UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

x	ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2013
¨	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
	For the transition period from _________ to ________

Commission file number: 333-171842

Southern States Sign Company

(Exact name of registrant as specified in its charter)

Nevada	26-3014345
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Viale Bruno Buozzi 83, Rome Italy

(Address of principal executive offices)

39.06.80692582

(Issuer’s telephone number)

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

Securities registered under Section 12(g) of the Exchange Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

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 ¨ No x

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

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

Indicate by check mark 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. ¨

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

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company x

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

The aggregate market value of the issued and outstanding common stock held by non-affiliates of the registrant as of June 30, 2013 was $0 based on the closing bid quotation of $0.00 per share on the National Association of Securities Dealers Inc. OTC Bulletin Board on that date.

As of May 14, 2014, there were 40,151,261 shares of the registrant’s common stock outstanding. 

Table of Contents

		Page
PART I
Item 1.	Business	3
Item 1A.	Risk Factors	10
Item 1B.	Unresolved Staff Comments	10
Item 2.	Properties	10
Item 3.	Legal Proceedings	11
Item 4.	Mine Safety Disclosures	11
PART II
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities	12
Item 6.	Selected Financial Data	13
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 8.	Financial Statements and Supplementary Data	22
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	42
Item 9A(T).	Controls and Procedures	43
Item 9B.	Other Information	44
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	45
Item 11.	Executive Compensation	49
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	50
Item 13.	Certain Relationships and Related Transactions, and Director Independence	51
Item 14.	Principal Accountant Fees and Services	52
PART IV
Item 15.	Exhibits, Financial Statement Schedules	52
Signatures		54

PART I

Item 1. Business

Company Overview

Southern States Sign Company (hereinafter referred to as the “Company,” “we,” “our,” “us,” or “SOST”) was incorporated on July 15, 2008, in the State of Nevada. We are a Company involved in the hospitality business. We own and develop hotels and spas in Italy. We operate our hotels indirectly, by means of contractual agreements with hotel management companies, so we can be classified as hospitality property investment specialists.

On November 1, 2012, we entered into a Share Exchange Agreement (the “Exchange Agreement”) with Conte Rosso & Partners S.r.l., a limited liability company organized under the laws of Italy (“CR&P”) and the holders of all of the outstanding capital stock of CR&P (each a “CR&P Shareholder” and collectively, the “CR&P Shareholders”). Pursuant to the Share Exchange, the CR&P Shareholders transferred all of the issued and outstanding capital stock of CR&P to us in exchange for 21,250,000 newly issued shares of our common stock (the “Share Exchange”), resulting in CR&P becoming a wholly owned subsidiary of the Company.

In October 2011, David Ben Bassat (“Bassat”), the principal stockholder of the Company and beneficial owner of approximately 83.4% of the outstanding shares of the Company, commenced negotiations with the CR&P Shareholders for the sale of substantially all of his shares in the Company. The sale was consummated on November 19, 2012, with the CR&P Shareholders paying Bassat $75,000 for 11,851,852 shares of the Company’s common stock (the “Bassat Stock Sale”). In connection with the Bassat Stock Sale, Bassat agreed to cancel his remaining 3,150,000 shares of the Company’s common stock. As part of the negotiations, Bassat and the CR&P Shareholders agreed to have the Company issue 21,250,000 shares of the Company’s common stock as consideration for CR&P’s assets and hotel business. The negotiations continued through the execution of the Exchange Agreement so that CR&P could complete its financial statements and establish the value of CR&P in order for the Company and CR&P to determine the number of shares of the Company’s common stock to be issued in consideration of CR&P’s assets.

Under Nevada Revised Statutes 92A.120(1), stockholder approval is not required for a share exchange in which the shares of the Nevada corporation are not being acquired in the share exchange. Since only CR&P’s shares were acquired by the Company in the Share Exchange, stockholder approval was not required.

We particularly focus on the ownership and development of boutique hotels, spas and resorts. We choose the investment opportunities on the basis of analysis and forecasts in respect of:

· Location;

· Profitability;

· track record;

· competitors;

· development potential; and

· acquisition cost vis a vis foreseeable profitability.

 We expect our investment in boutique hotels, spas and resorts to create:

· capital growth over the medium term;

· income immediately;

· location diversification; and

· synergies and scale economies.

We operate our Terme di Galzignano Hotels (Majestic, Splendid and Sporting hotels) by means of a contractual agreement with a major Italian hotel manager company called JSH Srl (“JSH”), while the Ripa Hotel and Resort Srl (“Ripa”) is being managed, since November 4, 2013, by means of a contractual agreement with IBH Ripa Srl (“IBH Ripa”), a company indirectly controlled by SOST. Such persons with whom contractual arrangements provide for their management of our hotels are referred to herein as “Hotel Managers.”

JSH was founded in 2010 by four professionals in the hotel management sector, with collectively more than 80 years of experience in the business, and as of today it manages 1,620 rooms in 15 major hotels in Italy. JSH is involved in the management business only and does not invest in hotel properties. IBH Ripa was founded in October 2013 and it is managed by a professional with many years of experience in the hotel management business. 

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The contractual agreement in place with our JSH provides for an annual rent composed of a guaranteed minimum rent plus a variable amount linked to the gross operating profit of our hotels, while the contractual agreement in place with IBH Ripa contains only a fixed rent. The contractual agreements with our Hotel Managers are described in this Item under “Properties.” Therefore, our revenues at a consolidated level are derived from both the rents we receive from the JSH and by the hotel revenues generated by IBH Ripa in the management of the Ripa hotel.

We intend to enter into the same kind of contractual agreements with JSH in relation to the future acquisitions of hotels in Italy and abroad.

We currently own 5 hotels and resorts in Padova, Italy (one hotel is currently closed and will be transformed into a private apartments building, with renovation expected to start in 2015) and Rome, Italy. Collectively, these properties feature approximately 500 hotel rooms and suites as well as restaurants, conference rooms, spas and golf courses. Our portfolio of hotel properties provides us with a diverse geographic footprint across Italy.

  Our senior management team has over 80 collective years of experience spanning multiple foreign jurisdictions. This team has established plans for growth focusing on the core principles of providing authentic Italian hospitality and expansion into foreign markets in which we do not have hotel properties.

We intend to develop our presence in Italy and abroad with a target to own 2,000 rooms within the next 3 to 5 years.

We are currently in negotiations with respect to acquisitions in Rome and Florence, Italy, and have started to search for investment opportunities in Milan

In addition to the items discussed above, we plan to continue to refresh our hotel room product, pursue third-party development partners for additional hotel and restaurant concepts and renovate select facilities to improve our product offerings.

Our Mission

Our mission is to invest in upscale and luxury hotel properties in Italy and abroad where we can exploit at best our long term experience in providing authentic Italian hospitality. By “upscale and luxury” hotels, we mean hotels that can be characterized by luxury appointments such as high quality fittings and fixtures, high quality service provided by the hotel’s staff, and the highest standards of comfort. Luxury and upscale hotels offer originality in architecture and interior design, high-grade materials in construction and decor, and such special touches as fresh flowers and plants in the guest rooms. Luxury and upscale properties also maintain a high staff-to-guest ratio, gourmet dining, and 24-hour room service.

Through our Hotel Managers we focus on customer satisfaction and delivering superior guest experiences by providing Italian inspired leisure experiences that are designed to exceed customer expectations in a clean, safe, friendly and fun environment. Our mission is for each guest at our hotel properties to feel as if they are an honored visitor to an Italian palazzo.

We believe our long-term success will depend substantially upon increasing the quality, reach and scope of our operating portfolio, including new-build developments, acquisitions and, where appropriate, asset sales. Recently we have completely renovated the Majestic Hotel in Padua and the Ripa Hotel in Rome.

Our Competitive Strengths

We have significant competitive strengths that support our goal of building a successful group of managed hotels.

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Top Rated Properties. We believe that our properties are well located and provide Italian hospitality that our guests seek. Our properties have consistently received four and five star ratings, awards and accolades for service and guest experience. Our property recognition and strength is key to our ability to drive preference for our hotels among our guests.

 Italian Platform with Compelling Growth Potential. Our existing Italian presence is distributed among a populous urban center and vacation destinations in Italy. We believe that our existing hotels provide us with a strong platform from which to selectively pursue new growth opportunities in markets where we are under-represented. Our management team applies their experience, judgment and knowledge to identify potential expansion targets for us. The combination of our existing Italian presence, experienced management team, established third-party relationships and significant access to capital provides us with a strong foundation for future growth and long-term value creation.

High Quality Owned Hotels Located in Desirable Markets. As of December 31, 2013, we operate a high quality portfolio of four owned properties. Our owned full service hotels are located in key markets in Italy, including major business centers and leisure destinations with strong growth potential. One of our owned hotels operates under the name Radisson which provides high name recognition and a strong position in local markets.

Our Business Strategy

Our goal is to be a leading hospitality property owner. In order to achieve this goal, we:

(i) select the most appealing hotel properties in the boutique hotels, spas and resorts segment;

(ii) undertake a full refurbishment and restoration process of these properties in order to achieve the standards we have identified to better reflect our idea of authentic Italian hospitality; and

(iii) put in place Hotel Managers who will ensure high occupancy at profitable daily rates.

This understanding and focus informs our strategies for improving the performance of our existing hotels and our potential expansion of our presence in markets worldwide.

· Focus on improvement in the performance of existing hotels.

We constantly monitor the activities of our Hotel Managers through monthly audit reports and regular visits to the properties, in order to ensure the constant highest level of service to our customers and the achievement over time of the profitability targets we have established with our Hotel Managers.

We establish our profitability targets with each of our Hotel Managers when we prepare our three year business plan, with an annual revision, for each of the hotels we own, and on the basis of the profits and losses of such business plans. In particular, we focus on the gross operating profit or G.O.P. reflected in such business plans and we determine the minimum guaranteed yearly rent or Minimum Guaranteed Amount, plus, in the case of the Galzignano hotels (the Ripa Hotel management agreement envisages only the Minimum Guaranteed Amount without any variable sum) and, for the future, in the case the other hotels we might acquire, the variable rent which is equal to 75% of the G.O.P that eventually exceeds the Minimum Guaranteed Amount (the “Variable Amount”). The sum of the Minimum Guaranteed Amount plus the potential Variable Amount represents the total income that we derive from our properties.

In setting our profitability targets, we take into consideration that the income we gain from the rents must be sufficient to service our debt and to cover all other costs, and to allow us to achieve a net income in line with our expectations, which means to have a percentage over net assets above a given level (i.e., the net yield of the 10-year Italian Treasury Bond, which is currently about 3.00%) and increasing over the years as we add new hotels under management. There can be no assurance given the number of variables involved, that we will be able to achieve our profitability targets.

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Given that all our costs are quite easily determined, as they are basically all fixed costs, the only non-predictable item of our net income is the Variable Amount. In this respect, in order to constantly monitor the ongoing operating results of our hotels, and to make sure that the results indicated in the budgets and in the business plans are effectively being achieved, so that both the Minimum Guaranteed Amount and, particularly, the Variable Amount will be effectively paid to the Company, we have a financial controller who, on a monthly basis, audits the managerial accounts provided by our Hotel Managers, and critically examines any deviation of the actual numbers from those contained in the business plans. His reports are then sent to our senior management, and going forward to our Board on a quarterly basis, so that senior management and the Board can take appropriate action in respect of the Hotel Managers with regard to our profitability targets. 

A key component of our strategy is for our Hotel Managers to maximize revenues and manage costs at existing hotel properties. Together we strive to enhance revenues by focusing on increasing our share of hotel stays by our existing guests and increasing the number of new guests we serve on a regular basis, with the ultimate goal of establishing and increasing guest loyalty to our properties. We manage costs by setting performance goals for our hotel management teams that are tied to compensation, and granting our general managers operational autonomy. We support these cost management efforts by assisting our general managers with tools and analytics provided by our regional and corporate offices and by compensating our hotel management teams based on property performance.

All of our hotels have restaurants. Each of Majestic, Sporting and Splendid at Galzignano has its own restaurant, and the golf club house also has one restaurant. The Ripa Hotel has two restaurants (“Ripa Place” and “la Suite”). All of these restaurants are managed directly by our Hotel Managers, under the terms and conditions of the Management Agreements.

Enhance Operational Efficiency. We and our Hotel Managers strive to align our staffing levels and expenses with demand without compromising our commitment to providing authentic hospitality and achieving high levels of guest satisfaction. During periods of declining demand for hospitality products and services we adjust staffing, arrangements with third party service providers, vendor terms and arrangements and certain standards in order to reduce costs without significantly impacting quality. As demand improves, we require our Hotel Managers to remain focused on actively managing expenses.

We have finalized a master - franchising agreement concerning the Majestic Hotel in Padova, with the Rezidor Group, controlled by Carlson Hotels Worldwide, which runs the world top search web engine in the hospitality sector. The Rezidor Group manages over 430 hotels in 70 countries and it owns several brands such as Radisson Blu, Hotel Missoni and Park Inn. The Radisson brand is among the best known brands in the international hotellerie business and, through the Carlson Hotels Worldwide system, it manages the booking procedures of all the partner hotels including those belonging to our hotels. Radisson provides booking and marketing services to JSH, in parallel with their own managing activity.

With reference to the Ripa Hotel in Rome, we finalized an agreement with Worldhotels, an independent European based hotel partner, which manages the booking procedures of more than 250 hotels globally.

· Expanding Our Presence in Attractive Markets

We intend to acquire properties where we believe demand is strong or will strengthen to ensure high occupancy levels at appropriate daily rates. Competition for good properties is strong but we believe that we can obtain opportunities because of our willingness to accept the need for refurbishment or expansion or by working with existing interested parties without the need to drive standardized branding.

Properties

The following is an overview of our existing properties as of May 16, 2014:

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Property	Date Acquired or Opened	Hotel Rooms		Suites		Conference Room Capacity
Rome, Italy
Ripa Hotel and Resort Spa	May 2008		200		2		568
Padova, Italy
Galzignano Terme Golf and Resort S.r.l.
Hotel Sporting	March 2009		93		19		125
Hotel Splendid	March 2009		61		30		—
Radisson Blu Hotel Majestic	March 2009		45		52		137
Hotel Green Park*	March 2009		86		8		—

* The Hotel Green Park is currently not operating and we intend to transform it into a private apartments building, with renovation to commence in 2015. 

The following table sets forth the historical occupancy rate, average daily room rates and revenues per available room (which is calculated based on the product of occupancy rate times average daily room rate) for our hotels:

	Occupancy						ADR				REVPAR
Year	Galzignano			RIPA			Galzignano		RIPA		Galzignano		RIPA
2009		60	%		69	%	€	105.0	€	85.1	€	62.9	€	58.71
2010		43	%		69	%	€	122.0	€	88.1	€	52.8	€	60.64
2011		40	%		75	%	€	120.0	€	86.4	€	47.6	€	64.43
2012		47	%		74	%	€	93.0	€	86.3	€	42.3	€	63.55
2013		47	%		73	%	€	88.50	€	75.2	€	41.4	€	54.75

Rome, Italy

Ripa Hotel and Resort Spa

Our Ripa Hotel Resort and Spa property commenced operations in 1973, and we bought it in May 2008. The Ripa Hotel is a full service 4-star property, consisting of 202 guest rooms and suites, located in the historic Trastevere district, on the West bank of the Tevere River. The hotel property is characterized by modern minimalistic style, original interiors, unexpected colors, and the use of innovative materials. A variety of architects contributed to different designs and styles in the hotel.

Ripa Hotel is a business-friendly hotel, seeking to meet the needs of business travelers as well as tourists. The hotel has a business center as well as other amenities for business travelers. Dining options at the hotel include a restaurant, a coffee shop/café, a bar/lounge as well as room service. The hotel offers a complimentary hot and cold buffet breakfast each morning to our guests.

Rome attracts over 11 million tourist and business visitors each year and this hotel is an attractive high quality destination hotel for many of such visitors.

Hotel Ripa is managed by IBH Ripa, which is indirectly owned by SOST through its subsidiaries Conte Rosso & Partners Srl and IBH Management Company Srl. Through our subsidiary, Aral Srl (the company that owns, by means of a financial lease contract, the real estate property of the Ripa Hotel), we entered into the lease and management agreement with IBH Ripa on October 30, 2013.

The lease and management agreement provides for a nine-year initial term with an automatic nine-year extension. The first termination date is therefore settled on October 2022. The annual rent is equal to €1,680,000 for the first year, €1,920,000 for the second year and €2,160,000 for the remainder. IBH Ripa provides and pays for ordinary maintenance as well as insurance during the term of the agreement, while extraordinary maintenance is on behalf of Aral Srl.

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The lease and management payments are fixed and are not a function of occupancy levels and average daily rates.

Padova, Italy

Galzignano Terme Golf and Resort

Our Galzignano Terme Golf and Resort commenced operations in 1969 and we bought it in March 2009. The resort is located at the foot of the Eugenean Hills in the heart of the Veneto region in Italy. The hotel is located 10 km from Padua and approximately 40 km from Venice and Verona. The resort consists of four properties covering more than 86 acres of land. The hotels within the property are the Hotel Sporting, Hotel Splendid, Radisson Blue Hotel Majestic and Hotel Green Park. Hotel Green Park is currently closed and will be transformed into an apartment building.

 The properties have two sports pools, six thermal pools with Jacuzzi pools and Kneipp therapy areas, six tennis courts and a Revital Center with fitness and spa areas. There is a nine-hole golf course with a putting green, driving range and a clubhouse on the property. Additionally, there are three golf courses within 15 km of the hotel complex that offer discount prices to our guests. The hotel has a retail area with shops that sell jewelry, magazines and souvenirs.

We believe that our Padua, Italy property attracts customers primarily from Germany, Austria and northern European countries and from major Italian cities. Approximately 1 million people reside within 50 km of the Padova, Italy property. 

Hotel Sporting

The Hotel Sporting is a full service 4-star property, consisting of 112 guest rooms divided into standard, superior, comfort, junior suite and suite. The 19 suites are each equipped with private terraces and balconies overlooking the Galzignano Terme property. Each guest room is non-smoking and equipped with standard comforts and technology, such as satellite TV and internet connections. Hotel Sporting offers guests access to all of the resort’s amenities, including the pools, tennis courts, and golf facilities. The hotel also has meeting facilities, a beauty parlor and a bar lounge.

Hotel Sporting, Hotel Majestic and Hotel Splendid (described below) are managed by Galzignano Gestioni S.r.l., a company controlled by JSH, and for purposes of this report, is referred to as JSH. We entered into a first lease agreement, for Hotel Sporting and Hotel Majestic only, with JSH on April 13, 2012, which was terminated in November 2013 and substituted by two separate new lease and management agreements in December 18, 2013 that also include Hotel Splendid.

The new lease agreement was executed through our newly incorporated subsidiary called GHG Resorts Srl (“GHG”), controlled by IBH Management Company Srl, and provides for a term of eighteen years and 21 days with an automatic nine year extension unless either party notifies the other at least eighteen months before the end of the initial term. We can terminate the contract at any time if JSH fails, among other things, to pay the rent or expenses, prepare the budget within contractual deadlines, maintain the properties or arrange for the insurance required by the contract. The annual rent consists of a guaranteed minimum rent, which is not based on occupancy levels and average daily rates, plus, starting from the fifth year, a variable amount based on 75% of the hotel’s gross operating profit. Gross operating profit is equal to revenues less allowances, premiums and discounts as well as fixed and variable costs. The guaranteed minimum rent for the 21 days of December 2013 and the full 2014 is €400,000, for 2015 is €550,000, for 2016 is €700,000, for 2017 is € 850,000 and thereafter will be equal to the maximum amount between € 950,000 and 75% of the Gross Operating Profit as described above. JSH provides and pays for ordinary and extraordinary maintenance during the term of the agreement.

The new management agreement was also executed through our newly incorporated subsidiary GHG and it provides for the management of the Hotel Sporting, Majestic and Splendid (described below) and provides for a term of eighteen years and 21 days with an automatic nine year extension unless either party notifies the other at least eighteen months before the end of the initial term. We can terminate the contract at any time if JSH fails, among other things, to pay the rent or expenses. The annual fee paid to GHG by JSH is €100,000 per year.

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GHG, in turn, has executed two different lease and management contractual agreements, the first one with Galzignano Terme Golf & Resort SpA (“Galzignano”), a fully owned subsidiary of SOST which is the owner of the Terme di Galzignano complex, in relation to the lease of the real estate, and the second one with RVH Srl (“RVH”), the owner of the hotel business related to the Terme di Galzignano Complex (which does not belong to the SOST group of companies).

The lease agreement between GHG and Galzignano was executed on December 18, 2013, and provides for a term of eighteen years and 21 days with an automatic nine year extension unless either party notifies the other at least eighteen months before the end of the initial term. We can terminate the contract at any time if GHG fails, among other things, to pay the rent or expenses. The annual rent consists of, a variable amount based on 75% of GHG’s Gross operating profit with a guaranteed minimum rent of € 100,000 per year. The management agreement between GHG and RVH was executed on December 18, 2013, and provides for a eighteen years and 21 days term with an automatic nine year extension unless either party notifies the other at least eighteen months before the end of the initial term. RVH can terminate the contract at any time if GHG fails, among other things, to pay the rent or expenses. The annual fee is € 100,000 per year.

Hotel Splendid

The Hotel Splendid is a full service 4-star property, consisting of 91 luxurious and uniquely furnished guest rooms, junior suites and suites. The top floors provide guests a view of the entire resort complex and guests have access to all of the resort’s amenities, including the pools, tennis courts, and golf facilities. 

The hotel's restaurant overlooks a garden through large, picture windows and offers a culinary mix featuring refined and creative Italian recipes, as well as international and regional dishes. The wine selection represents all Italian regions, with particular attention to wines which come from the Veneto and Euganean territory.

On July 31, 2013, Galzignano terminated its agreement with Salute e Benessere Alain Messegue Srl in connection with the management of Hotel Splendid.

The management agreement, originally dated as of June 28, 2012, provided that the Mr. Messegue would manage Hotel Splendid for an initial term of nine years. Galzignano terminated this agreement due the Mr. Messegue’s inability to generate a minimum of € 2.5 million in revenues from the management of Hotel Splendid for the period from June 28, 2013 to December 31, 2013, in accordance with the terms of such agreement. Mr. Messegue paid a fee of € 164,000 to Galzignano in connection with the early termination of the agreement.

 Radisson Blu Hotel Majestic

The Radisson Blu Hotel Majestic is a full service 4-star property, consisting of 97 guest rooms with unique features such as rainfall showerheads and concierge service, in addition to standard hotel amenities. The hotel restaurant, Naiades, specializes in modern interpretations of traditional Mediterranean dishes. Meals are also served on a terrace with countryside views intended to promote relaxation for our guests.

Hotel Majestic is managed by JSH and the terms of our management agreement are described above under “Hotel Sporting.”

Hotel Green Park

The Hotel Green Park is currently not operating.. This property will undergo complete renovations and it will be transformed into a private apartments building. We expect to start the renovations in 2015. 

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Marketing

Our marketing strategy is planned together with our Hotel Managers, and it is designed to maintain and build value and awareness while meeting the specific business needs of hotel operations. Building awareness and differentiating each of our properties is critical to increasing our footprint in the global hospitality industry. We are focused on targeting the distinct guest segments that each of our properties serves and supporting the needs of the hotels by thorough analysis and application of data and analytics.

Competition

There is intense competition in all areas of the hospitality industry in which we operate. Competition exists for hotel guests and hotel property development. Our principal competitors are other operators of full service hotels in Italy and around the world.

We compete for guests based primarily on reputation, location, customer satisfaction, room rates, quality of service, amenities, quality of accommodations and security.

The universe of hotels and hospitality is large and there are other companies who have offerings similar to us. We believe that our, desirable property locations, strong customer base and global development team will enable us to compete effectively.

Seasonality

The hospitality industry is seasonal in nature. The periods during which our hotel properties experience higher revenues vary from property to property, depending principally upon location and the customer base served. Based upon historical results, our Rome property typically generates the highest revenues in May, September and October and our Padua property generates the highest revenues in August, September and April. We generally expect our revenues to be lower in the first quarter of each year than in each of the three subsequent quarters. 

Governmental Regulations

Our businesses are subject to various laws and regulations promulgated by the EU, the Italian Republic and its regions, provinces and municipalities to protect the public who utilize the hotel and tourist sector. We are subject to the EU and national legislation concerning the protection of workers (Workers' Statute approved by Law 20.05.1970 n. 300), hygiene and safety in the workplace (Legislative Decree no. 81 of 09.04.2008), the pension and social security obligations (Law 30/04/1969 n. 153) the administration of food and drinks also alcoholic and food services (Consolidation Act on Public Safety approved by Royal Decree no. 773 of 06.18.1931), the prohibition of smoking in enclosed areas (51 paragraph 3 of Law no. 3/2003), the obligations of a tax (Decree of the President of the Republic of 22 December 1986, no. 917 - Approval of the consolidated income tax income Tax Code, Decree of the President of the Republic of 26 October 1972, n. 633, establishing VAT; Legislative Decree 15 December 1997, n. 446, establishing IRAP). Specifically, the Law no. 135 of 29 March 2001 contains the national legislation in the field of tourism and indicates the general principles and coordination, on which the Regions of the Italian State are called upon to issue their own laws, in accordance with the Constitutional Law of 18 October 2001, n. 3 which gives all such legal and administrative matters and tourist accommodation in the said regions. Such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. Material changes, new laws or regulations, or material differences in interpretations by courts or governmental authorities could adversely affect our operating results.

Environmental Matters

As property owners we are subject to various laws and regulations. These laws and regulations include, but are not limited to, the need to obtain consents from various regulatory authorities to build, develop, modify, expand or demolish existing structures, the requirement to ensure compliance with health and safety regulations during any such building projects or the operation of properties and limitations or controls on discharges to the atmosphere or waste or sewage disposal facilities.

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Employees

As of December 31, 2013, we employed 1 full and 1 part-time employees in our hospitality business, plus seven senior consultants (three of which are full time).We believe that our relationship with our employees is satisfactory.

Our Hotel Managers together employ approximately 75 full time employees plus approximately 250 are outsourcing employees who regularly work on our properties.

Available Information

For more information about us, visit our web site at www.italianboutiquehotels.com (currently under construction). Our electronic filings with the U.S. Securities and Exchange Commission (the “SEC”) (including all annual reports on Form 10-K, quarter reports on Form 10-Q, and current reports on Form 8-K, and any amendments to these reports), including the exhibits, are available free of charge through our web site as soon as reasonably practicable after we electronically file them with or furnish them to the U.S. Securities and Exchange Commission.

Item 1A. Risk Factors.

A smaller reporting company is not required to provide the information required by this Item.

Item 1B. Unresolved Staff Comments

A smaller reporting company is not required to provide the information required by this Item.

Item 2. Properties

We describe our hotel properties in Part I, Item 1. “Business,” under the heading “Properties” earlier in this report. We believe our properties are in generally good physical condition with the need for only routine repairs and maintenance and periodic capital improvements. Through our subsidiary, CR&P, we own all of our hotel properties except for the Ripa Hotel, which is owned by means of a financial lease with Unicredit Leasing SpA. Our executive offices are located at Viale Bruno Buozzi 83, Rome Italy. Currently we own and occupy approximately 5,000 square feet of office space. 

Item 3. Legal Proceedings

On May 15, 2013, Galzignano was formally notified that an arbitration panel rendered a judgment against it in the amount of € 5.05 million in connection with a dispute involving the renovation of the Hotel Majestic in 2010 pursuant to the terms of two procurement contracts, dated as of November 30, 2009 and May 7, 2010, respectively, by and between Galzignano and Sercos SpA (“Sercos”), a construction company based in Parma, Italy. Sercos was also granted a lien on the Galzignano resort in the amount of € 6.2 million. On August 2, 2013, Galzignano appealed the judgment of the arbitration panel to the Court of Venice which started to examine the appeal in December 2013, and the verdict is not expected before summer 2015. On the basis of the above judgment, Galzignano set an allowance for € 1,548,233 in its 2013 financial statements, which covers all expenses, penalties and interest costs related to this matter.

Item 4. Mine Safety Disclosures

Not applicable. 

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PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is currently quoted on the OTC Bulletin Board (“OTCBB”), which is sponsored by FINRA. The OTCBB is a network of security dealers who buy and sell stock. The dealers are connected by a computer network that provides information on current "bids" and "asks", as well as volume information. Our shares are quoted on the OTCBB under the symbol “SOST.OB”

The following table sets forth the range of high and low bid quotations for our common stock for each of the periods indicated as reported by the OTCBB. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

Fiscal Year Ending December 31, 2013
Quarter Ended	High $		Low $
December 31, 2013		0.00		0.00
September 30, 2013		0.00		0.00
June 30, 2013		0.00		0.00
March 31, 2013		0.00		0.00

Fiscal Year Ending December 31, 2012
Quarter Ended	High $		Low $
December 31, 2012		3.00		0.00
September 30, 2012		0.00		0.00
June 30, 2012		0.00		0.00
March 31, 2012		0.00		0.00

Penny Stock

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation. 

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer's account.

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.

These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling our securities.

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Holders of Our Common Stock

As of May 14, 2014, we had 40,151,261 shares of our common stock issued and outstanding, held by twenty (20) shareholders of record.

Dividends

There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where after giving effect to the distribution of the dividend:

1. we would not be able to pay our debts as they become due in the usual course of business, or;

2. our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.

We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future.

Recent Sales of Unregistered Securities

The information set forth below relates to our issuances of securities without registration under the Securities Act of 1933 during the reporting period.

On December 12, 2012, the Company issued 200,000 shares of its common stock to S.C.F. – Società di Consulenza Finanziaria – Srl, an accredited investor (“SCF”), in exchange for services provided by S.C.F. in connection with the Exchange Agreement.

On December 12, 2012, the Company issued 2,246,317 shares of its common stock to Integrated Asset Management PLC, an accredited investor in exchange for services rendered in connection with the Exchange Agreement.

On January 31, 2013, the Company issued 625,000 shares of its common stock to Seahawk Capital Partners, Inc., an accredited investor, in exchange for service rendered in connection with the Exchange Agreement.

Securities Authorized for Issuance under Equity Compensation Plans

For information regarding equity compensation plans, see Item 12 of this annual report on Form 10-K.

Item 6. Selected Financial Data

A smaller reporting company is not required to provide the information required by this Item. 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes and other financial information appearing elsewhere in this Current Report on Form 10-K. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Readers are also urged to carefully review and consider the various disclosures made by us which attempt to advise interested parties of the factors which affect our business. All amounts are set forth in euros.

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The following discussion and analysis relates to the results of the Company and should be read in conjunction with the financial statements and the related notes thereto and other financial information contained elsewhere in this Form 10-K. For further discussion and analysis related to the results of the Company, please see our Form 10-K for the fiscal year ended December, 2012 filed with the SEC on April 16, 2013 and Form 10-Q for the quarter ended September 30, 2013 filed with the SEC on November 15, 2013.

Overview

Southern States Sign Company is a hospitality company that owns and develops hotels and spas in Italy. We operate through our wholly owned subsidiary, Conte Rosso & Partners S.r.l. (“CR&P”) and, as a result, are classified as property investment specialists and hotel managers.

We intend to develop our presence in Italy and abroad with a target of owning 2,000 rooms within the next 3 to 5 years.

We are currently in a negotiations with respect to acquisitions in Rome and Florence and have started to search for investment opportunities in Milan

In addition to the items discussed above, we plan to continue to refresh our hotel room product, pursue third-party development partners for additional hotel and restaurant concepts and renovate select facilities to improve our product offerings.

Recent Developments and Events

On November 27, 2013, Masseria Santo Scalone Hotel and Resort Srl (“Masseria”), which was the owner of a real estate property in Ostuni, (Brindisi), resolved the contract entered with Peretola Srl on June 11, 2012 concerning the acquisition of the property. This was mainly due to the impossibility for the seller to fulfill certain conditions precedent (among which to provide the registration of the property as “hotel” instead of as “residential” in the land public registry). Accordingly the property (together with the relative mortgage loans) was returned to the seller, which in turn will have to reimburse Masseria of the down payments made so far (€ 442,188).  

On April 11, 2014, Aral Immobiliare Srl (“Aral”), the owner of the Ripa Hotel under a financial lease agreement with Unicredit Leasing SpA, entered into a settlement agreement with the Agenzia delle Entrate (the Italian Revenue Agency) in relation to a tax assessment issued by the latter on January 30, 2014. The tax assessment was concerning certain asserted outstanding taxes (VAT, income taxes etc.) related to the financial lease contract mentioned above for the years from 2008 onwards, for an overall amount of € 3,877,056.35. The settlement agreement envisages that, in relation to the first year of the financial lease contract (2008), Aral will pay the overall amount of € 1,234,202,52 plus interest, in twelve quarterly installments. The first installment has already been paid on April 30, 2014.

For the years from 2009 up to 2013, Aral and the Agenzia delle Entrate entered into a settlement that envisages the following payments:

2009: € 329,278.00

2010: € 189,810.00

2011: € 184,210.00

2012: € 179,710.00

2013 up to 2027: € 151,034.00 (which may be offset by Aral against higher VAT credit, if any)

2028: € 25,172.41 (which may be offset by Aral against higher VAT credit, if any)

On the basis of the above settlement, Aral already set an allowance for € 2,250,000.00 in its 2013 financial statements, which covers all expenses, penalties and interest costs related to this matter.

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Critical Accounting Policies and Estimates

We believe the following accounting policies and estimates are most critical to aid in understanding and evaluating our reported financial results.

Basis of consolidation

All majority-owned subsidiaries in which CR&P has both voting share and management control are consolidated. All significant intercompany accounts and transactions are eliminated. Subsidiaries over which control is achieved through other means, such as stockholder agreements, are also consolidated even if less than 51% of voting capital is held. The equity attributable to non-controlling interests in subsidiaries is shown separately in the consolidated financial statements.

Basis of presentation

The consolidated financial statements for the fiscal years ended December 31, 2013 and December 31, 2012 are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

The Euro is the functional currency of all companies included in these consolidated financial statements.

The amounts presented have been rounded to the nearest thousand.

Acquisitions

Assets acquired and liabilities assumed in business combinations are recorded on our consolidated balance sheets as of the respective acquisition dates based upon their estimated fair values at such dates.

The results of operations of businesses acquired by us have been included in the consolidated statements of income (loss) since their respective dates of acquisition. In certain circumstances, the purchase price allocations are based upon preliminary estimates and assumptions. Accordingly, the allocations are subject to revision when we receive final information, including appraisals and other analyses. There were no contingent payments, options, or commitments specified in any of the following acquisition agreements.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances, cash on current accounts with banks, bank deposits and other highly liquid short-term investments with original maturities of less than three months.

Accounts receivable & Allowance for doubtful accounts

Accounts receivable represents trade obligations from customers that are subject to normal trade collection terms, without discounts. The Company periodically evaluates the collectability of its accounts receivable and considers the need to record or adjust an allowance for doubtful accounts based upon historical collection experience and specific customer information. Actual amounts could vary from the recorded estimates. After the recognition of loss on receivables for doubtful accounts in the statement of operations of the year ended December 31, 2013, the Company has determined that as of December 31, 2013 and December 31, 2012 no allowance for doubtful accounts was required. The Company does not require collateral to support customer receivables.

Investments

Investments in unconsolidated affiliates over which we exercise significant influence, but do not control, including joint ventures, are accounted for using the equity method. 

Investments in unconsolidated affiliates over which we are not able to exercise significant influence are accounted for under the cost method. 

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Property, plant and equipment

Property, plant and equipment are stated at acquisition cost less accumulated depreciation and adjustments for impairment losses. Property, plant and equipment also includes assets under construction and plant and equipment awaiting installation.

Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in an item of property, plant and equipment. All other expenditures are recognized as expenses in the consolidated statement of income as incurred.

Capitalization ceases when construction is interrupted for an extended period or when the asset is substantially complete.

Where funds are borrowed specifically for the purpose of acquiring or constructing a qualifying asset, the amount of interest costs to be capitalized in a period on that asset is the actual interest cost incurred on the borrowing during the period.

Depreciation is charged on a straight-line basis over the estimated remaining useful lives of the individual assets. Depreciation commences from the time an asset is put into operation. Depreciation is not charged on assets to be disposed of or on land. The range of the estimated useful lives is as follows:

- Buildings and constructions: 33 – 66 years

- Machinery and equipment: 2 – 20 years

- Others: 5 years

Long-Lived Assets

We evaluate the carrying value of our long-lived assets for impairment by comparing the expected undiscounted future cash flows of the assets to the net book value of the assets when events or circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. If the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book value over the estimated fair value will be charged to earnings.

Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions, appraisals, and, if appropriate, current estimated net sales proceeds from pending offers.

We evaluate the carrying value of our long-lived assets based on our plans, at the time, for such assets and such qualitative factors as future development in the surrounding area and status of expected local competition.

Assets and liabilities held for resale

In connection with the strategy of concentrating in the portfolio of hotel, power, and plantations investments, in the periods presented we entered into various negotiations with potential purchasers to sell. Most of these sales concluded at the end of September 30, 2012.

The realized value of these assets are higher than the net asset carrying value and that resulted in a gain on discontinued operations.

Goodwill and Other Intangible Assets

We evaluate goodwill for impairment on an annual basis, and do so during the last month of each year using balances as of the end of September and at an interim date if indications of impairment exist. Goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount in a two-step process with an impairment being recognized only where the fair value is less than carrying value. We define a reporting unit at the individual property level.

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 When determining fair value in step one, we utilize internally developed discounted future cash flow models, third party appraisals and, if appropriate, current estimated net sales proceeds from pending offers. Under the discounted cash flow approach we utilize various assumptions, including projections of revenues based on assumed long-term growth rates, estimated costs and appropriate discount rates based on the weighted-average cost of capital. The principal factors used in the discounted cash flow analysis requiring judgment are the projected future operating cash flow, the weighted-average cost of capital and the terminal value growth rate assumptions. The weighted-average cost of capital takes into account the relative weights of each component of our capital structure (equity and long-term debt) and is determined at the reporting unit level. Our estimates of long-term growth and costs are based on historical data, various internal estimates and a variety of external sources, and are developed as part of our routine, long-term planning process. We then compare the estimated fair value to our carrying value.

If the carrying value is in excess of the fair value, we must determine our implied fair value of goodwill to measure if any impairment charge is necessary. The determination of our implied fair value of goodwill requires the allocation of the reporting unit’s estimated fair value to the individual assets and liabilities of the reporting unit as if we had completed a business combination.

We perform the allocation based on our knowledge of the reporting unit, the market in which they operate, and our overall knowledge of the hospitality industry.

Leasing

All lease agreements of the Company and its subsidiaries as lessees are accounted for as finance leases. The Company recognizes the asset and associated liability on its balance sheet. Finance leases are capitalized at the beginning of the lease at the lower of the fair value of the leased property and the present value of minimum lease payments. Each installment of the lease is apportioned between the liability and finance charges so as to achieve an equal reduction in capital due for each payment made at constant rate on the remaining financial balances.

Derivative financial instruments

The Company uses derivative financial instruments principally for the management of exposure to variable interest rates on long-term financing. All derivative financial instruments are classified as assets or liabilities and are accounted for at trade date. The Company measures all derivative financial instruments based on fair values derived from market prices of the instruments. Changes in the fair value of a derivative that is significant and that is designated and qualifies as a fair value hedge, along with the loss or gain on the hedged asset or liability, are recorded in the income statement.

As of December 31, 2013 and December 31, 2012, there are no derivative instruments. During 2012, there was only one derivative instrument hedging the risk of variable interest rates (an “interest rate cap”), the notional amount of which was € 4 million. This derivative instrument hedges the risk from change of interest rate on a mortgage loan facility with “bullet” repayments originally of € 8 million of which € 6.6 million is outstanding. This derivative was divested as part of our plan to focus on hotels only as of September 30, 2012.

Shareholder loans

Shareholder loans to the Company are all non-interest bearing. Italian law provides that the shareholders loans to a limited liability company ("S.r.l.") are not preferred and their repayment is subordinated to other categories of debt. As a result all shareholder loans are classified as non-current liabilities.

Severance indemnity fund

According to Italian accounting principles reflecting local law and applicable employment contracts, certain post-employment benefits accrue during the period of employment. Under U.S. GAAP, post-employment benefits are defined either as de fined contribution plans or defined benefit plans.

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In defined contribution plans, the Company's obligation is limited to the payment of contributions to the Government or to a fund. Defined benefit plans are pension, insurance and healthcare programs which cover the Company's obligation, even implicitly, to provide the benefits due to former employees. The liabilities associated with defined benefit plans are determined on the basis of actuarial assumption (discounting) and accrued in the financial statements over the employment period required to obtain the benefits.

The severance indemnity fund required by Italian law is a liability similar to a defined benefit plan, which, however, according to Italian accounting principles, is not subject to discounting. Given the small number of Company employees any difference between the present provisions in the financial statements prepared in accordance with Italian GAAP and discounted value of these benefits is considered to be immaterial.

Revenue Recognition

Our revenues are derived from rent we receive according to rental agreements we have in place with hotel management companies. The majority of our rent is fixed and payable monthly. The fixed agreements with set increasing rental rates are recognized on a straight line basis. We recognize additional revenue that is variable based on a percentage of the operating profit of our rented hotels only when the contingency of baseline target has been met.

Taxes

Income taxes

We account for income taxes to recognize the amount of taxes payable or refundable for the current year and the amount of deferred tax assets and liabilities resulting from the future tax consequences of differences between the financial statements and tax basis of the respective assets and liabilities. We recognize the financial statement effect of a tax position when, based on the technical merits of the uncertain tax position, it is more likely than not to be sustained on a review by taxing authorities. These estimates are based on judgments made with currently available information. We review these estimates and make changes to recorded amounts of uncertain tax positions as facts and circumstances warrant.

Results of Operations

For the years ended December 31, 2013 and December 31, 2012

	December 31,			December 31,
	2013			2012
	Audited			Audited
Revenue from operations	€	3,483		€	4,420
Direct operating and selling, general and administrative costs
Direct operating costs		1,884			1,207
Selling, general and administrative costs		9,558			441
Amortization and depreciation		2,235			2,239
Total direct operating, selling, and administrative costs		13,677			3,887
Operating Profit/(Loss)		(10,194	)		533
Interest income		697			33
Interest expenses		2,346			(2,210	)
Profit/(Loss) from continuing operations, before income taxes		(11,843	)		(1,644	)
Income taxes		769			(725	)
Profit/(Loss) from continuing operations, net of income taxes		(11,074	)		(2,369	)
Net profit/(loss) from operations of discontinued operations, after taxes		2			(1,391	)
Net profit/(loss) on disposal of discontinued operations, after taxes		(602	)		11,881
Net profit/(loss) from discontinued operations		(600	)		10,490
Consolidated net profit/(loss) for the period		(11,674	)		8,121
Less net loss attributable to non-controlling interests in the consolidated subsidiaries					32
Net profit/(loss) attributable to owners of Southern States Sign Company		(11,674	)		8,153

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Revenues

 Revenues for the year ended December 31, 2013, decreased approximately €937,000, or 21.2%, compared to the year ended December 31, 2012. This decrease is due mainly to the renegotiation of the management agreement of the Ripa Hotel, which resulted in a reduction of the annual rental fee.

Direct Operating Costs

Direct Operating Costs for the year ended December 31, 2013, increased approximately € 677,000, or 56.2%, compared to the year ended December 31, 2012. This increase is mainly due to start-up expenses of IBH Ripa, which has been entitled as new hotel management company of the Ripa Hotel during the second half of 2013.

Selling, General and Administrative Costs

Selling, General and Administrative costs for the years ended December 31, 2013 and 2012, were approximately € 9,558,000 and €441,000, respectively. Such expenses consist primarily of salaries and personnel related expenses, occupancy expenses, sales travel, consulting costs and other expenses. This increase is mainly due to the following costs:

− Advisory costs in connection with the Share Exchange and pre-listing process.

− Tax and related penalties and interests, due to a recent tax assessment settled by the Italian Tax Government Authority (€ 2,250,000).

− Allowance related to a litigation involving the renovation of the Hotel Majestic (Galzignano Terme Golf & Resorts, S.p.A.) mentioned above (Part I – Item 3. Legal proceedings) (€ 1,548,000).

− Loss on receivables for doubtful accounts for a total of € 3,391,000^, of which € 1,598,000 refers to losses on receivables from Laudatio (a company deconsolidated in 2012, currently related party), residual after its deconsolidation, since they were deemed no longer recoverables.

Amortization and Depreciation

Amortization and depreciation for the years ended December 31, 2013 and 2012 were approximately € 2,235,000 and €2,239,000, respectively. The decrease is immaterial.

Interest Income

Interest income for the years ended December 31, 2013 and 2012 was approximately a gain of € 697,000 and a gain of €33,000, respectively. The increase was mainly due to the interest income related to the receivable of € 8,890,000 from Masoledo in connection with the divestment of non-hotel assets which occurred during September, 2012.

Interest Expense

Interest expense for the years ended December 31, 2013 and 2012 was approximately € 2,346,000 and € 2,210,000 respectively. The increase was due to the higher average interest rate on financial debt, recorded in 2013.

Discontinued operations

During the fiscal year ended December 31, 2013, we completed the sales of the following non-hospitality properties:

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− In April, 2013 the Company sold the property located in Via Benaco, Milan (Italy). The property has been owned under a capital lease contract, which has been transferred to the acquirer (third party not related to our group) with no-cash inflow paid. The divestment generated a loss on disposal of € 31,000, net of taxes.

− In December, 2013 the Company also sold the property located in Via Buozzi, Rome (Italy). The property has been owned under a capital lease contract, which has been transferred to the acquirer (Valma Immobiliare S.r.l., a related party owned by Mr Conte’s family) with no-cash inflow paid. The divestment generated a loss on disposal of €571,000 net of taxes.

In addition to the disposals mentioned above, in November 2013, Masseria Santo Scalone Hotel and Resort Srl (“Masseria”), which was the owner of a real estate property in Ostuni, (Brindisi), resolved the contract entered with Peretola Srl on June 11, 2012 concerning the acquisition of the property. This was mainly due to the impossibility for the seller to fulfill certain conditions precedent (among which to provide the registration of the property as “hotel” instead of as “residential” in the land public registry). Accordingly the property (together with the relative mortgage loans) was returned to the seller, which in turn will have to reimburse Masseria of the down payments made so far (€ 442,188).  

Income Taxes

Income taxes for the years ended December 31, 2013 and 2012 were approximately a gain of € 769 and a loss of € 725, respectively. The decrease is related to the loss before income taxes occurred in 2013. The positive amount recognized in the statement of operations for the year ended December 31, 2013 refers to the recognition of lower income taxes allowances recorded in the statement of operations for the year ended December 31, 2012.

Going concern considerations

Notwithstanding the losses recorded in 2013, we expect to remain in operation for the foreseeable future on the basis of the strategies we are currently implementing, which will have a positive impact on the profitability of our business in the future years. Therefore we have the ability to continue as a going concern for a long and reasonable period following the date of the financial statements.

Liquidity and Capital Resources

For the years ended December 31, 2013 and December 31, 2012,

As of December 31, 2013 we had cash and cash equivalents of approximately € 728,000, negative working capital of approximately € 4,234,000 and accumulated loss of approximately € 3,466,000.

Cash Flows from Operating Activities

Net cash provided by operating activities was approximately € 231,000 for the year ended December 31, 2013, compared to the net cash used of approximately € 7,031,000 for the year ended December 31, 2012.

The net cash used in operating activities for the year ended December 31, 2013 reflects a net loss of approximately € 11,674,000 and a net loss from operations on discontinued operations of approximately € 2,000, offset by a gain on disposal of discontinued operations of approximately € 602,000, a depreciation and amortization of approximately € 2,235,000 and other depreciation and allowance of approximately 3,798,000. Changes in assets and liabilities included an increase in trade receivables of approximately € 2,715,000, an increase in related party receivables of approximately € 3,237,000, an increase in advanced payments on purchases of property of approximately € 8, a decrease in other assets of approximately € 822,000, an increase in trade payables of approximately € 1,135,000, a decrease in related party payables of approximately € 405,000, a decrease in other payables of approximately € 1,377,000, a decrease in VAT taxes receivable of approximately € 35,000 and an increase in other liabilities of approximately € 889,000.

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The net cash used in operating activities for the year ended December 31, 2012 reflects a net income of approximately € 8,121,000, a net gain from operations on discontinued operations of approximately € 1,391,000 and a depreciation and amortization of approximately €2,239,000, offset by a loss on disposal of discontinued operations of approximately € 11,881,000. Changes in assets and liabilities included a decrease in trade receivables of approximately € 1,518,000, a decrease in related party receivables of approximately € 20,610,000, an increase in other receivables of approximately € 11,000, a decrease in advanced payments on purchases of property of approximately € 6,000, a decrease in other assets of approximately € 52,000, a decrease in trade payables of approximately €2,341,000, an increase in related party payables of approximately € 6,989,000, an increase in other payables of approximately €1,327,000, an increase in VAT taxes receivable of approximately € 2,429 and an increase in other liabilities of approximately € 6,034,000. The net cash used in operating activities of discontinued operations was approximately € 161,000.

Cash Flows from Investing Activities

The net cash provided by investing activities for the year ended December 31, 2013 of approximately € 4,934,000 consist primarily of the cash inflow provided by investing activities of discontinued operations (approximately € 5,013,000) due to the returning of the property in Ostuni, (Brindisi) of Masseria Santo Scalone Hotel and Resort Srl to the seller. The contract entered with Peretola Srl was resolved, due to the impossibility for the seller to fulfill certain conditions precedent, as mentioned above.

The net cash provided by investing activities for the year ended December 31, 2012 of approximately € 382,000 consist primarily of the cash inflow (approximately € 1,049,000) due to the discontinued operations, offset by the cash out flow used in continuing operations referred to the purchases of intangible assets (approximately € 1,248,000) and the cash inflow provided by the sale of properties, plant and equipment.

Cash Flows from Financing Activities

Net cash used in financing activities for the year ended December 31, 2013 was approximately € 4,879,000, which was mainly due to the reimbursement of financial debt related to the return of the property in Ostuni (Brindisi) of Masseria, mentioned above. Net cash provided by financing activities for the year ended December 31, 2012 was approximately €6,779,000, which was mainly due to net financing on discontinued operations, in particular related to the divestment of the non-hotel assets and liabilities occurred in September, 2012.

Future Liquidity Needs

We have evaluated our expected cash requirements over the next twelve months, which includes, but is not limited to, interest payments, capital repayments, capital expenditures and working capital requirements. Whilst we are able to manage certain aspects of these cash requirements the level of income, rate of repayment of related party receivables and cost of debt, where variable, are outside our control.

In order to optimize our cash flow, we have very recently started negotiations with the lenders (a pool of four banks) of the mortgage loan in place on the Galzignano property, in order to achieve better terms and conditions (specifically to lengthen the maturity of the loan, currently set for October 2018, and to reduce interest costs). We are positive about the favorable acceptance of our requests.

We are also planning, but as yet have no contractual commitments, to make acquisitions and whilst we wish to effect at least some of these acquisitions through the issue of shares there can be no certainty that the vendors will accept such consideration and we may wish, to in any case, to effect such acquisitions using cash. Further, we plan to put in place new borrowings to finance the assets to be acquired or take-on existing borrowings secured on the assets planned to be acquired.

Based on existing assets, expected related party receivables repayments, business level, debt and interest rates we believe our current resources are sufficient for at least the next twelve months.

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However, to implement the business plan for the expansion of our assets we will require additional financing in the future. The timing of our need for additional capital will depend on the timing of the completion of the planned acquisitions, the terms of such acquisitions and whether existing lenders are willing to continue to provide finance upon a change of control of such assets.

We are in the process of developing one properties which will require capital expenditure – the Green Park Hotel being converted to apartments.

The development of the Green Park Hotel should start in the first half of 2015. It is expected that the Green Park Hotel conversion will cost approximately €4.4 million ($ 5.7 million) to be spent over a period of 1½ years from commencement in 2015.

In each case no work, beyond planning and negotiation of finance, has been undertaken and no work will start until the required financing has been agreed and contracted with lending institutions.

Commitments and contingencies

The Company and certain subsidiaries are defendants in legal actions in the normal course of business. Based on the advice of legal counsel, management believes that the amounts recognized and recorded as debt provisions or asset negative adjustments are sufficient to cover probable losses in connection with such actions.

The risk provisions or negative adjustments are recognized when in accordance with the opinion of legal counsel the liability is probable and measurable.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

A smaller reporting company is not required to provide the information required by this Item.

Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements:

Report of Independent Registered Public Accounting Firm	23
Balance Sheets as of December 31, 2013 and 2012;	26
Statements of Operations for the years ended December 31, 2013 and 2012	27
Consolidated Statement of Stockholders’ Equity (Deficit) for the years ended December 31, 2013 and 2012;	28
Statements of Cash Flows for the years ended December 31, 2013 and 2012; and	29
Notes to Financial Statements.	30

22

Southern States Sign Company

Consolidated Financial Statements for

the year ended December 31, 2013

Report of independent auditors

23

Crowe Horwath AS S.r.l. Revisione e organizzazione contabile Member Crowe Horwath International Milano, Via G. Leopardi 3 – 20123 Tel. +39 + 02 43912344 Fax: +39 02 4390711 Roma, Via Flaminia 21 – 00196 Tel. +39 06 68395091  Fax +39 06 68581565 Torino, C.so Matteotti 17 – 10121 Tel. +39 011 5119166  Fax +39 011 4407792 Napoli, Corso Vittorio Emanuele 651 – 80121 Tel. +39 081 5538773 Fax +39 081 411529 www.crowehorwath.net - info@crowehorwath-as.it

Report of Independent Registered Publication Firm

To the Board of Directors of

Southern States Sign Company

Rome, Italy

We have audited the accompanying consolidated balance sheet of Southern States Sign Company, expressed in euros as of December 31, 2013, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the year ended December 31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Southern States Sign Company as of December 31, 2013, and the result of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles in the United States of America.

As indicated in “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters”:

Crowe Horwath AS Srl	Capitale Sociale € 100.000,00	Sede Legale e Amministrativa
	Iscritta al Registro delle Imprese di Milano	Via G. Leopardi 3 – 20123 Milano
	Codice fiscale, P.I. e numero iscrizione 01414060200
	Iscritta nel Registro dei Revisori presso il Ministero della Giustizia
	(D.M. del 12.04.1995)

24

	Crowe Horwath AS S.r.l. Revisione e organizzazione contabile Member Crowe Horwath International

On April 10, 2013, Antonio Conte, Chief Executive Officer, Principal Financial Officer, Chairman and Director of the Company, resigned from each of his positions with the Company, effective as of the same date. There were no disagreements between Mr. Conte and the Company. Mr. Conte informed the Board of Directors of the Company that on April 9, 2013, he was placed under house arrest by the Criminal court in Rome for alleged bankruptcy and tax fraud related to events that took place in 2007 and 2008 and that such events in no way related to the Company or its business. Following his arrest, the Criminal court in Rome also ordered the seizure of all the shares owned by Mr. Conte in the Company, which were put under the management of a receiver.

Rome, May 15, 2014

Crowe Horwath AS S.r.l.

Salvatore Florena

(Partner)

25

€’000

SOUTHERN STATES SIGN COMPANY
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2013 & 2012

	December 31,			December 31,
	2013 Audited			2012 Audited
ASSET
Current Assets:
Cash	€	728		€	441
Net receivables		1,986			4,701
Related parties receivables		18,804			22,043
VAT Tax receivables		1,324			1,628
Other current assets		1,270			340
Available for sale assets					8,559
Total current assets		24,112			37,711
Non - Current Assets:
Net properties, plant and equipment (Including Capital Leased properties € 32,097 and € 33,259, respectively)		58,375			60,612
Goodwill		1,541			1,541
Other non-current assets (Including Related Parties non-current receivables € 8,890 and € 0, respectively)		10,492			10,535
Total non - current assets		70,408			72,689
Total Assets	€	94,520		€	110,400
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Bank overdrafts	€	963		€	2,970
Current maturities of long term loans and capital leases		10,915			9,798
Trade payables		7,207			6,072
Related parties payables		6,609			7,014
Others current liabilities		2,652			4,232
Available for sale liabilities					7,617
Total current  Liabilities		28,346			37,703
Non - current liabilities:
Long term loans and capital leases		36,581			37,706
Shareholder's loans		2,361			626
Other non-current liabilities		4,612			60
Total non - current  Liabilities		43,554			38,392
Stockholders' Equity
Common stocks		27			27
Additional Paid in Capital		26,059			26,059
Retained earnings/(Accumulated loss)		(3,466	)		7,359
Equity attributable to owners of Southern States Sign Company		22,620			33,445
Non-Controlling interests in the consolidated subsidiaries					860
Total Stockholders' Equity		22,620			34,305
Total Liabilities and Stockholders' Equity	€	94,520		€	110,400

26

SOUTHERN STATES SIGN COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2013 and 2012

€’000, except per share amounts

	December 31,			December 31,
	2013			2012
	Audited			Audited
Revenue from operations	€	3,483		€	4,420
Direct operating and selling, general and administrative costs
Direct operating costs		1,884			1,207
Selling, general and administrative costs		9,558			441
Amortization and depreciation		2,235			2,239
Total direct operating, selling, and administrative costs		13,677			3,887
Operating Profit/(Loss)		(10,194	)		533
Interest income		697			33
Interest expenses		2,346			(2,210	)
Profit/(Loss) from continuing operations, before income taxes		(11,843	)		(1,644	)
Income taxes		769			(725	)
Profit/(Loss) from continuing operations, net of income taxes		(11,074	)		(2,369	)
Net profit/(loss) from operations of discontinued operations, after taxes		2			(1,391	)
Net profit/(loss) on disposal of discontinued operations, after taxes		(602	)		11,881
Net profit/(loss) from discontinued operations		(600	)		10,490
Consolidated net profit/(loss) for the period		(11,674	)		8,121
Less net loss attributable to non-controlling interests in the consolidated subsidiaries					32
Net profit/(loss) attributable to owners of Southern States Sign Company		(11,674	)		8,153
Loss per share of Common Stock
Loss from continuing operations	€	(0.28	)	€	(0.07	)
Net Profit/(Loss) from discontinued operations	€	(0.01	)	€	0.31
Net Profit/(Loss)	€	(0.29	)	€	0.24
Weighted-average shares outstanding:
Common Stock
Basic and diluted		40,151,261			34,260,659

SOUTHERN STATES SIGN COMPANY

STATEMENT OF COMPREHENSIVE INCOME/(LOSS)

 €’000

	December 31,			December 31,
	2013			2012
	Audited			Audited
Net Profit/(Loss) for the period	€	(11,674	)	€	8,153
Other comprehensive income
Foreign currency Translation differences		17			6
Total comprehensive Income/(Loss)for the period	€	(11,657	)	€	8,159

27

SOUTHERN STATES SIGN COMPANY

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Audited)

€’000

										Equity
										attributable
										to non-
	Common Stock				Additional		Retained			controlling			TOTAL
	Shares		Amount		Paid In Capital		earnings			interests			EQUITY
Balance at December 31, 2011		33,101,852	€	25	€	25,978	€	(936	)	€	(3	)	€	25,064
Shares issued to Consultants		200,000		1		14		-			-			15
Acquisition of Southern States Sign Company		6,849,409		1		67		-			-			68
Change in Percentage of Controlling Interests		-		-		-		136			895			1,031
Net profit/(loss) for the year		-		-		-		8,153			(32	)		8,121
Foreign currency translation		-		-		-		6			-			6
Balance at December 31, 2012		40,151,261	€	27	€	26,059	€	7,359		€	860		€	34,305
Net profit/(loss) for the year		-		-		-		(11,674	)					(11,674	)
Change in percentage of controlling interests								832			(860	)		(28	)
Foreign currency translation		-		-		-		17			-			17
Balance at December 31, 2013		40,151,261	€	27	€	26,059	€	(3,466	)	€	-		€	22,620

28

€’000

SOUTHERN STATES SIGN COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

	December 31, 2013			December 31, 2012
	Audited			Audited
Cash Flows from Operating Activities:
Net Income/(loss)	€	(11,674	)	€	8,121
Net loss from operations on discontinued operations		(2	)		1,391
Net gain from discontinued operations		602			(11,881	)
Net Income/(loss) from continuing operations		(11,074	)		(2,369	)
Depreciation and amortization of non-current assets		2,235			2,239
Other depreciation and allowance		3,798
Other non-cash adjustments		(73	)		996
Cash flows from operations before changes in assets and liabilities		(5,114	)		866
Changes in assets and liabilities:
Change in trade receivables		2,715			(1,518	)
Change in related parties receivables		3,237			(20,610	)
Change in other receivables					11
Change in advance payment on purchase and other current assets		8			(6	)
Change in other assets		(822	)		(52	)
Change in trade payables		1,135			(2,341	)
Change in related parties payables		(405	)		6,989
Change in other payables		(1,377	)		1,327
Change in tax receivable and payable		(35	)		2,429
Change in other liabilities		889			6,034
Net cash provided by/(used in) operating activities of discontinued operations					(161	)
Net cash provided by/(used in) Operating Activities (A)		231			(7,031	)
Cash Flows from Investing Activities:
Purchases of intangible assets		(81	)		(1,248	)
Proceeds from sale of properties, plant and equipment		2			585
Proceeds from sale of associates and other company					2
Other investing change					(6	)
Net cash provided by investing activities of discontinued operations		5,013			1,049
Net cash provided by/(used in) investing activities (B)		4,934			382
Cash Flows from Financing Activities:
Net reimbursements/borrowings from bank overdrafts		(2,007	)		80
Net proceeds from/repayment of issuance of long-term debt		(8	)		(2,040	)
Net proceeds from/repayment of issuance of shareholders loan		1,735			804
Net cash provided by/(used in) financing activities of discontinued operations		(4,600	)		7,935
Net cash provided by Financing Activities (C )		(4,879	)		6,779
Net Increase/(decrease) in Cash and Cash Equivalents (A+B+C)		287			129
Cash and cash equivalents at beginning of the year		441			312
Cash and cash equivalents at end of the year	€	728		€	441

29

SOUTHERN STATES SIGN COMPANY

Notes to audited Consolidated Financial Statements

For the years ended December 31, 2013 and 2012

(Euros, amounts in thousands, unless otherwise indicated)

NOTE 1. ORGANIZATION

Southern States sign Company (“SOST”) is a corporation incorporated in the state of Nevada. SOST operates through its wholly owned subsidiary, Conte Rosso & Partners S.r.l. (“CR&P,” and together with SOST, the “Company”), which is a company incorporated in Italy. Operations are carried out through its subsidiary, CR&P, and mainly consists of investment in the hospitality industry.

On November 1, 2012, the Company entered into the Exchange Agreement with CR&P, pursuant to which the CR&P Shareholders transferred all of the issued and outstanding capital stock of CR&P to the Company in exchange for 21,250,000 newly issued shares of our common stock, resulting in CR&P becoming a wholly owned subsidiary of the Company. For information regarding the Exchange Agreement, see Item 1. – “Business” of this annual report. The transaction was accounted for as a reverse acquisition into a publicly traded shell corporation, and accordingly, no goodwill was recorded. As a result of the reverse acquisition, the historical financial statements of Southern State Sign Company for the periods prior to the date of the transaction are not presented.

As of December 31, 2013 the consolidated operating subsidiaries are the following (those entities which are indented represent subsidiaries of the entity under which they are indented):

Subsidiaries

Name of Company	% Ownership		Location	Principal activity
Southern States Sign Company
A.    Conte Rosso & Partners S.r.l.		100.00	Italy	Hospitality Business
1.    Aral Immobiliare S.r.l.		100.00	Italy	Hospitality business
2.    C.R.&P. Service S.c.a.r.l.		100.00	Italy	Group’s Exclusive financial services
3.    Galzignano Terme Golf & Resort S.p.A.		100.00	Italy	Hospitality business
4.    Masseria Santo Scalone Hotel & Resort S.r.l.		100.00	Italy	Hospitality business
5.    Primesint S.r.l.		100.00	Italy	Investment Company
6.    IBH Management Company S.r.l.		100.00	Italy	Hospitality business
7.    IBH Ripa S.r.l		100.00	Italy	Hospitality business
8.    GHG Resorts S.r.l.		100.00	Italy	Hospitality business

30

On March 26, 2013, I.B.H. Management Company S.r.l. (“I.B.H. Management”) was incorporated. I.B.H. Management is 95% owned by C.R.&P. Service S.c.a.r.l. and 5% owned by Mr. Antonio Conte.

 On April 3, 2013, GHG Resorts S.r.l. (“GHG Resorts”) was incorporated. GHG Resorts is 95% owned by I.B.H. Management and 5% owned by Mr. Antonio Conte.

On October 10, 2013, I.B.H. Ripa S.r.l. (“I.B.H. Ripa”) was incorporated. I.B.H. Ripa is 90% owned by I.B.H. Management and 10% owned by Aral Immobiliare S.r.l.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation

All majority-owned subsidiaries in which CR&P has both voting share and management control are consolidated. All significant intercompany accounts and transactions are eliminated. Subsidiaries over which control is achieved through other means, such as stockholders agreement, are also consolidated even if less than 51% of voting capital is held. The equity attributable to non-controlling interests in subsidiaries is shown separately in the consolidated financial statements.

Basis of presentation

The consolidated financial statements for the fiscal year ended December 31, 2013 and December 31, 2012 are prepared in accordance with generally accepted accounting principles generally accepted in the United States of America (“US GAAP”).

The Euro is the functional currency of all companies included in these consolidated financial statements.

The amounts presented have been rounded to the nearest thousand.

Fair value

We disclose the fair value of our financial assets and liabilities based on observable market information where available, or on market participant assumptions. These assumptions which are subjective in nature involve matters of judgment, and, therefore, fair values cannot always be determined with precision. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). “US GAAP” establishes a valuation hierarchy for prioritizing the inputs and the hierarchy places greater emphasis on the use of observable market inputs and less emphasis on unobservable inputs. When determining fair value, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of the hierarchy are as follows:

Level One—Fair values based on unadjusted quoted prices in active markets for identical assets and liabilities;

Level Two—Fair values based on quoted market prices for similar assets and liabilities in active markets, quoted prices in inactive markets for identical assets and liabilities, and inputs other than quoted market prices that are observable for the asset or liability;

31

Level Three—Fair values based on inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. Valuation techniques could include the use of discounted cash flow models and similar techniques.

We utilize the market approach and income approach for valuing our financial instruments. The market approach utilizes prices and information generated by market transactions involving identical or similar assets and liabilities and the income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). For instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the classification of fair value assets and liabilities within the fair value hierarchy.

The carrying values of cash equivalents, accounts receivable, financing receivable – current, accounts payable and current maturities of long-term debt approximate fair value due to the short-term nature of these items and their close proximity to maturity

Acquisitions

Assets acquired and liabilities assumed in business combinations are recorded on our consolidated balance sheets as of the respective acquisition dates based upon their estimated fair values at such dates.

The results of operations of businesses acquired by us have been included in the consolidated statements of income (loss) since their respective dates of acquisition. In certain circumstances, the purchase price allocations are based upon preliminary estimates and assumptions. Accordingly, the allocations are subject to revision when we receive final information, including appraisals and other analyses. There were no contingent payments, options, or commitments specified in any of our acquisition agreements.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances, cash on current accounts with banks, bank deposits and other highly liquid short-term investments with original maturities of less than three months.

Accounts receivable & Allowance for doubtful accounts

Accounts receivable represents trade obligations from customers that are subject to normal trade collection terms, without discounts. The Company periodically evaluates the collectability of its accounts receivable and considers the need to record or adjust an allowance for doubtful accounts based upon historical collection experience and specific customer information. Actual amounts could vary from the recorded estimates. The Company has determined that as of December 31, 2013 and 2012, € 0 is the allowance for doubtful accounts that was required. The Company does not require collateral to support customer receivables.

Investments

Investments in unconsolidated affiliates over which we exercise significant influence, but do not control, including joint ventures, are accounted for using the equity method.

Investments in unconsolidated affiliates over which we are not able to exercise significant influence are accounted for under the cost method.

Property, plant and equipment

Property, plant and equipment are stated at acquisition cost less accumulated depreciation and adjustments for impairment losses. Property, plant and equipment also includes assets under construction and plant and equipment awaiting installation.

32

Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in an item of property, plant and equipment. All other expenditures are recognized as expenses in the consolidated statement of income as incurred.

Capitalization ceases when construction is interrupted for an extended period or when the asset is substantially complete.

Depreciation is charged on a straight-line basis over the estimated remaining useful lives of the individual assets.

Depreciation commences from the time an asset is put into operation. Depreciation is not charged on assets to be disposed of or on land. The range of the estimated useful lives is as follows:

- Buildings and constructions: 33 - 66 years

- Machinery and equipment: 2 – 20 years

- Others: 5 years

Long-Lived Assets

We evaluate the carrying value of our long-lived assets for impairment by comparing the expected undiscounted future cash flows of the assets to the net book value of the assets when events or circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. If the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book value over the estimated fair value will be charged to earnings.

Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions, appraisals, and, if appropriate, current estimated net sales proceeds from pending offers.

We evaluate the carrying value of our long-lived assets based on our plans, at the time, for such assets and such qualitative factors as future development in the surrounding area and status of expected local competition.

Discontinued operations

In connection with the strategy of focusing on hotel ownership, at the end of September, 2012 we divested all of our non-hotel assets to a related party at cost.

The realized value of these assets is higher than the net asset carrying value.

In 2013 we continued to divest some non hospitality assets, by realizing following divestment:

−	We sold the property located in Via Benaco, Milan (Italy), owned by Primesint, S.r.l. The property has been owned under a capital lease contract, which has been transferred to the acquirer.
−	We sold the property located in Via Buozzi, Rome (Italy) owned by Conte Rosso & Partners, S.r.l. to a related party (Valma Immobiliare, S.r.l., owned by Mr.Conte’s family). The property has been owned under a capital lease contract, which has been transferred to the acquirer.
−	In 2013 we also resolved the Masseria Santo Scalone purchase contract, due to non fulfillment of some conditions precedent, by returning the real estate property and the related debt to the seller.

33

Goodwill and Other Intangible Assets

We evaluate goodwill for impairment on an annual basis, and do so during the last month of each year using balances as of the end of September and at an interim date if indications of impairment exist. Goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount in a two-step process with an impairment being recognized only where the fair value is less than carrying value. We define a reporting unit at the individual property level.

When determining fair value in step one, we utilize internally developed discounted future cash flow models, third party appraisals and, if appropriate, current estimated net sales proceeds from pending offers. Under the discounted cash flow approach we utilize various assumptions, including projections of revenues based on assumed long-term growth rates, estimated costs and appropriate discount rates based on the weighted-average cost of capital. The principal factors used in the discounted cash flow analysis requiring judgment are the projected future operating cash flow, the weighted-average cost of capital and the terminal value growth rate assumptions. The weighted-average cost of capital takes into account the relative weights of each component of our capital structure (equity and long-term debt) and is determined at the reporting unit level. Our estimates of long-term growth and costs are based on historical data, various internal estimates and a variety of external sources, and are developed as part of our routine, long-term planning process. We then compare the estimated fair value to our carrying value.

If the carrying value is in excess of the fair value, we must determine our implied fair value of goodwill to measure if any impairment charge is necessary. The determination of our implied fair value of goodwill requires the allocation of the reporting unit’s estimated fair value to the individual assets and liabilities of the reporting unit as if we had completed a business combination.

We perform the allocation based on our knowledge of the reporting unit, the market in which they operate, and our overall knowledge of the hospitality industry.

Leasing

All lease agreements of the Company and its subsidiaries as Lessees are accounted for as capital. The Company recognizes the asset and associated liability on its balance sheet. Capital are capitalized at the beginning of the lease at the lower of the fair value of the leased property and the present value of minimum lease payments. Each installment of the lease is apportioned between the liability and finance charges so as to achieve an equal reduction in capital due for each payment made at constant rate on the remaining financial balances.

Derivative financial instruments

The Company uses derivative financial instruments principally for the management of exposure to variable interest rates on long-term financing. All derivative financial instruments are classified as assets or liabilities and are accounted for at trade date. The Company measures all derivative financial instruments based on fair values derived from market prices of the instruments. Changes in the fair value of a derivative that is significant and that is designated and qualifies as a fair value hedge, along with the loss or gain on the hedged asset or liability, are recorded in the income statement.

 As of December 31, 2013 and December 31, 2012, there are no derivative instruments. During 2012, there was only one derivative instrument hedging the risk of variable interest rates (an “interest rate cap”), the notional amount of which was € 4 million. This derivative instrument hedges the risk from change of interest rate on a mortgage loan facility with “bullet” repayments originally of € 8 million of which € 6.6 million is outstanding. This derivative was divested as part of our plan to focus on hotels only as of September 30, 2012.

Shareholders loans

Shareholders loans to the Group are all non-interest bearing. Italian law provides that the shareholders loans to a corporation ("S.r.l.") are not preferred and their repayment is subordinated to other categories of debt. As a result all shareholder loans are classified as non-current liabilities.

34

Severance indemnity fund

According to Italian accounting principles reflecting local law and applicable employment contracts, certain post-employment benefits accrue during the period of employment. Under U.S. GAAP, post-employment benefits are defined either as de fined contribution plans or defined benefit plans.

In defined contribution plans, the Company's obligation is limited to the payment of contributions to the Government or to a fund. Defined benefit plans are pension, insurance and healthcare programs which cover the Company's obligation, even implicitly, to provide the benefits due to former employees. The liabilities associated with defined benefit plans are determined on the basis of actuarial assumption (discounting) and accrued in the financial statements over the employment period required to obtain the benefits.

The severance indemnity fund required by Italian law is a liability similar to a defined benefit plan, which, however, according to Italian accounting principles, is not subject to discounting. Given the small number of Company employee any difference between the present provisions in the financial statements prepared in accordance with Italian GAAP and discounted value of these benefits is considered to be immaterial.

Revenue Recognition

Our revenues are derived from rent we receive according to rental agreements we have in place with a Hotel Management Company. The majority of our rent is fixed and payable monthly. The fixed agreements with set increasing rental rates is recognized on a straight line-basis. We recognize additional revenue that is variable based on a percentage of the operating profit of our rented hotels only when contingency of the baseline target has been met.

Taxes

Income taxes

We account for income taxes to recognize the amount of taxes payable or refundable for the current year and the amount of deferred tax assets and liabilities resulting from the future tax consequences of differences between the financial statements and tax basis of the respective assets and liabilities. We recognize the financial statement effect of a tax position when, based on the technical merits of the uncertain tax position, it is more likely than not to be sustained on a review by taxing authorities. These estimates are based on judgments made with currently available information. We review these estimates and make changes to recorded amounts of uncertain tax positions as facts and circumstances warrant.

We are subject to income taxes under the tax laws of Italy. The Company accounts for uncertainty in income taxes in accordance with Topic 740, “Income Taxes,” of the Accounting Standards Codification (“ASC 740”). ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with generally accepted accounting principles and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in an income tax return. ASC 740 also provides guidance on recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. During the years ended December 31, 2013 and 2012, the Company recognized no adjustments for uncertain tax positions.

 The Company recognizes interest and penalties relating to uncertain tax positions in income tax expense. There is no interest or penalties relating to tax positions during the years ended December 31, 2013 and 2012.

The Company is also subject to examination in Italy where it has filed tax returns for the years 2009 through 2011. On April 11, 2014, Aral Srl. entered into a settlement agreement with the Italian Revenue Agency in relation to a tax assessment concerning certain asserted outstanding taxes (VAT, income taxes etc.), as mentioned below (see Note n. 13 – Subsequent events).

Stockholder’s equity

As of December 31, 2013, the share capital of CR&P is represented by 40,151,261 outstanding shares. Mr. Antonio Conte and his wife Maddalena Olivieri contributed 82.44% of the share capital of CR&P.

35

As of December 31, 2012, after the Share Exchange was consummated on November 1, 2012, the share capital of CR&P is represented by 39,526,261 outstanding shares. Mr. Antonio Conte and his family contributed 87.14% of the share capital of CR&P.

NOTE 3. RELATED PARTIES RECEIVABLES AND PAYABLES

Related parties current receivables and payables relate to the former CEO and shareholder, Mr. Antonio Conte, both directly and indirectly. As of December 31, 2013 the amounts of related parties current receivables of € 16,293 thousand and payables of € 6,213 thousand refers to CR&P Service, S.r.l., a subsidiary incorporated in 2012 that manages the Company’s cash facilities and cash pooling and also for other companies owned by Mr. Conte but not consolidated in CR&P (related parties). During the fiscal years 2012 and 2013, the operations of CR&P Service, S.r.l. did not generate any material impact on the consolidated equity and statement of operations of CR&P. The amounts shown as non-current receivables as of December 31, 2013 and December 31, 2012 relate to a receivable from Masoledo, S.r.l., owned by Mr. Conte in connection with the sale of the non-hotel business which occurred in September, 2012.

The amount of related parties current receivables of € 1,561 thousand refers to a sale of two non-hotel assets (buildings of Porto Rotondo e Porto Cervo, OT, Italy), previously owned by Ripa Hotel & Resorts, S.r.l. (a wholly-owned subsidiary merged with Aral S.r.l. on March, 2013), to Valma Immobiliare, S.r.l., a related party owned by Mr. Conte’s family.

NOTE 4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, included in continuing operations, comprises:

€’000

Property, plant and equipment	December 31, 2013			December 31, 2012
Hotel Ripa building, plant and equipment	€	42,594		€	42,654
Terme di Galzignano golf, building, plant and equipment		39,129			39,229
Less accumulated depreciation		(23,348	)		(21,271	)
Total, net	€	58,375		€	60,612

The properties owned by the Company as of March 18, 2014 has been recently tested for impairment, by committing a specialized appraisal firm, which provided updated appraisals of their fair value. The methodologies applied in those appraisals mainly consists in the market value method and the discounted future cash flows method. The appraisals show fair value amount of the properties significantly higher than the relevant carrying amount, as can be seen from the following table.

€’000

Property, plant and equipment	Balance Sheet as of December 31, 2013 (net of accumulated depreciation)		Appraisal values as  of March 18, 2014		Differential
Hotel Ripa building, plant and equipment	€	34,952	€	39,900	€	4,948
Terme di Galzignano golf, building, plant and equipment		23,423		56,393		32,970
Total	€	58,375	€	96,293	€	37,918

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NOTE 5. MAJOR ACQUISITIONS AND DIVESTMENTS

Masseria Santo Scalone Hotel & Resort S.r.l.

In line with the strategy to expand operations in the hospitality area, on September 29, 2012, the Company acquired 100.00% of Masseria Santo Scalone Hotel & Resort Srl (“Masseria”) from a related party (Masoledo Srl, owned by Mr. Conte’s family), which had previously purchased, in June 2012, an ancient real estate property located in Ostuni, Pulia, in the south of Italy, from Peretola Srl. The cost of acquisition of Masseria was €3.2 million.

The balance sheet effects of the acquisition are summarized below:

The purchase price allocation for the acquisition of Masseria Santo Scalone Hotel & Resort S.r.l. is as follows;

€’000	May 29, 2012
Current maturity of long-term debt	€	2,898
Related parties payable		300
Cash payments		10
Total purchase price	€	3,208
Allocated to:
Property, plant and equipment	€	4,903
Net working capital		(1.705	)
Cash		10
Total	€	3,208

There is no goodwill recognized on the acquisition of Masseria.

On November 27, 2013, Masseria resolved the contract entered with Peretola Srl in June 2012. This was mainly due to the impossibility for the seller to fulfill certain conditions precedent (among which to provide the registration of the property as “hotel” instead of as “residential” in the land public registry). Accordingly the property (together with the relative mortgage loans) was returned to the seller, which in turn will have to reimburse Masseria of the down payments made so far (€ 442,188).

Change in percentage of interests in Primesint, S.r.l.

At the beginning of 2013, the shareholders of the Company entered into an agreement of exchange of interests in Primesint Srl. After this investment, Primesint is a wholly-owned subsidiary. The transaction has been realized with no gain or loss for controlling interests.

Change in percentage of interests in Galzignano Terme Golf & Resorts, S.p.A.

At the beginning of 2013, the shareholders of the Company entered into an agreement of exchange of interests in Galzignano Terme Golf & Resorts, S.p.A.. After this transaction, Galzignano is a wholly-owned subsidiary. The transaction has been realized with no gain or loss for controlling interests.

Divestment of all non-hospitality businesses

In September 2012, the Company divested all of it non-hotel assets to a related party company controlled by the shareholders. The total assets and liabilities divested was € 52.9 million and € 44.7 million, respectively.

Divestment of the property in Via Benaco, Milan, Italy

In order to focus on the hospitality business, in April, 2013 the wholly-owned subsidiary Primesint, S.r.l. sold the property located in Via Benaco, Milan (Italy). The property has been owned under a capital lease contract, which has been transferred to the acquirer with no-cash inflow paid.

The balance sheet effects of this disposal are summarized in the table below:

37

Balance sheets effects of the divestment of the property in Via Benaco, Milan (Italy)

€’000	April 1, 2013
Inflow of cash and other assets	€	0
Total assets divested, less accumulated depreciation		(438	)
Total liabilities divested		407
Recognized loss		(31	)

The loss resulting from this divestment has been recognized in the consolidated statement of operations as a loss on disposal of discontinued operations.

Divestment of the property in Via Buozzi, Rome (Italy)

In order to focus on the hospitality business, in December, 2013, the wholly-owned subsidiary Conte Rosso & Partners, S.r.l. sold the property located in Via Buozzi, Rome (Italy) to a related party (Valma Immobiliare, S.r.l., owned by Mr.Conte’s family). The property has been owned under a capital lease contract, which has been transferred to the acquirer with no-cash inflow paid.

The balance sheet effects of this disposal are summarized in the table below:

Balance sheets effects of the divestment of the property in Via Buozzi, Rome (Italy)

€’000	December 18, 2013
Inflow of cash and other assets	€	0
Total assets divested, less accumulated depreciation		(3,137	)
Total liabilities divested		2,566
Recognized loss		(571	)

The loss resulting from this divestment has been recognized in the consolidated statement of operations as a loss on disposal of discontinued operations.

NOTE 6. GOODWILL

The table below shown the breakdown of goodwill related to continuing operations:

€’000

	Owned and leased hotel		Others owned properties		Total
Balance as of January 1, 2012
Goodwill, net		1,149		392		1,541
No Activity during the period		-		-		-
Balance as of December 31, 2012
Goodwill, net		1,149		392		1,541
Balance as of January 1, 2012
Goodwill, net		1,149		392		1,541
Acquisition of the Ripa Hotel’s hotel management activity		-		-		-
Balance as of December 31, 2013
Goodwill, net		1,149		392		1,541

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In the fiscal years ended December 31, 2013 and 2012, the company did not have any new goodwill or any impairment on existing goodwill.

NOTE 7. OTHER NON-CURRENT ASSETS

The table below shown the breakdown of other non-current assets, related to continuing operations:

€’000

	December 31, 2013		December 31, 2012
Related parties non-current receivables	€	8,890	€	8,890
Investment in other companies		4		13
Accruals and deferred costs		259		375
Other intangible assets		1,339		1,257
Total Other non-current assets	€	10,492	€	10,535

NOTE 8. BANK OVERDRAFTS AND LONG-TERM DEBT

Amounts of financial debt (related to continuing operations) due to non-related parties are:

€’000

Mortgage & Capital Leases

	December 31, 2013		December 31, 2012
Mortgage loan on property	€	21,084	€	20,791
Leases		26,412		26,712
Total	€	47,496	€	47,503

	December 31, 2013		December 31, 2012
Current portion of debt	€	10,915	€	9,798
Long term debt		36,581		37,706
Total	€	47,496	€	47,503

BANK OVERDRAFT

The following tables sets out the main terms and conditions and the outstanding overdraft balances as of December 31, 2013 and 2012 of the financial debts referred to continuing operations:

€’000

Company	Type of debt	Object	Collateral		Outstanding balance as of December  31, 2013		Outstanding balance as  of Dec. 31,  2012
CONTE ROSSO & PARTNERS, S.R.L.	BANK OVERDRAFT	Cash facility		-		-		2,051
TERME DI GALZIGNANO, S.r.l.	BANK OVERDRAFT	Cash facility		-		963		919
				TOTAL		963		2,970

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Outstanding non-current loans related to continuing operations

as of December 31, 2013 and 2012

€’000

Company	Type of debt	Object	Collateral	Outstanding. balance as of Dec. 31, 2013		Outstanding balance as of Dec. 31, 2012
CONTE ROSSO & PARTNERS, S.R.L.	UNSECURED LOAN	Cash facility	-		507		688
ARAL IMMOBILIARE, S.r.l.	CAPITAL LEASE	Building purchase	Hotel property in Rome, Italy		26,279		26,712
ARAL IMMOBILIARE, S.r.l.	MORTGAGE LOAN	Building purchase	Building, Porto Cervo (Olbia), Italy		308		438
TERME DI GALZIGNANO, S.r.l.	MORTGAGE LOAN	Building purchase	Hotel property in Galzignano (Padova), Italy		14,843		14,361
TERME DI GALZIGNANO, S.r.l.	MORTGAGE LOAN ("bullet" reimbursement plan)	Cash facility	Hotel property in Galzignano (Padova), Italy		5,559		5,304
			TOTAL		47,496		47,503

The following table sets out the significant term and future payments of long-term loans related to continuing operations:

				€’000
				Installments maturity as  of December 31
Company	Type of debt	Object	Collateral	2014		2015		2016		2017		2018
CONTE ROSSO & PARTNERS, S.R.L.	UNSECURED LOAN	Cash facility	-		328		179		-		-
ARAL IMMOBILIARE, S.r.l.	MORTGAGE LOAN	Building purchase	Building, Porto Cervo (Olbia), Italy		308
ARAL IMMOBILIARE, S.r.l.	CAPITAL LEASE	Building purchase	Hotel property in Rome, Italy		911		649		678		709		742
TERME DI GALZIGNANO, S.r.l.	MORTGAGE LOAN	Building purchase	Hotel property in Galzignano (Padova), Italy		3,809		1,379		1,379		1,379		1,379
TERME DI GALZIGNANO, S.r.l.	MORTGAGE LOAN ("bullet" reimbursement plan)	Cash facility	Hotel property in Galzignano (Padova), Italy		5,559
			TOTAL	€	10,915	€	2,207	€	2,057	€	2,088	€	2,121

The following table sets out the amounts of the assets held and used by capital lease:

	Asset Balances at			Asset Balances at
Class of property	December 31, 2013			December 31, 2012
Building	€	38,730		€	38,730
Less: accumulated depreciation		(6,633	)		(5,471	)
Net balance	€	32,097		€	33,259

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The following table sets out the schedule of the undiscounted and discounted future minimum lease payments:

Minimum lease payments (future and net present value)
Year ending December 31:		€’000
2014		2,053
2015		1,763
2016		1,763
2017		1,763
2018		1,763
Later years		18,740
Purchase option		11,522
Net minimum lease payments		39,366
Less: Amount representing interest		(13,087	)
Present value of net minimum lease payments	€	26,279

As of December 31, 2013, there are no unused credit lines.

NOTE 9. SHAREHOLDER’S LOANS

In order to strengthen the Group’s capital position and taking into account future financial commitments to enable the real estate investment and development projects to be progressed, in the last quarter of 2011, Mr. Conte waived repayment of shareholder’s loans of € 25.9 million.

NOTE 10. OTHER NON CURRENT LIABILITIES

The amount of € 4,612 as of December 31, 2013, mainly refers to the following allowances to provisions account:

− the amount of € 2,250 is related to the settlement of Aral. with the Italian Revenues Agency, mentioned below in the note n. 13 – Subsequent events.

− The amount of € 1,548 refers to a litigation occurred between Galzignano Terme Golf & Resort, S.p.A. and Sercos SpA.

The amount of € 590 refers to an allowance about a dispute with a supplier.

NOTE 11. COMMITMENTS AND CONTINGENCIES

The Company and certain subsidiaries are defendants in legal actions in the normal course of business. Based on the advice of legal counsel, management believes that the amounts recognized and recorded as debt provisions or asset negative adjustments are sufficient to cover probable losses in connection with such actions.

The risk provisions or negative adjustments are recognized when in accordance with the opinion of legal counsel the liability is probable and measurable.

NOTE 12. INCOME TAXES

Tax losses carryforwards

Under Italian tax law the operating loss carryforwards available for offset against future profits can be used indefinitely. Operating loss carryforwards are only available for offset against national income tax, in the limit of 80% of taxable annual income (this restriction does not apply to the operating loss incurred in the first three years of the Company’s activity, which are therefore available for 100% offsetting).

Our operating losses carried forward and available for offset against future profits as of December 31, 2013 and December 31, 2012 is € 12,325 and €651, respectively.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

41

Components of the Company’s deferred tax asset are as follows as of December 31, 2013 and 2012:

€’000

	2013			2012
Deferred tax asset – net operating loss carryovers		3,389			179
Less Valuation allowance		(3,389	)		(179	)
Net deferred tax asset	€			€	-

The Company periodically evaluates whether it is more likely than not that it will generate sufficient taxable income to realize the deferred income tax asset. The ultimate realization of this asset is dependent upon the generation of future taxable income sufficient to offset the related deductions. At the present time, management cannot presently determine when the Company will be able to generate sufficient taxable income to realize the deferred tax asset; accordingly, a valuation allowance has been established to offset the asset.

The reconciliation of income tax benefit attributable to continuing operations computed at the Italian statutory tax rates to the income tax benefit recorded is as follows:

	Year ended December 31,
	2013			2012
Income tax at Italian statutory rate of 27.5%	€	(3,210	)	€	2,369
Increase in valuation allowance		3,210			(2,369	)
Income tax benefit	€			€	-

NOTE 13. SUBSEQUENT EVENTS

On April 11, 2014, Aral Immobiliare Srl (“Aral”), the owner of the Ripa Hotel under a financial lease agreement with Unicredit Leasing SpA, entered into a settlement agreement with the Agenzia delle Entrate (the Italian Revenue Agency) in relation to a tax assessment issued by the latter on January 30, 2014. The tax assessment was concerning certain asserted outstanding taxes (VAT, income taxes etc.) related to the financial lease contract mentioned above for the years from 2008 onwards, for an overall amount of € 3,877,056.35. The settlement agreement envisages that, in relation to the first year of the financial lease contract (2008), Aral will pay the overall amount of € 1,234,202,52 plus interest, in twelve quarterly installments. The first installment has already been paid on April 30, 2014.

For the years from 2009 up to 2013, Aral Srl and the Agenzia delle Entrate entered into a settlement that envisages the following payments:

2009: € 329,278.00

2010: € 189,810.00

2011: € 184,210.00

2012: € 179,710.00

2013 up to 2027: € 151,034.00 (which may be offset by Aral against higher VAT credit, if any)

2028: € 25,172.41 (which may be offset by Aral against higher VAT credit, if any)

On the basis of the above settlement, Aral already set an allowance for € 2,250,000.00 in its 2013 financial statements which covers all expenses, penalties and interest costs related to this matter.

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure (Item 304 of Reg. S-K)

On January 20, 2014, the Company, through and with the approval of its Board of Directors, informed Bompani Audit Srl (“Bompani”), that it was terminating Bompani as the Company’s independent registered public accounting firm, effective as of such date.

42

Bompani was appointed as the Company’s independent registered public accountant firm on April 11, 2013. The report of Bompani on the Company’s consolidated financial statements for the year ended December 31, 2012 did not contain an adverse opinion or disclaimer of opinion, or modification of opinion as to uncertainty, audit scope, or accounting principles.

During the period of time that Bompani served as the Company’s independent registered public accountant, there were no disagreements with Bompani, resolved or unresolved, on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to the satisfaction of Bompani, would have caused Bompani to make reference to the subject matter of the disagreements in connection with its report.

There were no “reportable events” as that term is described in Item 304(a)(1)(v) of Regulation S-K that occurred during the period of time that Bompani served as the Company’s independent registered public accountant.

The Company has requested that Bompani furnish it a letter addressed to the SEC stating whether it agrees with the above statements. A copy of that letter, dated January 20, 2014 is filed as Exhibit 16.2 to this Form 10-K.

On January 20, 2014, the Company, through and with the approval of its Board of Directors, engaged Crowe Horwath AS Srl (“Crowe”) as its independent registered public accounting firm.

During the Company’s two most recent fiscal years ended December 31, 2012 and December 31, 2013, the Company did not consult with Crowe regarding the application of accounting principles to a specific completed or contemplated transaction or regarding the type of audit opinions that might be rendered by Crowe on the Company's financial statements, and Crowe did not provide any written or oral advice that was an important factor considered by the Company in reaching a decision as to any such accounting, auditing or financial reporting issue.

Furthermore, during the Company’s two most recent fiscal years ended December 31, 2012 and December 31, 2013, the Company has not consulted Crowe on any matter that was the subject of a disagreement as that term is defined in Item 304(a)(1)(iv) of Regulation S-K, or a reportable event.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

As required by paragraph (b) of Rules 13a-15 or 15d-15 under the Exchange Act, our principal executive officer and principal financial officer evaluated our company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this annual report on Form 10-K. Based on this evaluation, our sole chief executive officer and principal financial officer concluded that as of December 31, 2013, these disclosure controls and procedures were effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and include controls and procedures designed to ensure that such information is accumulated and communicated to our company’s management, including our company’s principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) for our company. Our company’s internal control over financial reporting is designed to provide reasonable assurance, not absolute assurance, regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America. Internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States of America, and that our company’s receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

43

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

Our management, including our principal executive officer and principal financial officer, conducted an evaluation of the design and operation of our internal control over financial reporting as of December 31, 2013 based on the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as at December 31, 2013.

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Our internal control over financial reporting was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

Changes in Internal Control Over Financial Reporting.

There were no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information

On October 30, 2013 we terminated the previous lease and management contractual agreement regarding the Ripa hotel with Ku Hotels Srl. No penalty was paid by any of the parties. On the same date we entered into a new lease and management agreement with IBH Ripa subsidiary of SOST controlled through its subsidiaries Aral Srl (the company that owns, by means of a financial lease contract, the real estate property of the Ripa Hotel), and IBH Management Company Srl. The new lease and management agreement provides for a nine-year initial term with an automatic nine-year extension. IBH Ripa. The annual rent is €1.680.000 for the first year, €1.920,000 for the second year and €2.160.000 for the remainder years to lease and manage the business operations of the Ripa Hotel. IBH Ripa provides and pays for ordinary maintenance as well as insurance during the term of the agreement, while extraordinary maintenance is on behalf of Aral Srl.

On December 18, 2013, a new lease agreement and a new management agreement regarding the Terme di Galzignano complex were executed - through our newly incorporated subsidiary called GHG Resorts Srl (“GHG”), controlled by IBH Management Company Srl - with JSH, in replacement of the one previously executed on April, 2012. The new lease agreement comprises all three operating hotels (Majestic, Sporting and Splendid) and provides for a eighteen years and 21 days term with an automatic nine year extension unless either party notifies the other at least eighteen months before the end of the initial term. We can terminate the contract at any time if JSH fails, among other things, to pay the rent or expenses, prepare the budget within contractual deadlines, maintain the properties or arrange for the insurance required by the contract. The annual rent consists of a guaranteed minimum rent plus, starting from the fifth year, a variable amount based on 75% of the hotel’s gross operating profit. Gross operating profit is equal to revenues less allowances, premiums and discounts as well as fixed and variable costs. The guaranteed minimum rent for the 21 days of December 2013 and the full 2014 is €400,000, for 2015 is €550,000, for 2016 is €700,000, for 2017 is € 850,000 and thereafter will be the maximum amount between € 950,000 and 75% of the Gross operating profit as described above. JSH provides and pays for ordinary and extraordinary maintenance during the term of the agreement.

44

The new management agreement provides for the management of the Hotel Sporting, Majestic and Splendid as well and provides for a eighteen years and 21 days term with an automatic nine year extension unless either party notifies the other at least eighteen months before the end of the initial term. We can terminate the contract at any time if JSH fails, among other things, to pay the rent or expenses. The annual fee paid to GHG by JSH is €100,000 per year.

GHG, in turn, has executed two different lease and management contractual agreements, the first one with Galzignano Terme Golf & Resort SpA (“Galzignano”), a fully owned subsidiary of SOST which is the owner of the Terme di Galzignano complex, in relation to the lease of the real estate, and the second one with RVH Srl (“RVH”), the owner of the hotel business related to the Terme di Galzignano Complex (which does not belong to the SOST group of companies).

The lease agreement between GHG and Galzignano was executed on December 18, 2013, and provides for a eighteen years and 21 days term with an automatic nine year extension unless either party notifies the other at least eighteen months before the end of the initial term. We can terminate the contract at any time if GHG fails, among other things, to pay the rent or expenses. The annual rent consists of, a variable amount based on 75% of GHG’s Gross operating profit with a guaranteed minimum rent of € 100,000 per year. The management agreement between GHG and RVH was also executed on December 18, 2013, and provides for a eighteen years and 21 days term with an automatic nine year extension unless either party notifies the other at least eighteen months before the end of the initial term. RVH can terminate the contract at any time if GHG fails, among other things, to pay the rent or expenses. The annual fee is € 100,000 per year.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The following table contains information with respect to our current executive officers and directors:

Name	Age	Principal Positions With Us
Sergio Schisani	59	Chief Executive Officer, Principal Financial Officer and Director
Giancarlo Lanna	55	Chairman of the Board of Directors
Marco Milli	46	Director
Charles Gargano	79	Director
Dorothy Herman	60	Director

 Set forth below is a brief description of the background and business experience of our current executive officers and directors.

Sergio Schisani, served as the General Manager of Torre SGR, a Real Estate Investment Trust, since 2006, prior to joining the Company. Torre SGR is owned by the Fortress Group, a private equity firm with more than € 3 billion in assets under management. As General Manager of Torre SGR, Mr. Schisani helped facilitate the REIT’s investment in 17 properties with a total market value of € 550 million. Mr. Schisani graduated from the University of Rome in 1979 with a degree in engineering. Mr. Schisani was appointed Chief Executive Officer, Principal Financial Officer and Director of the Company in April 2013.

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Giancarlo Lanna has practiced law since 1982. Mr. Lanna’s practice focuses primarily on the areas of business, employment and administrative law for private clients, public institutions and listed companies. Mr. Lanna currently serves as a member of the Board of Governors for the Promotion of International Commercial Arbitration and Conciliation in the Mediterranean, Vice Chairman of the Italy-China Foundation and Director for SIBAC Co Ltd., a business consulting company. From 2005 to 2012, Mr. Lanna served as Chairman of Simest SpA, a financial institution for the development and promotion of Italian enterprises abroad. Also, from 2003 to 2007, Mr. Lanna served as the Chairman of Italian System for Business SpA, a company whose aim is to promote the internationalization of Italian companies. Mr. Lanna graduated from Naples University in 1985 with a degree in law. Mr. Lanna was appointed Chairman and Director of the Company in November 2012.

Marco Milli currently runs his own legal practice in Rome and has more than 15 years of experience in academia as a professor and visiting professor in various Italian and European universities. Mr. Milli currently serves as a director at the Fondazione Banca Nazionale delle Comunicaziono, or the BNC Foundation, whose mission is to provide funding for studies, projects, actions and initiatives in various areas such as volunteering, philanthropy, charity, environmental protection and quality and art conservation and enhancement of cultural heritage. Mr. Milli graduated with a degree in law from the University of Rome “La Sapienza.” Mr. Milli was appointed Director of the Company in November 2012.

Charlie Gargano served as Chairman and Chief Executive Officer of the Empire State Development Corporation and Vice-Chairman of the Port Authority of New York and New Jersey from 1995 to 2007. He was appointed to these positions by Governor George Pataki. Mr. Gargano has spent more than 20 years in public service at the Federal and State level, serving under two presidents as well as the administration of Governor Pataki. He has an MBA and Bachelor's degree in Civil Engineering from Farleigh Dickinson University, as well as a Master's degree in Civil Engineering from Manhattan College. Mr. Gargano has also received four Honorary Doctorate Degrees and holds professional engineering licenses in New York, New Jersey, Connecticut, Oklahoma and Vermont. Mr. Gargano was appointed Director of the Company in November 2012.

Dorothy Herman is the Chief Executive Officer of Prudential Douglas Elliman, a real estate brokerage company, which is New York’s largest residential brokerage, with over 4,000 real estate professionals and 675 employees working in more than 70 offices. Ms. Herman also controls a portfolio of real estate services, including commercial and retail leasing and sales services, relocation and settling-in services, new development and consulting services, property management services, PDE Title service and mortgage services as provided by DE Capital Mortgage. Ms. Herman began her real estate career in Long Island where she purchased Prudential Long Island Realty in 1989. After turning DE Capital Mortgage into a major brokerage operating in Long Island and the Hamptons, Ms. Herman purchased Douglas Elliman, one of Manhattan’s largest brokerage firms, with her partner Howard Lorber in 2003. Since 2003, Prudential Douglas Elliman has become one of the largest and fastest-growing real estate firms in New York as well as South Florida. Mrs. Herman was appointed Director of the Company in November 2012.

 On January 14, 2014, due to personal reasons, Mr. Domenico Ballo resigned from all its engagements with our group.

Director Qualifications

We have not formally established any specific, minimum qualifications that must be met by each of our directors or specific qualities or skills that are necessary for one or more of our members of the board of directors to possess. However, we generally evaluate the following qualities: educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom and ability to represent the best interests of our stockholders.

We, along with our officers and directors, believe that the above-mentioned attributes, along with the leadership skills and other experiences of our board members described below, provide us with a diverse range of perspectives and judgment necessary to facilitate our goals.

Sergio Schisani

We believe that Mr. Schisani is well-qualified to serve on the board of directors of the Company due to his success as a general manager of a REIT. Mr. Schisani has proven to possess the vision as well as the strategic skills necessary to assist the Company in achieving its growth targets in the future.

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Giancarlo Lanna

We believe that Mr. Lanna is well-qualified to serve on the board of directors of the Company as his background in the international business environment as well as his experience in working for publicly-held companies will be of great support for the international development of the Company.

Marco Milli

We believe that Mr. Milli is well-qualified to serve on the board of directors of the Company as his contacts and well-established relationships in the hospitality sector will be a great asset to the development of the Company.

Charles Gargano

We believe that Mr. Gargano is well-qualified to serve on the board of directors of the Company as his past experience as Chairman and Chief Executive Officer of the Empire State Development Corporation and Vice-Chairman of the Port Authority of New York and New Jersey demonstrates his leadership and business development skills that will aid in the growth and development of the Company. Mr. Gargano has full knowledge of U.S. GAAP.

Dorothy Herman

We believe that Ms. Herman is well-qualified to serve on the board of directors of the Company due to her lengthy experience in the real estate industry and, in particular, with regards to the process of real estate development and acquisitions in the U.S.

Terms of Directors

All directors hold office for one-year terms until the election and qualification of their successors. Officers are elected by the board of directors and serve at the discretion of the board.

There are no family relationships among our directors and executive officers.

Involvement in Certain Legal Proceedings

To the best of our knowledge, during the past ten years, none of the following occurred with respect to a present or former director or executive officer: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses), except that on April 9, 2013, Antonio Conte, the former Chief Executive Officer, Principal Financial Officer, President and Director of the Company was placed under house arrest by the Court of Rome for alleged bankruptcy and tax fraud related to events that took place in 2007 and 2008; (3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

Committees of the Board of Directors

Our board of directors has two standing committees: an Audit Committee and a Nominating or Governance Committee. To date, our board of directors has not established a Compensation Committee, in part because our Board of Directors believes that, at this stage of our development, the functions of a Compensation Committee can be adequately performed by the members of the Board of Directors. We intend to establish a Compensation Committee in the future.

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Audit Committee:

Charles Gargano, Marco Milli and Dottie Herman currently serve as members of the Audit Committee. The Audit Committee does not have an “audit committee financial expert” as defined in applicable SEC rules. We do not have an audit committee financial expert because we believe the cost related to retaining a financial expert at this time is prohibitive. Responsibilities of the Audit Committee include:

· the appointment, compensation, retention, replacement, and oversight of the work of the independent auditors and any other independent registered public accounting firm engaged by us;

· pre-approving all audit and permitted non-audit services to be provided by the independent auditors or any other registered public accounting firm engaged by us, and establishing pre-approval policies and procedures;

· reviewing and discussing with the independent auditors all relationships the auditors have with us in order to evaluate their continued independence;

· setting clear hiring policies for employees or former employees of the independent auditors;

· obtaining a report, at least annually, from the independent auditors describing (i) the independent auditor’s internal quality-control procedures and (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues;

· reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and

· reviewing with management, the independent auditors, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities.

Nominating and Corporate Governance Committee:

Charles Gargano, Marco Milli and Dottie Herman currently serve as members of the Nominating and Corporate Governance Committee. Responsibilities of the Nominating and Corporate Governance Committee shall include:

· establishing and articulating qualifications, desired background and selection criteria for members of the board of directors;

· developing policy regarding the consideration of candidates for election or appointment to the board of directors that are recommended by stockholders of the Company and procedures to be followed by stockholders in submitting such recommendations;

· making recommendations to the board of directors concerning all nominees for board membership, including the re-election of existing board members and the filling of any vacancies;

· evaluating and making recommendations to the board of directors concerning the number and responsibilities of board committees and committee assignments, including recommending committee chairs;

· annually soliciting input from the board of directors and conducting an annual review of the effectiveness of the operation of the board of directors and the board committees;

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· developing, recommending and periodically reviewing a set of corporate governance principles applicable to the Company in accordance with applicable laws and regulations;

· considering matters relating to the retirement of board members;

· developing an orientation program for new directors, reviewing such programs on a periodic basis and recommending action to the board of directors, individual directors and management, where appropriate;

· conducting an annual self-assessment of the performance of the Nominating or Governance Committee;

· approving service by directors on any additional for-profit boards, on public company audit committees and approving service by executive officers on any board; and

· overseeing the implementation by management of standards and procedures for detecting and deterring unethical conduct and promoting an organizational culture that encourages a commitment to compliance with the law and periodically reviewing the efficacy of such standards and procedures.

Our Company currently does not have any defined policy or procedural requirements for stockholders to submit recommendations or nominations for directors, but we will define a nominating policy in the future. The board of directors believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our Company does not currently have any specific or minimum criteria for the election of nominees to the board of directors and we do not have any specific process or procedure for evaluating such nominees. The board of directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.

A stockholder who wishes to communicate with our board of directors may do so by directing a written request addressed to our CEO and director, Sergio Schisani, at the address appearing on the first page of this Annual Report on Form 10-K.

Code of Ethics

We have adopted a Code of Conduct and Ethics (the “Code”) that applies to all of our officers, directors and employees (including our Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer or persons performing similar functions). In the event that we have any amendments to or waivers from any provision of the Code applicable to our Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer, we intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K by posting such information on our website.

Item 11. Executive Compensation

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The Company presently does not have employment agreements with its named executive officers and it has not established a system of executive compensation or any fixed policies regarding compensation of executive officers. The Company has not paid any cash and/or stock compensation to its named executive officers. As our business and operations expand and mature, we expect to develop a formal system of compensation designed to attract, retain and motivate talented executives.

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Summary Compensation Table

The Company has made no compensation payments to any directors or officers.

Narrative Disclosure to the Summary Compensation Table

Our named executive officers do not currently receive any compensation from the Company for their service as officers of the Company.

Outstanding Equity Awards at Fiscal Year-end Table

The Company has made no equity awards to any executive officer.

Narrative Disclosure to the Director Compensation Table

Our directors do not currently receive any compensation from the Company for their service as members of the Board of Directors of the Company.

Stock Option Grants

We have not granted any stock options to our executive officers or directors since our inception.

Disclosure of Commission Position of Indemnification for Securities Act Liabilities

In accordance with the provisions in our articles of incorporation, we will indemnify an officer, director, or former officer or director, to the full extent permitted by law.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of us in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Securities Authorized for Issuance Under Equity Compensation Plans

We have no compensation plans under which equity securities are authorized for issuance.

Beneficial Ownership

The following table sets forth, as of April 30, 2014, the beneficial ownership of our common stock by each executive officer and director, by each person known by us to beneficially owning more than 5% of the our common stock and by the executive officers and directors as a group. Except as otherwise indicated, all shares are owned directly and the percentage shown is based on 40,151,261 shares of common stock issued and outstanding on May 14, 2014.

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Name and address of beneficial owner	Amount of beneficial ownership		Percent of class
Total all executive officers and directors (one person)		0		0	%
Other 5% Shareholders
Antonio Conte Via Cortina d’Ampezzo 221 Rome, Italy 00135		21,291,667		53.03	%
Maddalena Olivieri (wife of Antonio Conte) Via Cortina d’Ampezzo 221 Rome, Italy 00135		11,810,185		29.41	%
Integrated Asset Management PLC 4 Hill Street London, W1J 5NE		2,246,317		5.60	%

As used in this table, “beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of, a security). In addition, for purposes of this table, a person is deemed, as of any date, to have “beneficial ownership” of any security that such person has the right to acquire within 60 days after such date.

On April 10, 2013, Antonio Conte, Chief Executive Officer, Principal Financial Officer, Chairman and Director of the Company, resigned from each of his positions with the Company, effective as of the same date. There were no disagreements between Mr. Conte and the Company. Mr. Conte informed the Board of Directors of the Company that on April 9 2013, he was placed under house arrest by the Criminal court in Rome for alleged bankruptcy and tax fraud related to events that took place in 2007 and 2008 and that such events in no way related to the Company or its business. Following his arrest, the Criminal court in Rome also ordered the seizure of all the shares owned by Mr. Conte in our Company, which were put under the management of a receiver.

 The persons named above (with the exception of Mr. Antonio Conte for the reasons explained above) have full voting and investment power with respect to the shares indicated. Under the rules of the Securities and Exchange Commission, a person (or group of persons) is deemed to be a “beneficial owner” of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase our common stock.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Prior to April 10, 2013, Antonio Conte was a shareholder in and a director of both the Company and CR&P and, pursuant to the Share Exchange, received further 10,625,000 shares of common stock issued by the Company in exchange for his interest in CR&P. Mr. Conte’s wife, Maddalena Olivieri, and his brother, Mr. Paolo Conte, beneficially owned common stock of the Company before the new shares of common stock were issued as part of the Share Exchange.

Except as detailed above, with the exception of the Bassat Stock Sale, as described in Part I, Item 1. “Business” under the “Overview,” none of our directors or executive officers, nor any proposed nominee for election as a director, nor any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to all of our outstanding shares, nor any members of the immediate family (including spouse, parents, children, siblings, and in-laws) of any of the foregoing persons has any material interest, direct or indirect, in any transaction over the last two years or in any presently proposed transaction which, in either case, has or will materially affect us.

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Director Independence

Our common stock is currently quoted on the OTCBB and is not listed on the Nasdaq Stock Market or any other national securities exchange. Accordingly, we are not currently subject to the Nasdaq continued listing requirements or the requirements of any other national securities exchange. Nevertheless, in determining whether a director or nominee for director should be considered "independent" the board utilizes the definition of independence set forth in Rule 5605(a)(2) of the Nasdaq Stock Market Rules. Our board of directors has determined that Messrs. Milli, Gargano and Lanna and Mrs. Herman are “independent directors” as defined by the Nasdaq Stock Market Rules.

Item 14. Principal Accounting Fees and Services

Below is the table of Audit Fees (amounts in €) billed by our auditor in connection with the audit of the Company’s annual financial statements for the years ended December 31, 2013 and 2012:

Financial Statements for the Year Ended December 31:	Audit Fees		Audit Related Fees		Tax Fees		All Other Fees
2013	€	50,000	€	0	€	0	€	0
2012	€	80,000	€	0	€	0	€	0

PART IV

Item 15. Exhibits and Financial Statements Schedules

(a) Documents filed as part of this report

(1) Financial Statements

Reference is made to the Index to Consolidated Financial Statements of the Company, under Item 8 of Part II hereof.

(b) Exhibits

Exhibit Number	Description
2.1	Share Exchange Agreement, dated as of November 1, 2012, by and among Conte Rosso & Partners S.r.l. and Southern States Sign Company and the Shareholders of Conte Rosso & Partners S.r.l. (incorporated by reference to Exhibit 2.1 of the Company’s Report on Form 8-K filed on November 7, 2012)
2.2	Preliminary Agreement, dated as of February 8, 2013, by and between Primesint S.r.l. and ES Group S.r.l. (incorporated by reference to Exhibit 2.1 of the Company’s Report on Form 8-K filed on February 14, 2013)
2.3	Preliminary Agreement, dated as of February 8, 2013, by and among Primesint S.r.l and Mavip S.r.l. (incorporated by reference to Exhibit 2.2 of the Company’s Report on Form 8-K filed on February 14, 2013)
3.1	Articles of Incorporation (incorporated by reference to Exhibit 3.1 of the Registration Statement on Form S-1 filed on January 25, 2011)
3.2	Bylaws (incorporated by reference to Exhibit 3.2 of  the Registration Statement on Form S-1 filed on January 25, 2011)
10.1	Lease Agreement, dated as of February 24, 2009, between Ripa Hotel & Resort SpA, as Lessor, and Ku Hotels S.r.l., as Lessee (incorporated by reference to Exhibit 99.5 the Company’s Report on Form 8-K/A filed on February 21, 2013)

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10.2	Management Agreement, dated as of February 24, 2009, between Ripa Hotel & Resort SpA, as Lessor, and Ku Hotels S.r.l., as Lessee (incorporated by reference to Exhibit 99.6 the Company’s Report on Form 8-K/A filed on February 21, 2013)
10.3	Lease Agreement, dated as of April 13, 2012, between Terme di Galzignano SpA, as Lessor, and Galzignano Gestioni S.r.l., as Lessee (incorporated by reference to Exhibit 99.7 the Company’s Report on Form 8-K/A filed on February 21, 2013)
10.4	Lease Agreement, dated as of June 28, 2012, between Terme di Galzignano SpA, as Lessor, and Salute e Benessere Alain Messgue Srl, as Lessee (incorporated by reference to Exhibit 99.8 of the Company’s Report on Form 8-K/A filed on February 21, 2013)
10.5	Amendment to Management Agreement, dated as of March 10, 2013, between Ripa Hotel & Resort Srl, as Lessor, and Ku Hotels Srl, as Lessee (incorporated by reference to Exhibit 2.1 of the Current Report filed on Form 8-K filed on March 14, 2013)
10.6	Amendment to Lease Agreement, dated as of March 10, 2013, between Ripa Hotel & Resort Srl, as Lessor, and Ku Hotels Srl, as Lessee (incorporated by reference to Exhibit 2.2 of the Current Report filed on Form 8-K filed on March 14, 2013)
10.7	Agreement, dated as of March 10, 2013, between Ripa Hotel & Resort Srl and Ku Hotels Srl (incorporated by reference to Exhibit 2.3 of the Current Report filed on Form 8-K filed on March 14, 2013)
14.1*	Code of Ethics

16.1	Letter from Silberstein Ungar, PLLC, dated February 13, 2013 (incorporated by reference to Exhibit 16.1 of the Current Report filed on Form 8-K filed on February 13, 2013)
16.2	Letter from Bompani Auditors, dated January 20, 2014 (incorporated by reference to Exhibit 16.2 of the Current Report filed on Form 8-K filed on January 22, 2014)
21.1*	Subsidiaries of Southern States Sign Company
31.1*	Certification of Chief Executive Officer and Principal Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**	Certification of Chief Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101***	Interactive Data Files of Financial Statements and Notes

*	Filed herewith.
**	Furnished (and not filed) herewith pursuant to Item 601(b)(32)(ii) of Regulation S-K under the Exchange Act.
***	Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Annual Report on Form 10-K shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act, except as shall be expressly set forth by specific reference in such filing or document.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		Southern States Sign Company
May 16, 2014	By:	/s/Sergio Schisani
		Sergio Schisani
		Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/ Sergio Schisani	Director	May 16, 2014
Sergio Schisani	Chief Executive Officer
	and
	Principal Financial Officer
	( Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer )
/s/ Giancarlo Lanna	Chairman of the Board of Directors	May 16, 2014
Giancarlo Lanna
/s/ Marco Milli	Director	May 16, 2014
Marco Milli
/s/ Charles Gargano	Director	May 16, 2014
Charles Gargano
/s/ Dorothy Herman	Director	May 16, 2014
Dorothy Herman

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