The Company complied with the exemption requirements of Section 4(2) of the Securities Act based on

the following factors: (1) the issuances were isolated private transactions based on service agreements

which did not involve a public offering; (2) the offerees had access to the kind of information which

registration would disclose; (3) the offerees was financially sophisticated; and (4) all of the offerees

serve the Company as either officers or directors or both.

The Company complied with the exemption requirements of Regulation S by having directed no offering

efforts in the United States, by offering securities only to offerees who were outside the United States at

the time of the offering, and ensuring that the offerees to whom the securities were offered and authorized

were non-U.S. offerees with an addresses in a foreign country.

ITEM 6.

SELECTED FINANCIAL DATA

Not required.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other

parts of this current report contain forward-looking statements that involve risks and uncertainties.

Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,”

“plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future

performance and our actual results may differ significantly from the results discussed in the forward-

~~forward-~~looking statements. Factors that might cause such differences include but are not limited to those

discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future

Results and Financial Condition below. The following discussion should be read in conjunction with our

financial statements and notes thereto included in this current report. Our fiscal year end is December 31.

Discussion and Analysis

Our plan of operation through December of ~~2017~~2018 is to ~~commence~~develop the ~~construction~~Paradisus ofPapagayo ~~the~~Bay ~~Paradisus~~Resort &

~~Papagayo Bay Resort &~~ Luxury Villas project, the completion of which will require a total net investment of approximately $192

~~of approximately $192~~ million (excluding non-recuperated overhead expenses and the anticipated $25 million in net proceeds for

~~million in net proceeds for~~ the sale of private villas). We ~~plan~~aim to ~~realize~~secure a minimum of $~~100~~140 million in new funding over the next

~~funding over the next~~ twelve months, ~~and~~though anour ~~additional~~actual ~~$40~~financing ~~million~~requirements inmay ~~funding~~be byadjusted ~~the~~to ~~time~~suit ~~the~~that ~~development~~amount realized.

isNew ~~completed,~~funding ~~though~~over ~~our~~the ~~actual~~next ~~financing~~twelve ~~requirements~~months ~~may~~is beexpected ~~adjusted~~ to ~~suit~~be ~~that~~raised ~~amount~~from ~~realized.~~debt ~~New~~financing through bonds,

~~funding~~shareholder ~~over~~loans and the ~~next~~guaranty ~~twelve~~agreement ~~months~~if ~~is expected to be raised from debt financing through bonds,~~necessary.

shareholder loans and the guaranty agreement.

Results of Operations

During the year ended December 31, ~~2015~~2016, our operations focused on (i) completing earthwork; (ii) ~~seeking~~

~~prospective~~pursuing ~~project~~additional ~~development~~debt ~~partners~~financing; (iii) ~~pursuing~~obtaining ~~additional~~government ~~debt~~approval ~~financing;~~to ~~(iv)~~extend ~~obtaining~~the term of the

~~government approval to extend the term of the~~ concessions; and (viv) ~~obtaining~~securing government approval to include beachfront property adjacent to the

~~beachfront property adjacent to the~~ project~~; and (vi) creating sub-concessions for prospective villa owners~~.

The Company has been funded since inception from debt or equity placements and by shareholders or

partners in the form of loans. Capital raised to date has been used to develop the Costa Rican property

including for the purchase of the land concessions, earthwork, and general and administrative costs.

Comprehensive Losses

The variance in losses over the comparative annual period is reconciled below:

Comprehensive ~~loss~~Loss ~~2014~~2015

4(19,~~482~~218,~~482~~851)

Variances ~~2015~~2016 from ~~2014~~2015

Decrease in general and administrative ~~expenses~~

~~748~~906,~~420~~873 ~~Decrease~~Increase indue ~~consulting~~to ~~expenses~~higher consulting

expenses

expenses, project-related expenses and

expenses related to considering a public

listing in Switzerland. This increase was

overcompensated by negative personnel

costs due to a reversal of share-based

payments for the late Josef Mettler

Increase in impairment expenses

(2,642,556) Impairment attributed to expenses

related to the purchase of additional

concessions in Costa Rica

Increase in interest income

822,~~951~~850 Increase in deposits

~~Increase~~ Decrease in interest ~~expense~~expenses

(1692,~~675)~~764 ~~Increase~~Higher indebt ~~borrowings~~and interest,

~~Increase~~over incompensated ~~amortization~~by ofa ~~debt~~decrease ~~issuance costs~~in

~~(2,499,185) Increase~~amortization inof ~~provisions~~deferred financing cost.

~~Change~~ Decrease in ~~Fair~~loss ~~Value~~on extinguishment of ~~Conversion Feature~~debt

~~386~~6,~~660~~512,812 ~~Decrease~~Less inimpact ~~fair~~from ~~value~~debt ~~of conversion~~extinguishment

~~feature~~in ~~from inception to year end~~2016.

~~Loss~~Change onin ~~extinguishment~~fair values of ~~debt~~conversion features

(72,~~678~~113,~~080)~~826 ~~Comprised~~Primarily ofdecrease ~~loss~~in ~~due~~time tovalue ~~repayment~~ of

~~loans~~conversion ~~from Dr. Max Rössler ($748,000)~~feature

~~and~~Increase in ~~loss~~unrealized onexchange ~~extinguishment associated~~gains

~~with~~1,316,508 Currency ~~settlement of matured old CHF bonds~~fluctuations

~~with~~Increase ~~substantially~~in ~~different~~other ~~convertible~~income / (expenses)

~~CHF bonds~~ ($6153,~~929,000~~346) Increase in expenses

~~Decrease~~Income ~~in exchange gains~~Taxes

(21,~~652,223)~~151 ~~Decrease~~No inincome ~~exchange~~taxes ~~gain~~in ~~due to less~~2016

~~volatility~~Decrease in ~~the~~foreign ~~value~~currency oftranslation ~~the EUR and CHF~~losses

in666,078 Currency ~~relation to the value of USD.~~fluctuations

~~Increase~~Decrease in ~~other~~actuarial ~~expenses~~gains / losses

~~(92~~39,~~954)~~151 ~~Increase~~Changes into ~~miscellaneous~~actuarial ~~expenses~~assumptions

Income taxes

(1,151) Immaterial

Decrease in foreign currency translation gain

(2,955,132) Decrease in foreign currency fluctuations

in 2015 when compared to previous

period

Total variances

~~(14~~9,~~736~~476,~~369)~~111

Comprehensive ~~loss~~Loss ~~2015~~2016

19(9,~~218~~742,~~851~~739)

We did not generate revenue during this period and we expect to continue to incur losses through the ~~year~~

year ended December 31, ~~2016~~2017.

Income Tax Expense (Benefit)

The Company has a prospective income tax benefit resulting from a net operating loss carry-forward ~~and~~

and startup costs that will offset future operating profits.

Capital Expenditures

The Company expended a significant amount on capital expenditures for the period from inception to

December 31, ~~2015,~~2016 inand ~~connection~~expects ~~with~~to ~~the~~incur ~~purchase~~future ofcash ~~land~~outflows ~~that~~on ~~includes~~capital aexpenditure ~~hotel~~as ~~concession~~discussed in ~~Costa Rica~~

~~and~~the ~~expects~~"Liquidity toand ~~incur~~Capital ~~future~~Resources" ~~cash~~and ~~outflows on capital expenditure as discussed in~~ the "~~Liquidity~~Going ~~and~~Concern" ~~Capital~~paragraphs below.

~~Resources" and the "Going Concern" paragraphs below.~~17

Liquidity and Capital Resources

The Company has been in the development stage since inception and has experienced significant changes in

in liquidity, capital resources, and stockholders’ equity.

As of December 31, ~~2015~~2016 and ~~2014~~2015, the following were the working capital items:

December 31, ~~December 31,~~

December 31,

2016

2015

2014

Current assets

Cash and cash equivalents

806,440

111,830

14,347

Receivable from related parties

49,292

19,945

27,163

Other assets

456,099

158,574

289,156

Total current assets

1,311,830

290,349

330,666

Current liabilities

Bank liabilities

179,313

153,375

Accounts payable

3,311,512

8,048,608

6,181,057

Accrued expenses

3,160,723

7,831,247

5,444,514

Notes payable

1,500,000

2,736,912

3,023,759

Notes payable to related parties

307,088

1,130,978

~~1,162,100~~Other liabilities

~~CHF-Bond~~120

~~25,511,898~~Bonds

~~EUR-Bond~~6,687,384

8,~~488~~347,~~631~~717

Total current liability

2814,~~415~~966,~~689~~826

4128,~~476~~274,~~703~~775

Net working capital

(2813,~~125~~654,~~340~~996)

(4127,~~146~~984,~~037~~426)

17As of December 31, 2016 and 2015 the following were the items making up the total stockholders’

~~As of December 31, 2015 and 2014 the following were the items making up the total stockholders’~~ deficit:

December 31, ~~December 31,~~

December 31,

2016

2015

2014

Assets

Current assets

1,311,830

290,349

330,666

Non-current assets

7068,~~002~~354,~~299~~502

5867,~~083~~007,~~516~~090

Total assets

7069,~~292~~666,~~648~~332

5867,~~414~~297,~~182~~439

Liabilities

Current liabilities

2814,~~415~~966,~~689~~825

4128,~~476~~274,~~703~~775

Non-current liabilities

83105,~~141~~872,~~947~~146

3980,~~568~~287,~~568~~652

Total liabilities

~~111~~120,~~557~~838,~~638~~971

81108,~~045~~562,~~271~~427

Total stockholders’ deficit

(51,172,639)

(41,264,988)

~~(22~~The negative working capital of $13,~~631~~605,~~089)~~935 is of immediate concern. However, based on the guaranty

~~The~~signed ~~negative~~by ~~working~~certain ~~capital~~principals, ofthe ~~$28,125,340~~Company is ofconvinced ~~immediate concern~~ that ~~requires~~it ~~the~~can ~~Company~~address toliquidity ~~take~~problems.Net cash

~~significant~~flow ~~action~~used in ~~the~~operating ~~near~~activities ~~term~~for tothe ~~meet~~twelve ~~anticipated~~months ~~cash~~ended ~~needs.~~December ~~Meanwhile~~31, ~~management~~2016, ~~continues~~was to$11,478,901, as

~~believe~~compared ~~that~~to it$6,024,873 ~~can~~for ~~address~~the ~~liquidity~~twelve-month ~~problems~~period asended ~~necessary~~December by31, ~~relying on the guaranty provided by certain~~2015.

~~principals~~The ofCompany expects to use net cash flow in operating activities until the Company. completes the

Net cash flow used in operating activities for the twelve months ended December 31, 2015, was

$6,024,873, as compared to $7,493,010 for the twelve-month period ended December 31, 2014.

We expect to continue to use net cash flow in operating activities until the Company completes the

Paradisus Papagayo Bay Resort & Luxury Villas project, which completion is projected for the fourth

quarter of ~~2017~~2018.

Net cash used in investing activities for the twelve months ended December 31, ~~2015~~2016, was $91,~~178~~737,~~106~~927 as

compared to $79,~~784~~178,~~605~~106 for the twelve-month period ended December 31, ~~2014~~2015. Net cash used in ~~investing~~

~~activities in the current twelve-month period is comprised of receivables from related parties, purchase of~~18

~~property~~investing ~~and~~activities ~~equipment,~~in ~~advance~~the ~~payments~~current totwelve-month ~~subcontractors,~~period ~~and~~is ~~down~~comprised ~~payments~~of ~~for~~receivables ~~property~~from ~~and~~related parties,

~~equipment,~~purchase ~~offset~~of byproperty ~~deposits~~and ~~related~~equipment, toadvance ~~construction~~payments ~~activities~~to subcontractors, and ~~restricted~~down ~~cash.~~payments ~~Net cash used in~~for

~~investing~~property ~~activities~~and inequipment, ~~the~~offset ~~prior~~by ~~comparable~~deposits ~~twelve-month~~related ~~period~~to ~~was~~construction ~~comprised~~activities ofand ~~receivables~~restricted ~~from~~cash. ~~related~~Net cash

~~parties,~~used ~~purchase~~in ofinvesting ~~property~~activities ~~and~~in ~~equipment,~~the ~~deposits~~prior ~~related~~comparable totwelve-month ~~construction~~period ~~and~~was ~~restricted~~comprised ~~cash.~~of receivables

from related parties, purchase of property and equipment, deposits related to construction and restricted

cash.

We expect to continue to use net cash flow in investing activities while in the process of developing the

Paradisus Papagayo Bay Resort & Luxury Villas.

Net cash provided by financing activities for the twelve-month period ended December 31, ~~2015~~2016, was

$1513,~~326~~994,~~185~~449 as compared to $1415,~~618~~326,~~170~~ 185 for the twelve-month period ended December 31, ~~2014~~2015. Net ~~cash~~

cash provided by financing activities in the current twelve-month period is comprised of ~~bank~~proceeds ~~liabilities, notes~~from

notes payable to related parties, ~~notes~~and ~~payable~~proceeds ~~and~~from bond issuances net of commissions, offset by the ~~repayment of~~

repayment of notes payable to related parties, the repayment of ~~outstanding~~bank ~~bonds~~liabilities, ~~debt~~the ~~issuance~~repayment ~~costs, and changes in~~of

~~other~~outstanding ~~debt.~~bonds, ~~Net~~and ~~cash~~the ~~provided~~repayment byof ~~financing~~notes ~~activities~~payable inand ~~the~~other ~~prior~~debt. ~~comparable~~Net ~~twelve-month~~cash ~~period~~provided ~~was~~by financing

~~comprised~~activities ofin ~~bank~~the ~~liabilities,~~prior ~~notes~~comparable ~~payable~~twelve-month toperiod ~~related~~was ~~parties~~comprised of bank liabilities, notes payable, ~~bond issuances net of~~to

~~commissions~~related parties, ~~changes~~notes inpayable, ~~other~~and ~~debt~~proceeds ~~and~~from ~~the~~bond ~~sale~~issuances net of ~~treasury stock~~commissions, offset by the ~~repayment of notes payable~~

~~to related parties, the~~ repayment of ~~notes payable, the repayment of~~ bonds ~~and debt issuance costs~~.

We expect net cash flow provided by financing activities to continue indue ~~order~~to ~~for~~ the ~~Company~~unrealized ~~to secure~~financing

necessary ~~financing~~ to complete the development of the Paradisus Papagayo Bay Resort & Luxury Villas.

Management believes that cash on hand, related party loans and the assurance of the Guaranty Agreement

as described in the going concern paragraph below are sufficient for us to conduct operations over the ~~next~~

next twelve months.

We had ano ~~bank~~formal ~~liability~~lines of ~~$179,313~~credit asor ofother ~~December~~bank ~~31,~~financing ~~2015,~~arrangements ~~which~~as ~~represents~~of aDecember ~~temporary~~31, ~~secured~~2016.

~~overdraft~~We ~~facility~~have ~~bearing~~commitments that include an ~~interest~~award ~~rate~~letter issued in favor of ~~8.9%.~~certain general contractors together

Wewith ~~have commitments for executed~~ purchase orders and related agreements for $57130 million as of December 31, 2016, in connection

~~2015, in connection~~ with the development of the Paradisus Papagayo Bay Resort & Luxury Villas, which commitments are

~~commitments are~~ included in the required estimated net financing of $192 million to complete the project.

~~Most~~We ~~material~~maintain ~~commitments~~a ~~are~~defined ~~not~~benefit ~~contractually~~plan ~~agreed~~that ascovers all of ~~the~~our ~~end~~Swiss ofemployees ~~the~~as ~~period.~~of WeDecember ~~have~~31, ~~cancellable~~2016.

~~commitments~~We tohave ~~Meridian~~no ~~that~~current ~~are~~plans ~~not~~for ~~included~~significant inpurchases ~~the~~or ~~required~~sales ~~financing~~of ~~for~~plant ~~the~~or ~~development~~equipment as of ~~the~~December 31,

~~Paradisus~~2016, ~~Papagayo~~except ~~Bay~~in ~~Resort~~connection &with ~~Luxury~~the ~~Villas~~planned construction of ~~approximately~~the ~~$15,000,000~~Paradisus asPapagayo ofBay ~~December~~Resort ~~31, 2015,~~&

~~for~~Luxury ~~the purchase of two additional concession properties in Polo Papagayo~~Villas, ~~Guanacaste, Costa Rica.~~

We ~~maintain~~have ano ~~defined~~current ~~benefit~~plans ~~plan~~to ~~that~~make ~~covers~~any ~~all~~changes in the number of our ~~Swiss~~ employees ~~and~~as ~~have~~of ~~employment~~December 31, 2016.

agreements with our Chief Executive Officer and Chief Operating Officer as of December 31, 2015.

We have no current plans for significant purchases or sales of plant or equipment, except in connection with

the planned construction of the Paradisus Papagayo Bay Resort & Luxury Villas, and the acquisition of “La

Punta” and the four hotels in Graubünden.

We have no current plans to make any changes in the number of our employees as of December 31, 2015.

Future Financings

The Company ~~signed~~is ain ~~letter~~the process of ~~engagement~~fulfilling ~~with~~CHF ~~ISM~~Bond ~~Capital~~offerings ~~LLP~~of ~~(“ISM”),~~up ato ~~London~~CHF ~~based~~50,000,000 ~~investment~~during the

~~firm,~~second onquarter ~~March~~of ~~10, 2015, to conduct a $100 million asset backed bond issuance~~2017. ~~On October 4, 2015, the~~

~~bilateral~~The ~~agreement~~Company ~~with~~will ~~ISM~~continue ~~was~~to ~~extended~~rely ~~into~~on athe ~~multilateral~~terms ~~agreement,~~of ~~with~~the ~~Stifel~~Guaranty ~~Nicolaus~~Agreement ~~Europe~~as ~~Ltd~~necessary to meet

~~(“Stifel”),~~shortfalls ~~to enlarge the territories~~ in ~~which~~development ~~the offering could be presented to include North America~~financing.

~~Despite the commitment to identify investors, the success of this proposed bond issuance for the amount~~19

contemplated or any lesser amount, does not guarantee that all or part of the amount offered will be

subscribed. Neither of Stifel or ISM has yet conducted the anticipated offering.

The Company will continue to rely on the terms of the Guaranty Agreement as necessary to meet shortfalls

in development financing.

Off-Balance Sheet Arrangements

As of December 31, ~~2015~~2016, we had no significant off-balance sheet arrangements that have or are ~~reasonably~~

reasonably likely to have a current or future effect on our financial condition, changes in ~~financial condition, revenues~~

financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or ~~capital resources that are material to~~

capital resources that are material to stockholders.

Going Concern

The Company intends to build a hotel in the Papagayo Gulf Tourism Project area of Guanacaste, Costa

Rica. The total net investment is estimated to be approximately $~~192~~212 million. (including overhead

19expenses).

The project is expected to open in the fourth quarter of ~~2017~~2018. Until the completion of the project, ~~the~~

the following expenditures are estimated to be incurred:

a. Gross project cost

217,000,000

b. Less: Proceeds from sale of villas

(25,000,000)

c. Net project cost

192,000,000

d. Overhead expenses

20,000,000

f ~~Total, excluding other potential projects~~

Total, excluding other potential projects

212,000,000

~~Sixty~~Seventy percent ~~(60%~~ ) of the ~~net~~“Net project cost” is intended to be financed through the issuance of secured

bonds, for which negotiations have been initiated. The remaining ~~forty~~thirty percent ~~(40%~~ of the ~~net~~“Net project cost”,

as well as “non-recuperated overhead expenses” and the cost of ~~other~~ potential “other projects” are intended to ~~be financed by the main~~

be financed by the main shareholders or lenders of the project, ~~i.e.~~in ~~Zypam~~the ~~Ltd.,~~absence ~~shareholder~~of ~~and~~alternative ~~related entity to Mr. Josef Mettler,~~financing

Mrcommitments, i.e. ~~Hans~~Zypam ~~Rigendinger~~Ltd., shareholder, ~~Chief~~and ~~Operating~~related ~~Officer~~entity ~~and~~to ~~Company~~the ~~Board~~late ~~Member~~Mr. Josef Mettler, DrMr. ~~Max~~Hans

~~Rössler~~Rigendinger, ~~Company~~shareholder, ~~Board~~Chief ~~Member~~Executive Officer and ~~controlling~~Company ~~shareholder~~Board ofMember ~~Aires,~~and MrDr. ~~Josef~~Max ~~Mettler~~Rössler, ~~shareholder,~~

~~Director~~Company Board Member and ~~Chief~~controlling ~~Executive~~shareholder ~~Officer~~of Aires.

On July 16, 2012, certain principal shareholders of the Company or principal lenders to the project ~~entered~~

entered into a guaranty agreement in favor of ~~the~~SunVesta ~~Company~~AG. The purpose of the guaranty is to ensure that ~~until~~

until such time as financing is secured for the entire project that they will act as ~~guarantors~~a guarantor to creditors to ~~the extent of the~~

the extent of the project’s ongoing capital requirements. ~~On September 22, 2015, the signatories to the guaranty formally~~

~~agreed~~On toSeptember ~~maintain~~22, ~~the guaranty~~2015, asthe ~~necessary,~~signatories ~~until~~to ~~December~~the ~~31,~~guaranty ~~2018,~~formally ~~after~~agreed ~~which~~to ~~date~~maintain the guaranty, ~~will~~as

necessary, until December 31, 2018, after which date the guaranty will expire. The guaranty agreement

~~The Guaranty Agreement~~ requires that within 30 days of receiving a demand notice, the requested funds are made available by the

~~made available by the~~ guarantors to the Company. ~~Based on this guaranty, management believes that~~

~~available~~On ~~funds~~September ~~are~~12, ~~sufficient~~2016, tothe ~~finance~~signatories ~~cash~~to ~~flows for~~ the ~~twelve~~guaranty ~~months~~formally ~~subsequent~~agreed to ~~December~~maintain 31the guaranty, ~~2015~~as

~~and~~necessary, ~~the~~until ~~filing~~completion ~~date,~~of ~~though~~the ~~future~~construction ~~anticipated~~of ~~cash~~Paradisus ~~outflows~~Papagayo ~~for~~Bay ~~investing~~Resort ~~activities~~& ~~continue~~Luxury toVillas, ~~depend on~~after

which date the ~~availability~~guaranty ofwill ~~financing~~expire. The guaranty agreement requires that within 30 days of receiving a

demand notice, the requested funds are made available by the guarantors to the Company.

Based on this Guaranty Agreement, management believes that available funds are sufficient to finance

cash flows for the twelve months subsequent to December 31, 2016, and the filing date, though future

cash outflows for investing activities will continue to depend on the availability of financing.

Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition

The statements contained in the section titled Management’s Discussion and Analysis of Financial

Condition and Results of Operations and elsewhere in this current report, with the exception of historical

facts, are forward-looking statements. We are ineligible to rely on the safe-harbor provision of the ~~Private~~

Private Litigation Reform Act of 1995 for forward looking statements made in this current report. ~~Forward-looking~~

Forward-looking statements reflect our current expectations and beliefs regarding our future results of ~~operations,~~

operations, performance, and achievements. These statements are subject to risks and uncertainties and ~~are based upon~~

are based upon assumptions and beliefs that may or may not materialize. These statements include, but ~~are not limited to,~~

are not limited to, statements concerning:

— our anticipated financial performance and business plan

— the sufficiency of existing capital resources

— our ability to raise additional capital to fund cash requirements for future operations

— uncertainties related to our future business prospects

— our ability to generate revenues to fund future operations

— the volatility of the stock market

— general economic conditions

20We wish to caution readers that our operating results are subject to various risks and uncertainties that

Wecould ~~wish~~cause ~~to caution readers that~~ our ~~operating~~actual results ~~are~~to ~~subject~~differ tomaterially ~~various~~from ~~risks~~those ~~and~~discussed ~~uncertainties~~or ~~that~~anticipated ~~could~~elsewhere in this

~~cause~~report. ~~our~~We ~~actual~~also ~~results~~wish to ~~differ~~advise ~~materially~~readers ~~from~~not ~~those~~to ~~discussed~~place orany ~~anticipated~~undue ~~elsewhere~~reliance inon ~~this~~the ~~report.~~forward-looking Westatements

~~also~~contained ~~wish~~in tothis ~~advise~~report, ~~readers~~which ~~not~~reflect toour ~~place~~beliefs ~~any~~and ~~undue~~expectations ~~reliance~~only onas of the ~~forward-looking~~date ~~statements~~of ~~contained~~this inreport. We

~~this~~assume ~~report,~~no ~~which~~obligation ~~reflect~~to ~~our~~update ~~beliefs~~or ~~and~~revise ~~expectations~~these ~~only~~forward-looking asstatements ofto ~~the~~reflect ~~date~~new ofevents ~~this report. We assume no~~or

~~obligation~~circumstances toor ~~update~~any orchanges ~~revise~~in ~~these~~our ~~forward-looking~~beliefs ~~statements~~or toexpectations, ~~reflect~~other ~~new~~than ~~events~~as orrequired ~~circumstances~~by orlaw.

any changes in our beliefs or expectations, other than as required by law.

Recent Accounting Pronouncements

Please see Note 2 to the accompanying consolidated financial statements for recent accounting

pronouncements.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET ~~RISK~~

RISK

Not required.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our audited financial statements for the years ended December 31, ~~2015~~ 2016 and ~~2014~~ 2015 are attached hereto as

F- 1 through F-50.

Due to rounding, the sum of individual positions may be higher or lower than 100%.

SUNVESTA, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

Page

Report of Independent Registered Public Accounting Firm

F-2

Consolidated Balance Sheets

F-3

Consolidated Statements of Comprehensive Loss

F-4

Consolidated Statements of Stockholders’ Deficit

F-5

Consolidated Statements of Cash Flows

F-6

Notes to Consolidated Financial Statements

F-8

F-1

Tel. +41 44 444 35 55

BDO AG

Fax +41 44 444 37 66

Fabrikstrasse 50

8031 Zürich

Switzerland

Report of Independent Registered Public Accounting Firm

Board of Directors and ~~Shareholders~~

Shareholders SunVesta, Inc., ~~Oberrieden, Switzerland~~

~~We have audited the accompanying consolidated balance sheets of SunVesta~~Oberrieden, ~~Inc. as of December 31, 2015~~Switzerland

~~and~~We ~~2014~~have ~~and~~audited the ~~related~~accompanying consolidated ~~statements~~balance sheets of ~~comprehensive loss~~SunVesta, ~~stockholders’~~Inc. ~~deficit,~~as ~~and~~of ~~cash~~December

~~flows~~31, ~~for~~2016 ~~each of the two~~and ~~years in~~ 2015 and the ~~period ended December~~ ~~31, 2015. These financial~~related consolidated statements ~~are the~~of comprehensive loss, stockholders’

~~responsibility~~ deficit, and cash flows for each of the ~~Company’s management~~ two years in the period ended December 31, 2016. ~~Our responsibility is to express an opinion on these financial~~These

financial statements ~~based on our audits~~ are the responsibility of the Company’s management. Our responsibility is to

~~We conducted~~ express an opinion on these financial statements based on our audits ~~in accordance with the standards of the Public Company Accounting Oversight~~.

~~Board~~We ~~(United~~conducted ~~States). Those~~our ~~standards~~audits ~~require~~in ~~that~~accordance wewith ~~plan~~the ~~and~~standards ~~perform~~of the ~~audit~~Public toCompany ~~obtain reasonable~~Accounting

~~assurance about whether the financial statements are free of material misstatement~~Oversight Board (United States). ~~The Company is not~~ Those standards require that we plan and perform the audit to obtain

~~required~~reasonable toassurance ~~have,~~about ~~nor~~whether ~~were~~the wefinancial ~~engaged~~statements toare ~~perform,~~free ~~an audit~~ of ~~its~~material ~~internal control over financial reporting~~misstatement. The

~~Our~~Company ~~audits~~is ~~included~~not ~~consideration~~required ofto ~~internal~~have, ~~control~~nor ~~over~~were ~~financial~~we ~~reporting~~engaged asto aperform, ~~basis~~an ~~for~~audit ~~designing~~of ~~audit~~its internal control

~~procedures~~over ~~that~~financial ~~are~~reporting. ~~appropriate~~Our inaudits ~~the~~included ~~circumstances,~~consideration ~~but not for the purpose~~ of ~~expressing~~internal ancontrol ~~opinion~~over onfinancial ~~the~~reporting

~~effectiveness~~as ofa ~~the~~basis ~~Company’s~~for ~~internal~~designing ~~control~~audit ~~over~~procedures ~~financial~~that ~~reporting.~~are ~~Accordingly~~appropriate in the circumstances, webut ~~express~~not nofor ~~such~~the

purpose of expressing an opinion~~. An audit also includes examining,~~ on ~~a test basis, evidence supporting~~ the ~~amounts and disclosures~~ effectiveness of the Company’s internal control over

~~in the~~ financial ~~statements~~ reporting. Accordingly, ~~assessing the accounting principles used and significant estimates made by~~we express no such opinion. An audit also includes examining, on a

~~management~~test basis, asevidence ~~well~~supporting ~~as evaluating~~ the ~~overall~~amounts ~~financial~~and ~~statement~~disclosures ~~presentation. We~~in ~~believe~~the ~~that~~financial ~~our~~statements, ~~audits~~assessing the

~~provide~~accounting principles used and significant estimates made by ~~a reasonable basis for our opinion.~~management, as well as evaluating the

Inoverall ~~our~~financial ~~opinion,~~statement ~~the~~presentation. ~~consolidated~~We ~~financial~~believe ~~statements~~that our ~~referred~~audits toprovide ~~above~~a ~~present~~reasonable ~~fairly,~~basis infor ~~all material respects,~~our

~~the financial position of SunVesta, Inc~~opinion. ~~at December 31, 2015 and 2014, and the results of its operations and~~

~~its~~In ~~cash~~our ~~flows~~opinion, ~~for each of~~ the ~~two~~consolidated ~~years~~financial instatements ~~the~~referred ~~period~~to ~~ended~~above ~~December~~present 31fairly, ~~2015,~~ in ~~conformity~~all ~~with~~material

~~accounting~~respects, ~~principles~~the ~~generally~~financial ~~accepted~~position inof ~~the~~SunVesta, ~~United~~Inc. ~~States~~at December 31, 2016 and 2015, and the results of ~~America.~~its

~~Zürich~~operations and its cash flows for each of the two years in the period ended December 31, ~~May 13,~~ 2016, in

conformity with accounting principles generally accepted in the United States of America.

Zürich, March 17, 2017

BDO AG

// ~~Christoph~~Andreas ~~Tschumi~~Wyss

// Julian Snow

~~Christoph~~Andreas ~~Tschumi~~Wyss

~~ppa.~~ Julian Snow

F-2

SUNVESTA, INC. ~~CONSOLIDATED BALANCE SHEETS~~

		December 31, 2015	December 31, 2014
Assets
Current assets
Cash and cash equivalents	$	111,830	14,347
Receivable from related parties		19,945	27,163
Other assets		158,574	289,156
Total current assets		290,349	330,666
Non-current assets
Property and equipment - net		61,271,424	51,201,352
Deposits related to construction work		798,874	820,565
Debt issuance costs - net		2,995,209	2,006,849
Notes receivable		280,242	-
Down payment for property and equipment		2,972,083	2,369,816
Restricted cash		1,684,467	1,684,934
Total non-current assets		70,002,299	58,083,516
Total assets	$	70,292,648	58,414,182
Liabilities and stockholders' deficit
Current liabilities
Bank liabilities		179,313	153,375
Accounts payable		8,048,608	6,181,057
Accrued expenses		7,831,247	5,444,514
Note payable		2,736,912	3,023,759
Notes payable to related parties		1,130,978	1,162,100
EUR-Bond		8,488,631	-
CHF-Bond		-	25,511,898
Total current liabilities		28,415,689	41,476,703
Non-current liabilities
EUR-Bond		-	9,057,986
Convertible CHF-Bond		28,720,443	-
Liability related to conversion feature		6,976,322	-
Notes payable to related parties		47,198,362	30,299,312
Other long term debts		36,140	74,837
Pension liabilities		210,680	136,433
Total non-current liabilities		83,141,947	39,568,568
Total liabilities	$	111,557,636	81,045,271
Stockholders' deficit
Preferred stock, $0.01 par value; 50,000,000 shares
authorized, no shares issued and outstanding		-	-
Common stock, $0.01 par value; 200,000,000 shares
authorized; 95,941,603 shares issued and outstanding, as of December 31, 2015 and 83,541,603 shares issued and outstanding as of December 31, 2014		959,416	835,416
Additional paid-in capital		23,403,438	22,942,486
Accumulated other comprehensive income / (loss)		1,778,961	1,265,590
Accumulated deficit		(67,406,803)	(47,674,581)
Treasury stock, 0 shares, as of December 31, 2015 and December 31, 2014, respectively		-	-
Total stockholders' deficit		(41,264,988)	(22,631,089)
Total liabilities and stockholders' deficit	$	70,292,648	58,414,182

CONSOLIDATED BALANCE SHEETS

~~The~~December ~~accompanying~~31, ~~notes are an integral part of these consolidated financial statements~~2016

December 31, 2015

Assets

Current assets

Cash and cash equivalents

806,440

111,830

Receivable from related parties

49,292

19,945

Other assets

456,099

158,574

Total current assets

1,311,830

290,349

Non-current assets

Property and equipment - net

66,216,658

61,271,424

Deposits related to construction work

190,549

798,874

Notes receivable

280,242

Down payment for property and equipment

2,972,083

Restricted cash

1,667,052

1,684,467

Total non-current assets

68,354,502

67,007,090

Total assets

69,666,332

67,297,439

Liabilities and stockholders' deficit

Current liabilities

Bank liabilities

179,313

Accounts payable

3,311,512

8,048,608

Accrued expenses

3,160,723

7,831,247

Note payable

1,500,000

2,736,912

Notes payable to related parties

307,088

1,130,978

Other liabilities

120

Convertible CHF-Bond

6,202,921

EUR-Bond

484,463

8,347,717

Total current liabilities

14,966,826

28,274,775

Non-current liabilities

Convertible CHF-Bond

31,892,613

25,866,148

CHF-Bond

16,384,893

Liability related to conversion feature

5,936,378

6,976,322

Notes payable to related parties

51,473,793

47,198,362

Other long-term debts

36,140

Pension liabilities

184,469

210,680

Total non-current liabilities

105,872,146

80,287,652

Total liabilities

120,838,972

108,562,427

Stockholders' equity

Preferred stock, $0.01 par value; 50,000,000 shares

authorized, no shares issued and outstanding

Common stock, $0.01 par value; 200,000,000 shares authorized;

959,416

101,841,603 shares issued and outstanding

Additional paid-in capital

23,238,526

23,403,438

Accumulated other comprehensive income / (loss)

2,997,562

1,778,961

Accumulated deficit

(78,368,143)

(67,406,803)

Total stockholders' deficit

(51,172,639)

(41,264,988)

Total liabilities and stockholders' deficit

69,666,332

67,297,439

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

F-3

SUNVESTA, INC. ~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS Years Ended December 31, 2015 and 2014~~

		2015	2014
Revenues
Revenues, net	$	-	-
Cost of revenues		-	-
Gross profit		-	-
Operating expenses
General and administrative expenses		(5,986,071)	(6,734,491)
Total operating expenses		(5,986,071)	(6,734,491)
Loss from operations	$	(5,986,071)	(6,734,491)
Other income / (expenses)
Interest income		44,957	36,006
Interest expense		(4,147,997)	(4,146,322)
Amortization of debt issuance costs and commissions		(3,428,099)	(928,914)
Change in Fair Value of Conversion Feature		386,660	-
Loss on extinguishment of debt		(7,678,080)	-
Exchange differences		1,185,680	3,837,903
Other income / (expenses)		(108,121)	(15,168)
Total other income / (expenses)		(13,745,000)	(1,216,495)
Loss before income taxes		(19,731,071)	(7,950,986)
Income Taxes		(1,151)	-
Net loss		(19,732,222)	(7,950,986)
Other Comprehensive loss:
Foreign currency translation		513,371	3,468,504
Total Comprehensive loss	$	(19,218,851)	(4,482,482)
Loss per common share
Basic and diluted	$	(0.21)	(0.09)
Weighted average common shares
Basic		94,338,589	88,325,165
Diluted		94,338,589	88,325,165

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Years Ended December 31, 2016 and 2015

2016

2015

Revenues

Revenues, net

Cost of revenues

Gross profit

Operating Expenses

General and administrative expenses

(5,079,198)

(5,986,071)

Impairment expenses

(2,642,556)

Total operating expenses

(7,721,754)

(5,986,071)

Income / (loss) from operations

(7,721,754)

(5,986,071)

Other income / (expenses)

Interest income

67,808

44,957

Interest expense

(6,883,332)

(7,576,096)

Change in Fair Value of Conversion Feature

2,500,486

386,660

Loss on extinguishment of debt

(1,165,268)

(7,678,080)

Exchange differences

2,502,188

1,185,680

Other income / (expenses)

(261,468)

(108,122)

Total other expenses

(3,239,586)

(13,745,000)

Profit/ (loss) before income taxes

(10,961,340)

(19,731,072)

Income Taxes

(1,151)

Net income / (loss)

(10,961,340)

(19,732,222)

Comprehensive income / (loss)

Foreign currency translation

1,178,721

513,372

Actuarial gains / (losses)

39,880

Comprehensive income / (loss)

(9,742,739)

(19,218,851)

Earnings / (loss) per common share

Basic and diluted

(0.11)

(0.21)

Weighted average common shares

Basic and diluted

100,245,439

94,338,589

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

F-4

SUNVESTA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

Years Ended December 31, ~~2015~~2016 and ~~2014~~2015

Common

Additional

Accumulated

Accumulated

Treasury

Total

Stock

Paid -in ~~Capital~~

Other

~~deficit~~Accumulated

~~Stock~~Treasury

Stockholders’

Capital

Comprehensive

~~Deficit~~deficit

Stock

Equity

Income (Loss)

~~December 31, 2013~~(Deficit)

~~835~~December 31,~~416 $~~ 2014

~~21,852,666~~ $

(2835,~~202,914) $~~416

~~(39,723,595)~~ $

~~(23~~22,~~755) $~~942,486

~~(19,262,182)~~$

~~Net loss~~1,265,590

(47,674,581)

(22,631,089)

Translation adjustments

(7513,~~950,986)~~372

~~Foreign~~Net ~~currency~~loss

3,468,504

(19,732,222)

3(19,~~468~~732,~~504~~222)

~~translation~~Stock based compensation expense

~~Stock based~~124,000

~~compensation expense~~460,952

1,103,275

584,952

Actuarial gains & losses

1,103,275

Sale of treasury stock

(13,455)

~~23,755~~-

~~10,300~~-

December 31, ~~2014~~2015

~~835~~959,416 $

~~22,942,486~~ $

123,~~265~~403,~~590 $~~438

~~(47,674,581)~~ $

~~- $~~1,778,961

~~(22,631,089)~~$

(67,406,803)

(41,264,988)

Translation adjustments

1,178,721

(0)

1,178,721

Net loss

(1910,~~732~~961,~~222~~340)

~~Foreign~~Stock ~~currency~~based compensation expense

(164,912)

513,371

~~513~~(164,~~371~~912)

~~translation~~Actuarial gains & losses

Stock based

compensation expense

124,000

460,952

39,880

~~584,952~~-

~~December 31~~39, ~~2015~~880

December 31, 2016

959,416 $

~~23,403,438~~ $

123,~~778~~238,~~961 $~~526

~~(67,406,803)~~ $

~~- $~~2,997,562

~~(41,264,988)~~$

(78,368,143)

(51,172,639)

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

F-5

SUNVESTA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, ~~2015~~2016 and ~~2014~~2015

2016

2015

2014

Cash flows from operating activities

Net loss

(10,961,340)

(19,732,223)

(7,950,986)

Adjustments to reconcile net loss to net cash

Depreciation and amortization

61,771

67,163

~~62,478~~Impairment on Down Payment

2,642,555

Amortization of debt issuance costs and commissions

2,588,290

3,428,099

~~928,914~~Accrued interest on debt

3,713,440

Extinguishment of Debt

1,165,268

7,678,080

Unrealized exchange differences

(3,004,224)

(1,925,603)

(1,301,145)

Stock compensation expense

(164,912)

584,952

1,103,275

Loss on extinguishment of debt

7,678,080

Change in Fair Value of conversion feature

(386,660)

Increase in pension fund commitments

18,791

74,833

~~50,604~~Expenses (+) / Income (-) related to conversion feature

~~- Increase / decrease in:~~(2,051,203)

(386,660)

- Cash flow impact of increase / decrease in:

Other current assets

846,413

130,582

(270,465)

Accounts payable

(4,335,084)

1,910,735

(544,694)

Accrued expenses

(1,998,668)

2,145,169

429,009

Net cash used in operating activities

(11,478,901)

(6,024,873)

~~(7,493,010)~~Cash flow from investing activities

Cash flows from investing activities

Notes receivable

(280,242)

Receivables from related parties

(1,507,128)

(2Payments to acquire property,~~625,058)~~ plant and equipment

~~Purchase of property and equipment~~(1,455,760)

(6,801,793)

(5Proceeds from sale of property,~~005,536)~~ plant and equipment

36,578

Deposits related to construction

(641,818)

21,811

~~(151,477)~~Payments for down payments for property and equipment

~~Down payments for property and equipment~~-

(610,810)

Proceeds from down payments for property and equipment

309,023

Restricted cash

14,050

~~(2,534)~~Loan receivable and participations

(31,424)

Net cash used in investing activities

(1,737,927)

(9,178,106)

(7,784,605)

Cash flows from financing activities

~~Increase~~Proceeds infrom bank liabilities

42,047

25,938

~~153,375~~Repayments of bank liabilities

(220,100)

Proceeds from notes payable related parties

18,~~579~~456,~~621~~316

216,~~114~~359,~~876~~360

Repayment of notes payable related parties

(23,~~320~~286,~~261~~465)

~~(1,733,837)~~-

Proceeds from ~~notes~~(Repayments ~~payable~~of) Notes Payable

~~607,151~~-

2485,~~690,800~~665

~~Repayment~~Proceeds from bond issuance, net of ~~notes~~commissions ~~payable~~and debt

~~(121,486)~~issuance costs

(17,~~076~~433,~~495)~~328

~~Proceeds from bond issuance~~8, ~~net of commissions~~392,693

12,405,719

20,664,185

Repayment of bonds

(7,786,584)

(9,837,471)

~~(5,729,712)~~Repayments of note payable and other debt

~~Payment for debt issuance costs~~(644,091)

(4,013,026)

(2,519,733)

Changes in other long term debt

44,411

Purchase/Sale of treasury stock

10,300

Net cash provided by financing activities

13,994,449

15,326,185

14,618,170

Effect of exchange rate changes

(83,009)

(25,723)

44,119

Net increase / - decrease in cash

694,612

97,483

(615,326)

Cash and cash equivalents, beginning of period

111,830

14,347

629,673

Cash and cash equivalents, end of period

806,442

111,830

14,347

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

F-6

SUNVESTA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, ~~2015~~2016 and ~~2014~~2015

Additional information

2016

2015

2014

Interest paid

2,395,000

1,509,889

Capitalized interest and debt issuance costs for construction (non-cash)

3,694,061

3,335,000

~~2,883,999~~Reversal of capitalized payment obligation for construction (non-cash)

~~Repayment of Specogna Holding AG loan by Aires (non-cash)~~451,816

707,428

Assumption of ~~loans~~payables ~~Josef~~due ~~Mettler~~from AIRES by ~~AIRES~~Global Care AG (non-cash)

17,~~507~~621,~~128~~345

1,455,214

Assumption of loans 4f capital by AIRES (non-cash)

~~1,142,681~~Conversion of Loans payable to Global Care AG to CHF convertible bonds

~~Payment of Wernli loan by AIRES~~4,635,352

~~568,000~~Assumption of payables due from Global Care AG by Sportiva (non-cash)

1,533,150

Conversion of Loan from third party to CHF-Convertible Bond

599,700

Assumption of loan due from Global Care AG by Dr. Max Rössler

1,442,253

Conversion of Loan from Dr. Max Rössler to CHF-Bond

15,406,139

Transfer from EUR-Bond to CHF-Bond

953,683

Repayment of Specogna Holding AG loan by Aires

707,428

Interest paid

2,395,000

Assumption of receivables from Josef Mettler by AIRES (non-cash)

1,507,128

Assumption of loans Dr. Max Rössler by AIRES (non-cash)

1,551,669

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

F-7

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

CORPORATE INFORMATION

On August 27, 2007, SunVesta Inc. (“SunVesta”) acquired SunVesta Holding AG (“SunVesta

AG”) ~~(collectively “the Company”)~~. Until recently, SunVesta AG ~~holds~~ held five wholly-owned subsidiaries: SunVesta Projects and

~~SunVesta Projects and~~ Management AG, a Swiss company; Rich Land Investments Limitada, a Costa Rican company

~~Costa Rican company~~ (“Rich Land”); SunVesta Costa Rica Limitada, a Costa Rican company (“SVCR”), Altos del

~~(“SVCR”), Altos del~~ Risco SA, a Costa Rican company (“AdR”) and SunVesta Holding España SL (“España”), a

~~(“España”), a~~ Spanish company. Effective May 21, 2016 the three Costa Rican companies were merged,

Inwhereby Altos del Risco ~~January~~SA ~~2005,~~absorbed ~~the Company changed~~ its two ~~business~~affiliated ~~focus~~companies ~~to the development of holiday resorts~~ and subsequently changed its

~~investments in the hospitality and related industry. The Company has one major project in~~ name to SunVesta Costa Rica SA.

~~Rica.~~In ~~Planning~~January 2005, ~~for~~the ~~this~~Company changed ~~project~~its ~~has~~business ~~been~~focus ~~fully~~to ~~completed,~~the ~~all~~development ~~consents~~of ~~have been granted, and~~holiday resorts

~~excavation~~and ~~work~~investments ~~began~~ in ~~March~~ ~~2013~~the hospitality and related industry. The Company is ~~still~~has inone ~~process~~major ofproject ~~securing financing for~~in

~~the project and has not realized revenue to date~~Costa Rica. ~~Since the financing of the~~ Planning for this project ~~is not complete~~ has been fully completed, all consents have been granted,

~~the Company’s activities are subject to significant risks~~ and ~~uncertainties~~ excavation work began in March 2013. The Company is still in 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”).

SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include those of the Company and its subsidiaries. One

hundred percent of assets and liabilities as well as revenues and expenses of all consolidated

companies are included. Receivables, payables, as well as revenues and expenses between

consolidated companies are eliminated. Unrealized intercompany profits, which may be ~~included~~

included in assets as of the end of the respective periods are also eliminated. Certain previously ~~reported~~

reported amounts have been reclassified to conform to the current presentation.

Fiscal year

The fiscal year of the Company and all its subsidiaries correspond with the calendar year.

Use of estimates

These consolidated financial statements are prepared in conformity with accounting principles

generally accepted in the United States of America (“US GAAP”) and require management to

make assumptions and estimates, which have an impact on the reported assets and liabilities as ~~well~~

well as on the disclosure of contingent assets and liabilities at the balance sheet dates. These

considerations also impact reported income statement items. While the effective amounts may ~~vary~~

~~from~~vary from the estimates, management is convinced that all relevant information having an impact ~~on the~~

on the estimates have been taken into consideration and are appropriately disclosed. ~~Management~~

Management believes that the valuation of property and equipment includes substantial ~~estimates.~~

estimates.

F-8

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Cash and cash equivalents

Cash and cash equivalents include petty cash, post and bank accounts as well as time deposits ~~with~~

with maturities of less than three months.

Notes receivable

Notes receivable consists of an advance due from REP Caribbean Development Corporation. This

receivable is stated at the amount the Company intends to collect. The Company makes ongoing

estimates regarding the collectability.

Allowance for Doubtful Accounts

Management makes ongoing estimates relating to the collectability of receivable balances and

maintains a reserve for estimated losses resulting from the inability of counterparties to meet ~~their~~

their financial obligation to us. As of December 31, ~~2015~~2016 and ~~2014~~2015 the Company does not have ~~any~~

any amounts reserved in the consolidated balance sheet nor bad debt expense recorded in the ~~statement~~

statement of comprehensive loss.

Other assets

Other assets include items, such as value added tax, withholding tax or similar credits with

maturities less than one year.

Property and equipment

Property and equipment are valued at cost less accumulated depreciation. Repair and ~~maintenance~~

maintenance expenses are charged to the income statement when incurred. The cost of fixed ~~assets, including~~

assets, including leasehold improvements are capitalized and depreciated over the following ~~useful lives:~~

useful lives:

— Land (concessions)

not depreciated

— IT equipment

3 years

— Other equipment and furniture

5 years

— Leasehold improvements

5 years

— Vehicles

5 years

— Project in process

not depreciated until project finished

The cost and the related accumulated depreciation are removed from the balance sheet at the ~~time~~

time of disposal.

Project in process relates to costs incurred directly related to the planning and construction of the

hotel in the Papagayo Gulf Tourism Project of Costa Rica and are reasonably recoverable from

future hotel and rental operations or the sale of certain apartments. Once the project in process is

finished the Company will reclassify the capitalized costs to corresponding categories and

determine the depreciation method and depreciation period.

Interest capitalization

Interest expense is capitalized on the carrying value of the construction in progress during the

construction period, in accordance with ASC 835-20, Capitalization of Interest.

F-9

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

~~Interest~~With ~~capitalization~~respect to the construction in progress, the Company has capitalized a cumulative amount

~~Interest~~of ~~expense~~$13,059,061 and is$9,365,000 of interest ~~capitalized~~expense onand ~~the~~debt ~~carrying~~issuance ~~value~~costs as of ~~the construction in progress during the~~December 31,

~~construction~~2016 ~~period,~~and inDecember ~~accordance~~31, ~~with ASC 835-20~~2015, ~~Capitalization~~respectively ofto ~~Interest.~~property ~~With~~and ~~respect to the~~equipment.

construction in progress, the Company capitalized $9,365,000 and $6,030,000 of interest expense

and debt issuance costs as of December 31, 2015 and December 31, 2014, respectively to property

and equipment.

Deposits related to construction work

The Company prepays deposits for construction work, which costs are capitalized initially and ~~will~~

will be amortized once construction has begun.

Debt issuance ~~costs~~cost

~~Debt~~The ~~issuance~~Company ~~costs~~reclassified ~~arise~~debt asissuance acost ~~result~~to ofbe ~~issuing~~presented ~~debt,~~net ~~i.e.~~with the ~~EUR~~issued ~~bonds,~~debt ~~CHF~~as ~~bonds, CHF~~per

~~convertible bonds and the loan with Aires International Investments Inc~~ASU 2015-3.~~, and are amortized over~~ This ASU was applied retrospectively for all periods presented

the life of the debt using the effective interest method. The costs comprise of finder's fees of

generally between three and 12 percent of the amount issued and costs incurred in connection with

issuing the bonds, such as legal and accounting fees, and stamp duty taxes. The accumulated

amortization of debt issuance costs was $797,857 and $4,345,089 as of December 31, 2015 and

December 31, 2014, respectively.

Down payment for property and equipment

Down payments for property and equipment are recorded at cost. Once the corresponding ~~property~~

property and equipment item has been completely purchased, it will be reclassified to a ~~corresponding~~

corresponding subcategory within property and equipment and amortized. The Company ~~assesses regularly if the~~

assesses regularly if the down payments are recoverable in accordance with ASC 360 Property, ~~Plant, and Equipment.~~

Plant, and Equipment. Should any down payments due to specific circumstances not be ~~assessed as recoverable, they will~~

assessed as recoverable, they will be impaired.

Restricted Cash

Restricted cash includes cash that is not disposable for the Company without third party ~~permission~~

permission such as rental deposits or deposits related to the project in process. Based on the ~~nature of the~~

nature of the Company’s underlying business it will be determined whether a deposit is ~~recorded as a current or~~

recorded as a current or non-current asset.

F-10

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances

indicate that the carrying amount of the assets may not be recoverable. The carrying value of a

long-lived asset or asset group is considered to be impaired when the undiscounted expected ~~cash~~

cash flows from the asset or asset group are less than its carrying amount. An impairment loss is

is recognized to the extent that the carrying value of the asset exceeds its fair value. Fair value is

is determined based on quoted market prices, where available, or is estimated as the present ~~value of~~

value of the expected future cash flows from the asset or asset group discounted at a rate ~~commensurate with~~

commensurate with the risk involved.

Income taxes

The Company has not incurred material current taxes on income as it has not generated taxable

income in any of the jurisdictions in which it operates.

~~Deferred taxes are calculated on the temporary differences that arise between the tax base of an~~F-10

asset or liability and its carrying value on the balance sheet of the Company prepared for

consolidation purposes, with the exception of temporary differences arising on investments in

foreign subsidiaries where the Company has plans to permanently reinvest profits into the foreign

subsidiaries.

Deferred tax assets on tax loss carry-forwards are only recognized to the extent that it is more likely

than not, that future profits will be available and the tax loss carry-forward can be utilized.

Changes to tax laws or tax rates enacted at the balance sheet date are taken into account in the

determination of the applicable tax rate provided that they are likely to be applicable in the period

when the deferred tax assets or tax liabilities are realized.

The Company is subject to income taxes in the United States of America, Switzerland, Spain and

Costa Rica. Significant judgment is required in determining income tax provisions and in

evaluating tax positions.

The Company recognizes the benefit of uncertain tax positions in the financial statements when it is

more likely than not that the position will be sustained on examination by the tax authorities. The

benefit recognized is the largest amount of tax benefit that is greater than 50 percent likely of being

realized on settlement with the tax authority, assuming full knowledge of the position and all

relevant facts. The Company adjusts its recognition of these uncertain tax benefits in the period in

which new information is available impacting either the recognition or measurement of its

uncertain tax position. Interest and penalties related to uncertain tax positions are recognized as

income tax expense.

F-11

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Deferred taxes are calculated on the temporary differences that arise between the tax base of an

asset or liability and its carrying value on the balance sheet of the Company prepared

for consolidation purposes, with the exception of temporary differences arising on investments

in foreign subsidiaries where the Company has plans to permanently reinvest profits into the

foreign subsidiaries.

Deferred tax assets on tax loss carry-forwards are only recognized to the extent that it is more

likely than not, that future profits will be available and the tax loss carry-forward can be utilized.

Changes to tax laws or tax rates enacted at the balance sheet date are taken into account in the

determination of the applicable tax rate provided that they are likely to be applicable in the

period when the deferred tax assets or tax liabilities are realized.

The Company is subject to income taxes in the United States of America, Switzerland, Spain

and Costa Rica. Significant judgment is required in determining income tax provisions and in

evaluating tax positions.

The Company recognizes the benefit of uncertain tax positions in the financial statements when

it is more likely than not that the position will be sustained on examination by the tax authorities.

The benefit recognized is the largest amount of tax benefit that is greater than 50 percent likely of

being realized on settlement with the tax authority, assuming full knowledge of the position and

all relevant facts. The Company adjusts its recognition of these uncertain tax benefits in the

period in which new information is available impacting either the recognition or measurement of

its uncertain tax position. Interest and penalties related to uncertain tax positions are recognized

as income tax expense.

Concentration of risks

Financial instruments that potentially subject the Company to concentrations of credit risk are

primarily cash and cash equivalents. Cash and cash equivalents are maintained with several

financial institutions. Deposits held with banks may exceed the amount of insurance provided on

such deposits. Generally, these deposits may be redeemed upon demand. Cash and cash ~~equivalents~~

equivalents are subject to currency exchange rate fluctuations.

Foreign Currency Translation and Transactions

The consolidated financial statements of the Company are presented in US Dollars (“$”) which is

is also the functional currency of the parent company. The financial position and results of ~~operations~~

operations of our foreign subsidiaries are determined using the currency of the environment in ~~which an entity~~

which an entity primarily generates and expends cash as the functional currency. Assets and ~~liabilities of these~~

liabilities of these subsidiaries are translated at the exchange rate in effect at each year-end. ~~Statement of~~

Statement of comprehensive loss accounts are translated at the average rate of exchange ~~prevailing during the~~

prevailing during the year. Translation adjustments arising from the use of differing exchange ~~rates from period to period~~

rates from period to period are included in accumulated other comprehensive income (loss) in ~~stockholders’ deficit. Gains and~~

~~losses resulting from foreign currency transactions are included in other income and expenses~~stockholders’ deficit.

~~(exchange differences), except intercompany foreign currency transactions that are of a~~F-11

long-term-investment nature which are included in accumulated other comprehensive income in

stockholders’ equity.

Bonds

Bonds comprise of bonds payable in Euros (“EUR”) and Swiss Francs (“CHF”), which bear fixed

interest rates. Bonds are carried at notional value. If a bond becomes repayable within the next 12

months from the balance sheet date on, such bond or the corresponding portion of this bond will be

categorized as current. Commissions paid to bondholders themselves are reflected as debt

discounts and amortized over the term of the bond, based on the “effective interest method”. The

amortization expense is reflected in amortization of debt issuance cost.

F-12

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Gains and losses resulting from foreign currency transactions are included in other income and

expenses (exchange differences), except intercompany foreign currency transactions that are of a

long-term-investment nature which are included in accumulated other comprehensive income in

stockholders’ equity.

Bonds, net of debt issuance costs

Bonds comprise of bonds payable in Euros (“EUR”) and Swiss Francs (“CHF”), which bear

fixed interest rates. Bonds are carried at notional value. If a bond becomes repayable within the

next 12 months from the balance sheet date on, such bond or the corresponding portion of this

bond will be categorized as current. Commissions paid to bondholders themselves are reflected as

debt discounts and amortized over the term of the bond, based on the “effective interest method”.

The amortization expense is reflected in amortization of debt issuance cost.

Bonds are presented net of debt issuance costs, that arise as a result of issuing debt, i.e. the EUR

bonds, CHF bonds, CHF convertible bonds and the loan with Aires International Investments

Inc. These costs are amortized over the life of the debt using the effective interest method. The

costs comprise of finder's fees of generally between three and 12 percent of the amount issued

and costs incurred in connection with issuing the bonds, such as legal and accounting fees, and

stamp duty taxes. The accumulated amortization of debt issuance costs was $1,242,172 and

$797,857 as of December 31, 2016 and December 31, 2015, respectively.

Pension Plan

The Company maintains a pension plan covering all employees in Switzerland; it 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~~

The underlying principle is that employees render services ratably over this period, and ~~therefore, the~~

therefore, the statement of comprehensive loss effects of pensions should follow a similar ~~pattern. ASC 715~~

pattern. ASC 715 requires recognition of the funded status, or difference between the fair value of ~~plan assets and the~~

plan assets and the projected benefit obligations of the pension plan on the balance sheet, by ~~recording a corresponding~~

recording a corresponding expense in the net loss. If the projected benefit obligation exceeds the ~~fair value of plan assets, then~~

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~~

that involve several actuarial assumptions, the most significant of which are the discount rate ~~and the~~

and the long-term rate of asset return (based on the market-related value of assets). The fair ~~values of plan~~

values of plan assets are determined based on prevailing market prices.

Related parties

Parties are considered ~~to be~~ related if one party directly or indirectly controls, is controlled by, or is

under common control ~~with~~of the other party, if it has an interest in the other party that gives

significant influence ~~over the party~~, if it has joint control over the party, or if it is an associate or a joint

~~joint~~ venture. Senior management of ~~the Company~~ or close family members is are also deemed to be related parties.

~~related parties.~~F-12

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2016 and 2015

SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Earnings per Share

Basic earnings per share are calculated using the Company’s weighted-average outstanding

common shares. When the effects are not anti-dilutive, diluted earnings per share is calculated

using the weighted-average outstanding common shares and the dilutive effect of warrants and

stock options, if any, as determined under the treasury stock method.

Additionally, the Company's two convertible CHF-Bonds were issued in October 2015. These

convertible CHF bonds convert into shares of Sunvesta Holding AG, the Company's wholly ~~owned~~

owned subsidiary. The resulting common shares assumed to be converted as of the issuance date ~~are~~

are included in the denominator for diluted EPS under the if-converted method to the extent that ~~their~~

their effect is considered dilutive.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, restricted cash,

receivables from related parties, bank liabilities, accounts payable to third or related parties, note

payables to third or related parties, bonds as well as the conversion feature of the convertible

bonds. The fair value of these financial instruments approximate their carrying value due to the

short maturities of these instruments, unless otherwise explicitly noted.

ASC 820 Fair Value Measurements establishes a three-tier fair value hierarchy, which

prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as

observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than

quoted prices in active markets that are either directly or indirectly observable; and Level 3,

defined as unobservable inputs in which little or no market data exists, therefore requiring an entity

to develop its own assumptions.

Stock-based compensation

Stock-based compensation costs are recognized in earnings using the fair value based method

for all awards granted. Compensation costs for unvested stock options and awards are

recognized in earnings over the requisite service period based on the fair value of those options

and awards. For employees, fair value is estimated at the grant date and for non-employees’ fair

value is re-measured at each reporting date as required by ASC 718 Compensation-Stock

Compensation, and ASC 505- 50 Equity-Based Payments to Non-Employees. Fair values of

awards granted under the share option plans are estimated using a Black-Scholes option pricing

model. The model’s input assumptions are determined based on available internal and external

data sources. The risk-free rate used in the model is based on the US treasury rate for the

expected contractual term. Expected volatility is based on historical volatilities of a peer group

of similar companies in the same industry.

F-13

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, restricted cash,

receivables from related parties, bank liabilities, accounts payable to third or related parties, note

payables to third or related parties and bonds. The fair value of these financial instruments

approximate their carrying value due to the short maturities of these instruments, unless otherwise

explicitly noted.

ASC 820 Fair Value Measurements establishes a three-tier fair value hierarchy, which prioritizes

the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs

such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active

markets that are either directly or indirectly observable; and Level 3, defined as unobservable

inputs in which little or no market data exists, therefore requiring an entity to develop its own

assumptions.

Stock-based compensation

Stock-based compensation costs are recognized in earnings using the fair value based method for

all awards granted. Compensation costs for unvested stock options and awards are recognized in

earnings over the requisite service period based on the fair value of those options and awards. For

employees, fair value is estimated at the grant date and for non-employees’ fair value is

re-measured at each reporting date as required by ASC 718 Compensation-Stock Compensation,

and ASC 505-50 Equity-Based Payments to Non-Employees. Fair values of awards granted under

the share option plans are estimated using a Black-Scholes option pricing model. The model’s input

assumptions are determined based on available internal and external data sources. The risk-free rate

used in the model is based on the US treasury rate for the expected contractual term. Expected

volatility is based on historical volatilities of a peer group of similar companies in the same

industry.

Derivative Financial Instruments

Derivative financial instruments are initially measured at fair value at the contract date and are

subsequently measured to fair value at each reporting date. The Company's derivative financial

instrument relates to the conversion feature bifurcated from the Company's convertible CHF ~~Bond~~

~~(Note 12), is accounted for under ASC 815 and recorded as Liability related to conversion feature~~Bond

in(Note ~~the~~12), ~~consolidated~~is ~~balance~~accounted ~~sheets.~~for ~~Changes~~under inASC ~~the~~815 ~~fair~~and ~~value~~recorded ~~each~~as ~~period~~Liability ~~(gains~~related orto ~~losses) are~~conversion

~~reflected~~feature in the ~~statement~~consolidated ofbalance ~~comprehensive~~sheets. ~~loss~~Changes asin ~~Change~~the infair ~~Fair~~value ~~Value~~each ofperiod ~~Conversion~~(gains ~~Feature.~~or losses)

are reflected in the statement of comprehensive loss as Change in Fair Value of Conversion

Feature.

New accounting standards – not adopted

In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting

Standards Updates (ASU) 2014-15 requiring an entity’s management to evaluate whether there

are conditions or events, considered in aggregate, that raise substantial doubt about entity’s

ability to continue as a going concern within one year after the date that the financial statements

are issued (or within one year after the date that the financial statements are available to be issued

when applicable). The amendments to (ASU) 2014-15 are effective for the annual period ending

after December 15, 2016, and for annual periods and interim periods thereafter. Early application

is permitted. The Company is in the process of evaluating the prospective impact that (ASU)

2014-15 will have on its balance sheet.

In January 2016, the Financial Accounting Standards Board (FASB) issued Accounting

Standards Update 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and

Measurement of Financial Assets and Financial Liabilities. The update requires several changes

with respect to recognition and measurement as well as disclosure requirements with respect to

financial instruments). The amendments to (ASU) 2016-01 are effective for the annual period

ending after December 15, 2017, and for annual periods and interim periods thereafter. Early

application is permitted. The Company is in the process of evaluating the prospective impact

that (ASU) 2016-01 will have on its balance sheet.

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.

F-14

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

~~New~~In ~~accounting~~March ~~standards~~2016, –the ~~not~~Financial ~~adopted~~Accounting Standards Board (FASB) issued Accounting Standards

~~In February~~ Updates ASU 2016-9, ~~the Financial Accounting Standards Board~~ Compensation—Stock Compensation (~~FASB~~Topic 718) ~~issued Accounting Standards~~: Improvements to

~~Update 2016~~Employee Share-02Based Payment Accounting, ~~Leases (Topic 842). The standard requires the~~ requiring certain changes to recognition ~~of lease assets~~ and

~~lease liabilities by lessees for those leases classified~~ measurement as ~~operating leases~~ well as disclosure of Share-Based Payments. ~~Leases~~ The standard will ~~be classified as~~ become

~~either~~effective ~~finance~~for orthe ~~operating,~~Company ~~with~~beginning ~~classification~~January ~~affecting~~1, ~~the~~2017. ~~pattern~~The ofCompany ~~expense~~is ~~recognition.~~currently ~~The~~assessing the

~~standard~~impact ~~requires~~adoption ~~lessors~~of tothis ~~classify leases~~standard aswill ~~either~~have ~~sales-type,~~on ~~finance~~its orconsolidated ~~operating.~~results Aof ~~sales-type~~operations, financial

~~lease~~condition, ~~occurs~~cash ifflows, ~~the lessor transfers all of the risks~~ and ~~rewards,~~financial asstatement ~~well as control of the underlying~~disclosures.

~~asset,~~In toJune 2016, the ~~lessee.~~Financial IfAccounting ~~risks~~Standards ~~and~~Board ~~rewards~~(FASB) ~~are~~issued ~~conveyed~~Accounting ~~without the transfer of control, the lease is~~Standards

~~treated as a financing lease. If the lessor does not convey risks and rewards or control~~Updates ASU 2016-13, ~~an operating~~ Financial Instruments—Credit Losses (Topic 326): Measurement of

~~lease results. The standard will become effective for the Company beginning January 1~~Credit Losses on Financial Instruments, ~~2019. The~~ requiring certain changes to the recognition and

~~Company is~~measurement ~~currently assessing the~~as ~~impact adoption~~ well as disclosure of ~~this~~ incurred and expected credit losses. The standard ~~will~~ ~~have on its consolidated~~will

~~results of operations~~become effective for the Company beginning January 1, ~~financial condition, cash flows, and financial statement disclosures~~ 2020. The Company is currently

~~In April 2015,~~ assessing the ~~Financial Accounting Standards Board (FASB) issued Accounting Standards~~ impact adoption of this standard will have on its consolidated results of operations,

~~Updates~~financial ~~(ASU)~~condition, ~~2015-03~~cash ~~which~~flows, ~~requires~~and ~~that~~financial ~~debt~~statement ~~issuance costs be reported in the balance sheet as~~disclosures.

~~a direct deduction from the face amount of the related liability~~In November 2016, ~~consistent with~~ the ~~presentation of~~ Financial Accounting Standards Board (FASB) issued Accounting

~~debt~~Standards ~~discounts.~~Updates ~~Prior~~ASU ~~to the amendments~~2016-18, ~~debt~~requiring ~~issuance~~that ~~costs~~restricted ~~were~~cash ~~presented~~and asrestricted acash ~~deferred charge~~equivalents

~~(i.e.,~~be anincluded ~~asset)~~with oncash ~~the~~and ~~balance~~cash ~~sheet.~~equivalents ~~The~~when ~~ASU~~reconciling ~~provides examples illustrating~~ the ~~balance~~beginning-of-period ~~sheet~~and end-

~~presentation~~ of ~~notes net~~ - period total cash amounts shown on the statement of ~~their related discounts and debt issuance costs~~ cash flows. ~~Further~~ Consequently, ~~the~~ transfers

~~amendments~~between ~~require~~cash ~~the~~and ~~amortization~~restricted ofcash ~~debt~~will ~~issuance~~not ~~costs to~~ be ~~reported~~presented as ~~interest~~a ~~expense.~~separate line item in the operating,

~~Similarly,~~investing ~~debt~~or ~~issuance~~financing ~~costs~~sections ~~and~~of ~~any~~the ~~discount~~cash orflow ~~premium~~statement. isThe ~~considered~~amendments inare ~~the~~effective ~~aggregate when~~for

~~determining~~public ~~the~~business ~~effective~~entities ~~interest~~for ~~rate~~fiscal onyears ~~the~~beginning after ~~debt. The~~December ~~amendments~~15, ~~are~~2017, ~~effective~~and ~~for public~~interim periods

~~business~~within ~~entities~~those ~~for~~ fiscal years. ~~beginning~~The ~~after~~Company considers ~~December~~that ~~15,~~ASU ~~2015,~~2016-18 ~~and~~will ~~interim~~have ~~periods~~a ~~within~~limited impact

~~those fiscal years. The application~~ on the presentation of ~~this ASU will result in~~ the ~~reclassification~~ statement of ~~debt issuance~~ cash flows.

cost and the relating amortization.

In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards

Updates (ASU) 2014-15 requiring an entity’s management to evaluate whether there are conditions

or events, considered in aggregate, that raise substantial doubt about entity’s ability to continue as a

going concern within one year after the date that the financial statements are issued (or within one

year after the date that the financial statements are available to be issued when applicable). The

amendments to (ASU) 2014-15 are effective for the annual period ending after December 15, 2016,

and for annual periods and interim periods thereafter. Early application is permitted. The Company

is in the process of evaluating the prospective impact that (ASU) 2014-15 will have on its balance

sheet.

F-15

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

GOING CONCERN

The Company is currently working on building a hotel in the Papagayo Gulf Tourism Project ~~area~~

area of Guanacaste, Costa Rica. The project is expected to open in the fourth quarter of ~~2017~~ 2018. ~~Until the~~

Until the completion of the project, the following expenditures are estimated to be incurred:

a. Gross project cost

217,000,000

b. Less: Proceeds from sale of villas

(25,000,000)

c. Net project cost

192,000,000

d. Overhead expenses

20,000,000

e. Total, excluding other potential projects

212,000,000

~~Sixty~~Seventy percent ~~(60%)~~ of the Net project cost is intended to be financed through the issuance of

secured bonds, for which negotiations have been initiated. The remaining ~~forty~~thirty percent ~~(40%)~~ of the

~~the~~net ~~Net~~ project cost, as well as non-recuperated overhead expenses are intended to be financed by the

~~the~~ main shareholders or lenders of the project, i.e. Zypam Ltd., shareholder and related entity to the

late Mr. Josef Mettler, Mr. Hans Rigendinger, shareholder, Company Director and Chief ~~Operating~~

Executive Officer, Dr. Max Rӧssler, controlling shareholder of Aires International Investment, ~~Inc. and~~

~~Company Director, Mr~~Inc. ~~Josef Mettler, shareholder,~~ and Company Director~~, Chief Executive Officer~~.

~~and Chief Financial Officer.~~F-15

~~On July 16~~SUNVESTA, ~~2012, certain principal shareholders of the Company or principal lenders to the project~~INC.

~~entered~~NOTES ~~into~~TO aCONSOLIDATED ~~Guaranty~~FINANCIAL ~~Agreement in favor of the Company. The purpose of the guaranty is to~~STATEMENTS

~~ensure~~December ~~that~~31, ~~until~~2016 ~~financing~~and ~~is secured for the entire project that they will act as guarantors to~~2015

~~creditors to the extent of the project’s ongoing capital requirements~~3. ~~On September 22, 2015, the~~

~~signatories~~GOING toCONCERN ~~the~~- ~~guaranty formally agreed to maintain the guaranty, as necessary, until December~~CONTINUED

31On July 16, ~~2018~~ 2012, ~~after which date~~ certain principal shareholders of the ~~guaranty will expire.~~ 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 financing is secured for the entire project that they will act as

guarantors to creditors to the extent of the project’s ongoing capital requirements. On September

22, 2015, the signatories to the guaranty formally agreed to maintain the guaranty, as necessary,

until December 31, 2018, after which date the guaranty will expire.

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.

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~~

management believes that available funds are sufficient to finance cash flows for the twelve ~~months subsequent~~

months subsequent to December 31, 2015 and the filing date, though future anticipated cash ~~outflows for investing~~

outflows for investing activities continue to depend on the availability of financing.

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

USD ~~($)~~

EURO

CHF

~~CRC~~Other

Total

equivalents

December 31, ~~2015 December 31, 2014~~2016

December 31, 2015

original currency

9831,~~629~~670

10778,~~696~~040

114,~~507~~260

8,533

in $

9831,~~629~~670

11763,~~667~~428

111,~~518~~342

16806,440

111,830

14,347

USD ($) =

US Dollar

EURO =

Euro

CHF

Swiss Francs

CRC

Costa Rican Colón

F-16

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

RESTRICTED CASH

As of December 31, ~~2015~~2016, the Company has the following restricted cash positions:

Restricted Cash

December 31, 2016

December 31, 2015

December 31, 2014

Credit Suisse in favor of BVK pension fund

~~BVK Personalvorsorge des Cantons Zurich~~125,400

128,805

~~129,272~~HSBC in favor of Costa Rican Tourism Board

~~HSBC in favor of~~-

Costa Rican Tourism Board

370,000

~~370,000~~Banco National de Costa Rica in favor of the Costa

~~Banco~~Rican ~~Nacional~~Tourism ~~de Costa Rica in favor of the~~Board

~~Costa Rican Environmental Agency – SETENA~~-

622,312

Banco National de Costa Rica in favor of the Costa Rican

Tourism Board

563,350

~~563,350~~Banco Lafise in favor Costa Rican Tourism Board

933,350

Banco Lafise in favor Costa Rican Environmental

Agency – SETENA

608,302

Banco Nacional de Costa Rica in favor of the Costa

Rican Environmental Agency – SETENA

622,311

Gross

1,~~684~~667,~~467~~052

1,684,~~934~~466

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~~

not expected before finalization of the corresponding project. Due to this fact these restricted ~~cash~~

cash positions have been classified as long term.

The restricted cash position in favor of BVK ~~Personalvorsorge~~pension ~~des~~fund ~~Cantons Zurich~~ is a rental deposit related to a long

~~deposit related to a long~~ term lease contract for office space. Due to this fact this restricted cash position is also classified

~~position is also classified~~ as long term.

~~NOTE~~NOTES RECEIVABLE

On June 15, 2015, the Company granted REP Caribbean Development Corporation, a third ~~party, a~~

party, a short term advance in the amount of $250,000. The repayment was due on November ~~30, 2015 with~~

30, 2015, with a fixed interest payment of $5,000. The advance is secured by a non-related ~~Swiss~~ ~~individual. On~~Swiss

individual. On December 10, 2015 , the advance was increased by $25,000. Including accrued ~~interest, the overdue~~

interest, the overdue amount at December 31, ~~2015~~2016 was approximately $280,000.

~~Dated April 27, 2016 the related party QuadEquity Holdings AG has signed a~~ As this commitment to has not been executed, REP Caribbean Development Corporation still owes

~~purchase~~these ~~against~~funds ~~cash~~to ~~this~~the ~~note receivable not later than June 30, 2016~~Company.

F-17

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

PROPERTY & EQUIPMENT

December 31, 2016

December 31, 2015

December 31, 2014

Land

19,700,000

IT Equipment

221,060

185,846

Other equipment and furniture

219,734

278,000

277,557

Leasehold improvements

74,004

66,617

Vehicles

74,000

139,000

Construction in-process

46,457,172

41,412,351

31,275,559

Gross

66,745,970

61,781,814

51,644,579

Less accumulated depreciation

(529,312)

(510,390)

(443,227)

Net

66,216,658

61,271,424

51Depreciation expenses for the period ended December 31,~~201,352~~

~~Depreciation~~2016 ~~expenses~~and ~~for the year~~2015

6761,~~163~~771

6216,~~478~~802

Property and equipment is comprised primarily of land held in Costa Rica that is currently being

developed for hotels and capitalized project costs in connection with the Papagayo Gulf Tourism

project. The land amounts to $19.7 million comprised of $7 million related to the concession ~~held~~

formerly held by Rich Land (~84,000 m2) and $12.7 million formerly held by AdR (~120,000 ~~m2).~~

~~The Rich Land concession is a right to use the property for a specific period of time of initially 20~~m2).

~~years from~~ The $7 million concession is a right to use the ~~date~~ property for a specific period of ~~grant, which thereafter can be renewed at no further cost, if the landholder is~~ time of initially

up20 toyears ~~date~~from ~~with~~the ~~its~~date ~~obligations~~of ~~and~~grant, ifwhich ~~there~~thereafter iscan nobe ~~significant~~renewed ~~change~~at inno ~~government~~further ~~policies.~~cost, ~~The~~if the

~~current concession initially expired~~ landholder is up to date with its obligations and if there is no significant change in ~~June 2022.~~ government

policies. The ~~AdR~~ current concession iswas ~~also a~~initially ~~right~~ set to ~~use~~ ~~the property~~expire ~~for a specific~~in ~~period~~June ~~of time of initially 30~~2022.

~~years from~~ The $12.7 million concession is also a right to use the ~~date~~ property for a specific period of ~~grant, which thereafter can be renewed at no further cost, if the landholder is~~ time of

upinitially 30 to years from the date ~~with its obligations and if there is~~ of grant, which thereafter can be renewed at no ~~significant change in government policies. The~~ further cost, if the

~~current concession initially expired~~ landholder is up to date with its obligations and if there is no significant change in ~~November 2036.~~ 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~~ has unanimously approved the extension of both

concessions until 2052.

The construction in process through December 31, ~~2015~~2016 and December 31, ~~2014~~2015, is represented

primarily by architectural work related to the hotel and apartments as well as construction work.

Deposit related to construction work

For the year ended December 31, ~~2015~~ 2016, the Company had made deposits with several ~~contractors to~~

contractors to initiate earth moving groundwork. These deposits will be offset against invoices ~~for such~~

for such groundwork as completed. As of December 31, ~~2015~~2016 and ~~2014~~2015, the Company has ~~deposits of~~

deposits of $~~798~~190,~~874~~549 and $~~820~~798,~~565~~874 respectively, ~~remaining~~which have not been set off.

F-18

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

DOWN PAYMENTS FOR PROPERTY & EQUIPMENT

December 31, 2016

December 31, 2015

~~December~~La ~~31,~~Punta ~~2014~~(neighbouring piece of land)

La Punta (neighboring piece of land)

2,669,816

2,~~369~~669,816

~~Hotels~~Hotel Engadina

302,267

Gross

2,669,816

2,972,083

~~2,369,816~~Value adjustment on Down Payment La Punta

(2,669,815)

Total (net)

2,972,083

2,369,816

Agreement to purchase neighboring pieces of land

On April 20, 2012, the Company entered into an agreement to purchase two additional ~~concession~~

concession properties located at Polo Papagayo, Guanacaste, with a total surface of ~~approximately 230,000~~

approximately 230,000 square meters for $22,895,806, whereof fifty percent was to be paid in ~~cash and the other fifty~~

~~percent~~cash and the other fifty percent through a combination of a 10 percent equity share in La Punta ~~(the concession properties~~

(the concession properties in Polo Papagayo) and five percent in equity of Paradisus Papagayo ~~Bay Resort & Luxury Villas~~

Bay Resort & Luxury Villas (currently under ~~construction~~ development). Both of these are located in Costa ~~Rica. The payment schedule was~~

~~as follows:~~Rica.

-On November 13, 2012, the above agreement was amended to decrease the total purchase price

to $017,200,200 with no equity payments.5 The terms and conditions of ~~million is required as a~~ the cash payment ~~by May 16, 2012~~ were to

-be defined. Furthermore, all payments by the Company to date and in the future were to be

~~$5.0~~refundable ~~million~~in isthe ~~required~~event asthe apurchase ~~cash~~did ~~payment~~not ~~by August 31, 2012~~close.

$5.698 million is required as a cash payment by January 31, 2013

Equity is required to be transferred upon final payment

On November 13, 2012, the above agreement was amended to decrease the total purchase price to

$17.2 million with no equity payments. The terms and conditions of the cash payment were to be

defined. Furthermore, all payments by the Company to date and in the future became refundable.

During the second quarter of 2013, the Company entered into a new, revised agreement for the

purchase of ~~two~~the ~~additional~~said ~~concession~~ properties. atThe ~~Polo~~original ~~Papagayo,~~agreement ~~Guanacaste.~~(including ~~The~~amendments) ~~original~~as described

~~contract as described~~ above was cancelled and replaced by a new ~~contract~~ agreement, which included the following clauses:

~~following clauses:~~- The total purchase price is $ 17,500,000 of which $ 1,369,816 has been paid as of date

-of the new revised agreement and therefore $16,130,184 was outstanding as per the date

~~The total purchase price is $17,500,000~~ of ~~which $1,369,816 has been paid as of date of~~ the new, revised agreement.

~~agreement and therefore~~ - Since the original seller owes a third party $168,~~130~~000,~~184 is outstanding as per date of the new~~000, ~~revised agreement.~~ the Company was to pay

-$8,000,000 of the purchase price directly to this third party instead of to the original

~~Since the original~~ seller ~~of these two additional concession properties at Polo Papagayo~~. The remaining $8, ~~Guanacaste owes a~~130,184 on the new agreement was to be paid directly to the

~~third~~original ~~party~~seller. ~~$8,000,000~~Payment ~~the~~schedules ~~Company~~were ~~has to pay $8,000,000 of the purchase price directly to this third party~~defined.

instead of the original seller. The remaining $8,130,184 will be paid directly to the original seller of the

concession properties.

The payment schedule for these two additional concession properties at Polo Papagayo Guanacaste is as

hereinafter:

Third Party

$300,000 on May 4, 2013 which was paid on May 3, 2013 and is non-refundable

$1,000,000 on June 30, 2013, which is refundable and $700,000 of this $1,000,000 was paid on October 29,

2013. The remaining $300,000 was paid in 2015.

$1,000,000 on July 31, 2013, which is refundable and has not been paid as of the date of this report.

$1,000,000 on August 31, 2013 which is refundable and has not been paid as of the date of this report.

$1,500,000 on September 30, 2013, which is refundable and has not been paid as of the date of this report.

$1,500,000 on October 31, 2013, which is refundable and has not been paid as of the date of this report.

$1,700,000 on November 30, 2013, which is refundable and has not been paid as of the date of this report.

$8,000,000 in total to Third Party

F-19

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

DOWN ~~PAYMENT~~PAYMENTS FOR PROPERTY & EQUIPMENT - CONTINUED

~~Original~~As ~~Seller~~of this balance sheet date, the following is the situation:

-(USD)

~~$1,000,000 on January 31, 2014 which has not been paid as of the date of this report and is non-refundable.~~(USD)

-Total

~~$1,000,000 on February 28, 2014 which has not been paid as of the date of this report and is non-refundable.~~Description

-USD

~~$1,000,000 on March 31, 2014 which has not been paid as of the date of this report and is non-refundable.~~USD

-USD

~~$1,000,000~~Total ~~on April 30, 2014 which has not been paid as of the date of this report and is non-refundable.~~commitment

-9,500,000

$18,000,000 ~~on May 31, 2014 which has not been paid as of the date of this report and is non-refundable.~~

-17,500,000

~~$1,000,000~~Payments ontill ~~June~~31 30December, ~~2014 which has not been paid as of the date of this report and is non-refundable.~~2016

-1,669,816

$1,000,000 ~~on July 31, 2014 which has not been paid as of the date of this report and is non-refundable.~~

$12,~~130~~669,~~184 on August 31, 2014 which has not been paid as of the date of this report and is non-refundable.~~816

~~$8,130,184~~Thereof ~~in total to Original Seller~~refundable:

~~The Company had paid down payments on the purchase of these properties of $2~~-1,669,816 ~~as of~~

~~December 31~~-700, ~~2015, of which $300,~~000 ~~was paid in refundable payments during the period ended~~

~~December 31~~-2, ~~2015 as part of the new~~369, ~~revised agreement noted above totaling $16,100,000. The~~816

~~Company~~thereof ~~is in discussions with the Original Seller regarding an extension of this agreement.~~non-refundable

~~Additionally, a failure to pay will lead to liquidated damages of 5% of any installments paid toward~~0

~~the purchase price. Should the Company not be successful in obtaining a time extension for the~~300,000

~~payment of the purchase price or amendment to the purchase agreement~~300, ~~it will have to write-off~~000

~~$300,000~~Total ofoutstanding ~~that~~at ~~purchase~~31 ~~price paid in 2013 for the new~~December, ~~revised agreement and 5% of additional~~

~~damages on the additional $1~~7,~~000~~830,~~000 paid for a total of $50,000, which is not refundable as per~~184

~~contract terms.~~7,000,000

~~The original $1~~14,~~369~~830,~~816 was made pursuant to a previous agreement and is not subject to the 5%~~184

~~liquidated~~Thereof ~~damages clause.~~overdue

~~Down payment for Purchase Four Hotels in the Canton of Graubünden~~-7, ~~Switzerland~~830,184

~~On September 19~~-7, ~~2016~~000, ~~the Company signed an agreement for the acquisition of four existing~~000

~~hotels in the Canton of Graubünden~~-14, ~~Switzerland. The properties comprise an aggregate of 141~~830,184

~~rooms.~~Thereof ~~The~~not ~~consideration for this down payment is $302,267, which amount was paid on October~~overdue

~~25, 2015. Should the transaction not close before a date that is yet to be renegotiated then the~~0

~~consideration will not be refundable. In the event that the transaction does close then this~~0

~~consideration will be allocated to the total purchase price for the hotels.~~0

The Company has not fulfilled the terms of either the agreement with the original seller or the

agreement with the third party seller. Notice of termination of the agreement with the third party

was received on January 4, 2014. Despite attempts to renegotiate a new agreement to purchase

the additional concession properties, the Company noticed cancellation of the agreement with

the original seller on February 24, 2017.

The agreement with the original seller entitled the Company to reimbursement for all amounts

paid as deposits against the purchase of the concessions less a liquidated damages penalty of 5%

in the event that the purchase did not close on providing notice of cancellation to the original

seller.

The agreements with the third party seller entitled the Company to reimbursement for all

amounts paid as deposits minus a non-refundable payment of $300,000 and a liquidated damages

penalty of 5% in the event that the purchase did not close on receiving notice of termination.

All expenses related to the agreements with the original seller and the agreement with the third

party seller, were impaired as of December 31, 2016.

Hotel Engadina

This amount of 0 and $ 302,267 as per December 31, 2016 and December 31, 2015 respectively,

related to a purchase option that was bought by QuadEquity Holdings, a related party during the

year ended December 31, 2016.

F-20

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

FAIR VALUE MEASUREMENT

The guidance on fair value measurements defines fair value as the exchange price that would be

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.~~

participants. This guidance also specifies a fair value hierarchy based upon the observability ~~of inputs used in~~

of inputs used in valuation techniques. Observable inputs (highest level) reflect market data ~~obtained from~~

~~independent~~obtained from independent sources, while unobservable inputs (lowest level) reflect internally ~~developed market~~

developed market assumptions. In accordance with this guidance, fair value measurements are ~~classified under the~~

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~~

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~~

the measurements are classified within Level 2. If quoted or observable market prices are not ~~available,~~

available, fair value is based upon internally developed models that use, where possible, current ~~market-based~~

market-based parameters such as interest rates, yield curves and currency rates. These ~~measurements are~~

measurements are classified within Level 3.

Fair value measurements are classified according to the lowest level input or value-driver that is

is significant to the valuation. A measurement may therefore be classified within Level 3 even ~~though~~

though there may be significant inputs that are readily observable.

Fair value measurement includes the consideration of nonperformance risk. Nonperformance ~~risk~~

risk refers to the risk that an obligation (either by counterparty or the Company) will not be ~~fulfilled. For~~

fulfilled. For financial assets traded in an active market (Level 1), the nonperformance risk is ~~included in the~~

included in the market price. For certain other financial assets and liabilities (Level 2 and 3), ~~the Company’s fair~~

the Company’s fair value calculations have been adjusted accordingly.

As of December 31, ~~2015~~2016 and December 31, ~~2014~~2015, respectively, there are no financial assets or

or liabilities measured on a recurring basis at fair value. with the exception of the liability

related to the conversion feature.

F-21

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

FAIR VALUE MEASUREMENT - CONTINUED

In addition to the methods and assumptions to record the fair value of financial ~~instruments as~~

instruments as discussed above, the Company used the following methods and ~~assumptions to estimate the fair~~

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.

—

Receivables from related parties (current) – carrying amount approximated fair value due to the short term nature of

the receivables.

—

Accounts Payable – carrying amount approximated fair value.

—

Note payable – carrying amount approximated fair value due to the short term nature of the note payable.

—

Bank liabilities - carrying amount approximated fair value due to the short term nature of bank liabilities.

—

Notes receivable - carrying amount approximated fair value.

—

Notes payable to related parties - Dr. M. Rӧssler (current) –The ~~fair~~ fair value was calculated based on ~~the underlying~~

the underlying publically traded shares. However, the Company records the loan at nominal value. The Company does not have

sufficient cash to repurchase the shares as of balance sheet date and hence repay the loans in shares.

—

Notes payable to related parties – (current) – carrying amount approximated fair value due to the short term nature of

of the notes payable.

—

EUR– bond (old) – carrying amount approximated fair value due to its short term nature

—

EUR- bonds – The fair values of the bonds payable are classified as level 3 fair values. The fair values of the bonds

have been determined by discounting cash flow projections discounted at the respective interest rates of 7.25% for

EUR bonds, which represents the current market rate based on the creditworthiness of the Company. Hence, the

carrying values approximate fair value.

—

CHF-bonds – The fair values of the bonds payable are classified as level 3 fair values. The fair values of the bonds

have been determined by discounting cash flow projections discounted at the respective interest rates of 7.25% ~~for~~and

6.5% respectively for CHF bonds, which ~~represents~~represented the current market rate based on the creditworthiness of the ~~Company. Hence, the~~

Company at the date of issue. Hence, the carrying values approximate fair value.

—

Notes payable to related parties – Aires (non-current) – The fair values of the notes payable to Aires International

Investments Inc. are classified as level 3. The fair values of the notes were determined by discounting cash flow

projections discounted at the respective interest rates of 7.25%, which represents the current market rate based on ~~the~~

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

~~calculate~~ the option value at each reporting date and multiplied by the number of potentially convertible shares. Hence the

~~Hence the~~ carrying value of the obligation approximates the fair value.

F-22

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

FAIR VALUE MEASUREMENT - CONTINUED

The fair value of our financial instruments is presented in the table below:

December 31, 2016

December 31, 2015

December 31, 2014

Carrying

Fair Value ~~Carrying~~ $

~~Fair Value~~Carrying

Fair Value $ ~~Reference~~Fair Value Ref-

Amount $

Levels

$erence

Cash and cash equivalents

806,440

111,830

14,347

Note 4

Restricted cash

1,667,052

1,684,467

1,684,467 ~~1,684,934~~

1,684,934

Note 5

Receivables from related parties –

~~parties –~~ other (current)

49,292

19,945

27,163

Note 10

Accounts Payable

3,311,512

8,048,608

8,048,608 ~~6,181,057~~

6,181,057

Bank liabilities

179,313

153,375

~~Note11~~Note 11

Note payable

1,500,000

2,736,912

2,736,912 ~~3,023,759~~

3,023,759

Note 17

Notes payable to related parties –

~~parties –~~ Dr. M. Rӧssler (current)

~~803,223~~-

~~765,890~~-

Note 10

~~(current)~~Notes payable to related parties –

~~Notes~~Rigendinger ~~payable to related~~(current)

1,973

1,914

Note 10

~~parties~~Notes –payable ~~Rigendinger~~to ~~(current)~~related parties –

~~Notes~~other ~~payable to related~~(current)

307,088

1,129,005

356,963

Note 10

parties – other (current)

Notes receivable

280,242

0280,242

Note 6

EUR-bonds

484,463

8,488,631

8,488,631 ~~9,057,986~~

9,057,986

Note 12

Convertible CHF-bonds

-38,095,533

~~- 25~~38,~~511~~095,~~898~~533

2528,~~511~~720,~~898~~443

28,720,443

Note 12

~~Convertible~~ CHF-bonds

16,384,893

28,720,443

Note 12

Notes payable to related parties –

Aires (non-current)

51,473,793

47,198,362

47,198,362 ~~30,299,312~~

30,299,312

Note 10

parties – Aires (non-current)

Liability related to conversion

feature

5,936,378

6,976,322

Note 12

The Company's financial liabilities measured at fair value on a recurring basis consisted of the

liability relates to conversion feature as of the following date:

Balance at December 31, 2014

Value at Inception (Loss on Extinguishment) - October 1, 2015

$6,929,614

Q4 Additions

$433,368

Change in Fair Value of Conversion Feature

($386,660)

Balance at December 31, 2015

$6,976,322

Additions

449,283

Change in Fair Value of Conversion Feature

(2'500'486)

Extinguishment of debt

1,165,268

FX Revaluation

(154,010)

Balance at December 31, 2016

5,936,378

F-23

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

FAIR VALUE MEASUREMENT - CONTINUED

The Company used a Black-Scholes model to value the Liability related to conversion feature as of

~~October~~of 1December 31, ~~2015~~2016 and December 31, 2015.

The assumptions as of ~~October~~December 131, ~~2015~~2016 are as follows:

Stock Price: CHF 5.08

Annualized Risk Free Rate: .720001% Exercise Price: CHF 8

Exercise Price: CHF 8

Annualized Volatility: 80%

Time to Maturity: 31.75 years

The assumptions as of December 31, 2015 ~~are~~were as follows:

Stock Price: CHF 5.08

Annualized Risk Free Rate: .72% Exercise Price: CHF 8

~~Exercise~~Annualized ~~Price~~Volatility: 80% ~~CHF~~Time 8to Maturity: 2.75 years

~~Annualized~~The ~~Volatility: 80%~~annualized risk free rate was changed from a US treasury rate to a Swiss treasury rate, as the

~~Time~~underlying tobasis ~~Maturity:~~value ~~2.75~~are ~~years~~shares in a Swiss company denominated in Swiss Francs.

F-24

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

10.

RELATED PARTY TRANSACTIONS

The advances from (to) related parties are composed as follows:

Receivables

Payables

December 31,

December

December 31,

~~December 31,~~2016

31, 2015

2016

2015

2014

2015

2014

Hans Rigendinger

1,973

1,914

Aires International

51,473,793

47,198,362

~~30,299,312~~Akyinyi Interior and Exterior

Dr. Max Rӧssler

-Decoration

803,223

Akyinyi Interior and

Exterior Decoration

290,000

~~170~~290,000

Global Care AG

240,210

186,963

Geoffrey Long

19,945

27,163

7Sportiva participations ag

Sportiva participations

528,660

Late Josef Mettler

~~Josef Mettler~~17,088

70,135

QuadEquity Holdings

10 4f capital ag

~~Total~~Dr. ~~excluding~~Max Rössler

~~interest~~-

Turan Tokay

49,292

Total excluding interest

49,292

19,945

2751,~~163~~780,881

48,329,340

31,461,412

Accrued interest

6,370,579

3,818,494

Total

49,292

19,945

2751,~~163~~780,881

54,699,919

35,279,906

of which non-current

51,473,793

47,198,362

30,299,312

Related party

Capacity

Interest Repayment Security

Rate

Terms

~~Security~~1 Hans Rigendinger Shareholder, CEO and Company board member

1 Hans Rigendinger Shareholder, COO and Company board member

none

2 Aires International Company owned ~~100%~~ by Dr. Max Rössler, a ~~Company~~ board member

3 Dr. Max Rӧssler

Shareholder and Company board member

Akyinyi Interior

43 and Exterior

Company owned by the ~~wife~~widow of ~~CEO,~~the ~~who~~late ~~is also a~~Josef

Decoration

~~Company board member~~Mettler

none

54 Global Care AG

Company owned by Dr. Max Rössler, a board

member

none

65 Geoffrey Long

Head of Accounting “The Americas”

none

76 Sportiva

~~participations~~Participations agAG Company formerly owned by the late Josef Mettler

Company owned by Josef Mettler

none

87 Late Josef Mettler Former shareholder, CEO, CFO and Company board

~~Shareholder, CEO, CFO and Company board~~ member

none

98 ~~Quad~~Turan ~~Equity~~Tokay

~~Company owned by Josef Mettler (see above)~~Shareholder

none

10 4f capital ag

Company owned by Josef Mettler (see above)

none

F-25

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

10.

RELATED PARTY TRANSACTIONS - CONTINUED

Loan agreement Aires International Investment Inc.

As of December 31, ~~2015~~2016, the Company owes Aires International Inc. the following:

Borrower

Debt instrument

Amount in CHF

Amount in Annual

~~Annual~~Repayment date *

Repayment date

denominated in

USD interest

interest

CHF

rate

SunVesta Inc.

Promissory note

10,044,~~370~~371

109,~~234~~855,~~240~~731 7.25 %

~~7.25~~After %Dec 31, 2020

Dec 31, 2017

SunVesta Inc.

Promissory note

10,000,000

109,~~089~~812,~~900~~195 7.25 %

~~7.25~~After %Dec 31, 2020

Dec 31, 2017

SunVesta Inc.

Promissory note

10,000,000

109,~~089~~812,~~900~~195 7.25 %

~~7.25~~After %Dec 31, 2020

Dec 31, 2017

SunVesta Inc.

~~Promissory~~Loan ~~note~~agreement

29,~~750~~675,~~408~~972

29,~~775~~605,~~134~~602 7.25 %

~~7.25~~After %Dec 31, 2020

Dec 31, 2017

SunVesta Holding

Loan agreement

1312,~~904~~625,~~120~~177

1412,~~009~~388,~~188~~070 7.25 %

~~7.25~~After %Dec 31, 2020

Dec 31, 2017

Total

4751,~~198~~473,~~362~~793

The notes may be repaid in whole or in part.

Loans due to Dr. Max Rӧssler

In 2012, Dr. Max Rössler, a related party, provided loans totaling $0.8 million that were initially

repayable in December 2012 but were extended through December 2015. These loans were to be

repaid in cash or with the delivery of certain shares of equity in two public companies. The

Company had the right of settlement and carried the loans at their fair values, which was the

amount of cash paid in without considerations for the change in value of the underlying securities.

In December 2015, Dr. Rössler and the Company settled these loans through a transfer to a separate

debtor - Aires - of $1,551,669 (CHF 1,535,900). The Company assessed this debt modification to

be an extinguishment under the guidance prescribed in ASC 470-50 and correspondingly

recognized a Loss on Extinguishment in its statements of comprehensive loss for $748,466.

Loan due to Global Care AG

~~During 2014~~In April 2016, Global Care AG ~~loaned the Company $186,398~~ (~~CHF 185~~a related party controlled by Dr. Max Rössler,~~000), which amount~~ ~~was~~himself board

~~repayable~~member onand ~~October~~related ~~31,~~party) ~~2014.~~assumed ~~The~~a ~~loan~~liability ~~includes~~of aCHF ~~fixed~~4.5 ~~interest~~million ~~payment~~from ofAires ~~$20,570 (CHF~~International

~~20,000)~~Investment Inc., (also Asa ofrelated party ~~the~~controlled ~~date~~by ofDr. ~~this~~Max ~~report,~~Rössler). ~~both~~This ~~amounts~~CHF ~~are overdue~~4.5 million ~~According to the agreement, there~~was

~~are no penalties for late payment~~subsequently subscribed into bonds of the CHF-Convertible Bond issue. As this conversion

includes a significant conversion option, the exchange is treated as an extinguishment of debt

and an amount of $1,071,317 has been reclassified in the statement of profit or loss from

revaluation of conversion feature to extinguishment of debt. In June 2016, there were the

following changes to the debt structure:

A liability of CHF 2,656,083 was transferred from Dr. Max Rössler to Global Care AG

A liability of CHF 1.5 million was transferred from Sportiva to Global Care

A liability of CHF 1.4 million was transferred from Global Care to Dr. Max Rössler.

In December 2016, Dr. Max Rössler subscribed a loan in the amount of CHF 15.2 million into

bonds of the new CHF-Bond issue 2016-2020. As this conversion did not represent a significant

change of the conditions between the old debt and the new debt, the exchange was not treated as

an extinguishment of debt.

Receivable from and loans to Josef Mettler

OnDuring ~~June 30~~2016, ~~2015,~~the ~~Aires~~payable ~~International~~to ~~Investments, Inc~~Mr. ~~absorbed~~Mettler in the ~~Company’s~~amount ~~receivables~~of ~~from~~$70,135 was repaid.

~~Mr.~~During the third quarter 2016 Josef Mettler ofpassed ~~$1,507,128~~away ~~(CHF 1,419,412) by~~and ~~crediting the amount due to the Company~~companies ~~against~~formerly owned by him

are no longer related parties to the ~~amount due from the~~ Company ~~to Aires~~. ~~As of December 31, 2015, there is a payable to Mr.~~

~~Mettler of~~ During the third quarter 2016, $7017,~~135 (CHF 69,609).~~775 was advanced to the late Josef Mettler for private

~~For the year ended December 31, 2014, the amount borrowed by the Company became a loan~~expenses.

receivable to the Company of $1,455,214. In the third and fourth quarters of 2014, Aires

International Investments Inc. absorbed the Company's receivables from Mr. Mettler by crediting

the amount due to the Company against the amount due from the Company to Aires.

F-26

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

10.

RELATED PARTY TRANSACTIONS - CONTINUED

~~Receivables~~Current ~~from~~account 4fSportiva ~~capital~~Participations AG

~~For~~ During the ~~year~~ period ended December 31, ~~2014,~~ 2016 there were the ~~amount owed by~~ following movements on the ~~Company became a receivable to~~ current

account of Sportiva Participations AG until the ~~Company for $1,142,681 from 4f capital ag~~ death of the late Josef Mettler. At that point,

~~In the third and fourth quarters of 2014, Aires International Investments Inc~~Sportiva Participations AG was no longer a related party. ~~absorbed the~~

~~Company's receivables from 4f capital ag in the amount of $1,142,681 by crediting the amount due~~CHF

~~to the Company against the amount due from the Company to Aires.~~USD

~~For~~Balance ~~the year ended~~ December 31, 2015~~, there were no such transactions.~~

~~Current account Sportiva participations ag~~524,695

~~During the period ended December 31~~528, ~~2015 the Company borrowed approximately $2.8 million~~660

~~and repaid $2.3 million resulting in a payable as of December 31, 2015 of $528,660 (CHF~~Cash paid to SunVesta

~~524~~870,~~695). The Current account Sportiva participations ag carries an interest rate of 3%.~~000

875,780

Cash received from SunVesta

(2,812,911)

(2,867,777)

Transfers from/(to) other related parties

1,502,026

1,545,020

Interest credited to the account

4,801

4,852

Changes in forreign currency

1,976

Transfer to third party upon death of the late Josef Mettler

(88,611)

(88,511)

Balance September 12, 2016

Commissions paid or payable to related parties

During the periods ended December 31, ~~2015~~2016, and December 31, ~~2014~~2015, the Company paid

commissions to 4f Capital AG in the amount of $~~253,945~~ 0 (up to the death of the late Josef Mettler) and ~~$123,000, respectively, for services~~

$253,945, respectively, for services related to financing of the Company. These costs ~~are capitalized as debt issuance costs. 4f Capital AG~~ were

iscapitalized as debt issuance costs. 4f Capital AG was a company owned and directed by ~~Mr. Mettler (Board Member and CEO of~~ the ~~Company)~~ ~~that~~late

~~receives~~ Josef Mettler that received a commission of 1.5% for new funds that the Company receives based ~~on consulting~~

on consulting services rendered by 4f Capital AG.

Hans Rigendinger

In 2013, the Company borrowed $600,000 at 3% interest from Hans Rigendinger. The amount due

to Mr. Rigendinger for this loan at December 31, 2015 was $1,973.

Mr. Rigendinger also held bonds denominated in Euros and Swiss Francs valued at approximately

$492,000 as of December 31, 2015 and $4,316,000 as of December 31, 2014.

Service fees paid or payable to Akyinyi Interior and Exterior Decoration

During the ~~periods~~year ended December 31, ~~2015, and~~ ~~December~~2016 ~~31,~~there ~~2014,~~were ~~the~~no ~~Company~~payments ~~paid~~to ~~fees~~Akyinyi toInterior and Exterior

~~Akyinyi~~Decoration ~~Interior~~ and ~~Exterior~~ ~~Decoration, which is a company owned~~during by the ~~wife~~ ~~of a~~year ~~member of~~ended December 31, 2015, $120,000 fees for decoration services

~~the Board of Directors, related~~ were paid. These costs have been capitalized to ~~interior design of the Papagayo Gulf Tourism project in the~~ property and equipment.

~~amount of approximately $120,000 for both years~~11. ~~These costs have been capitalized to property~~

~~and~~BANK ~~equipment.~~LIABLITIES

The bank liabilities due at December 31, 2016 and 2015 in the amounts of $0 and $153,375

respectively, represented temporary, secured overdraft facilities, bearing an interest rate of 8.9%.

F-27

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

10.

RELATED PARTY TRANSACTIONS - CONTINUED

Consulting Fees paid or payable to Cambridge Limited Corp.

During the periods ended December 31, 2015, and December 31, 2014, the Company paid fees to

Cambridge Limited Corporation, which is a company owned by the father-in-law of a member of

the Board of Directors. These fees related to accounting and consulting services rendered in Costa

Rica for the Company in the amount of approximately $179,279 and $166,851, respectively.

11.

BANK LIABLITIES

The bank liabilities due at December 31, 2015 and 2014 in the amounts of $179,313 and $153,375

respectively, represent temporary, secured overdraft facilities, bearing an interest rate of 8.9%.

12.

BONDS

Description

EUR (€) bond old (repaid)

CHF bond I (repaid)

Issuer:

SunVesta Holding AG

Type of securities:

Bond in accordance with Swiss law

Approval by SunVesta AG BOD:

May 12, 2010

June 3, 2011

Volume:

Up to € 25,000,000

Up to CHF 15,000,000

Units:

€1,000

CHF 50,000

Offering period:

11/10/2010 – 04/30/2011

09/01/2011 – 02/28/2012

Due date:

November 30, 2013

August 31, 2015

Issuance price:

100 %

100%

Issuance day:

December 1, 2010

September 1, 2011

Interest rate:

8.25% p.a.

7.25% p.a.

Interest due dates:

November 30 of each year,

August 31 of each year,

the first time November 30, 2011

the first time August 31, 2012

Applicable law:

Swiss

F-28

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

12.

BONDS - CONTINUED

Description

EUR (€) bond new I

~~CHF~~EUR (€) bond IInew ~~parallel (repaid)~~II

Issuer:

SunVesta Holding AG

Type of securities:

Bond in accordance with Swiss ~~law~~

Bond in accordance with ~~Swiss law~~

Approval by SunVesta AG ~~BOD:~~

October 31, 2013

May 19, 2014

Volume:

Up to ~~€15~~EUR15,000,000

Up to ~~CHF~~EUR 15,000,000

Units:

~~€10~~EUR10,000

~~CHF~~EUR 10,000

Offering period:

11/07/2013 – 03/31/2014

05/01/~~2014~~14 – 06/30/~~2014~~14

Due date:

December 2, 2016

~~August~~December 3102, ~~2015~~2016

Issuance price:

100%

100 %

Issuance day:

December 2, 2013

~~September~~December 0102, 2013 ~~(retroactive)~~

Interest rate:

7.25% p.a.

7.25 % p.a.

Interest due dates:

December 2, 2013

August 31

Applicable law:

Swiss

Description

EUR (€) bond new II (parallel)

Issuer:

SunVesta Holding AG

Type of securities:

Bond in accordance with Swiss law

Approval by SunVesta AG BOD:

May 19, 2014

Volume:

Up to EUR 15,000,000

Units:

EUR 10,000

Offering period:

05/01/14 – 06/30/14

Due date:

December 02, 2016

Issuance price:

100 %

Issuance day::

December 02, 2013 (retroactive)

Interest rate:

7.25 % p.a.

Interest due dates:

December 02

Applicable law:

Swiss

EURO (€) Bond new I

EURO

Bond

(New)

2016

2015

Balances January 1

6,871,630

7,355,572

Cash inflows

281'754

Cash outflows

(6,736,255)

Foreign currency

adjustments

(103,834)

(765'696)

Sub-total

31,541

6,871,630

Discounts (commissions paid to bondholders) and

debt issuance costs

(588,613)

Accumulated amortization of discounts and

debt issuance costs

563,636

432,128

Total accumulated unamortized discounts and

debt issuance costs

(24,977)

(156,485)

Balances December 31 (Carrying value)

6,564

6,715,145

As per date of this report the Company has realized a cumulative amount of EUR 0 related to the

EURO Bond I. This due to the fact, that certain bondholders have not redeemed their principal

amounts up to the date of this report.

F-28

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2016 and 2015

12.

BONDS - CONTINUED

EURO (€) Bond new II

EUR Bond

new II

2016

2015

Balances January 1

1,658,300

1,761,258

Cash inflows

Cash outflows

(159,950)

Reclassification from / to Bond

(953,683)

Foreign currency adjustments

(32,862)

(102,958)

Sub-total

511,805

1'658,300

Discounts (commissions paid to bondholders) and

debt issuance costs

(174,660)

Accumulated amortization of discounts and

debt issuance costs

140,754

148,932

Total accumulated unamortized discounts and

debt issuance costs

(33,906)

(25,728)

Balances December 31 (Carrying value)

477,899

1,632,572

During the year ended December 31, 2016, an amount of $953,683 was reclassified to the new

parallel CHF-Bond III. Since the new debt was not significantly different from the old debt, the

exchange was not treated as an extinguishment of debt.

As per date of this report the Company has realized a cumulative amount of EUR 0 related to the

EURO Bond new II. This due to the fact, that certain bondholders have not redeemed their

principal amounts up to the date of this report.

F-29

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

12.

BONDS –- CONTINUED

On September 30, 2015, the Company approved the issuance of two new convertible CHF-~~bonds. The major~~

bonds. The major terms and conditions are the following:

Description

Convertible CHF Bond I

Convertible CHF Bond II

Issuer:

SunVesta Holding AG

Type of securities:

Senior convertible bonds,

convertible into shares of ~~the~~

the issuer, in accordance ~~with Swiss~~

with Swiss law

Approval by SunVesta AG BOD:

September 30, 2015

Volume:

Up to CHF 45,000,000

Up to CHF 15,000,000

Denomination:

CHF 5,000

Offering period:

October 01, 2015

Maturity date:

September 30, 2018

Issue price:

100 %

Redemption price:

100 %

Issuance date:

October 01, 2015

Coupon:

6.00 % p.a.

Interest due dates:

September 30 of each year, ~~the~~

the first time September 30, ~~2016~~

2016

Reference price:

CHF 6.50

Initial conversion price:

CHF 8.00

Applicable law:

Swiss

In October 2015, Sunvesta Holding AG, a wholly owned subsidiary of the Company settled

approximately $27,300,000 worth of old CHF-Bonds which had matured on August 31, 2015 ~~and~~

and were extended through September 30, 2015 (i.e. unpaid). These CHF-Bonds were rolled ~~forward/exchanged~~

~~into~~forward/ and exchanged for two substantially different convertible bonds of Sunvesta Holding ~~AG. One is a $45,000,000~~

AG. One is a $45,000,000 Convertible Bond and the other a $15,000,000 Convertible Bond as ~~is discussed in tables above.~~

presented in tables above. These new Convertible bonds are substantially different than the ~~previous CHF bonds that matured~~

previous CHF bonds that matured in the third quarter of 2015 and this financing is ~~subsequently accounted for as an extinguishment. The~~therefore

accounted for as an extinguishment. The Company has recorded a loss on extinguishment equal ~~to the fair value of the conversion feature.~~

to the fair value of the conversion feature. Third party issuance costs totaling $3,100,000 ~~have been capitalized and amortized over the life of~~ at

~~the bonds~~inception ~~under~~have ~~the effective~~been ~~interest~~capitalized ~~rate~~and ~~method.~~amortized ~~Finally,~~over the ~~fair~~life ~~value~~ of the ~~liability related to~~bonds under the effective

~~conversion feature was expensed in the period~~interest rate method. Finally, the change of the fair value of the liability related to conversion

feature was expensed in the period.

F-30

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

12.

BONDS - CONTINUED

The nominal and carrying amounts have changed as follows:

CHF Bond

CHF BOND I

2016

2015

2014

Balances January 1

10,999,192

8,558,443

Cash inflows

~~5,542,245~~-

Cash outflows

(5,913,796)

Foreign currency adjustments

159,884

(953,513)

Reclassifications to CHF Bond II

~~(2,147,983)~~-

Reclassifications to Convertible CHF Bond I

(2,005,548)

Reclassifications to Convertible CHF Bond II

(3,239,732)

Sub-total

~~10,999,192~~-

Discounts (commissions paid to bondholders)

(670,764)

Accumulated amortization of discounts

670,764

~~474,294~~Unamortized discounts

Accumulated Unamortized discounts

(196,470)

Balances December 31 (Carrying value)

~~10,802,722~~Balances September 30 and December 31

~~From~~(Carrying ~~the CHF Bond I issue in this rollforward, $2,005,548 was reclassified to the Convertible CHF~~value)

Bond I in the fourth quarter of 2015. Additionally, $3,239,732 was reclassified to the Company's

CHF Convertible Bond II.

In 2014, the Company reclassified $2,147,983 to CHF Bond II. As CHF Bond II has identical terms

as CHF Bond I, this reclassification is neither an extinguishment nor modification.

EUR-Bond

(new)

2015

2014

Balances January 1

7,355,572

6,757,065

Cash inflows

281,754

1,562,402

Cash outflows

~~Foreign~~From the CHF Bond I ~~currency adjustments~~issue in this roll-forward, $2,005,548 was reclassified to the Convertible

~~(765~~CHF Bond I in the fourth quarter of 2015. Additionally,~~696)~~ $3,239,732 was reclassified to the

~~(963,896)~~Company's CHF Convertible Bond II.

~~Sub-total~~CHF

6,871,630

7,355,572

Discounts (commissions paid to bondholders)

(23,753)

(17,305)

Accumulated Amortization of discounts

14,059

4,729

Accumulated Unamortized discounts

(9,694)

(12,576)

Balance December 31 (Carrying value)

6,861,936

7,342,995

F-31

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

12.

BONDS - CONTINUED

As per date of this report the Company has realized a cumulative amount of EUR 6.30 million

($6.87 million) related to the EURO Bond I.

EUR-Bond

old

EURO BOND I

2015

2014

Balances January 1

5,786,248

Cash inflows

Cash outflows

(5,729,712)

Foreign currency adjustments

(56,536)

Sub-total

Discounts (commissions paid to bondholders)

(248,195)

Accumulated Amortization of discounts

248,195

Accumulated Unamortized discounts

Balance December 31 (Carrying value)

CHF Bond II

CHF Bond II

CHF BOND II

Bond

2016

2015

2014

Balances January 1

15,304,228

15,304,228

Cash inflows

10,819,209

12,912,402

Cash outflows

(3,923,675)

Foreign currency adjustments

(51,779)

243,843

Reclassifications from CHF Bond I

~~2,147,983~~-

Reclassifications to Convertible CHF Bond I

(185,127)

Reclassifications to Convertible CHF Bond II

(21,962,856)

Sub-total

~~15,304,228~~-

Discounts (commissions paid to bondholders)

(1,578,825)

(1,041,917)

Accumulated amortization of discounts

1,578,825

~~446,864~~Unamortized discounts

Accumulated Unamortized discounts

(595,052)

Balances December 31 (Carrying value)

~~14,709,176~~Balances September 30 and December 31 (Carrying

~~From the CHF Bond II issue in this rollforward, $185,127 was reclassified to the Convertible CHF~~-

~~Bond I in Q4 2015. Additionally, $21,962,856 was reclassified to the Company's CHF Convertible~~-

~~Bond II.~~value)

~~F-32~~From the CHF Bond II issue in this roll forward, $185,127 was reclassified to the Convertible

CHF Bond I in the fourth quarter of 2015. Additionally, $21,962,856 was reclassified to the

Company's CHF Convertible Bond II.

F-31

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

12.

BONDS - CONTINUED

~~EUR-Bond~~Convertible CHF BOND I

EUR-Bond

new II

EURO BOND NEW II

2015

2014

Balances January 1

1,761,258

Cash inflows

1,960,226

Cash outflows

Foreign currency adjustments

(102,958)

(198,968)

Sub-total

1,658,300

1,761,258

Discounts (commissions paid to bondholders)

(59,740)

Accumulated Amortization of discounts

28,135

13,473

Accumulated Unamortized discounts

(31,605)

(46,266)

Balances December 31 (Carrying value)

1,626,695

1,714,991

As per date of this report, the Company has realized a cumulative amount of EUR 1.51 million

($1.64 million) related to the EURO Bond new II.

Convertible

CHF Bond I

~~Convertible CHF BOND I~~2016

2015

2014

Balances January 1

2,250,048

Cash inflows

~~100~~1,~~990~~640,887

-100'990

Cash outflows

(103,008)

Foreign currency adjustments

(105,058)

(41,617)

-Reclassifications to / from Bond (net)

~~Reclassifications from CHF Bonds I and II~~(34,486)

2,190,675

Sub-total

3,648,383

2,250,048

Discounts (commissions paid to bondholders) and debt issuance costs

(136,722)

(136,219)

Accumulated Amortization of discounts and debt issuance costs

117,652

57,896

Reclassification to CHF Bonds

(104,038)

~~Discounts~~Total ~~(commissions~~Accumulated ~~paid~~Unamortized todiscounts ~~bondholders)~~and debt issuance costs

-(123,108)

~~Accumulated Amortization of discounts~~(78,323)

Accumulated Unamortized discounts

Balances December 31 (Carrying value)

23,~~250~~525,~~048~~275

-2,171,725

InSince the ~~fourth~~new ~~quarter~~debt ofwas ~~2015,~~not ~~the~~significantly ~~Company~~different ~~issued~~from ~~this~~the ~~Convertible~~old ~~CHF~~debt, ~~Bond~~the Iexchange ~~with~~was ~~funds~~not ~~received~~treated

~~from~~as an extinguishment ~~new bondholders totaling $100,990~~of debt. ~~Additionally~~Furthermore, $2599,~~005~~700 (CHF 600,~~548~~ 000) was ~~reclassified~~ converted from ~~CHF~~ a loan.

~~Bond~~Since Ithe ~~and~~new ~~$185,127~~debt was ~~reclassified~~significantly different from ~~CHF Bond II.~~ the old debt, the exchange was treated as

~~As per date~~ an extinguishment of debt and an amount of ~~this report~~$93,950.87 ~~the~~was ~~Company~~accounted ~~has~~for ~~realized~~as a ~~cumulative~~loss ~~amount of CHF 2.42 million~~on

~~($2.64~~extinguishment ~~million)~~of ~~related to the Convertible Bond I~~debt.

~~F-33~~As per date of this report, the Company has realized a cumulative amount of CHF 3.6 million

($3.5 million) related to the Convertible Bond I.

During the year ended December 31, 2016, the Company reclassified $634,186 (CHF 630,000)

from convertible CHF Bond I to convertible CHF Bond II, together with a corresponding

amount of $104,038 of capitalized debt issuance costs.

F-32

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

12.

BONDS - CONTINUED

Convertible CHF BOND II

Convertible

CHF Bond II

~~Convertible CHF BOND~~ II 2016

II 2015

2014

Balances January 1

26,470,395

Cash inflows

7,142,850

1,747,122

Cash outflows

(787,371)

Foreign currency adjustments

(1,187,441)

(479,315)

-Reclassifications to CHF Bonds

~~Reclassifications from CHF Bonds I and II~~5,131,937

25,202,588

Sub-total

36,770,369

26,470,395

Discounts (commissions paid to bondholders) and debt issuance costs

(4,890,690)

(2,977,065)

Accumulated Amortization of discounts and debt issuance costs

2,586,541

201,093

Reclassification to CHF Bonds

104,038

~~Discounts~~Total ~~(commissions~~Accumulated ~~paid~~Unamortized todiscounts ~~bondholders)~~and debt issuance costs

0(2,200,111)

(2,775,972)

Balances December 31 (Carrying value)

34,570,259

23,694,423

As per date of this report the Company has realized a cumulative amount of CHF 33.20 million

($32.7 million) related to the Convertible Bond II.

During the year ended December 31, 2016, the Company reclassified $634,186 (CHF 630,000)

from convertible CHF Bond I to convertible CHF Bond II, together with a corresponding

amount of $104,038 of capitalized debt issuance costs.

In April 2016, Global Care AG (a related party controlled by Dr. Max Rössler, a Company

board member and related party) assumed a liability of CHF 4.5 million from Aires International

Investment Inc., (also a related party controlled by Dr. Rössler). This CHF 4.5 million was

subsequently subscribed into bonds of the CHF Convertible Bond issue. As the conversion

inclues a significant conversion option, the exchange is treated as an extinguishment of debt and

an amount of $1,071,317 has been reclassified in the statement of profit or loss from revaluation

of conversion feature to extinguishment of debt.

Included in this amount is approximately $6.20 million (CHF 6.32 million), which, by

agreement between the Company and the bondholders and as a deviation from the standard

terms, was repayable as of February 28, 2017. As these amounts were due within 12 months from

the reporting date, these funds are classified within current liabilities on the consolidated balance

sheet.

As per date of this report, approximately $1.1 million have been repaid, the remaining amount

was extended under unchanged conditions and are planned to be converted into a new bond issue

during May 2017.

The Company initiated a new 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.

F-33

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2016 and 2015

12.

BONDS - CONTINUED

Description

Convertible 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

We had realized $15,547,647 as of the year ended December 31, 2016. Included in this amount

is $15,192,404 (CHF 15.2 million) that was converted from loans from related parties. Since the

new debt was not significantly different from the old debt and did not include a conversion

feature deemed substantive, the exchange was not treated as an extinguishment of debt.

CHF BOND III

CHF

original

Bond III

2016

2015

Balances January 1

~~Accumulated~~Cash ~~Amortization of discounts~~inflows

699,650

Cash outflows

Foreign currency adjustments

(290,665)

Reclassifications to / from Bonds

15,192,404

Sub-total

15,601,389

Discounts (commissions paid to bondholders) and debt issuance costs

(106,618)

Accumulated Amortization of discounts and debt issuance costs

3,814

Total Accumulated Unamortized discounts and debt issuance costs

(102,804)

Balances December 31 (Carrying value)

15,498,586

As per date of this report the Company has realized a cumulative amount of CHF 16.7 million

($16.5 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 was reclassified from EUR Bond II.

F-34

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2016 and 2015

12.

BONDS - CONTINUED

Since the new debt was not significantly different from the old debt, the exchange was not treated as

an extinguishment of debt. We had realized a cumulative amount of $886,307 as of the year ended

December 31, 2016.

CHF BOND III

CHF Bond III

CHF Bond III

parallel

2016

2015

Balances January 1

~~Accumulated~~Cash ~~Unamortized discounts~~inflows

~~Balances~~Cash ~~December 31 (Carrying value)~~outflows

26,470,395

~~In fourth~~Foreign ~~quarter of 2015, the Company issued this Convertible CHF Bond II with funds received~~currency

~~from new bondholders totaling $1,747,122. Additionally, $3,239,732 was reclassified from CHF~~adjustments

~~Bond I and $21~~(17,~~962,856 was reclassified from CHF Bond II.~~915)

~~As per date of this report the Company has realized a cumulative amount of CHF 29.05 million~~Reclassifications to / from Bonds

~~($29.27 million) related to the Convertible Bond II.~~979,510

FSub-34total

961,595

Discounts (commissions paid to bondholders) and debt issuance costs

(79,289)

Accumulated Amortization of discounts and debt issuance costs

4,001

Total Accumulated Unamortized discounts and debt issuance costs

(75,288)

Balances December 31 (Carrying value)

886,307

As per date of this report the Company has realized a cumulative amount of CHF 0.9 million ($0.9

million) related to the CHF Bond III parallel.

F-35

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

13.

INCOME TAXES

The components of loss before income taxes are as follows:

December 31, 2016

December 31, 2015

December 31, 2014

Domestic

(1,411,971)

(3,863,810)

(1,571,359)

Foreign

(159,~~867~~549,~~261~~369)

(615,~~379~~867,~~627~~262)

Loss before income tax

(1910,~~731~~961,~~071~~340)

(719,~~950~~731,~~986~~072)

Income taxes relating to the Company’s operations are as follows:

December 31, 2016

December 31, 2015

December 31, 2014

Current income taxes

US Federal, state and local

Foreign

(1,151)

Deferred income taxes

US Federal, state and local

Foreign

Income tax expense/recovery

(1,151)

(1,151)

Income taxes at the United States federal statutory rate compared to the Company’s income tax

expenses as reported are as follows:

December 31, 2016

December 31, 2015

December 31, 2014

Net loss before income tax

(1910,~~731~~961,~~071~~340)

(719,~~950~~731,~~986~~072)

Statutory rate

35%

Expected income tax recovery

(3,836,469)

(6,905,875)

(2,782,845)

Impact on income tax expense/recovery from

Change in valuation allowance

3,518,283

4,979,054

1,284,444

Different tax rates in foreign jurisdictions

921,953

697,632

140,441

Expiration of unused tax loss carry forwards

502,483

268,151

Permanent differences

(645,752)

1,803,538

-Difference due to tax review / previous year

~~Tax penalty US Federal~~(317, ~~state and local~~710)

Difference due to tax review / previous year adjustments

(633,957)

~~1,263,087~~adjustments

Others

(142,789)

58,457

(173,278)

Income tax expense

(1,151)

F-36

F-35

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

13.

INCOME TAXES - CONTINUED

The Company’s deferred tax assets and liabilities consist of the following:

December 31, 2016

December 31, 2015

December 31, 2014

Deferred tax assets

Tax loss carry forward

20,370,022

17,321,345

12,342,291

Valuation allowance

(20,370,022)

(17,321,345)

(12,342,291)

Deferred tax assets/liabilities

As of ~~April 2~~ December 31, ~~2012~~ 2016 and 2015, ~~the Company was advised by the Internal Revenue Service (IRS) of aggregate~~ there were no known uncertain tax positions. We have not

~~penalties~~identified ~~amounting~~any totax ~~$140,000.~~positions ~~This~~for ~~penalty concerns~~which ~~failures~~it tois ~~file~~reasonably ~~certain~~possible ~~tax~~that ~~returns~~a ~~for~~significant ~~the~~change will

~~years ended 2008, 2009 and 2010. Despite an ongoing appeal process,~~ occur during the ~~Company changed its~~ next 12 months.

~~assessment~~Pursuant ~~during~~to ~~the~~ASC ~~year~~740-10-25-3 ~~ended~~Income ~~December 31~~Taxes, ~~2012 and~~an ~~determined~~income ~~that~~tax itprovision ishas ~~“more~~not ~~likely than~~been made for

~~not” that it will have to pay the penalty~~U. ~~Therefore,~~ S. or additional foreign taxes since none of the subsidiaries of the Company ~~recorded $140,000 in income tax~~ are generating

~~expense~~income nor are expected to in the foreseeable future. The company expects that future earnings

Aswill ~~of December 31~~be reinvested, ~~2015~~but could ~~and~~become ~~2014,~~subject to additional tax ~~there~~ if they were noremitted ~~known uncertain tax positions. We have not~~as dividends

~~identified any tax positions for which it is reasonably possible that a significant change will occur~~or were loaned to the Company, or if the Company should sell or dispose of its stock in the

~~during the next 12 months~~foreign subsidiaries. It is not practical to determine the deferred tax liability, if any, that might

~~Pursuant~~ be payable on foreign earnings because if the Company were to ~~ASC 740-10-25-3~~ ~~Income Taxes, an income tax provision has~~repatriate ~~not~~these ~~been made for U.S.~~earnings, the

~~or additional foreign taxes since all subsidiaries of the~~ Company ~~are not generating income nor are~~ believes there would be various methods available to it, each with different U.S. tax

~~expected to in the foreseeable future~~consequences. ~~The company expects that future earnings will be reinvested,~~

~~but could become subject~~ The Company’s operating loss carry forward of all jurisdictions expire according to ~~additional tax if they were remitted as dividends or were loaned to~~ the

~~Company,~~following ~~or if the Company should sell or dispose of its stock in the foreign subsidiaries. It is not~~schedule:

practical to determine the deferred tax liability, if any, that might be payable on foreign earnings

because if the Company were to repatriate these earnings, the Company believes there would be

various methods available to it, each with different U.S. tax consequences.

The Company’s operating loss carry forward of all jurisdictions expire according to the following

schedule:

Domestic

Foreign

2016

764,332

2017

5,~~674~~129,~~921~~934

2018

9,~~940~~083,~~370~~582

2019

6,~~381~~215,~~864~~044

2020

2,~~680~~610,~~101~~044

2021

7,~~624~~707,~~181~~090

2022

147,~~832~~458,~~242~~249

~~Beyond 2022~~2023

20392,~~229,018~~931

14,899,080

Beyond 2023

21,177,817

Total operating loss carry forwards

2021,~~229~~570,~~018~~748

4753,~~898~~103,~~011~~23

F-3637

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

13.

INCOME TAXES - CONTINUED

The following tax years remain subject to examination:

United States of America

Switzerland

Costa Rica*

2008

YES

N/A

2009

YES

N/A

2010

YES

N/A

2011

YES

N/A

2012

YES

~~YES~~NO

N/A

2013

YES

~~YES~~NO

2014

YES

2015

YES

~~2015~~NO

2016

YES

* The Costa Rican companies are taxable since 2013.

F-3738

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

14.

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~~

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~~

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~~

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~~

that involve several actuarial assumptions, the most significant of which are the discount rate ~~and the~~

and the long-term rate of asset return (based on the market-related value of assets). The fair ~~values of plan~~

values of plan assets are determined based on prevailing market prices.

~~Net~~The ~~periodic~~projected ~~pension~~benefit ~~cost~~obligation ~~has~~and ~~been~~the ~~included~~fair invalue ~~the~~of ~~Company’s~~plan ~~results~~assets have changed as follows:

2016

2015

2014

Projected Benefit Obligations beginning of year

463,576

352,704

293,423

Service cost - current

60,070

56,927

50,733

Interest expense

3,698

5,239

5,356

Benefit payments and transfers

(102,949)

(12,091)

(12,127)

Actuarial gains/losses

(42,879)

61,864

42,749

Currency translation losses

(10,616)

(1,067)

(27,430)

Projected Benefit Obligations end of year

370,901

463,576

352,704

Fair Asset Values beginning of year

252,896

216,271

202,896

Expected returns

7,496

6,448

5,558

Contributions paid

39,980

46,348

42,446

Benefits paid and transfers

(102,949)

(12,091)

(12,127)

Actuarial gains/losses

(5,497)

(3,426)

(3,537)

Currency translation losses

(5,494)

(654)

(18,965)

Fair Asset Value of assets end of year

186,432

252,896

216,271

Net liabilities

(184,469)

(210,680)

~~(136,433)~~F-39

F-38

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

14.

PENSION PLAN - CONTINUED

The following were the primary assumptions:

Future benefits, to the extent that they are based on compensation, include salary increases, as

presented above, consistent with past experiences and estimates of future increases in the Swiss

labor market.

December 31, 2016

December 31, 2015

December 31, 2014

Assumptions at year end

Discount rate

0.60%

0.80%

1.50%

Expected rate of return on plan assets

3.00%

Future salary increases

1.50%

Future pension increases

0.00%

Net periodic pension costs have been included in the Company’s results as follows:

December 31, 2016

December 31, 2015

December 31, 2014

Pension expense

Current service cost

$60,070

56,927

50,733

Net actuarial (gain) loss recorded

2,499

(606)

Interest cost

3,698

5,239

5,356

Expected return on assets

(7,496)

(6,448)

(5For the years ended December 31,~~558)~~ 2016 and December 31, 2015 the Company made cash

~~Employee~~ contributions of $88,312 and $23,000, respectively, to its defined benefit pension plan.

~~(23,174)~~All of the assets are held under the collective contract by the plan’s re-insurance Company and

~~(21,223)~~are invested in a mix of Swiss and international bond and equity securities within the limits

~~Net~~prescribed ~~periodic~~by ~~pension~~the ~~cost~~Swiss Pension Law.

$The expected future cash flows to be paid by the Company in respect of employer contribution

32to the pension plan for the year ending December 31,~~544~~ 2017 are $20,000.

~~28,701~~F-40

For the years ended December 31, 2015 and December 31, 2014 the Company made cash

contributions of $23,000 and $21,200, respectively, to its defined benefit pension plan.

All of the assets are held under the collective contract by the plan’s re-insurance Company and are

invested in a mix of Swiss and international bond and equity securities within the limits prescribed

by the Swiss Pension Law.

The expected future cash flows to be paid by the Company in respect of employer contribution to

the pension plan for the year ending December 31, 2016 are $23,000.

F-39

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

15.

STOCK COMPENSATION

The Company has included share based compensation under the SunVesta Inc. Stock Option ~~Plan~~

Plan 2013 (“the Plan”) as part of the total remuneration in certain employment and Board of ~~Director’s~~

Director’s contracts. The Company is authorized to grant up to 50,000,000 shares under the ~~Plan.~~

~~The purpose of the~~ Plan ~~is to advance the interests of the Company by encouraging its employees to~~.

~~remain associated with~~ The purpose of the ~~Company and assist~~ Plan is to advance the interests of the Company in ~~building value. Such share based~~by encouraging its

~~remuneration includes either shares or options~~ employees to ~~acquire shares of~~ remain associated with the Company~~’s common stock~~ and assist the Company in building value.

~~For all employees, fair value is estimated at the grant date. Compensation costs for unvested~~ Such share based remuneration includes either shares or options to acquire shares of the

~~are expensed over~~ Company’s common stock. For all employees, fair value is estimated at the ~~requisite service period on a straight-line basis~~ grant date.

Compensation costs for unvested shares are expensed over the requisite service period on a

straight-line basis.

Share Grants – Mr. Hans Rigendinger

On January 1, 2013, the Company granted to Hans Rigendinger 3,500,000 common shares, ~~valued~~

valued at $0.08 an amount equal to the share price and fair value of the shares on the grant date. ~~These~~

These shares were granted as a signing bonus with the Company. Additionally, the Company ~~granted~~

granted 2,500,000 common shares as a retention award due on each anniversary of his signing ~~with the~~

with the Company. The employment contract was initially for three years with an additional ~~bilateral option~~

bilateral option for an additional two years. Therefore, the Company could be required to issue ~~up to 12,500,000~~

up to 12,500,000 common shares through January 1, 2018.

Share Grants – Dr. Max Rössler

On July 3, 2013, the Company granted to Dr. Max Rössler 3,000,000 common shares, valued at

$0.07 an amount equal to the share price and fair value of the shares on the grant date. These ~~were~~

were issued in connection with his appointment to the Board of Directors. These shares were ~~officially~~

officially issued on October 15, 2013.

Share Grants – Mr. Josef Mettler

On July 4, 2013, the Company granted 5,000,000 common shares to Josef Mettler, valued at ~~$0.07,~~

$0.07, an amount equal to the share price and fair value of the shares on the grant date, in ~~connection with~~

connection with his employment agreement. These shares were officially issued on October 15, ~~2013. Additionally,~~

2013. Additionally, the Company granted 3,000,000 common shares as a retention award for ~~each completed year of~~

each completed year of employment (e.g. first time as per July 4, 2014). The employment ~~contract is for an initial term of~~

contract is for an initial term of three years with an additional bilateral option for another two, ~~two-year periods, but a maximum of~~

~~December~~two-year periods, but a maximum of December 31, 2020. Therefore, in total the Company could ~~be requested to issue up to 21,000,000~~

be requested to issue up to 21,000,000 common shares through December 31, 2020 related to the ~~retention bonus.~~

~~F-40~~retention bonus.

Since Josef Mettler passed away during the third quarter 2016, 3,000,000 common shares were

issued to his estate as earned compensation as of July 4, 2016. From after this date, the necessary

accrual up until his passing away has been reversed as of December 31, 2016.

F-41

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

15.

STOCK COMPENSATION - CONTINUED

Share Grants – Mr. José María Figueres

On March 10, 2014, the Company authorized the issuance of 500,000 common shares, valued at

at $0.10, an amount equal to the share price and therefore the fair value on grant date, and a ~~retention~~

retention award of 200,000 common shares for each fully completed year of service to José ~~María Figueres~~

María Figueres in connection with his appointment to the Board of Directors.

Share Grants – Mr. Howard M. Glicken

On March 10, 2014, the Company authorized the issuance of 500,000 common shares, valued at

at $0.10, an amount equal to the share price and therefore the fair value on grant date, and a ~~retention~~

retention award of 200,000 common shares for each fully completed year of service to Howard ~~Glicken in~~

Glicken in connection with his appointment to the Board of Directors.

Based on these contracts the Company has included the following stock-based compensation in ~~the~~

the Company’s results:

Stock-based compensation (shares)

December 31, 2016

December 31, 2015

December 31, 2014

Shares granted

46,800,000 shares

46,~~400~~800,000 shares

Fair Value respectively market price on grant date

$0.0746

$0.0744

Total maximal expenses (2013-2020)

$3,490,000

$3,450,000

Shares vested

29,800,000 shares

23,900,000 shares

~~18,000,000~~Shares ~~shares~~forfeited

12,000,000 shares

23,900,000 shares

Unvested shares

5,000,000 shares

22,900,000 shares

28As of December 31,~~400~~ 2016,~~000~~ the Company ~~shares~~expects to record compensation expense in the future

Asup ofto ~~December 31~~$200,000 ~~2015,~~as ~~the Company expects to record compensation expense in the future up to~~follows:

$1,345,000 as follows:

Stock-based

Year ending December 31,

compensation

2016

2017

2018

2019

2020

2021

(shares)

Unrecognized

compensation

~~410~~200,000

~~410,000~~0

~~210,000~~0

~~105,000~~0

expense

F-4142

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

15.

STOCK COMPENSATION - CONTINUED

Stock Options – Mr. Hans Rigendinger

The Company granted to Hans Rigendinger, in connection with his employment contract,

10,000,000 stock options on January 1, 2013. Each option entitles Mr. Rigendinger to buy one

Company share at a strike price of $0.05. These options will be vested in two identical ~~installments~~

installments (installment A and B) of 5,000,000 options.

Installment A is contingent on obtaining a financing arrangement with a specific counterparty. As

As of the grant date, the fair value was $300,000. As of July 4, 2013, the Company assessed that ~~this~~

this financing arrangement with the specific counterparty will not be completed. Therefore, the

Company assessed the probability of completion to be zero and recognized no expense. On July 4,

4, 2013, the Company authorized a revised stock option agreement. This removed the requirement ~~for~~

for financing with a specific counterparty and updated for any counterparty. As of date of the ~~revised~~

revised stock option agreement, the fair value was $246,000. Installment A was modified on ~~July 4, 2013,~~

July 4, 2013, since the initial performance condition was improbable to be met. Since the ~~modification changed~~

modification changed the expectation that the options will ultimately vest and no expense had ~~been recognized for the~~

been recognized for the original award, the fair value of the modified award has been expensed ~~on a straight line basis over~~

on a straight line basis over the expected vesting period.

For installment B, it is required that Meliá Hotels International (“Melía”) assumes management

responsibilities for Paradisus Papagayo Bay Resort & Luxury Villas. As of grant date, the fair ~~value~~

value was $340,000 and the Company estimated that Meliá ~~assumes~~would assume responsibility as of ~~July 1, 2015. As~~

July 1, 2015. As of March 6, 2014, the Company still ~~assesses~~assessed the probability that this ~~performance condition will be~~

performance condition would be met at 100%, but the date by which the performance condition ~~will be achieved was postponed to the fourth~~

would have to be achieved was postponed to the fourth quarter 2015, as the opening date was ~~postponed. As of the date of this report, the estimated~~

~~opening~~postponed. As of the date ~~was~~of ~~postponed~~this toreport, the ~~fourth~~estimated ~~quarter~~opening ~~2017.~~date ~~The~~was ~~Company~~postponed ~~still~~to ~~assessed~~ the ~~probability~~fourth

~~that~~quarter ~~this~~2018, ~~performance~~as ~~condition~~was ~~will~~the berequired ~~met~~date atof ~~100%. Hence,~~ the ~~remaining~~performance ~~fair~~condition. ~~value~~The ofCompany ~~the~~still ~~award~~assessed

~~will~~the beprobability ~~expensed~~that onthis aperformance ~~straight-line~~condition ~~basis~~will ~~over~~be ~~the~~met ~~recalculated~~at ~~expected~~100%. Hence, the remaining ~~vesting-period.~~fair

Fvalue of the award will be expensed on a straight-42line basis over the recalculated expected

remaining vesting period.

F-43

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

15.

STOCK COMPENSATION - CONTINUED

Stock Options – Dr. Max Rӧssler

The Company granted to Dr. Max Rӧssler, in connection with his appointment to the Board of

Directors, 10,000,000 stock options on July 3, 2013. Each option entitles Dr. Rӧssler to buy one

Company share at a strike price of $0.05. These options will be vested in two identical ~~installments~~

installments (installment A and B) of 5,000,000 options.

For installment A (5,000,000 options), it is required to complete a financing arrangement for the

Project. As of grant date, the fair value was $249,835. The Company expensed the total fair ~~value~~

value on a straight-line basis over the expected vesting period.

For installment B (5,000,000 options), it is required that Meliá assumes management

responsibilities for Paradisus Papagayo Bay Resort & Luxury Villas. As of grant date the fair ~~value~~

value was $258,210 and the Company estimated that Meliá would assume responsibility as of ~~July 1,~~

July 1, 2015. As of March 6, 2014 the Company ~~assessed~~ still assesses the probability that this ~~performance condition~~

~~will~~ performance condition would be met at 100%, but the date by which the performance condition ~~will be achieved was postponed to the~~

would have to be achieved was postponed to the fourth quarter 2015, as the opening date was ~~postponed. As of the date of this report, the estimated~~

postponed. As of the date of this report, the estimated opening date was postponed to the fourth ~~quarter 2017. The Company still assessed the probability~~

~~that~~quarter ~~this~~2018, as ~~performance~~was the ~~condition~~required ~~will~~date beof ~~met~~the atperformance ~~100%~~condition. ~~Hence,~~The ~~the~~Company ~~remaining~~still ~~fair value of the award~~assessed

~~will~~the probability that this performance condition will be ~~expensed on a straight-line basis over~~ met at 100%. Hence, the ~~recalculated expected~~ remaining ~~vesting-period.~~ fair

value of the award will be expensed on a straight-line basis over the recalculated expected

remaining vesting period.

Stock Options – Mr. Josef Mettler

The Company granted to the late Josef Mettler, in connection with his employment contract, ~~12,000,000~~

12,000,000 stock options on July 4, 2013. Each option ~~entitles~~ entitled the late Mr. Mettler to buy one ~~share at a strike price of~~

share at a strike price of $0.05. These options ~~have~~ had three different performance conditions. For

~~For~~ installment A (3,000,000 options), it is was required to complete a bridge financing arrangement. As

As of grant date the fair value was $149,000. The Company expensed the total fair value on a

straight-~~line~~ line basis over the expected vesting period. For installment B (4,000,000 options), it was

~~For installment B (4,000,000 options), it is~~ required to complete a financing arrangement (main financing arrangement for Paradisus

~~financing arrangement for Paradisus~~ Papagayo Bay Resort & Luxury Villas). As of grant date the fair value was $200,000. The

~~fair value was $200,000. The~~ Company has expensed the total fair value on a straight-line basis over the expected vesting

~~over the expected vesting~~ period. For installment C (5,000,000 options), it was required that Meliá assumes management

~~For installment C (5~~responsibilities for Paradisus Papagayo Bay Resort & Luxury Villas. As of grant date,~~000,000 options), it is required that Meliá assumes management~~ the fair

~~responsibilities for Paradisus Papagayo Bay Resort & Luxury Villas. As of grant date~~value was $258, 000 and the Company ~~fair~~estimated that Meliá assumes responsibility ~~value~~as of July 1,

~~was $258~~2015. As of March 6,~~000 and~~ 2014 the Company ~~estimated~~ still assessed the probability that ~~Meliá assumes responsibility as of July 1, 2015. As~~ this performance

~~of March 6~~condition would be met at 100%, ~~2014~~ but the ~~Company still assesses~~ date, up to which the ~~probability that this~~ performance condition ~~will be~~ would

~~met~~have atto ~~100%,~~be ~~but~~achieved ~~the~~was ~~date~~postponed to the ~~performance~~fourth ~~condition~~quarter ~~will~~2015, beas ~~achieved~~the ~~was~~opening ~~postponed~~date towas ~~the fourth~~postponed.

~~quarter 2015, as the opening date was postponed.~~ As of the date of this report, the estimated opening date was postponed to the fourth quarter 2018,

~~opening date~~ as was ~~postponed to~~ the ~~fourth quarter 2017~~ required date of the performance condition. Due to his passing away during ~~The Company still assessed~~ the ~~probability~~ third

quarter 2016, the probability that ~~this~~ any of the above performance condition will be met ~~at 100~~ is 0%. ~~Hence, the remaining fair value of the award~~

~~will be expensed on a straight-line basis over~~ Therefore, all previously recognized expenses in the ~~recalculated expected remaining vesting-period.~~ amount of $561,064 – corresponding to

~~F-43~~options that have not yet vested for all installments above–have been reversed as of December

31, 2016.

F-44

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

15.

STOCK COMPENSATION - CONTINUED

Summary

A summary of stock options outstanding as per December 31, ~~2015~~2016 is as follows:

Options outstanding

Number of Options

Weighted average

Options

exercise price

remaining

contractual life

Outstanding January 1, ~~2015~~2016

32,000,000

$ 0.05

87.42 years

Granted

Exercised

Forfeited or expired

0(12,000,000)

Outstanding December 31, ~~2015~~2016

3220,000,000

$ 0.05

76.4238 years

Exercisable December 31, ~~2015~~2016

The following table depicts the Company’s non-vested options as of December 31, ~~2015~~2016 and

changes during the period:

Non-vested options

Shares under ~~Options~~

Weighted average ~~grant~~

~~date fair value~~Options

~~Non-vested~~grant atdate ~~December 31, 2014~~fair

value

Non-vested at January 1, 2016

32,000,000

$ 0.053

~~Granted~~Non-vested-granted

Vested

~~Forfeited~~Non-vested, forfeited or ~~canceled~~cancelled

(12,000,000)

Non-vested at December 31, 2016

~~Non-vested at December 31~~20, ~~2015~~000,000

~~32,000,000~~$ 0.075

~~$ 0.053~~Under the provisions of ASC 718 Compensation – Stock Compensation, the Company is

~~Under the provisions of ASC 718 Compensation – Stock Compensation, the Company is~~ required to measure and recognize compensation expense related to any outstanding and

tounvested ~~measure~~stock options previously granted, and thereafter recognize, ~~compensation~~in its ~~expense~~consolidated ~~related to any outstanding and unvested stock~~financial

~~options previously granted, and thereafter recognize, in its consolidated financial~~ statements, compensation expense related to any new stock options granted after implementation

~~compensation~~using ~~expense~~a ~~related~~calculated tofair ~~any~~value ~~new~~based ~~stock~~option-pricing ~~options~~model. ~~granted~~The ~~after~~Company ~~implementation~~uses ~~using~~the aBlack-Scholes

~~calculated fair value based~~ option- pricing model~~. The Company uses~~ to calculate the ~~Black-Scholes~~ fair value of all of its stock options and its assumptions are

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. The following assumptions were used to

calculate the compensation expense and the calculated fair value of stock options granted:

Assumption

December 31, 2016

December 31, 2015

December 31, 2014

Dividend yield

Risk-free interest rate used (average)

Expected market price volatility

Average expected life of stock options

n.a.

FThe computation of the expected volatility assumption used in the Black-44Scholes 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.

F-45

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

15.

STOCK COMPENSATION - CONTINUED

~~The~~As ~~computation~~ of ~~the~~December ~~expected~~31, ~~volatility~~2016, ~~assumption~~the ~~used~~Company inhad ~~the~~unrecognized ~~Black-Scholes~~compensation ~~calculation~~expenses ~~for~~related to

~~new~~stock ~~grants~~options iscurrently ~~based~~outstanding, onto ~~historical~~be ~~volatilities~~recognized ofin afuture ~~peer~~quarters ~~group~~respectively ofyears ~~similar companies in the same~~as

~~industry. The expected life assumptions are based on underlying contracts.~~follows:

As of December 31, 2015, the Company had unrecognized compensation expenses related to stock

options currently outstanding, to be recognized in future quarters respectively years as follows:

Through to

Stock-based compensation (options)

~~December~~Through ~~31,~~to ~~2016~~December

~~December~~Through ~~31,~~to ~~2017~~December

31, 2017

31, 2018

Unrecognized compensation expense

~~134~~40,~~956~~964

3330,~~739~~723

16.

SUMMARY OF STOCK AND OPTION COMPENSATION EXPENSE

The Company recorded the following amounts related to stock based compensation expense ~~during~~

during the periods ended December 31, 2016 and December 31, 2015:

Summary of share and option based compensation expense

December

31,

December 31, 2015

~~December 31, 2014~~2016

expense

~~Option~~Expense related to option grants

(509,912)

134,952

~~560,941~~Expense related to share grants

~~Share grants~~345,000

450,000

542,334

Total (recorded under general & administrative expense)

(164,912)

584,952

1,103,275

17.

FUTURE LEASE COMMITMENTS

On December 1, 2012, the Company entered into a lease agreement for the premises for ~~its~~ ~~Swiss~~its

Swiss office with an unrelated entity. The annual rental expense amounts to approximately ~~$130,000 on a~~

~~fixed~~$130,000 on a fixed term expiring on December 31, 2017. The company has been invited by the

~~Future~~landlord ~~lease~~to ~~commitments~~discuss a continuation or termination of the rental agreement. The objective is to come

~~December~~to ~~31,~~decisions ~~2015~~before the middle of the calendar year 2017.

December 31,

Future lease commitments

2016

2015

2014

2016

130,000

2017

130,000

F-4546

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

18.

NOTES PAYABLE

December 31, 2016

December 31, 2015

December 31, 2014

Promissory note

1,500,000

2,000,000

Specogna Holding AG

~~605,743~~-

~~707~~60,~~428~~'743

R. Weimar (private investor)

131,169

316,331

Total

1,500,000

2,736,912

3,023,759

Promissory Note

As part of the completion of the purchase of SunVesta Costa Rica SA (former Altos del ~~Risco on March 9, 2013, the~~ ~~parties agreed~~Risco)

on March 9, 2013, the parties agreed that $2,000,000 of ~~consideration is~~ the purchase price would be converted ~~into a non-interest bearing and uncollateralized loan~~

into a non-interest bearing and uncollateralized loan payable which was originally due for ~~payment on March 8, 2014, then extended to March 8, 2015.~~

Onpayment on March 168, ~~2015~~2014, ~~the~~then ~~Company~~extended ~~agreed with the counterparty~~ to March ~~extend~~8, 2015. ~~the~~On March ~~due~~16, ~~date~~2015, ~~through~~the Company

~~March~~agreed ~~16,~~with ~~2016. As of~~ the ~~date~~counterparty ofto ~~this~~extend ~~report~~ the ~~promissory~~due ~~note~~date ~~remains~~through ~~outstanding~~March 16, 2016.

On April 21, 2016, the Company signed a new agreement, which stipulated new payment terms.

The total amount of $2,000,000 was then repayable in four quarterly installments of $500,000

each, starting on August 21, 2016.

On September 19, 2016, the Company signed a new agreement, which stipulated that the first

quarterly repayment of $500,000 was due on November 21, 2016, only and not on August 21,

2016.

Loans Specogna Holding AG

On ~~May 15~~ December 31, ~~2014~~ 2015, the Company entered into a short term loan agreement for ~~CHF 1.0 million~~

(approximately $~~1.01 million)~~ 607,000 with Specogna Holding AG ~~(“Specogna)~~ repayable on ~~July 31~~ February 29, ~~2014~~ 2016, with ~~a fixed~~ an

interest payment of ~~approximately $30,300~~ 8 % per annum. ~~This~~ The loan was ~~repaid in 2014~~ secured personally and jointly by Dr. Max

~~On September 16~~Rössler, ~~2014,~~ the ~~Company~~late ~~entered~~Mr. ~~into~~Josef aMettler ~~short~~and ~~term~~Mr. ~~loan~~Hans ~~agreement for approximately~~Rigendinger.

~~$736,000 with~~During ~~Specogna~~the ~~repayable~~year onended ~~October~~ December 31, ~~2014~~ 2016, ~~with a~~ ~~fixed~~this ~~interest payment of~~loan has been converted into convertible bonds.

~~approximately~~Since ~~$32,000.~~the new ~~The loan~~ debt was significantly ~~secured personally and jointly by Dr. Max Rössler~~different from the old debt, ~~Mr. Josef~~ the exchange was treated as an

~~Mettler~~ extinguishment of debt and Mr an amount of $93,950. ~~Hans Rigendinger. The amounts due to Specogna were repaid~~ 87 was accounted for as a loss on ~~March 24, 2015,~~

byextinguishment ~~Aires on behalf~~ of ~~the Company, with no penalties incurred~~debt.

On December 31, 2015, the Company entered into a short term loan agreement for approximately

$607,000 with Specogna repayable on February 29, 2016, with an interest payment of 8 % per

annum. The loan is secured personally and jointly by Dr. Max Rössler, Mr. Josef Mettler and Mr.

Hans Rigendinger.

Loan R. Weimar (private investor)

On May 23, 2014, the Company entered into a short term loan agreement for ~~approximately~~

approximately $376,800 with Roland Weimar. The loan was repayable in five installments, (four ~~payments of~~

payments of $84,700, one payment of $38,000), with the initial payment due on June 2, 2014 ~~and the latest one~~

~~due~~and the latest one due on June 1, 2015. The interest rate is 2 % per annum. The Company has ~~repaid $245,631 of the~~

~~loan~~repaid as$22,683 ofduring the ~~filing~~first ~~date~~quarter of2016, ~~this report~~$34,015 ~~whereas~~was ~~the~~transferred ~~entire~~to ~~loan~~another ~~amount~~liability in ~~should have been repaid.~~the

second quarter and $66,946 was repaid in the third quarter of 2016. The agreement does not ~~stipulate any repercussions for late payments.~~

~~Bruno~~stipulate ~~Wernli~~any repercussions for late payments.

On ~~September~~October 164, ~~2014,~~2016 the ~~Company~~entire ~~entered~~amount ~~into~~- aincluding ~~short~~interest ~~term~~- ~~loan~~was ~~agreement for approximately~~repaid.

~~$568,000 with Bruno Wernli (“Wernli”), repayable on October 31, 2014, with a fixed interest~~F-47

payment of approximately $53,000. The loan was secured personally and jointly by Dr. Max

Rössler, Mr. Josef Mettler and Mr. Hans Rigendinger. The amounts due to Wernli were repaid on

December 19, 2014, by Aires on behalf of the Company.

F-46

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

19.

OPENING DATE “Paradisus Papagayo Bay Resort & Luxury Villas”

On June 2, 2014, the Company amended its agreement with Meliá (“Sixth addendum to the

management agreement of March 8, 2011”) to postpone the opening date as follows:

- The construction of the “Paradisus” will be completed by November 15, 2015

- Should the “Paradisus” not be completed by November 15, 2015, (subject to force ~~majeure)~~

majeure) and should an extension date not be agreed, subsequent to November 15, 2015, the ~~Company~~

Company will be obligated to pay Meliá a daily amount of $2,000 as liquidated damages.

- Should the Company be unable to complete the construction of the “Paradisus” by ~~February~~

February 15, 2016, Meliá, can terminate the management agreement obligating the ~~Company to~~

Company to compensate Meliá in the amount of $5,000,000 unless the respective parties ~~agree to extend~~

agree to extend such date.

Dated April 27, 2016 a seventh addendum ~~has~~was ~~been~~ signed between the Company and ~~Melia~~Melía with the

~~the~~ following major conditions:

New completion date: September 15, 2018 (subject to force majeure)

Should the completion not occur by September 15, 2018 and should the parties ~~Parties~~ not have

agreed in writing an extension to such date, after September 15, 2018 , the ~~Owner shall pay the~~ Company

~~Manager~~shall pay Melía a daily amount of ~~USD~~ $2,000 as liquidated damages.

Should the completion not occur by November 15, 2018, ~~the manager~~ Melía shall be entitled to

terminate the agreement unless the ~~Parties~~parties agree in writing to extend ~~such~~the ~~date.~~completion ~~The owner shall be~~date

~~obliged~~and tothe ~~pay~~Company ~~the~~shall ~~manger~~be anobliged ~~amount~~to ofpay ~~USD~~Melía $5,000,000 as liquidated damages solely to

to compensate the Manager.

20.

SEGMENT INFORMATION

The chief operating decision maker (“CODM”) is the Company’s CEO. Neither the CODM nor ~~the~~

the Company’s directors receive disaggregated financial information about the locations in ~~which~~

which project development is occurring. Therefore, the Company considers that it has only one ~~reporting~~

reporting segment.

The following table presents the Company’s tangible fixed assets by geographic region:

December 31, 2016

December 31, 2015

December 31, 2014

Location of tangible assets

Switzerland

37,286

76,573

115,210

Costa Rica

66,179,372

61,194,851

51,086,142

Total

66,216,658

61,271,424

~~51,201,352~~F-48

F-47

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

21.

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~~

per share are calculated applying the treasury stock method. When there is a net income dilutive ~~effect~~

effect all stock-based compensation awards or participating financial instruments are considered. ~~When~~

When the Company posts a loss, basic loss per share equals diluted loss per share. The following ~~table~~

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

Year Ended

December 31, 2016

December 31, 2015

December 31, 2014

Company posted

Net loss

Basic weighted average shares outstanding

100,245,439

94,338,589

88,325,165

Dilutive effect of common stock equivalents

None

Dilutive weighted average shares outstanding

100,245,439

94,338,589

88,325,165

As of December 31, 2014, there were a total of 6,500,000 common shares vested were not issued

and included in the basic weighted average shares outstanding.

The following table shows the number of stock equivalents that were excluded from the

computation of diluted earnings per share for the respective period because the effect ~~would~~ ~~have~~would

have been anti-dilutive.

Earnings per share

Year Ended

December 31, 2016

December 31, 2015

December 31, 2014

Options to Hans Rigendinger

10,000,000

Options to Dr. M. Rössler

10,000,000

Options to Josef Mettler

12,000,000

Total Options

20,000,000

32,000,000

32,000,000

Shares to Hans Rigendinger

5,000,000

7,500,000

10,000,000

(retention bonus – non vested)

Shares to Josef Mettler ~~(retention award – non~~

15,000,000

~~18,000,000~~(retention award – non vested)

vested)

Shares to Howard Glicken and José Maria Figueres

400,000

(retention award – non vested)

Shares associated with Convertible CHF Bonds

4,358,840

3,558,068

Total Shares

9,758,840

26,458,068

28,400,000

Total Options and Shares

29,758,840

58,458,068

60Options related to Convertible CHF bonds: Each bond in the principal amount of CHF 5,~~400,~~000 can

~~Options related to Convertible CHF bonds: Each bond in~~ be converted on any business day during the ~~principal amount~~ conversion period into 625 common shares of ~~CHF 5,000 can be~~

~~converted~~SunVesta onHolding ~~any~~AG ~~business~~at ~~day~~a ~~during the~~ conversion ~~period~~price ~~into~~equal ~~625~~to ~~common~~CHF ~~shares of SunVesta Holding~~8.

~~AG at a conversion price equal to CHF 8.~~F-49

F-48

SUNVESTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2015~~2016 and ~~2014~~2015

22.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses according consolidated statement of comprehensive loss

include:

~~General and administrative expenses~~Twelve-month

~~December 31, 2015~~Twelve-month

~~December~~period ~~31, 2014~~ended

period ended

December 31,

2016

2015

Rental & related expenses

188,094

194,982

175,394

Audit

~~267~~291,~~087~~218

~~235,995~~267'087

Filing Compare · SUNVESTA, INC.