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Down Payments For Property & Equipment

9 Months Ended

Sep. 30, 2016

8. NOTE 8: DOWN PAYMENTS FOR PROPERTY & EQUIPMENT

		September 30, 2016	December 31, 2015
La Punta (neighboring piece of land)		2,669,816	2,669,816
Hotel Engadina		-	302,267
Gross	$	2,669,816	2,972,083
Value adjustement on Down Payment La Punta		(300,000)	-
Total (net)	$	2,369,816	2,972,083

Agreement to purchase neighboring pieces of land

On April 20, 2012, the Company entered into an agreement to purchase two additional concession properties located at Polo Papagayo, Guanacaste, with a total surface of approximately 230,000 square meters for $23,395,806 whereof fifty percent was to be paid in cash and the other fifty percent through a combination of a 10 percent equity share in La Punta (the concession properties in Polo Papagayo) and five percent in equity of Paradisus Papagayo Bay Resort & Luxury Villas (currently under development). Both of these properties are located in Costa Rica.

On November 13, 2012, the above agreement was amended to decrease the total purchase price to $17,200,200 with no equity payments. The terms and conditions of the cash payment were to be defined. Furthermore, all payments by the Company to date and in the future became refundable.

During the second quarter of 2013, the Company entered into a new, revised agreement for the purchase of the said properties with a total purchase price of $17,500,000.

As of this balance sheet day, the following is the situation:

Description	Original seller USD	Third party USD	Total USD
Total commitment	9,500,000	8,000,000	17,500,000
Payments till 30 September 2016	1,669,816	1,000,000	2,669,816
Thereof refundable:	(1,669,816)	(700,000)	(2,369,816)
thereof non-refundable	-	300,000	300,000
Total outstanding at 30 September 2016	7,830,184	7,000,000	14,830,184
Thereof overdue	(7,830,184)	(7,000,000)	(14,830,184)
Thereof not overdue	-	-	-

In light of the above situation the Company is in discussions with the Original Seller regarding an extension and adaptation of the current agreement, which, for all practical reasons, must be considered obsolete.

Additionally, a failure to pay will lead to liquidated damages of 5% of any installments paid toward the purchase price. Should the Company not be successful in obtaining a time extension for the payment of the purchase price or amendment to the purchase agreement it will have to write-off $300,000 of that purchase price paid in 2013 for the new, revised agreement and 5% of additional damages on the additional $1,000,000 paid for a total of $50,000, which is not refundable as per contract terms.

Both, the $300,000 write-off (accounted for as impairment expenses) as well as the $50,000 for additional damages (accounted for as general and administrative expenses) have been provided for in the results year-to-date 2016.

8. DOWN PAYMENTS FOR PROPERTY & EQUIPMENT - CONTINUED

Down payment for Purchase Four Hotels in the Canton of Graubünden, Switzerland

On September 19, 2015, the Company signed an option agreement to acquire four existing hotels in the Canton of Graubünden, Switzerland with an unrelated third party. The properties optioned comprise an aggregate of 141 rooms. The consideration for the option was CHF 300,000, which amount was paid on October 25, 2015.

Dated May 10, 2016, the Company, QuadEquity Holdings AG and the potential Seller of the four hotels concluded an agreement, whereby QuadEquity Holdings AG assumed all of the Company’s rights and obligations from the original contract. In return, QuadEquity Holdings AG would pay the Company the amount of $302,000 (CHF 300,000) before May 30, 2016. This payment was received by the Company on June 1, 2016.