Commitments

3 Months Ended

Mar. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments

9. Commitments

Skytower:

On August 9, 2016, SIII entered into a Securities Purchase Agreement (the “Kayu Agreement”) to acquire 60% of the issued capital stock Kayu Tekstil Sanayi Ve Ticaret Limited Sirketi (“Kayu”), a Turkish company, from Najibi Investment Trading FZC (hereinafter “Najibi”), G7 Entertainment Incorporated, (hereinafter “G7”), Royaltun General Trading LLC., (hereinafter “Royaltun”), and Soha Investment Inc., (hereinafter “Soha) (jointly hereinafter the “Shareholders”). In consideration for the Kayu shares, the Company agreed to issue convertible debentures in the amount of $30,205,939 to the Shareholders of Kayu. This is a related party transaction as Mr. Abbas Salih is a Director and Officer, as well as the controlling shareholder, of SIII and has an ownership interest in and/or control of the Shareholders. Kayu has an agreement to acquire the Skytower Hotel Atayol in Akcakoca, Turkey (the “Skytower Property”), subject to the successful discharge of a debt on the Skytower Property and the transfer of title to Kayu.
Upon discharge of the debt on the Skytower Property, the Company will issue convertible debentures in the amount of $12,656,768 to Najibi, a Company that settled the existing debt on the Skytower Property. Upon transfer of the Skytower Property title to Kayu, the Company will issue convertible debentures in the amount of $20,137,293 to a shareholder of Kayu to acquire the remaining 40% of the capital stock of Kayu. Upon completion of these transactions, SIII will own 100% of Kayu.

The Company has the right to terminate the agreements to acquire the issued capital stock of Kayu and cancel the associated convertible debentures if the vendors do not complete certain closing conditions.

As of the filing date, the closing conditions in the Kayu agreement have not yet been met, and the convertible debentures have not been issued to the Shareholders.

Marriott:

In August 2016, the Company entered into agreements to acquire 50% of the issued capital stock of Par-San Turizm A.S. (“Par-San”), a Turkish company that is the owner of a Marriott Renaissance Hotel in Izmir, Turkey (the “Marriott”). In consideration for the Par-San shares, the Company agreed to issue convertible debentures in the amount of $44,365,532 to Najibi Investment Trading FZC, G7 Entertainment Incorporated, SOHA Investment & Partners, and Royaltun General Trading L.L.C. (collectively “Shareholders”), the shareholders of Par-San.

On October 14, 2016, the Company and the Shareholders mutually agreed to terminate their agreements and cancel the associated convertible debentures. At the same time, the Company and the Shareholders entered into new agreements to acquire 50% of the issued capital stock of Par-San. In consideration for the Par-San shares, the Company agreed to issue convertible debentures in the amount of $47,400,000 to the Shareholders. This is a related party transaction as Mr. Abbas Salih is a Director and Officer, as well as the controlling shareholder, of SIII and has an ownership interest in and/or control of the Shareholders.

The closing of the new agreement is subject to certain conditions, which have not yet been met. The Company has the right to terminate the new agreements and cancel the associated debentures if the closing conditions are not met in a reasonable amount of time.

All of the above mentioned convertible debentures have the following terms:

a) Non-interest bearing.

b) Mature on December 31, 2021 (the “Maturity Date”).

c) At any time prior to the Maturity Date, the convertible debenture holder may convert the debenture into common stock of the Company at a price of $1.00 per share.

d) The convertible debenture will automatically convert into common stock upon the closing price of the Company’s common stock closing above $1.00 per share for 20 consecutive trading days.

The Company has not yet determined the accounting treatment for the above mentioned series of transactions.