The Company has included share based compensation under the SunVesta Inc. Stock Option Plan 2013 (the “Plan”) as part of the total remuneration in certain employment and Board of Director’s contracts. The Company is authorized to grant up to 50,000,000 shares under the Plan.

The purpose of the Plan is to advance the interests of the Company by encouraging its employees to remain associated with the Company and assist the Company in building value. Such share based remuneration includes either shares or options to acquire shares of the Company’s common stock.

For all employees, fair value is estimated at the grant date. Compensation costs for unvested shares are expensed over the requisite service period on a straight-line basis.

On January 1, 2013, the Company granted to Hans Rigendinger 3,500,000 common shares, valued at

$0.08 an amount equal to the share price and fair value of the shares on the grant date. These shares were granted as a signing bonus with the Company. Additionally, the Company granted 2,500,000 common shares as a retention award due on each anniversary of his signing with the Company. The employment contract was initially for three years with an additional bilateral option for an additional two years. Therefore, the Company could be required to issue up to 12,500,000 common shares through January 1, 2018.

On July 3, 2013, the Company granted to Dr. Max Rössler 3,000,000 common shares, valued at $0.07 an amount equal to the share price and fair value of the shares on the grant date. These were issued in connection with his appointment to the Board of Directors. These shares were officially issued on October 15, 2013.

On July 4, 2013, the Company granted 5,000,000 common shares to the late Josef Mettler, valued at $0.07, an amount equal to the share price and fair value of the shares on the grant date, in connection with his employment agreement. These shares were officially issued on October 15, 2013. Additionally, the Company granted 3,000,000 common shares as a retention award for each completed year of employment (e.g. first time as per July 4, 2014). The employment contract is for an initial term of three years with an additional bilateral option for another two two-year periods, but a maximum of December 31, 2020. Therefore, in total the Company could have been requested to issue up to 21,000,000 common shares through December 31, 2020 related to the retention bonus.

As Josef Mettler passed away during the third quarter 2016, 3,000,000 common shares were issued for the last time on July 4, 2016. From after this date, the necessary accrual up until his passing away has been reversed as of September 30, 2016.

14. STOCK COMPENSATION - CONTINUED

Share Grants – Mr. José María Figueres

On March 10, 2014, the Company authorized the issuance of 500,000 common shares, valued at $0.10, an amount equal to the share price and therefore the fair value on grant date, and a retention award of 200,000 common shares for each fully completed year of service to José María Figueres in connection with his appointment to the Board of Directors.

Share Grants – Mr. Howard M. Glicken

On March 10, 2014, the Company authorized the issuance of 500,000 common shares, valued at $0.10, an amount equal to the share price and therefore the fair value on grant date, and a retention award of 200,000 common shares for each fully completed year of service to Howard Glicken in connection with his appointment to the Board of Directors.

Based on these contracts, the Company has included the following stock-based compensation in the Company’s results:

Stock-based compensation (shares)	Three and nine months ended September 30, 2016	Three and nine months ended September 30, 2015
Shares granted	46,800,000 shares	46,400,000 shares
Fair Value respectively market price on grant date	$0.0737	$0.0744
Total maximal expenses (2013-2020)	$3,450,000	$3,450,000
Shares vested	29,800,000 shares	23,900,000 shares
Unvested shares	17,000,000 shares	22,900,000 shares

Of the granted shares, 12,000,000 have been forfeited due to the death of Josef Mettler.

As of September 30, 2016, the Company expects to record compensation expense in the future up to $420,000 as follows:

Stock-based compensation (shares)

Year ending December 31,

Through December 31, 2016

2017

2018

2019

2020

Unrecognized compensation expense

60,000

210,000

14. STOCK COMPENSATION - CONTINUED

Stock Options – Mr. Hans Rigendinger

The Company granted to Hans Rigendinger, in connection with his employment contract, 10,000,000 stock options on January 1, 2013. Each option entitles Mr. Rigendinger to buy one Company share at a strike price of $0.05. These options will be vested in two identical installments (installment A and

B) of 5,000,000 options.

Installment A is contingent on obtaining a financing arrangement with a specific counterparty. As of the grant date, the fair value was $300,000. As of July 4, 2013, the Company assessed that this financing arrangement with the specific counterparty will not be completed. Therefore, the Company assessed the probability of completion to be zero and recognized no expense. On July 4, 2013, the Company authorized a revised stock option agreement. This removed the requirement for financing with a specific counterparty and updated for any counterparty. As of date of the revised stock option agreement, the fair value was $246,000. Installment A was modified on July 4, 2013, since the initial performance condition was improbable to be met. Since the modification changed the expectation that the options will ultimately vest and no expense had been recognized for the original award, the fair value of the modified award has been expensed on a straight line basis over the expected vesting period.

For installment B, it is required that Meliá Hotels International (“Melía”) assumes management responsibilities for Paradisus Papagayo Bay Resort & Luxury Villas. As of grant date, the fair value was $340,000 and the Company estimated that Meliá would assume responsibility as of July 1, 2015. As of March 6, 2014, the Company still assessed the probability that this performance condition would be met at 100%, but the date, up to which the performance condition would have to be achieved was postponed to the fourth quarter 2015, as the opening date was postponed. As of the date of this report, the estimated opening date was postponed to the fourth quarter 2018, as was the required date of the performance condition. The Company still assessed the probability that this performance condition will be met at 100%. Hence, the remaining fair value of the award will be expensed on a straight-line basis over the recalculated expected remaining vesting period.

Stock Options – Dr. Max Rssler

The Company granted to Dr. Max Rssler, in connection with his appointment to the Board of Directors, 10,000,000 stock options on July 3, 2013. Each option entitles Dr. Rssler to buy one Company share at a strike price of $0.05. These options will be vested in two identical installments (installment A and B) of 5,000,000 options.

For installment A (5,000,000 options), it is required to complete a financing arrangement for the Project. As of grant date, the fair value was $249,835. The Company expensed the total fair value on a straight-line basis over the expected vesting period.

14. STOCK COMPENSATION - CONTINUED

Stock Options – Dr. Max Rssler - Continued

For installment B (5,000,000 options), it is required that Meliá assumes management responsibilities for Paradisus Papagayo Bay Resort & Luxury Villas. As of grant date the fair value was $258,210 and the Company estimated that Meliá would assume responsibility as of July 1, 2015. As of March 6, 2014 the Company still assesses the probability that this performance condition would be met at 100%, but the date, up to which the performance condition would have to be achieved was postponed to the fourth quarter 2015, as the opening date was postponed. As of the date of this report, the estimated opening date was postponed to the fourth quarter 2018, as was the required date of the performance condition. The Company still assessed the probability that this performance condition will be met at 100%. Hence, the remaining fair value of the award will be expensed on a straight-line basis over the recalculated expected remaining vesting period.

Stock Options – late Mr. Josef Mettler

The Company granted to the late Josef Mettler, in connection with his employment contract, 12,000,000 stock options on July 4, 2013. Each option entitled the late Mr. Mettler to buy one share at a strike price of $0.05. These options had three different performance conditions.

For installment A (3,000,000 options), it was required to complete a bridge financing arrangement. As of grant date the fair value was $149,000. The Company expensed the total fair value on a straight- line basis over the expected vesting period.

For installment B (4,000,000 options), it was required to complete a financing arrangement (main financing arrangement for Paradisus Papagayo Bay Resort & Luxury Villas). As of grant date the fair value was $200,000. The Company has expensed the total fair value on a straight-line basis over the expected vesting period.

For installment C (5,000,000 options), it was required that Meliá assumes management responsibilities for Paradisus Papagayo Bay Resort & Luxury Villas. As of grant date, the fair value was $258,000 and the Company estimated that Meliá assumes responsibility as of July 1, 2015. As of March 6, 2014 the Company still assessed the probability that this performance condition would be met at 100%, but the date, up to which the performance condition would have to be achieved was postponed to the fourth quarter 2015, as the opening date was postponed. As of the date of this report, the estimated opening date was postponed to the fourth quarter 2018, as was the required date of the performance condition.

Due to his passing away during the third quarter 2016, the probability that any of the above performance condition will be met is 0%. Therefore, all previously recognized expenses in the amount of $561,064 – corresponding to options that have not yet vested for all installments above – have been reversed as of September 30, 2016.

14. STOCK COMPENSATION - CONTINUED

Stock Options – Summary

A summary of stock options outstanding as per September 30, 2016 is as follows:

Options outstanding	Number of Options	Weighted average exercise price	Weighted average remaining contractual life
Outstanding January 1, 2016	32,000,000	$ 0.05	7.42 years
Granted	-
Exercised	-
Forfeited or expired	(12,000,000)
Outstanding September 30, 2016	20,000,000	$ 0.05	6.63 years
Exercisable September 30, 2016	0

The following table depicts the Company’s non-vested options as of September 30, 2016 and changes during the period:

Non-vested options	Shares under Options	Weighted average grant date fair value
Non-vested at January 1, 2016	32,000,000	$ 0.053
Non-vested-granted	-	-
Vested	-	-
Non-vested, forfeited or cancelled	(12,000,000)	-
Non-vested at September 30, 2016	20,000,000	$ 0.075

Under the provisions of ASC 718 Compensation – Stock Compensation, the Company is required to measure and recognize compensation expense related to any outstanding and unvested stock options previously granted, and thereafter recognize, in its consolidated financial statements, compensation expense related to any new stock options granted after implementation using a calculated fair value based option-pricing model. The Company uses the Black-Scholes option-pricing model to calculate the fair value of all of its stock options and its assumptions are based on historical and available market information. No stock options were granted for the periods ended September 30, 2016 and September 30, 2015.

Assumption	September 30, 2016	September 30, 2015

Dividend yield
Risk-free interest rate used (average)
Expected market price volatility
Average expected life of stock options	n.a	n.a

The computation of the expected volatility assumption used in the Black-Scholes calculation for new grants is based on historical volatilities of a peer group of similar companies in the same industry. The expected life assumptions are based on underlying contracts.