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Going Concern
 9 Months Ended
Sep. 30, 2016
Notes  
Going Concern

 

3.                       NOTE 3: GOING CONCERN

 

The Company is currently working on building a hotel in the Papagayo Gulf Tourism Project area of Guanacaste, Costa Rica. The project is expected to open in the fourth quarter of 2018. Until the completion of the project, the following expenditures are estimated to be incurred:

 

a.

Gross project cost

$

217,000,000

b.

Less: Proceeds from sale of villas

 

(25,000,000)

c.

Net project cost

 

192,000,000

d.

Overhead expenses

 

20,000,000

e.

Total, excluding other potential projects

$

212,000,000

 

Seventy percent of the net project cost is intended to be financed through the issuance of secured bonds, for which negotiations have been initiated. The remaining thirty percent of the net project cost, as well as non-recuperated overhead expenses are intended to be financed by the main shareholders or lenders of the project, i.e. Zypam Ltd., shareholder and related entity to the late Mr. Josef Mettler, Mr. Hans Rigendinger, shareholder, Company Director and interim Chief Executive Officer, Dr. Max Rssler, controlling shareholder of Aires International Investment, Inc. and Company Director.

 

On July 16, 2012, certain principal shareholders of the Company or principal lenders to the project entered into a Guaranty Agreement in favor of the Company. The purpose of the guaranty is to ensure that until financing is secured for the entire project that they will act as guarantors to creditors to the extent of the project’s ongoing capital requirements. On September 22, 2015, the signatories to the guaranty formally agreed to maintain the guaranty, as necessary, until December 31, 2018, after which date the guaranty will expire.

 

On October 28, 2016, Hans Rigendinger and Dr. Max Rössler formally agreed to maintain the guaranty, as necessary, until completion of the construction of Paradisus Papagayo Bay Resort & Luxury Villas, after which date the guaranty will expire.

 

The Guaranty Agreement requires that within 30 days of receiving a demand notice, requested funds are made available by the guarantors to the Company. Based on this guaranty, management believes that available funds are sufficient to finance cash flows for the twelve months subsequent to September 30, 2016 and the filing date, though future anticipated cash outflows for investing activities continue to depend on the availability of financing.