10-K: International Land Alliance Reports $2.1 Million Net Loss in 2023 Amidst Expansion Efforts

International Land Alliance, Inc. reported a net loss of $2.1 million for 2023, despite a significant increase in revenue due to the acquisition of Rancho Costa Verde Development, LLC.

Summary

• International Land Alliance, Inc. reported a net loss of $2.1 million for the year ended December 31, 2023, compared to a net loss of $10.4 million in 2022.
• The company's revenue increased to $7.1 million in 2023, up from $0 in 2022, primarily due to the acquisition of Rancho Costa Verde Development, LLC (RCVD).
• Operating expenses decreased to $4.4 million in 2023 from $8.4 million in 2022, with a significant reduction in impairment losses.
• Other expenses increased to $3.8 million in 2023 from $2.1 million in 2022, mainly due to losses from debt extinguishment and increased interest expenses.
• The company's accumulated deficit stood at $27.2 million as of December 31, 2023.
• The company's cash and cash equivalents were approximately $140,247 at December 31, 2023.
• The company has a working capital deficit of approximately $26.8 million as of December 31, 2023.
• The company's ability to continue as a going concern is dependent on its ability to generate revenues, raise capital, or issue debt instruments.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While revenue increased significantly due to the RCVD acquisition, the company still reported a net loss, has a substantial accumulated deficit, and faces significant financial risks. The going concern warning and dependence on future financing are major concerns.

Positives

• The company's revenue increased significantly due to the acquisition of RCVD.
• Operating expenses decreased due to reduced impairment losses.
• The company's net loss improved compared to the previous year.

Negatives

• The company reported a net loss of $2.1 million for the year ended December 31, 2023.
• The company has an accumulated deficit of $27.2 million as of December 31, 2023.
• The company has a working capital deficit of approximately $26.8 million as of December 31, 2023.
• Other expenses increased due to losses from debt extinguishment and increased interest expenses.
• The company's ability to continue as a going concern is dependent on its ability to generate revenues, raise capital, or issue debt instruments.

Risks

• The company's ability to continue as a going concern is dependent on its ability to generate revenues, raise capital, or issue debt instruments.
• The company has a significant working capital deficit.
• The company is dependent on the sale of securities or debt to fund operations.
• The company has potential conflicts of interest with companies controlled by its officers and directors.
• The company's lack of operating history makes evaluating its business difficult.
• The company's real estate development strategies may not be successful.
• The real estate market is cyclical, and a downturn could increase the risk of loss.
• The company may be subject to uninsured losses.
• The company is dependent on key personnel.
• The company is subject to regulatory inquiries, claims, suits, and prosecutions.
• The company is vulnerable to concentration risks because it intends to focus on the residential market.
• General economic conditions in Mexico may have an adverse effect on operations.
• The company is subject to anti-corruption laws.
• The company's operations may be affected by social instability in Mexico.
• The company's stock is subject to penny stock regulations and restrictions.
• The company does not have an audit or compensation committee.
• The company's directors own a significant percentage of outstanding voting securities.
• The company may issue additional shares of common stock, which would reduce investors' ownership.
• The company does not intend to pay any cash dividends on its common stock.
• The company's stock price may be volatile.
• The company's stock is thinly traded.
• Shares eligible for future sale may adversely affect the market.
• The company could issue additional common stock, which might dilute the book value of its common stock.
• The company's articles of incorporation allow for the creation of new series of preferred stock without further approval by stockholders.

Future Outlook

The company anticipates generating continued revenues over the next twelve months as it continues to market the sale of lots held for sale and also from home construction, now having assumed title of its Oasis Park Resort property and through the acquisition of RCVD. The company expects to assume title to its other properties; however, there can be no assurance that such revenue will be sufficient to cover its expenses. Consequently, the company expects to be dependent on the proceeds from future debt or equity investments to sustain its operations and implement its business plan.

Management Comments

• Management believes that recent regulatory developments in the electricity industry and overall growth in the Mexican economy will increase competition in the real estate investment industry.
• Management believes that the transfer of title to the land will be approved and transferred by the end of our fiscal year of 2023, there is no assurance that such transfer of title will be approved in that time frame or at all.

Industry Context

The document highlights the growth in the Mexican real estate industry due to foreign investment and a strong domestic market, particularly the rising middle class. It also notes the demand from international buyers, especially from California, seeking affordable retirement alternatives. The company positions itself to capitalize on these trends by offering affordable luxury residences in Baja California.

Comparison to Industry Standards

• The document mentions that the Mexican public real estate market is fragmented and highly competitive, with numerous developers and builders.
• The company competes with local, regional, and national developers, homebuilders, and others with respect to the sale of residential properties.
• The company also competes with builders and developers to obtain financing on commercially reasonable terms.
• The company is also subject to competition from other entities engaged in the business of resort development, sales and operation, including vacation interval ownership, condominiums, hotels and motels.
• Some of the world's most recognized lodging, hospitality and entertainment companies have begun to develop and sell resort properties in the Baja California area, many of which possess significantly greater financial, marketing and other resources than those of the Company.

Related Party Transactions

• The company has and will continue to enter into agreements with firms owned or controlled by its officers and directors.
• The company has engaged in substantial real estate activities between the company and other entities controlled by an officer of the company.
• The company has also borrowed funds from an entity controlled by other officers of the company.

Stakeholder Impact

• Shareholders face the risk of losing their investment if the company does not continue as a going concern.
• Shareholders may experience dilution if the company issues additional shares of common stock.
• Employees may be affected by the company's financial instability.
• Customers may be impacted by potential delays in project development.
• Creditors face the risk of non-payment due to the company's financial difficulties.

Next Steps

• The company plans to continue its research and marketing efforts to identify potential home buyers.
• The company expects to assume title to its other properties.
• The company will continue to seek additional financing from investors.

Key Dates

Keywords

real estate development, Baja California, residential properties, land acquisition, resort development, financial results, equity investment, debt financing, convertible notes, promissory notes