10-Q: International Land Alliance Faces Going Concern Doubt

International Land Alliance reported a net loss of $6.7 million for the six months ended June 30, 2026, and faces substantial doubt regarding its ability to continue as a going concern.

Summary

• International Land Alliance (ILA) reported a net loss of $3,963,373 for the three months ended June 30, 2026, and $6,700,018 for the six months ended June 30, 2026.
• The company's current liabilities exceeded its current assets by approximately $22.0 million as of June 30, 2026.
• ILA has an accumulated deficit of approximately $45.1 million as of June 30, 2026.
• The company's ability to continue as a going concern is dependent on its ability to generate revenues and raise capital.
• Significant increases in general and administrative expenses, largely due to stock-based compensation, contributed to the net loss.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing as highly negative due to significant net losses, a substantial working capital deficit, and explicit statements raising substantial doubt about the company's ability to continue as a going concern.

Positives

• The real estate market in Northern Baja California has shown significant improvement and recovery from the impact of COVID-19.
• The company is continuing research and marketing efforts to identify potential home buyers.
• A partnership with a similar development company in Baja California Norte is leveraging additional resources and marketing plans.
• The company has made progress on the Oasis Park Resort project, including road and entrance structure completion, and commencement of clubhouse and model home construction.

Negatives

• Net loss for the three months ended June 30, 2026, was $3,963,373, compared to $1,978,642 in the prior year period.
• Net loss for the six months ended June 30, 2026, was $6,700,018, compared to $2,937,448 in the prior year period.
• Current liabilities of $22,664,666 exceeded current assets of $676,967 by $21,987,699 as of June 30, 2026.
• Accumulated deficit reached $45,119,158 as of June 30, 2026.
• General and administrative expenses increased significantly by $2,336,007 for the three-month period and $4,036,051 for the six-month period, largely due to stock-based compensation.
• The company explicitly states that substantial doubt exists about its ability to continue as a going concern.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern.
• The company faces significant liquidity shortages.
• If marketing efforts to increase sales are unsuccessful, the company will continue to experience a shortfall in cash, requiring further equity or debt financing or substantial operating expense reductions.
• The acquisition of title to land for the Valle Divino project is subject to approval from the Mexican government, with no assurance of timely approval or approval at all.
• The company has not yet established the bank trust for the Plaza Bajamar property, which is anticipated to occur before the end of fiscal year 2026.
• The company's risk factors have not materially changed from those disclosed in its Form 10-K for the year ended December 31, 2025.

Future Outlook

The company anticipates generating increased revenues over the next twelve months through continued marketing and sales of plots and house construction. However, if marketing efforts are unsuccessful, a cash shortfall will necessitate further equity or debt financing or significant operating expense reductions to avoid curtailing operations. The positive impact of sales and marketing initiatives, quality of amenities, global economy, demand for vacation homes, future plot/home prices, and project locations are expected to significantly affect future operating results.

Management Comments

• Management evaluated all relevant conditions and events and determined that substantial doubt exists about the Company's ability to continue as a going concern.
• The Company continues to raise additional capital through the issuance of debt instruments and equity to fund its ongoing operations, which may have the effect of potentially diluting the holdings of existing shareholders.
• Management anticipates that the Company's capital resources will significantly improve if its plots of land gain wider market recognition and acceptance resulting in increased plot sales and house construction.
• The real estate market in Northern Baja California has continued to significantly improve and has fully recover from the negative impact of Covid-19.

Industry Context

StockSavvy.ai notes that the real estate development sector, particularly in international markets like Baja California, is sensitive to economic conditions, financing availability, and regulatory approvals. The company's reliance on debt and equity financing to fund operations and its explicit mention of going concern issues highlight the inherent risks in this industry, especially for companies with significant development projects and ongoing capital needs.

Comparison to Industry Standards

• The company's net loss of $6.7 million for six months and a working capital deficit of $22.0 million are significantly worse than typical industry standards for healthy real estate development companies.
• The explicit statement of substantial doubt about the company's ability to continue as a going concern is a critical indicator of financial distress, far below industry benchmarks for financial stability.
• While specific comparable companies are not detailed in the filing, the company's financial performance and liquidity position suggest it is not performing in line with established, financially sound real estate developers.

Legal Proceedings

• CleanSpark, Inc. initiated a civil action alleging breach of a Securities Purchase Agreement related to Series B Preferred Stock. Settlement discussions are ongoing, including potential redemption of the Series B Preferred Stock.

Related Party Transactions

• Accrued salary expenses to CEO Frank Ingrande ($63,000), CFO Jason Sunstein ($63,000), and Chairman Roberto Valdes ($63,000) for the six months ended June 30, 2026.
• Stock issuances to Frank Ingrande, Jason Sunstein, and Roberto Valdes in March 2026 to compensate for accrued, unpaid salary from previous years ($393,038 each).
• The land for Plaza Bajamar and Valle Divino is owned by entities controlled by Roberto Valdes, with land purchase agreements in place.
• The company funded construction on residential lots, projects amenities, and land acquisition for companies controlled by Roberto Valdes, totaling $1.4 million.
• R-MAC Properties, Inc., owned by beneficial owners and Vice Presidents of ILA, provided marketing and sales support services totaling $313,037 for the six months ended June 30, 2026.
• Lisa Landau, sister of CFO Jason Sunstein, provided advances to the company, with balances of $530,000 and $590,000 as of June 30, 2026, and December 31, 2025, respectively.

Stakeholder Impact

• Shareholders may experience dilution due to ongoing capital raises through equity issuance.
• Creditors and noteholders face increased risk due to the company's going concern issues and liquidity challenges.
• Potential buyers and investors may be deterred by the company's financial instability and project title uncertainties.
• Employees may face uncertainty regarding job security due to the company's precarious financial situation.

Next Steps

• Continue research and marketing efforts to identify potential home buyers.
• Secure additional financing through equity or debt to fund ongoing operations.
• Potentially reduce operating expenses to avoid curtailing future operations.
• Complete the legal process for title transfer of Valle Divino and Plaza Bajamar properties.
• Resolve settlement discussions with CleanSpark, Inc. regarding the redemption of Series B Preferred Stock.

Key Dates

Recommendation

The company's financial condition, characterized by significant net losses, a substantial working capital deficit, and explicit statements of doubt about its ability to continue as a going concern, presents a high level of risk. The ongoing need for capital raises, potential dilution, and unresolved legal matters further exacerbate these concerns, making it a sell recommendation for seasoned investors.

Keywords

Land Development, Real Estate, Baja California, Convertible Notes, Going Concern, Stock-Based Compensation, Financial Statements, Quarterly Report