INTERNATIONAL LAND ALLIANCE INC. Management report and analysis of the financial situation and operating results. (Form 10-Q)

Presentation of our company

The Company was incorporated under the laws of the State of Wyoming on
September 26, 2013. We are based at San Diego, California. We are a residential land development company with target properties located primarily in the Baja California North region of Mexico and Southern California. Our main activities are buying properties, obtaining zoning and other necessary rights to subdivide the properties into residential and commercial building land, securing financing for the purchase of the land, improving the infrastructure and amenities of properties and the sale of land to buyers, retirees, investors and business developers. We offer the option of financing (i.e. taking a promissory note from the buyer for all or part of the purchase price) with guaranteed acceptance on any purchase for each customer.


The real estate market of Northern Baja California continued to improve significantly and fully recovered from the negative impact of Covid-19. House prices continued to rise Southwestern United Statesand inventories remained very low, generating further attraction from homebuyers looking for second homes or vacation homes.

The Company’s current portfolio includes residential, resort and commercial properties including the following projects:

    ?   Oasis Park Resort is a 497-acres master planned real estate community
        including 1,344 residential home sites, south of San Felipe, Baja
        California that offers180-degree sea and mountain views. In addition to
        the residential lots, there is a planned boutique hotel, a spacious
        commercial center, and a nautical center. The Company recently allowed
        prospective homeowners and existing lot holders to tour the property
        again, which resulted in multiple sales closings and commitments for new
        home construction. 75 of the 1,344 planned residential lots were pre-sold
        to initial stakeholders. The Company has made significant progress on the
        project, which included the completion of the two-mile access road and the
        community entrance structure. The Company also started construction of the
        waterfront clubhouse, and model homes. The Company has not sold any home
        sites during the three months ended March 31, 2022, has not received any
        additional payments for its new home construction.

    ?   Valle Divino is a self-contained solar 650-home site project in Ensenada,
        Baja California, with test vineyard at the property. This resort includes
        137 residential lots and 3 commercial lots on 20 acres of land. This
        represents an estimated $60 million in gross sales opportunity. There has
        been no additional sale of residential lots during the three months ended
        March 31, 2022.

    ?   Plaza Bajamar Resort is an 80-unit project located at the internationally
        renowned Bajamar Ocean front hotel and golf resort. The Bajamar oceanfront
        golf resort is a master planned golf community located 45 minutes south of
        the San Diego-Tijuana border along the scenic toll road to Ensenada. The
        first Phase will include 22 "Merlot" 1,150 square-foot single-family homes
        that features two bedrooms and two baths. The home includes two primary
        bedroom suites - one on the first floor and one upstairs, as well as
        fairway and ocean views from a rooftop terrace. The Merlot villas will
        come with the installation of solar packages.

    ?   Emerald Grove Estates is the Company's newly renovated Southern California
        property, used for organized events at this 8,000 square foot event venue.

Equity-method investment:

    ?   Rancho Costa Verde ("RCVD") is a 1,100-acre master planned second home,
        retirement home and vacation home real estate community located on the
        east coast of Baja California. RCV is a self-sustained solar powered green
        community that takes advantage of the advances in solar and other green
        technology. In May 2021, the Company acquired a 25% investment in RCV in
        exchange for $100,000 and 3,000,000 shares of the Company's common stock,
        and such investment was recorded as an equity-method investment in the
        Company's condensed consolidated financial statements.


As of March 31, 2022:

  ? The Company executed residential plot sales agreements for its Valle Divino
    project and accepted several reservations for home sales to purchase twenty
    percent (20%) inventory for phase I project at its Plaza Bajamar. To avoid
    paying multiple title transfer fees and the extended time for each recording,
    the seller for both parcels, Valdeland, S.A. de C.V., an entity controlled by
    the Company's Chief Executive Officer, is in the process of creating a master
    bank trust. This will provide the Company through its Mexican's subsidiary,
    International Land Alliance, S.A. de C.V., the rights, and interest to each
    property, including buildings and improvements. As demonstrated from the
    Company's Oasis Park Resort, this will also potentially allow the Company to
    record revenue from its Valle Divino and Plaza Bajamar projects, as sales are
    made, and individual trusts are established for each buyer, pending further
    review of Mexican trust law. The Company expects to have this trust
    established by the end of second fiscal quarter of 2022. As of March 31, 2022,
    the Company received approximately $102,164 from plot sales, which are
    currently reported as contract liability in the Company's consolidated balance
    sheet until individual trusts are established and title transferred to the
    buyer. The Company broke ground on the Valle Divino development in July 2020
    and completed its first stage of construction in January 2021 and started
    reservations of residential lots. The Company has a dedicated partner for
    solar-plus-storage power solutions at its properties, CleanSpark, Inc., which
    serves as the Company's exclusive partner for the installation of solar
    solutions across its portfolio, including the model homes at Plaza Bajamar.
    The Company commenced construction of a model home, and a clubhouse for wine

  ? The Company partnered with Clean Spark, Inc. to successfully deploy a
    microgrid on the Company's model home at Plaza Bajamar, and established plan
    to outfit all units at the property, as well all units at Valle Divino with
    solar micro grid installations.

  ? Resumed construction and service work at Oasis Park Resort for Phase I of the

  ? Reopened the Company's newly renovated event center at its Emerald Grove
    Estates property in Southern California. The Company entered into a contract
    to sell a vacant 20-acre parcel of the property for approximately $630,000.
    The property includes the main parcel of land with existing structures along
    with three additional parcels of land which are vacant plots.

  ? Continued our research and marketing efforts to identify potential home buyers
    in the United States, Canada, Europe, and Asia. Through the formation of a
    partnership with a similar development company in the Baja California Norte
    Region of Mexico, we have been able to leverage additional resources with the
    use of their established and proven marketing plan which can help us with
    sophisticated execution and the desired results for residential plot sales and

  ? Title of Oasis Park Resort in San Felipe was assumed during 2019. As progress
    continues on the development of the Oasis Park Resort, we are expecting the
    transfer of title on the Villas del Enologo in Rancho Tecate, Valle Divino in
    Ensenada, Baja California and Plaza Bajamar in Ensenada, Baja California
    during the Company third fiscal quarter of 2022, as we continue to follow the
    necessary steps to complete this legal process.

  ? Continued efforts to secure financing and strengthen balance by closing a $0.6
    million debt financing with accredited institutional investors to continue the
    funding of our projects and operating costs.


Results of operations for the three months ended March 31, 2022compared to the three months ended March 31, 2021

                                        For the three months ended
                                         March 31,         March 31,
                                           2022               2021
Revenues, net                         $             -      $        -

Cost of revenues                                    -               -

Gross profit                                        -               -

Operating expenses
Sales and marketing                            30,278          16,900
General and administrative expenses         1,333,946         770,847
Total operating expenses                    1,364,224         787,747

Loss from operations                       (1,364,224 )      (787,747 )

Other income (expense)
Other expense                                       -         (10,876 )
Loss from equity-method investment            (41,104 )             -
Interest income                                16,973           9,219
Interest expense                             (104,367 )      (201,079 )
Total other expense                          (128,498 )      (202,736 )

Net loss                              $    (1,492,722 )    $ (990,483 )

Operating Expenses

Operating expenses increased by $576,477 for $1,364,224 for the three months ended March 31, 2022from $787,747 for the three months ended March 31, 2021.

Sales and marketing expenses increased by approximately $13,378for $30,278 within three months March 31, 2022from $16,900 within three months March 31, 2021. This increase is directly related to additional expenditures under consulting and real estate marketing agreements aimed at generating traffic and interest in the Company’s various projects.

General and administrative expenses increased by approximately $563,099 within three months March 31, 2022compared to the three months ended March 31, 2021primarily due to an increase in stock-based compensation expense of approximately $555,000 related to stock options granted to employees, affiliates and consultants over the vesting period.

Other income (expense)

Other expenses decreased by approximately $74,000for $128,498 within three months March 31, 2022from $202,736 within three months March 31, 2021. This decrease is related to a decrease in interest expense of approximately $97,000directly attributable to the decrease in the remaining balance of promissory notes, offset by an increase of approximately $41,100 in the loss of the investment under the Company’s equity method.


Net Loss

The Company has completed the three months ended March 31, 2022with a net loss of
$1,492,722compared to a net loss of $990,483 for the three months ended
March 31, 2021. The increase in our net loss results from the reasons described above.

The factors that will most significantly affect future operating results will

    ?   The acquisition of land with plots for sale;
    ?   The sale price of future plots, compared to the sale price of plots in
        other resorts in Mexico;
    ?   The cost to construct a home on the plots to be transferred, and the
        quality of construction;
    ?   The quality of our amenities;
    ?   The global economy and the demand for vacation homes; and
    ?   The on-going effects of COVID-19 on the US and global economy and
        specifically in our target market.

Other than the foregoing, we are not aware of any trends, events or uncertainties that have had, or can reasonably be expected to have, a material impact on our revenues or expenses.

Capital resources and liquidity

The money was $193,276 and $56,590 from March 31, 2022and December 31, 2021, respectively. As shown in the accompanying financial statements, we recorded a loss of $1,492,722 for the three months ended March 31, 2022. Our working capital deficit at March 31, 2022been $3,737,119 and net cash used in operating activities for the three months ended March 31, 2022have been $344,942. These factors and our ability to raise additional capital to achieve our objectives raise substantial doubt as to our ability to continue our business. We anticipate that our expenses will continue to increase for the foreseeable future due to increased operations, increased construction activities and the development of current and future projects that include our current business operations.

We expect to generate revenue over the next twelve months as we continue to market the sale of land held for sale to our Oasis Park Resort and we get the title of our other projects (Divino Valley and Bajamar Square), which we believe will occur during the Company’s third fiscal quarter of the year ended December 31, 2022.

If the Company is not successful in its marketing efforts to increase its sales, the Company will continue to experience a lack of liquidity, and it will be necessary to obtain funds through equity or debt financing in sufficient amounts or to further reduce its operating expenses in a way to avoid having to interrupt its future activities.

Operating Activities

Net cash flows used in operating activities for the three months ended March 31, 2022been $344,942 mainly due to the loss of $1,492,722 compensated by a non-monetary equity compensation of $871,688amortization of the discount on the debt of $19,241loss of the Company’s investment using the equity method $41,104depreciation of $13,102and the net change in assets and liabilities of $202,644.

Net cash flows used in operating activities for the three months ended March 31, 2021 been $162,857 mainly due to the loss of $990,483 compensated by a non-monetary equity compensation of $356,350and an increase in accounts payable of $104,826.

Investing Activities

Net cash flows used in investing activities were $109,000 for the three months ended March 31, 2022. The funds were used for the development of various projects at Plaza Bajamar and Divino Valley.

Net cash flows used in investing activities were $135,647 for the three months ended March 31, 2021. The funds were used for the acquisition and development of the Emerald Grove and Costa Bajamar properties.


Financing Activities

Net cash flow generated by financing activities for the three months ended March 31, 2022been $590,628 primarily cash proceeds from the issuance of promissory notes for a total amount of $522,500the cash proceeds of the ongoing related party financing for an aggregate amount of $170,102offset by $90,954 repayment of advances to related parties, and $11,620 reimbursement of promissory notes.

Net cash flow generated by financing activities for the three months ended March 31, 2021been $405,907 primarily cash proceeds from the issuance of promissory notes for a total amount of $577,486financing net of refinancing of approximately $387,000sale of common shares of $45,000and offset by reimbursement of a promissory note of $585,315.

As a result of these activities, we recorded an increase in cash and cash equivalents of $136,686 for the three months ended March 31, 2022.

Our ability to continue as a going concern depends on our success in obtaining additional financing from investors or the sale of our common stock.

Critical Accounting Polices

There have been no material changes in our critical accounting policies from the critical accounting policies and material judgments and estimates disclosed in our Annual Report on Form 10-K for the year ended
December 31, 2021filed with the SECOND on April 15, 2022.

Off-balance sheet arrangements

During the period ended March 31, 2022we have not entered into any off-balance sheet arrangements.

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