UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2022.

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 000-56111

INTERNATIONAL LAND ALLIANCE, INC.

(Exact name of registrant as specified in its charter)

Wyoming

46-3752361

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

350 10th Avenue, Suite 1000, San Diego, California 92101

(Address of principal executive offices) (Zip Code)

(877) 661-4811

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large-accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large-accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large-accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~August 15,~~November 18, 2022, the registrant had ~~36,138,029~~36,796,365 shares of common stock, $0.001 par value per share, outstanding.

TABLE OF CONTENTS

Part I. Financial Information	3
Item 1. Consolidated Financial Statements	3
Consolidated Balance Sheets – As of ~~June~~September 30, 2022 (unaudited) and December 31, 2021(audited)	3
Consolidated Statements of Operations – For the three and ~~six~~nine months ended ~~June~~September 30, 2022, and 2021 (unaudited)	4
Consolidated Statements of Changes in Stockholders’ Equity (deficit) for the three and ~~six~~nine months ended ~~June~~September 30, 2022, and 2021 (unaudited)	5
Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~June~~September 30, 2022, and 2021 (unaudited)	76
Notes to Consolidated Financial Statements	87
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2526
Item 3. Quantitative and Qualitative Disclosures about Market Risk	3031
Item 4. Controls and Procedures	3031

Part II. Other Information	3132
Item 1. Legal Proceedings	3132
Item 1A. Risk Factors	3132
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3132
Item 3. Defaults upon Senior Securities	3233
Item 4. Mine Safety Disclosures	3233
Item 5. Other Information	3233
Item 6. Exhibits	3233

Signatures	3334

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

INTERNATIONAL LAND ALLIANCE, INC.

CONSOLIDATED BALANCE SHEETS

	June 30, 2022			December 31, 2021			September 30, 2022			December 31, 2021
	(unaudited)			(audited)				(unaudited)			(audited)
ASSETS
Current assets
Cash	$	5,534		$	56,590		$	95,841		$	56,590
Accounts Receivable		327,289			314,090			55,472			30,273
Prepaid and other current assets		202,672			251,665			206,110			251,665
Total current assets		535,495			622,345			357,423			338,528

Accounts receivable								283,817			283,817
Land		203,419			203,419			203,419			203,419
Land Held for Sale		647,399			647,399			647,399			647,399
Buildings, net		889,948			915,884			876,847			915,884
Furniture and equipment, net		2,146			2,682			2,012			2,682
Construction in Process		1,168,355			852,020			1,296,555			852,020
Note receivable		100,000			100,000			100,000			100,000
Accrued interest on note receivable		7,180			3,234			9,153			3,234
Equity-method investment		2,329,737			2,511,830			2,279,985			2,511,830
Total assets	$	5,883,679		$	5,858,813		$	6,056,610		$	5,858,813

LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued liabilities	$	1,587,511		$	1,656,533		$	734,613		$	1,022,384
Accounts payable and accrued liabilities – Related party								1,045,454			634,149
Contract liability		330,433			126,663			487,545			146,663
Deposits		20,000			20,000			500			-
Derivative liability								278,466			-
Promissory notes, net of debt discounts		2,097,316			102,762			2,208,898			102,762
Promissory notes, net of debt discounts– Related Parties		986,447			834,984			1,298,880			834,984
Total current liabilities		5,021,707			2,740,942			6,054,356			2,740,942

Promissory notes, net of current portion		-			1,735,538			-			1,735,538

Total liabilities		5,021,707			4,476,480			6,054,356			4,476,480

Commitments and Contingencies (Note 9)								-

Preferred Stock Series B (Temporary Equity)		293,500			293,500			293,500			293,500

Stockholders’ equity
Preferred stock; $0.001 par value; 2,000,000 shares authorized; 28,000 Series A shares issued and outstanding as of June 30, 2022, and December 31, 2021		28			28
1,000 Series B shares issued and outstanding as of June 30, 2022, and December 31, 2021		1			1
Preferred stock, value
Common stock; $0.001 par value; 150,000,000 shares authorized; 36,138,029 and 31,849,327 shares issued and outstanding as of June 30, 2022, and December 31, 2021, respectively		36,139			31,850
Stockholders’ equity (deficit)
Preferred stock; $0.001 par value; 2,000,000 shares authorized; 28,000 Series A shares issued and outstanding as of September 30, 2022, and December 31, 2021								28			28
1,000 Series B shares issued and outstanding as of September 30, 2022, and December 31, 2021								1			1
Preferred stock value								1			1

Common stock; $0.001 par value; 150,000,000 shares authorized; 36,471,365 and 31,849,327 shares issued and outstanding as of September 30, 2022, and December 31, 2021, respectively								36,472			31,850
Additional paid-in capital		18,589,351			15,760,772			18,707,352			15,760,772
Accumulated deficit		(18,057,047	)		(14,703,818	)		(19,035,099	)		(14,703,818	)
Total stockholders’ equity		568,472			1,088,833
Total stockholders’ equity (deficit)								(291,246	)		1,088,833

Total liabilities and stockholders’ equity	$	5,883,679		$	5,858,813
Total liabilities and stockholders’ equity (deficit)							$	6,056,610		$	5,858,813

The accompanying notes are an integral part of these unaudited consolidated financial statements.

INTERNATIONAL LAND ALLIANCE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021			September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
	For the three months ended						For the six months ended						For the three months ended						For the nine months ended
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021			September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Revenues and lease income	$	16,973		$	8,340		$	33,946		$	17,559		$	16,973		$	8,340		$	50,919		$	25,899

Cost of revenues		-			-			-			-			-			-			-			-

Gross profit		16,973			8,340			33,946			17,559			16,973			8,340			50,919			25,899

Operating expenses
Sales and marketing		772,405			1,198,300			802,683			1,215,200			100,600			61,000			903,283			1,276,200
General and administrative expenses		739,801			649,398			2,073,747			1,420,245
General and administrative expense														432,434			496,822			2,506,181			1,917,067
Total operating expenses		1,512,206			1,847,698			2,876,430			2,635,445			533,034			557,822			3,409,464			3,193,267

Loss from operations		(1,495,233	)		(1,839,358	)		(2,842,484	)		(2,617,886	)		(516,061	)		(549,482	)		(3,358,545	)		(3,167,368	)

Other income (expense)
Other income (expense)		536			2,499			536			(8,377	)
Other income														-			100,000			536			91,624
Income (loss) from equity-method investment		(140,989	)		6,942			(182,093	)		6,942			(49,752	)		32,270			(231,845	)		39,212
Change in fair value derivative														219,069			-			219,069			-
Interest income														-			1,534			-			1,534
Interest expense		(224,821	)		(144,913	)		(329,188	)		(345,992	)		(631,308	)		(226,379	)		(960,496	)		(572,372	)
Total other expense		(365,274	)		(135,472	)		(510,745	)		(347,427	)		(461,991	)		(92,575	)		(972,736	)		(440,002	)

Net loss	$	(1,860,507	)	$	(1,974,830	)	$	(3,353,229	)	$	(2,965,313	)	$	(978,052	)	$	(642,057	)	$	(4,331,281	)	$	(3,607,370	)

Loss per common share - basic and diluted	$	(0.05	)	$	(0.08	)	$	(0.10	)	$	(0.12	)	$	(0.03	)	$	(0.02	)	$	(0.12	)	$	(0.14	)

Weighted average common shares outstanding - basic and diluted		35,452,918			25,975,729			34,164,313			24,743,583			36,394,441			30,418,295			34,917,678			26,662,971

The accompanying notes are an integral part of these unaudited consolidated financial statements.

INTERNATIONAL LAND ALLIANCE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2022, and 2021

(unaudited)

~~For~~Activity for the ~~Three and Six~~Nine Months Ended ~~June~~September 30, 2022

																							Shares		Amount		Shares		Amount		Shares		Amount		Capital			1	Deficit			Equity
	Series A Preferred Stock				Series B Preferred Stock				Common Stock				Additional Paid-in				Accumulated			Total Stockholders’			Series A Preferred Stock				Series B Preferred Stock				Common Stock				Additional Paid-in				Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital				Deficit			Equity			Shares		Amount		Shares		Amount		Shares		Amount		Capital				Deficit			Equity

Balance, December 31, 2021		28,000	$	28		1,000	$	1		31,849,327	$	31,850	$	15,760,772		-	$	(14,703,818	)	$	1,088,833			28,000	$	28		1,000	$	1		31,849,327	$	31,850	$	15,760,772		-	$	(14,703,818	)	$	1,088,833
Common shares issued pursuant to promissory notes		-		-		-		-		450,000		450		201,825		-		-			202,275			-		-		-		-		450,000		450		201,825				-			202,275
Common stock issued for option exercise		-		-		-		-		600,000		600		-		-		-			600			-		-		-		-		600,000		600		-				-			600
Common stock issued for consulting services		-		-		-		-		814,714		815		446,463		-		-			447,278			-		-		-		-		814,714		815		446,463				-			447,278
Stock-based compensation		-		-		-		-		-		-		871,688		-		-			871,688			-		-		-		-		-		-		871,688				-			871,688
Warrants issued in connection with debt financing		-		-		-		-		-		-		159,664		-		-			159,664			-		-		-		-		-		-		159,664				-			159,664
Dividend on Series B Preferred		-		-		-		-		-		-		(15,000	)	-		-			(15,000	)		-		-		-		-		-		-		(15,000	)			-			(15,000	)
Net loss		-		-		-		-		-		-		-		-		(1,492,722	)		(1,492,722	)		-		-		-		-		-		-		-		-		(1,492,722	)		(1,492,722	)
Balance, March 31, 2022		28,000	$	28		1,000	$	1		33,714,041	$	33,715	$	17,425,412		-	$	(16,196,540	)	$	1,262,616			28,000	$	28		1,000	$	1		33,714,041	$	33,715	$	17,425,412		-	$	(16,196,540	)	$	1,262,616

Common stock issued with Finders’ Fee agreement		-		-		-		-		88,988		89		40,401		-		-			40,490			-		-		-		-		88,988		89		40,401				-			40,490
Common stock issued for option exercise		-		-		-		-		700,000		700		-		-		-			700			-		-		-		-		700,000		700		-				-			700
Common stock issued for consulting services		-		-		-		-		1,635,000		1,635		728,250		-		-			729,885			-		-		-		-		1,635,000		1,635		728,250				-			729,885
Dividend on Series Preferred		-		-		-		-		-		-		(15,000	)	-		-			(15,000	)		-		-		-		-		-		-		(15,000	)			-			(15,000	)
Stock-based compensation		-		-		-		-		-		-		410,288		-		-			410,288			-		-		-		-		-		-		410,288				-			410,288
Net loss		-		-		-		-		-		-		-		-		(1,860,507	)		(1,860,507	)		-		-		-		-		-		-		-		-		(1,860,507	)		(1,860,507	)
Balance, June 30, 2022		28,000	$	28		1,000	$	1		36,138,029	$	36,139	$	18,589,351		-	$	(18,057,047	)	$	568,472			28,000	$	28		1,000	$	1		36,138,029	$	36,139	$	18,589,351		-	$	(18,057,047	)	$	568,472

Common stock issued for consulting services																								-		-		-		-		333,336		333		133,001				-			133,334
Dividend on Series Preferred																								-		-		-		-		-		-		(15,000	)			-			(15,000	)
Net loss																								-		-		-		-		-		-		-		-		(978,052	)		(978,052	)
Balance, September 30, 2022																								28,000	$	28		1,000	$	1		36,471,365		36,472		18,707,352		-	$	(19,035,099	)	$	(291,246	)

~~For~~Activity for the ~~Three and Six~~Nine Months Ended ~~June~~September 30, 2021

Shares Amount Shares Amount Shares Amount Capital payable Deficit Equity
Series A
Preferred Stock Series B
Preferred Stock Common Stock Additional
Paid-in Stock Accumulated Total
Stockholders’
(Deficit)
Shares Amount Shares Amount Shares Amount Capital payable Deficit Equity
Balance, December 31, 2020 28,000 $ 28 1,000 $ 1 23,230,654 $ 23,231 $ 8,705,620 $ (289,044 ) $ (9,641,756 ) $ (1,201,920 )
Common stock issued with debt settlement - - - - 118,000 118 84,480 (75,628 ) - 8,970
Commitment shares issued - - - - 85,000 85 130,815 - - 130,900
Common stock issued against accrued interest due to related party - - - - 29,727 30 10,969 - - 10,999
Common stock to be issued for cash - - - - - - - 45,000 - 45,000
Common stock issued from plot sale - - - - 100,000 100 32,412 (32,512 ) - -
Common stock granted for services - - - - - - (315,288 ) 315,288 - -
Stock-based compensation - - - - - - 67,380 280,000 - 347,380
Dividend on Series Preferred - - - - - - (15,000 ) - - (15,000 )
Net loss - - - - - - - - (990,483 ) (990,483 )
Balance, March 31, 2021 28,000 $ 28 1,000 $ 1 23,563,381 $ 23,564 $ 8,701,388 $ 243,104 $ (10,632,239 ) $ (1,664,154 )
Common stock issued with plot purchase - - - - 70,000 70 29,451 - - 29,521
Common stock issued for warrant and option exercise - - - - 1,160,000 1,160 98,840 - - 100,000
Common stock issued with equity-method investment - - - - 3,000,000 3,000 2,577,000 - - 2,580,000
Common stock issued for cash - - - - 140,000 140 64,860 (45,000 ) - 20,000
Common stock issued pursuant to consulting agreements - - - - 395,946 396 538,712 (280,000 ) - 259,108
Dividend on Series Preferred - - - - - - (15,000 ) - - (15,000 )
Stock-based compensation - - - - - - 1,307,078 - - 1,307,078
Net loss - - - - - - - - (1,974,830 ) (1,974,830 )
Balance, June 30, 2021 28,000 $ 28 1,000 $ 1 28,329,327 $ 28,330 $ 13,302,329 $ (81,896 ) $ (12,607,069 ) $ 641,723
Shares Amount Shares Amount Shares Amount Capital payable Deficit Equity
Balance, December 31, 2020 28,000 $ 28 1,000 $ 1 23,230,654 $ 23,231 $ 8,705,620 $ (289,044 ) $ (9,641,756 ) $ (1,201,920 )
Common stock issued with debt settlement - - - - 118,000 118 84,480 (75,628 ) - 8,970
Commitment shares issued - - - - 85,000 85 130,815 - - 130,900
Common stock issued against accrued interest due to related party - - - - 29,727 30 10,969 - - 10,999
Common stock to be issued for cash - - - - - - - 45,000 - 45,000
Common stock issued from plot sale - - - - 100,000 100 32,412 (32,512 ) - -
Common stock granted for services - - - - - - (315,288 ) 315,288 - -
Stock-based compensation - - - - - - 67,380 280,000 - 347,380
Dividend on Series Preferred - - - - - - (15,000 ) - - (15,000 )
Net loss - - - - - - - - (990,483 ) (990,483 )
Balance, March 31, 2021 28,000 $ 28 1,000 $ 1 23,563,381 $ 23,564 $ 8,701,388 $ 243,104 $ (10,632,239 ) $ (1,664,154 )
Common stock issued with plot purchase - - - - 70,000 70 29,451 - - 29,521
Common stock issued for warrant and option exercise - - - - 1,160,000 1,160 98,840 - - 100,000
Common stock issued with equity-method investment - - - - 3,000,000 3,000 2,577,000 - - 2,580,000
Common stock issued for cash - - - - 140,000 140 64,860 (45,000 ) - 20,000
Common stock issued pursuant to consulting agreements - - - - 395,946 396 538,712 (280,000 ) - 259,108
Dividend on Series Preferred - - - - - - (15,000 ) - - (15,000 )
Stock-based compensation - - - - - - 1,307,078 - - 1,307,078
Net loss - - - - - - - - (1,974,830 ) (1,974,830 )
Balance, June 30, 2021 28,000 $ 28 1,000 $ 1 28,329,327 $ 28,330 $ 13,302,329 $ (81,896 ) $ (12,607,069 ) $ 641,723

Common stock issued with debt settlement - - - - 35,000 35 12,570 (12,605 ) - -
Common stock issued with cash, net of offering costs - - - - 3,000,000 3,000 1,736,750 - - 1,739,750
Dividend on Series Preferred - - - - - - (15,000) - - (15,000)
Stock-based compensation - - - - - - 78,485 - - 78,485
Net loss - - - - - - - - (642,057) (642,057)
Balance, September 30, 2021 28,000 $ 28 1,000 $ 1 31,364,327 $ 31,365 $ 15,115,134 $ (94,501 ) $ (13,249,126 ) $ 1,802,901

The accompanying notes are an integral part of these unaudited consolidated financial statements.
5

INTERNATIONAL LAND ALLIANCE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

June 30, 2022 June 30, 2021
September 30,
2022

September 30,
2021

For the six months ended For the nine months ended
June 30, 2022 June 30, 2021
September 30,
2022

September 30,
2021

Cash Flows from Operating Activities
Net loss $ (3,353,229 ) $ (2,965,313 ) $ (4,331,281 ) $ (3,607,370 )
Adjustments to reconcile net loss to net cash used in operating activities:
Stock based compensation 1,281,976 1,922,536 1,281,976 2,001,021
Fair value equity securities issued for services 1,177,163 - 1,310,497 -
Loss on debt extinguishment - 10,876 - 10,876
Depreciation and amortization 26,472 23,387 39,708 35,311
Loss (Income) from equity-method investment 182,093 (6,942 ) 231,845 (39,212 )
Amortization of debt discount 144,935 136,975 291,374 284,616
Expenses paid by related party - 25,462
Changes in assets and liabilities
Excess Fair Value of derivative 356,785 -
Change in fair value of derivative liability (219,069 ) -
Changes in operating assets and liabilities
Accounts Receivable (13,199 ) - (25,199 ) -
Prepaid and other current assets 48,993 124,580 45,557 157,212
Accounts payable and accrued liabilities (235,002 ) 287,596
Accounts payable and accrued liabilities (25,219 ) 215,444 411,305
Other non-current assets - (39 ) - (8,379 )
Accrued interest on note receivable (3,946 ) - (5,919 ) -
Contract liability 203,770 30,000 340,882 37,000
Deposits - 117,980 500 137,980
Net cash used in operating activities (330,191 ) (365,054 ) (506,041 ) (703,349 )

Cash Flows from Investing Activities
Equity-method investee acquisition - (100,000 ) - (100,000 )
Cash payment to collaborative agreement - (100,000 )
Building and Construction in Progress payments (316,335 ) (171,259 ) (444,535 ) (241,259 )
Net cash used in investing activities (316,335 ) (271,259 ) (444,535 ) (441,259 )

Cash Flows from Financing Activities
Common stock, warrants and options sold for cash - 65,000 - 1,804,750
Common stock issued from options exercise 1,300 - 1,300 -
Common stock, warrants and plots promised for cash, net - 100,000 - 100,000
Cash payments on promissory notes- related party (192,244 ) (152,543 ) (262,596 ) (510,661 )
Cash payments on promissory notes (51,128 ) (593,196 ) (89,474 ) (982,086 )
Cash proceeds from convertible notes 522,500 288,874 663,250 288,874
Cash proceeds from promissory notes- related party 315,042 563,112 677,347 763,812
Cash proceeds from refinancing - 368,736 - 368,736
Net cash provided by financing activities 595,470 639,983 989,827 1,833,425

Net (decrease) increase in Cash (51,056 ) 3,670
Net increase in Cash 39,251 688,817

Cash, beginning of period 56,590 13,171 56,590 13,171

Cash, end of period $ 5,534 $ 16,841 $ 95,841 $ 701,988

Supplemental disclosure of cash flow information
Cash paid for interest $ 75,858 $ 75,513 $ 115,084 $ 127,174
Cash paid for income tax $ - $ - $ - $ -

Non-Cash investing and financing transactions
Dividend on Series B $ 30,000 $ 30,000 $ 45,000 $ 45,000
Debt discount from issuance of promissory notes $ 93,700 $ - $ 102,200 $ -
Debt discount from bifurcated derivative $ 140,750 $ -
Common stock issued for finder’s fee agreement $ 40,490 $ - $ 40,490 $ -
Debt discount created from warrants embedded in financing $ 159,664 $ - $ 159,664 $ -
Corporate expenses paid by related party note $ 28,665 $ - $ 49,145 $ -
Shares issued with debt modification $ - $ 8,970 $ - $ 8,970
Cancellation of previously issued common stock $ - $ 315,288 $ - $ 315,288
Interest on notes paid by related party $ - $ 11,067 $ - $ 17,734
Construction in progress paid by related party $ - $ 84,614 $ - $ 84,614
Common stock issued as consideration for equity-method investee $ - $ 2,580,000 $ - $ 2,580,000
Commitment shares issued with convertible note $ 202,275 $ 130,900 $ 202,275 $ 130,900
Corporate expenses paid through related party note $ - $ 25,462
Common stock issued in settlement of related party accrued interest on note $ - $ 10,999 $ - $ 10,999

The accompanying notes are an integral part of these unaudited consolidated financial statements.

6

INTERNATIONAL LAND ALLIANCE, INC.
Notes to Financial Statements
~~June~~September 30, 2022

NOTE 1 – NATURE OF OPERATIONS AND GOING CONCERN

Nature of Operations

International Land Alliance, Inc. (the “Company”) was incorporated under the laws of the State of Wyoming on September 26, 2013. The Company is a residential land development company with target properties located in the Baja California, Northern region of Mexico and Southern California. The Company’s principal activities are purchasing properties, obtaining zoning and other entitlements required to subdivide the properties into residential and commercial building plots, securing financing for the purchase of the plots, improving the properties infrastructure and amenities, and selling the plots to homebuyers, retirees, investors, and commercial developers.

Certain information and note disclosures included in the financial statements prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP” or “GAAP”) have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the ~~six~~nine months ended ~~June~~September 30, 2022, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. For further information, refer to the audited financial statements and notes for the year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K filed with the SEC on April 15, 2022.

Liquidity and Going Concern

The accompanying consolidated unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

Management evaluated all relevant conditions and events that are reasonably known or reasonably knowable, in the aggregate, as of the date the consolidated financial statements were available to be issued and determined that substantial doubt exists about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on the Company’s ability to generate revenues and raise capital. The Company has faced significant liquidity shortages as shown in the accompanying financial statements. As of ~~June~~September 30, 2022, the Company’s current liabilities exceeded its current assets by approximately $~~4.5~~5.7 million. The Company has recorded a net loss of $~~3,353,229~~4.3 million for the ~~six~~nine months ended ~~June~~September 30, 2022, has an accumulated deficit of approximately $~~18.1~~19.0 million as of ~~June~~September 30, 2022. Net cash used in operating activities for the ~~six~~nine months ended ~~June~~September 30, 2022, was approximately $~~330,200~~506,000. These factors raise substantial doubt 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 ~~in order~~ 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.~~sales and house construction. If the Company is not successful with its marketing efforts to increase sales, the Company will continue to experience a shortfall in cash, 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 manner to avoid the need to curtail its future operations subsequent to ~~June~~September 30, 2022. The direct impact of these conditions is not fully known.

However, there can be no assurance that the Company would be able to secure additional funds if needed and that if such funds were available on commercially reasonable terms or in the necessary amounts, and whether the terms or conditions would be acceptable to the Company. In such case, the reduction in operating expenses might need to be substantial in order for the Company to generate positive cash flow to sustain the operations of the Company. (See Note 11 regarding subsequent events).

7

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company maintains its accounting records on an accrual basis in accordance with GAAP. These consolidated financial statements are presented in United States dollars. The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q. All adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, ILA Fund I, LLC (the “ILA Fund”), a company incorporated in the State of Wyoming, International Land Alliance, S.A. de C.V., a company incorporated in Mexico (“ILA Mexico”), and Emerald Grove Estates LLC, incorporated in the State of ~~California.~~California, Plaza Bajamar, LLC, incorporated in State of Wyoming, Plaza Valle Divino, LLC, incorporated in the State of Wyoming. ILA Fund includes cash as its only assets with minimal expenses as of ~~June~~September 30, 2022. The sole purpose of this entity is strategic funding for the operations of the Company. ILA Mexico has plots held for sale for the Oasis Park Resort, no liabilities, and minimal expenses as of ~~June~~September 30, 2022. All intercompany balances and transactions are eliminated in consolidation.

The Company’s consolidated subsidiaries and/or entities were as follows:
SCHEDULE OF CONSOLIDATED SUBSIDIARIES AND ENTITY
Name of Consolidated Subsidiary or Entity
State or Other
Jurisdiction of
Incorporation or
Organization
Attributable Interest
ILA Fund I, LLC ~~Wyoming~~ ~~100~~ Wyoming 100 %
International Land Alliance, S.A. de C.V. (ILA Mexico) ~~Mexico~~ ~~100~~ Mexico 100 %
Emerald Grove Estates, LLC ~~California~~ ~~100~~ California 100 %
Plaza Bajamar LLC ~~Wyoming~~ ~~100~~ Wyoming 100 %
Plaza Valle Divino, LLC ~~Wyoming~~ ~~100~~ Wyoming 100 %

Investments - Equity Method

The Company accounts for equity method investments at cost, adjusted for the Company’s share of the investee’s earnings or losses, which are reflected in the consolidated statements of operations. The Company periodically reviews the investments for other than temporary declines in fair value below cost and more frequently when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. As of ~~June~~September 30, 2022, management believes the carrying value of its equity method investments ~~were~~was recoverable in all material respects.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management regularly evaluates estimates and assumptions related to the valuation of assets and liabilities. Management bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from management’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates include:

●■ Liability for legal contingencies.

8

●■ Useful life of buildings.
●■ Assumptions used in valuing equity instruments.
●■ Deferred income taxes and related valuation allowances.
●■ Going concern.
●■ Assessment of long-lived asset for impairment.
●■ Significant influence or control over the Company’s investee.
●■ Revenue ~~recognition~~recognition.

Segment Reporting

The Company operates as one reportable segment under ASC 280, Segment Reporting. The Chief Operating Decision Maker (“CODM”) regularly reviews the financial information of the Company at a consolidated level in deciding how to allocate resources and in assessing performances.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. The Company did not have any cash equivalents as of ~~June~~September 30, 2022, and December 31, 2021, respectively.

Fair Value of Financial Instruments and Fair Value Measurements

Accounting Standards Codification (“ASC”) 820 Fair Value Measurements and Disclosures, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1
~~Level 1 applies to assets or liabilities for which there are~~1: uses quoted market prices in active markets for identical assets or liabilities.

Level 22: uses observable market-based inputs or unobservable inputs that are corroborated by market data.

Level ~~2 applies to assets or liabilities for which there are~~3: uses unobservable inputs ~~other than quoted prices~~ that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, ornot corroborated by ~~observable~~ market data. ~~If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.~~
~~Level 3~~
~~Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.~~

As defined by ASC 820, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale, which was further clarified as the price that would be received to sell an asset or paid to transfer a liability (“an exit price”) in an orderly transaction between market participants at the measurement date.

The reported fair values for financial instruments that use Level 2 and Level 3 inputs to determine fair value are based on a variety of factors and assumptions. Accordingly, certain fair values may not represent actual values of the Company’s financial instruments that could have been realized as of any balance sheet dates presented or that will be recognized in the future, and do not include expenses that could be incurred in an actual settlement.

9
The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid, and other current assets, accounts payable and accrued liabilities, contracts liability, deposits, promissory notes, net of debt discounts and promissory notes related party approximate fair value due to their relatively short maturities. Equity-method investment is recorded at cost, which approximates its fair value since the consideration transferred includes cash and a non-monetary transaction, in the form of the Company’s common stock, which was valued based on a combination of a market and asset approach.

9
The fair value of the Company’s recorded derivative liability is determined based on unobservable inputs that are not corroborated by market data, which require a Level 3 classification. A Black-Sholes option valuation model was used to determine the fair value. The Company records derivative liability on the consolidated balance sheets at fair value with changes in fair value recorded in the consolidated statements of operation.
The following table presents balances of the liabilities with significant unobservable inputs (Level 3) as of September 30, 2022:
SCHEDULE OF LIABILITIES WITH SIGNIFICANT UNOBSERVABLE INPUTS
Fair Value Measurements at September 30, 2022 Using
Quoted Prices in
Active
Markets for Significant
Other Significant
Identical
Assets Observable
Inputs Unobservable
Inputs
(Level 1) (Level 2) (Level 3) Total

Derivative liability $ - $ - $ 278,466 $ 278,466
Total $ - $ - $ 278,466 $ 278,466
Cost Capitalization

The cost of buildings and improvements includes the purchase price of the property, legal fees, and other acquisition costs. Costs directly related to planning, developing, initial leasing and constructing a property are capitalized and classified as ~~Buildings~~buildings in the ~~Consolidated Balance Sheets.~~consolidated balance sheets. Capitalized development costs include interest, property taxes, insurance, and other direct project costs incurred during the period of development.

A variety of costs are incurred in the acquisition, development, and leasing of properties. After determination is made to capitalize a cost, it is allocated to the specific component of a project that is benefited. Determination of when a development project is substantially complete, and capitalization must cease, involves a degree of judgment. Our capitalization policy on development properties is guided by ASC 835-20 Interest – Capitalization of Interest and ASC 970 Real Estate - General. The costs of land and buildings under development include specifically identifiable costs. The capitalized costs include pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and related costs and other costs incurred during the period of development. We consider a construction project as substantially completed and held available for occupancy or sale upon the receipt of certificates of occupancy, but no later than one year from cessation of major construction activity. We cease capitalization on the portion (1) substantially completed and (2) occupied or held available for occupancy, and we capitalize only those costs associated with the portion under construction.

Land Held for Sale

The Company considers properties to be assets held for sale when (1) management commits to a plan to sell the property; (2) the property is available for immediate sale in its present condition and (3) the property is actively being marketed for sale at a price that is reasonable given the estimate of current market value. Upon designation of a property as an asset held for sale, we record the property’s value at the lower of its carrying value or its estimated net realizable value.

10
Land and Buildings

Land and buildings are stated at cost. Depreciation is provided by the use of the straight-line and accelerated methods for financial and tax reporting purposes, respectively, over the estimated useful lives of the assets. Buildings will have an estimated useful life of 20 years. Land is an indefinite lived asset that is stated at fair value at date of acquisition.

Revenue Recognition

Under ASC Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The guidance sets forth a five-step revenue recognition model. The underlying principle of the standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance.

10
The Company determines revenue recognition through the following steps:

■ Identification of the agreement or agreements with a buyer and/or investor.
■ Identification of the performance obligations in the agreement(s) for the sale of plots including the delivering title to the property being acquired from ILA.
■ Determination of the transaction price.
■ Allocation of the transaction price to the plots purchased when issued with equity or warrants to purchase equity in the Company; and
■ Recognition of revenue when, or as, we satisfy a performance obligation such as the transfer of control of the plots.

Revenue is measured based on considerations specified in the agreements with our customers. A contract exists when it becomes a legally enforceable agreement with a customer. The contract is based on either the acceptance of standard terms and conditions as stated in our agreement of plot sales or the execution of terms and conditions contracts with third parties and investors. These contracts define each party’s rights, payment terms and other contractual terms and conditions of the sale. Consideration was historically paid prior to transfer of title as stated above and in future land sales, the Company plans to transfer title to buyers at the time consideration has been transferred if the acquisition of the property has been completed by the Company. The Company applies judgment in determining the customer’s ability and intention to pay; however, collection risk is mitigated through collecting payment in advance or through escrow arrangements. A performance obligation is a promise in a contract or agreement to transfer a distinct product or item to the customer, which for us is transfer of title to our buyers. Performance obligations promised in a contract are identified based on the property that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract, whereby the transfer of the property is separately identifiable from other promises in the contract. We have concluded that the existing contracts only have one single performance obligation identified as the transfer of control of the property to the buyer, since the delivery of the title is merely seen as a protective right. Currently, upon execution of each contract, the Company has not developed sufficient controls and procedures to provide reasonable assurance that collection of the consideration, which the Company is entitled to, is probable. The Company has recognized $15,000 and $~~30,000~~45,000 of revenue from the seller’s financed contracts for deed in the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively. The Company currently retains title of the underlying asset under each contract until the customer pays the consideration in full. Management considers the retention of title as merely a protective right, which would potentially not disallow revenue recognition for the full consideration to which the Company is entitled.

The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. The transaction price is determined based on the consideration to which we will expect to receive in exchange for transferring title to the customer.

The Company recognizes revenue when it satisfies a performance obligation in a contract by transferring control over property to a customer. The Company’s principal activities in the real estate development industry which it generates its revenues is the sale of developed and undeveloped land.

11
Advertising costs

The Company expenses advertising costs when incurred. Advertising costs incurred amounted to $~~802,683~~903,283 and $~~39,200~~1,276,200 for the ~~six~~nine months ended ~~June~~September 30, 2022, and 2021, respectively.

Debt issuance costs and debt discounts

Debt issuance costs and debt discounts are being amortized over the ~~lives~~term of the related financings on a ~~basis that~~straight-line approach, which approximates the effective interest method. Costs and discounts are presented as a reduction of the related debt in the accompanying consolidated balance sheets.

11
Stock-Based Compensation

The fair value of stock options is estimated on the grant date using the Black-Scholes option pricing model, based on weighted average assumptions. Expected volatility is based on historical volatility of our common stock. The Company has elected to use the simplified method described in the Securities and Exchange Commission Staff Accounting Bulletin Topic 14C to estimate the expected term of employee stock options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The value of stock awards is determined using the fair value of the Company’s common stock on the date of grant. The Company accounts for forfeitures as they occur. Any compensation cost previously recognized for an unvested award that is forfeited because of a failure to satisfy a service condition is reversed in the period of the forfeiture. Compensation expense is recognized on a straight-line basis over the requisite service period of the award. Stock-based compensation includes the fair value of options, warrants and restricted stocks issued to employees, directors, and non-employees.

On February 11, 2019, the Company’s Board of Directors approved a 2019 equity incentive Plan (the “2019 Plan”). In order for the 2019 plan to grant “qualified stock options” to employees, it requires approval by the Company’s shareholders within 12 months from the date of the 2019 Plan. The 2019 Plan was never approved by the shareholders. Therefore, any options granted under the 2019 Plan prior to shareholders’ approval will be “non-qualified”. Pursuant to the 2019 Plan, the Company has reserved a total of 3,000,000 shares of the Company’s common stock under the Plan. The Company has a total of 2,150,000 options issued and outstanding under the 2019 Plan as of ~~June~~September 30, 2022.

On August 26, 2020, the Company’s Board of Directors approved the 2020 Equity Plan (the “2020 Plan”). The Company has reserved a total of 3,000,000 shares of the Company’s authorized common stock for issuance under the 2020 equity plan. The 2020 Equity Plan enables the Company’s board of directors to provide equity-based incentives through grants of awards to the Company’s present and future employees, directors, consultants, and other third-party service providers. The Company has a total of 1,700,000 options issued and outstanding under the 2020 plan as of ~~June~~September 30, 2022.

Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Income Taxes. The asset and liability method provide that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Management makes estimates and judgments about our future taxable income that are based on assumptions that are consistent with our plans and estimates. Should the actual amounts differ from our estimates, the amount of our valuation allowance could be materially impacted. Any adjustment to the deferred tax asset valuation allowance would be recorded in the income statement for the periods in which the adjustment is determined to be required. Management does not believe that it has taken any positions that would require the recording of any additional tax liability, nor does it believe that there are any unrealized tax benefits that would either increase or decrease within the next year.

Loss Per Share

The Company computes loss per share in accordance with ASC 260 – Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the consolidated statements of operations. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible notes payable using the if-converted method. Diluted EPS excludes all dilutive potential shares if their effect is antidilutive. During periods of net loss, all common stock equivalents are excluded from the diluted EPS calculation because they are antidilutive.

12

Securities that are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been antidilutive are:
SCHEDULE OF POTENTIALLY DILUTIVE SHARES

For the six months
ended
June 30, 2022

For the six months
ended
June 30, 2021

For the nine months
ended
September 30, 2022

For the nine months
ended
September 30, 2021

Options 3,850,000 2,900,000 3,850,000 2,900,000
Warrants 3,867,500 200,000 3,867,500 3,330,000
Total potentially dilutive shares 7,717,500 3,100,000 7,717,500 6,230,000

Concentration of Credit Risk

The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts through ~~June~~September 30, 2022.

Reclassification

Certain reclassifications have been made to prior year’s data to confirm to the current year’s presentation. Such reclassifications had no impact on the Company’s financial condition, operating results, cash flows or stockholders’ deficit.

Recent Accounting Pronouncements

Not Yet Adopted Accounting Standards:
In March of 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815), Fair Value Hedging - Portfolio Layer Method. The amendments in this Update amend the guidance in ASU 2017-12 relating to the “last-of-layer” method and rename the method as the “portfolio layer” method. It expands the scope of existing guidance so that entities can apply the portfolio layer method to portfolios of all financial assets, including both prepayable and non-prepayable financial assets. Additionally, the standard expands the current model to explicitly allow entities to designate multiple layers in a single portfolio as individual hedged items. This allows a larger portion of the interest rate risk associated with such a portfolio to be hedged. The Update is effective for fiscal years beginning after December 15, 2022, with early adoption permitted in any interim period after its issuance. The Company has not yet adopted this Update.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 provides guidance for estimating credit losses on certain types of financial instruments, including trade receivables, by introducing an approach based on expected losses. The expected loss approach will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. The guidance requires a modified retrospective transition method and early adoption is permitted. In November 2019, FASB issued ASU No. 2019-10, Financial Instruments – Credit Losses, Derivatives and Hedging, and Leases (“ASU 2019-10”), which defers the adoption of ASU 2016-13 for smaller reporting companies until periods beginning after December 15, 2022. The Company has not yet adopted ASU 2016-13 and will continue to evaluate the impact of ASU 2016-13 on its consolidated financial statements.

Adopted Accounting Standards:

In August 2020, the FASB issued ASU No. 2020-06 (“ASU 2020-06”) “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” ASU 2020-06 simplifies the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. In addition, ASU 2020-06 amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. The amendments also affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments. The amendments are effective for public entities excluding smaller reporting companies for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods. The Company adopted the new standard on January 1, 2022, which did not result in a material impact on the Company’s consolidated results of operations, financial position, and cash flows.

In February 2016, the FASB issued ASU 2016-02 (Topic 842), Leases, and issued subsequent amendments to the initial guidance or implementation guidance including ASU 2017-13, 2018-01, 2018-10, 2018-11, 2018-20 and 2019-01 (collectively, including ASU 2016-02, “ASC 842”), which supersedes the guidance in topic ASC 840, Leases. The new standard requires lessees to classify leases as either finance or operating based on whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether related expenses are recognized based on the effective interest method or on a straight-line basis over the term of the lease. For any leases with a term of greater than 12 months, ASU 2016-02 requires lessees to recognize a lease liability for the obligation to make the lease payments arising from a lease, and a right-of-use asset for the right to use the underlying asset for the lease term. An election can be made to account for leases with a term of 12 months or less similar to existing guidance for operating leases under ASC 840.

13

The new standard will also require new disclosures, including qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. For emerging growth companies such as the Company, ASU No. 2016-02 is effective for financial statements issued for fiscal years beginning after December 15, 2021. Early adoption is permitted.

The new standard will also require new disclosures, including qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. For public companies, the new standard is effective for interim and annual reporting periods beginning after December 15, 2018. The Company adopted the new standard on January 1, 2022, which did not result in a material impact on the Company’s consolidated results of operations, financial position, and cash flows, as the Company has no material leases.

~~In June 2016, the FASB issued ASU No. 2016-13,~~ ~~Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.~~ ASU 2016-13 provides guidance for estimating credit losses on certain types of financial instruments, including trade receivables, by introducing an approach based on expected losses. The expected loss approach will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. The guidance requires a modified retrospective transition method and early adoption is permitted. In November 2019, FASB issued ASU No. 2019-10, ~~Financial Instruments – Credit Losses, Derivatives and Hedging, and Leases~~ (“ASU 2019-10”), which defers the adoption of ASU 2016-13 for smaller reporting companies until periods beginning after December 15, 2022. The Company has not yet adopted ASU 2016-13 and will continue to evaluate the impact of ASU 2016-13 on its consolidated financial statements.
There were no other new accounting standards that had a material impact on the Company’s consolidated financial statements during the ~~six-month~~nine-month period ended ~~June~~September 30, 2022, and there were no other new accounting standards or pronouncements that were issued but not yet effective as of ~~June 20,~~September 30, 2022, that the Company expects to have a material impact on its consolidated financial statements.

NOTE 3 – ASSET PURCHASE AND TITLE TRANSFER

Emerald Grove Asset Purchase

On July 30, 2018, Jason Sunstein, the Chief Financial Officer, entered into a Residential Purchase Agreement) to acquire real property located in Hemet, California, which included approximately 80 acres of land and a structure for $1.1 million from an unrelated seller. The property includes the main parcel of land with an existing structure along with three additional parcels of land which are vacant plots to be used for the purpose of development “vacant plots”. The purpose of the transaction was as an investment in real property to be assigned to the Company subsequent to acquisition. The property was acquired by Mr. Sunstein since it was required that the seller transfer the property for consideration to an individual versus a separate legal entity. On March 18, 2019, Mr. Sunstein assigned the deed of the property to the Company. The total of the consideration plus acquisition costs assets of $1,122,050 was allocated to land and building in the following amounts: $271,225 – Land; $850,826 – Building. The land is an indefinite long-lived asset that was assessed for impairment as a grouped asset with the building on a periodic basis. The Company completed the refinancing of its existing first and second mortgage loans on the 80 acres of land and existing structure of its Emerald Grove property for aggregate principal amount of $1,787,000, which provided a net funding of approximately $387,000 during the first fiscal quarter of 2021.

On September 30, 2019, the Company entered into a contract for deed agreement with Integra Green whose principal is also a creditor. Under the agreement the Company agreed to the sale of 20 acres of vacant land and associated improvements located at the Emerald Grove property in Hemet, California for a total purchase price of $630,000. $63,000 was paid upon execution and the balance is payable in a balloon payment on October 1, 2026, with interest only payments of $3,780 due on the 1st of each month beginning April 1, 2020. During the duration of the agreement the Company retains title and is allowed to encumber the property with a mortgage at its discretion, however Integra Green has the right to use the property. The Company may also evict Integra Green from the premises in the case of default under the agreement.

During the year ended December 31, 2021, the Company received an additional $149,980 related to the purchase and recognized $496,797 of revenue related to the sale of 20 acres of vacant land and associated improvements located at the Emerald Grove property in Hemet, California, to ~~Integra Green.~~IntegraGreen.

During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company recognized $~~30,000~~45,000 of interest income from the financing component of the lot sale to ~~Integra green~~IntegraGreen as well as the coupon on the financed amount. Such amount is reported as revenue ~~and lease income~~ in the Company’s consolidated statement of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2022.

14

Oasis Park Title Transfer

On June 18, 2019, Baja Residents Club SA de CV (“BRC”), a related party with common ownership and control by our CEO, Robert Valdes, transferred title to the Company for the Oasis Park property which was part of a previously held land project consisting of 497 acres to be acquired and developed into Oasis Park resort near San Felipe, Baja. ILA recorded the property held for sale on its balance sheet in the amount of $670,000 and accordingly reduced the value as plots are sold. As of ~~June~~September 30, 2022, the Company reported a balance for assets held for sale of $647,399.

The Company transferred title to individual plots of land to the investors since the Company received this approval of change in transfer of title to ILA.

During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company did not enter into any new contract to sell plots of land.
On September 29, 2021, the Company entered into a house construction contract for total consideration of $99,000, of which $20,000 was funded as of December 31, 2021, and presented under Contract Liability in the consolidated balance sheets. During the nine months ended September 30, 2022, the customer funded additional amount of approximately $24,000, for total consideration paid of approximately $44,000 or 44% of the total consideration.

During the year ended December 31, 2021, the Company sold three (3) lots to an affiliate of a related party of the Company for a total purchase price of $120,000, of which $19,500 was funded as of December 31, 2021. The affiliate funded an additional $~~22,470~~33,970 in the ~~six~~nine months ended ~~June~~September 30, 2022, for aggregate amount funded since inception of $~~41,970~~53,470 or approximately ~~35%~~45% of the purchase price as of ~~June~~September 30, 2022. The amount funded was recorded and reported under contract liability in the Company’s consolidated ~~financial statements~~balance sheets as of ~~June~~September 30, 2022, as the collectability criterion for the existence of a contract was not deemed to be sufficiently satisfied to qualify for recognition of revenue pursuant to ASC 606.

NOTE 4 – LAND, BUILDING, NET AND CONSTRUCTION IN PROCESS

Land, buildings, net and construction in process as of ~~June~~September 30, 2022, and December 31, 2021:
SCHEDULE OF LAND, BUILDING, NET AND CONSTRUCTION IN PROCESS
Useful life
June 30,
2022

December 31,
2021
Useful life
September 30,
2022

December 31,
2021

Land – Emerald Grove $ 203,419 $ 203,419 $ 203,419 $ 203,419

Land held for sale – Oasis Park $ 647,399 $ 647,399 $ 647,399 $ 647,399

Construction in Process (Divino – Bajamar) $ 1,168,355 $ 852,020 $ 1,296,555 $ 852,020

Furniture & equipment 5 years $ 2,146 $ 2,682 5 years $ 2,012 $ 2,682

Building – Emerald Grove 20 years $ 1,048,138 $ 1,048,138 20 years $ 1,048,138 $ 1,048,138
Less: Accumulated depreciation (158,190 ) (132,254 ) (171,291 ) (132,254 )

Building, net $ 889,948 $ 915,884 $ 876,847 $ 915,884

Depreciation expense was $~~26,472~~39,708 and $~~23,387~~35,311 for the ~~six~~nine months ended ~~June~~September 30, 2022, and 2021, respectively.

Valle Divino

The Valle Divino is the Company’s premier wine country development project in Ensenada, Baja California. This land project consists of 20 acres to be acquired from Baja Residents Club, a Company controlled by our Chief Executive Officer and developed into Valle Divino resort. The acquisition of title to the land for this project is subject to approval from the Mexican government in Baja, California. The Company broke ground of the Valle Divino development in July 2020 and has commenced site preparation for two model homes including a 1-bedroom and 2- bedroom option. The first Phase of the development includes 187 homes. This development will also have innovative microgrid solutions by our partner to power the model home and amenities.

The Company funded the construction by an additional $97,000 during the ~~six~~nine months ended ~~June~~September 30, 2022. The construction contractor is also an entity controlled by our Chief Executive Officer. Construction began during the year ended December 31, 2020. The total of construction in process for Valle Divino was $453,275 and $356,275 as of ~~June~~September 30, 2022, and December 31, 2021, respectively.

15

As of ~~June~~September 30, 2022, the Company almost completed construction of the club house, the wine tasting room and sales office in anticipation of beginning site tours. As of ~~June~~September 30, 2022, the Company has presold 1314 units, proceeds of which were recorded under contract liability in the Company’s consolidated financial statements, since the Company has not met the criteria for the existence of a contract pursuant to ASC 606.

Plaza Bajamar

This project is located within the internationally renowned Bajamar Ocean Front Hotel and golf resort. The Company partnered with Clean Spark to provide sustainable, advanced solar-plus-storage power solutions. The Company has completed a 2BR/2BA model home, an enhanced entrance, and interior roads as well as site preparation for four (4) new homes adjacent to the model home. The Company is moving to the next stage, which will provide all units in the property with solar microgrid installations.

In November and December 2019, $250,000 was paid to the Company’s Chief Executive Officer, Roberto Valdes, $150,000 for constructing of two model Villas at our planned Plaza Bajamar development. The Company has not yet taken title to this property, which is currently owned by Valdeland, S.A. de C.V., an entity controlled by Roberto Valdes. The Company intends to purchase the land from this entity and has paid $100,000 to Roberto Valdes as a down payment for this purchase. The $150,000 is the total construction cost budget that is intended to cover the construction contractor. For the year ended December 31, 2020, the Company has issued the 250,000 shares of the Company’s common stock for total amount of $150,000 reported under Prepaid and other current assets in the consolidated balance sheets.

The Company funded the construction by an additional $~~189,300~~305,500 during the ~~six~~nine months ended ~~June~~September 30, 2022. The construction contractor is also an entity controlled by Roberto Valdes. Construction began during the year ended December 31, 2020. The balance of construction in process for Plaza Bajamar totaled $~~608,447~~724,647 and $419,147 as of ~~June~~September 30, 2022, and December 31, 2021, respectively.

During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company sold ~~six (6)~~seven (7) house construction for total consideration of $~~1.4~~1.6 million, of which $~~181,300~~282,570 was funded as of ~~June~~September 30, 2022. The funded amount was reported under contract liability in the consolidated balance sheet as of ~~June~~September 30, 2022.

NOTE 5 – RELATED PARTY TRANSACTIONS

Chief Executive Officer – Roberto Valdes

Effective January 1, 2020, the Company executed an employment agreement with its Chief Executive Officer.

The Company has paid $~~11,561~~16,561 of salary to its Chief Executive Officer for the ~~six~~nine months ended ~~June~~September 30, 2022. The Company has accrued $~~66,076~~99,114 of compensation costs in relation to the employment agreement for the ~~six~~nine months ended ~~June~~September 30, 2022. The balance owed is $~~319,978~~348,016 and $265,463 as of ~~June~~September 30, 2022, and December 31, 2021, respectively.

On October 2, 2021, the Company issued 500,000 stock options under the 2019 Plan with an exercise price of $0.50, vesting six months after issuance with a term of 5 years for estimated fair value of $270,000. These options have fully vested as of ~~June~~September 30, 2022. The Company recognized approximately $135,000 of stock-based compensation related to these stock options during the ~~six~~nine months ended ~~June~~September 30, 2022.

Chief Financial Officer – Jason Sunstein

Effective January 1, 2020, the Company executed an employment agreement with its Chief Financial Officer.

The Company paid its Chief Financial Officer salary compensation for services directly related to continued operations of $20,000 for the ~~six~~nine months ended ~~June~~September 30, 2022. The Company has accrued $~~66,076~~99,114 of compensation cost in relation to the employment agreement for the ~~six~~nine months ended ~~June~~September 30, 2022. The balance owed is $~~220,281~~253,319 and $174,205 as of ~~June~~September 30, 2022, and December 31, 2021, respectively.

16

On October 2, 2021, the Company issued 500,000 stock options under the 2019 Plan with an exercise price of $0.50, vesting six months after issuance with a term of 5 years for estimated fair value of $270,000. These options have fully vested as of ~~June~~September 30, 2022. The Company recognized approximately $135,000 of stock-based compensation related to these stock options during the ~~six~~nine months ended ~~June~~September 30, 2022.

The Company’s Chief Financial Officer is also the managing member of Six Twenty Management LLC, an entity that has been providing ongoing capital support to the Company (See Note 7).

The Company’s Chief Financial Officer also facilitated the Emerald Grove asset purchase as described in Note 3.

President – Frank Ingrande

In May 2021, the Company executed an employment agreement with its President. The Company paid its President, a total amount of compensation of $20,000 for the ~~six~~nine months ended ~~June~~September 30, 2022. The Company has accrued $~~66,076~~99,114 of compensation cost in relation to the employment agreement for the ~~six~~nine months ended ~~June~~September 30, 2022. The balance owed is $~~107,807~~140,845 and $61,731 as of ~~June~~September 30, 2022, and December 31, 2021, respectively.

Frank Ingrande is the co-founder and owner of ~~25%~~25% of the Company’s equity-method investee RCVD.

NOTE 6 – PROMISSORY NOTES ~~PAYABLE~~

Promissory notes consisted of the following at ~~June~~September 30, 2022, and December 31, 2021:
SCHEDULE OF PROMISSORY NOTES
June 30,
2022 December 31,
2021
Cash Call Note payable, due August 2020 - past maturity/settled $ 24,785 $ 24,785
Christopher Elder Note payable, 18% interest, due March 2020 - past maturity 1,500 1,500
Christopher Elder Note Payable, 15% interest, due March 2021 - past maturity 76,477 76,477
Redwood Trust Note payable, 12% interest, due February 2023 1,787,000 1,787,000
Sixth Street Lending Note payable, 10% interest, due February 2023 69,720 -
Mast Hill Note payable, 12% interest, due March 2023 250,000 -
Blue Lake Note payable, 12% interest, due March 2023 250,000 -
Total Notes Payable $ 2,459,482 $ 1,889,762
Less discounts (362,166 ) (51,462 )

Total Notes Payable 2,097,316 1,838,300

Less current portion (2,097,316 ) (102,762 )

Total Notes Payable - long term $ - $ 1,735,538
September 30,
2022 December 31,
2021
Cash Call note payable, due August 2020 - past maturity $ 24,785 $ 24,785
Cash Call note payable, due August 2020 - past maturity $ 24,785 $ 24,785
Christopher Elder note payable, 18% interest, due March 2020 - past maturity 1,500 1,500
Christopher Elder note Payable, 15% interest, due March 2021 - past maturity 76,477 76,477
Redwood Trust note payable, 12% interest, due February 2023 1,787,000 1,787,000
Sixth Street Lending note payable, 10% interest, due February 2023 34,860 -
1800 Diagonal note payable, 9% coupon, due July and September 2023 149,250 -
Mast Hill note payable, 12% interest, due March 2023 – In default 250,000 -
Blue Lake note payable, 12% interest, due March 2023 – In default 250,000 -
Total Notes Payable $ 2,573,872 $ 1,889,762
Less discounts (364,974 ) (51,462 )

Total Promissory notes 2,208,898 1,838,300

Less current portion (2,208,898 ) (102,762 )

Total Promissory notes - non-current $ - $ 1,735,538
17

~~Interest expense including amortization~~Accrued interest was approximately $90,500 and $48,600 as of September 30, 2022, and December 31, 2021.
Amortization of the associated debt discount for the ~~six~~nine months ended ~~June~~September 30, 2022, and 2021, was $~~178,355~~291,374 and $~~136,975~~284,616, respectively.

Redwood Trust

On January 21, 2021, the Company refinanced its existing first and second mortgage loans on the 80 acres of land and the structure located at Sycamore Road in Hemet, California for aggregate amount of $1,787,000, carrying coupon at twelve (12) percent, payable in monthly interest installments of $17,870 starting on September 1st, 2021, and continuing monthly thereafter until maturity on February 1st, 2023, at which time all sums of principal and interest then remaining unpaid shall be due and payable. The balloon payment promissory note is secured by deed of trust. Upon execution, the Company paid $53,610 of loan origination fees, presented as debt discount in the consolidated balance sheets, and prepaid six (6) months of interest only installments totaling $107,220, presented as Prepaid and other current assets in the consolidated balance sheets. The total amount of prepaid interest has been fully recognized as interest expense during the year ended December 31, 2021. The refinanced amount paid off the first and second mortgage loans with a net funding to the Company of approximately $387,000, net of finders’ fees. There has been no repayment of principal during the ~~six~~nine months ended ~~June~~September 30, 2022. The Company paid an aggregate amount of approximately $~~71,480~~125,100 in interest, of which approximately $35,700 was paid by related party, and the balance of accrued interest amounts to approximately $~~36,520~~36,900 as of ~~June~~September 30, 2022.
Promissory Notes

Cash Call, Inc.

On March 19, 2018, the Company issued a promissory note to Cash Call, Inc. for $75,000 of cash consideration. The note bears interest at ~~94%~~94%, matures on August 1, 2020. The Company also recorded a $7,500 debt discount due to origination fees due at the beginning of the note. On December 12, 2019, the loan and outstanding interest was settled for $52,493. As a result of the settlement, the Company recorded a gain on settlement of debt of $64,075 for the year ended December 31, 2019. The Company has not paid any principal during the ~~six~~nine months ended ~~June~~September 30, 2022. As of ~~June~~September 30, 2020, and December 31, 2021, the remaining principal balance was $24,785. The Company has not incurred any interest expense related to this promissory note during the ~~six~~nine months ended ~~June~~September 30, 2022.

Convertible Notes

Sixth Street Lending LLC

On February 2, 2022, the Company issued a convertible promissory note pursuant to which it borrowed gross proceeds of $~~116,200~~$116,200 for net proceeds of $100,000, net of issuance costs of $3,750 and original issuance discount of $12,450. Interest under the convertible promissory note is ~~10%~~10% per year, and the principal and all accrued but unpaid interest is due on February 2, 2023. The note requires ten (10) mandatory monthly installments of $12,782 (based on guaranteed twelve-month coupon) starting in March 2022.

17
The note is convertible upon an event of default at the noteholder’s option into shares of our common stock at the greater of a fixed conversion price or ~~25%~~25% discount to the trading price of the Company’s common stock, subject to standard anti-dilutive rights.

During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company paid its ~~four~~ required monthly installments for aggregate amount of $~~51,128~~89,474, consisting of $~~46,480~~81,340 of principal and $~~4,648~~8,134 applied against accrued interest.

The balance owed to Sixth Street Lending LLC is $~~69,720~~34,860 as of ~~June~~September 30, 2022. Accrued interest is immaterial as of ~~June~~September 30, 2022.

Mast Hill Fund, L.P (“Mast note”)

On March 23, 2022, the Company issued a convertible promissory note pursuant to which it borrowed gross proceeds of $250,000 for net proceeds of $211,250, net of issuance costs of $13,750 and original issuance discount of $25,000. Interest under the convertible promissory note is ~~12%~~12% per year, and the principal and all accrued but unpaid interest is due on March 23, 2023. The note requires eight (8) mandatory monthly installments of $35,000 starting in July 2022. Additionally, as an incentive to the note holder, the securities purchase agreement also provided for the issuance of 225,000 shares of common stock with fair value of approximately $101,000 fully earned at issuance, and 343,750 warrants to purchase an equivalent number of shares of common stock at an exercise price of $0.80 and a term of five years.
The note is convertible upon an event of default at the noteholder’s option into shares of our common stock at a fixed conversion price of $0.35, subject to standard anti-dilutive rights. With the issuance of a variable rate transaction with any new investor, the conversion price of the convertible debt and the strike price of the warrants will be adjusted down to the effective conversion price.

During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company did not pay any principal or interest on the Mast note. During the nine months ended September 30, 2022, the Company was able to extend the required amortization payment at three instances, pursuant to the terms of the underlying agreement, for total penalty paid of $10,500
. The principal balance owed to Mast Hill Fund is $250,000 as of ~~June~~September 30, 2022. Accrued interest totaled approximately $~~8,000~~15,400 as of ~~June~~September 30, 2022.

18
The Company is in technical default of the note since the Company (i) consummates a variable rate transaction with another lender and (ii) failed to make the required installment payment as required under the terms of the agreement. The Company has not yet received any default notice from the investor. Upon event of default, the Company is required to pay the outstanding principal plus accrued interest and a default penalty which is equal to 25% of the principal and accrued interest. As of December 31, 2022, the Company accrued $66,300 as default penalty, which is presented in other expense in the consolidated statement of operations.
Blue Lake Partners LLC (“Blue Lake note”)

On March 28, 2022, the Company issued a convertible promissory note pursuant to which it borrowed gross proceeds of $250,000 for net proceeds of $211,250, net of issuance costs of $13,750 and original issuance discount of $25,000. Interest under the convertible promissory note is ~~12%~~12% per year, and the principal and all accrued but unpaid interest is due on March 28, 2023. The note requires eight (8) mandatory monthly installments of $35,000 starting in July 2022. Additionally, as an incentive to the note holder, the securities purchase agreement provided for the issuance of 225,000 shares of common stock with fair value of approximately $101,000 fully earned at issuance, and 343,750 warrants for the purchase of an equivalent number of shares of common stock at an exercise price of $0.80 and a term of five years.

The note is convertible upon an event of default at the noteholder’s option into shares of our common stock at a fixed conversion price of $0.35, subject to standard anti-dilutive rights. With the issuance of a variable rate transaction with any new investor, the conversion price of the convertible debt and the strike price of the warrants will be adjusted down to the new effective conversion price.

During the ~~three~~nine months ended ~~June~~September 30, 2022, the Company did not pay any principal or interest on the Blue Lake note. The principal balance owed to Blue Lake Partners is $250,000 as of ~~June~~September 30, 2022. Accrued interest totaled approximately $~~7,600~~15,400 as of ~~June~~September 30, 2022.
The Company is in technical default of the note since the Company (i) consummates a variable rate transaction with another lender and (ii) failed to make the required installment payment as required under the terms of the agreement. The Company has not yet received any default notice from the investor. Upon event of default, the Company is required to pay the outstanding principal plus accrued interest and a default penalty which is equal to 25% of the principal and accrued interest. As of December 31, 2022, the Company accrued $66,300 as default penalty, which is presented in other expense in the consolidated statement of operations.
1800 Diagonal Lending Inc. (“Diagonal note”)
On July 28, 2022, the Company issued a convertible promissory note pursuant to which it borrowed gross proceeds of $85,000 for net proceeds of $80,750, net of issuance costs of $4,250. Interest under the convertible promissory note is 9% per year, and the principal and all accrued but unpaid interest is due on July 28, 2023. At any time from issuance, the note is convertible into shares of our common stock at 65% to the market price. The note includes a prepayment feature at a premium of 25% from the issuance date and up to 180 days.
On September 2, 2022, the Company issued a convertible promissory note pursuant to which it borrowed gross proceeds of $64,250 for net proceeds of $60,000, net of issuance costs of $4,250. Interest under the convertible promissory note is 9% per year, and the principal and all accrued but unpaid interest is due on September 2, 2023. At any time from issuance, the note is convertible into shares of our common stock at 65% to the market price. The note includes a prepayment feature at a premium of 25% from the issuance date and up to 180 days.
During the nine months ended September 30, 2022, the Company did not pay any principal or interest on the Diagonal note. The principal balance owed to Diagonal is $149,250 as of September 30, 2022. Accrued interest totaled approximately $1,790 as of September 30, 2022.

NOTE 7 – PROMISSORY NOTES – RELATED ~~PARTIES~~PARTY

Related party promissory notes consisted of the following at ~~June~~September 30, 2022, and December 31, 2021:
SCHEDULE OF RELATED PARTY TRANSACTIONS
June 30,
2022 December 31,
2021 September 30,
2022 December 31,
2021
RAS Real Estate LLC – Past maturity $ 249,589 $ 365,590 $ 249,589 $ 365,590
Six-Twenty Management LLC – On demand 674,083 447,317 968,541 447,317
Lisa Landau – On demand 62,774 22,077 80,750 22,077
Total On demand notes, net of discount $ 986,446 $ 834,984 $ 1,298,880 $ 834,984

18
Six Twenty Management LLC (“Six-Twenty”) – Manager is the Company’s Chief Financial Officer

On March 31, 2021, the Company executed a non-convertible promissory note with a related party for an initial amount funded of $288,611 and carrying a coupon of eight percent (8%8%) and a maturity of twelve months. This non-convertible promissory note was converted into an on demand note without scheduled maturity.

19
During the ~~six~~nine months ended ~~June~~September 30, 2022, Six-Twenty funded the Company for additional cash of $~~274,140~~618,445.

During the ~~six~~nine months ended ~~June 30,~~September30, 2022, the Company paid $~~47,374~~99,831 in cash towards the non-convertible promissory note.

As of ~~June~~September 30, 2022, the balance owed to Six-Twenty totals $~~674,083~~968,541 and accrued interest amounts to approximately $~~48,700~~67,800. As of December 31, 2021, the balance owed to Six-Twenty totals $447,317 and accrued interest amounts to $24,354.

RAS, LLC (past maturity)

On October 25, 2019, the Company issued a promissory note to RAS, LLC, a company controlled by an employee, who is a relative of the Company’s Chief Financial Officer for $440,803. The proceeds of the note were largely used to repay shareholders’ loans and other liabilities. The loan bears interest at ~~10%~~10%, and also carries a default coupon rate of ~~18%~~18%. The loan matured on April 25, 2020, is secured by 2,500,000 common shares and a Second Deed of Trust for property in Hemet, CA (Emerald Grove). During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company paid $116,000 towards the promissory note. The outstanding balance is $249,589 and $365,590 as of ~~June~~September 30, 2022, and December 31, 2021, respectively.

During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company paid $17,600 in interest and incurred approximately $~~26,000~~37,000 of interest based on the default coupon rate of ~~18%~~18%. As of ~~June~~September 30, 2022, and December 31, 2021, the accrued interest balance owed to RAS, LLC totals approximately $~~23,600~~34,700 and $15,200, respectively.

Lisa Landau

Lisa Landau is a relative of the Company’s Chief Financial Officer. Lisa Landau advanced approximately $~~40,900~~58,900 to the Company and directly paid corporate expenses for aggregate amount of $~~28,665~~46,535 during the ~~six~~nine months ended ~~June~~September 30, 2022. The Company repaid $~~28,870~~46,765 in cash during the ~~six~~nine months ended ~~June~~September 30, 2022, which leaves a principal balance of approximately $~~62,774~~80,750 as of ~~June~~September 30, 2022. The advances are on demand but do not bear any interest.

NOTE 8 – EQUITY METHOD INVESTMENT

In May 2021, the Company acquired a ~~25%~~25% investment in Rancho Costa Verde Development, LLC (“RCV”) in exchange for 3,000,000 shares of the Company’s common stock at a determined fair value of $0.86 per share and $100,000 in cash for total consideration of $2,680,000. The fair value of the non-monetary exchange was determined based on a valuation report obtained from an independent third-party valuation firm. The fair value of the Company’s common stock was determined based on weighted combination of market approach and asset approach. The market approach estimates fair value based on a weighted average between the listed price of the Company’s common shares and the Company’s recent private transaction adjusted for a lack of marketability discount.

The investment has been accounted for under the equity method. It was determined that the Company does not have the power to direct the activities that most significantly impact RCV’s economic performance, and therefore, the Company is not the primary beneficiary of RCV and RCV has not been consolidated under the variable interest model.

The investment was initially recorded at cost, which was determined to be $2,680,000.

1920

The following represents summarized financial information of RCV as of and for the ~~six~~nine months ended ~~June~~September 30, 2022:
SUMMARIZED FINANCIAL INFORMATION OF RCVD
Income statement June 30, 2022 September 30, 2022
Revenue $ 936,497 $ 1,975,303
Cost of goods sold (546,262 ) (1,006,210 )
Gross margin 390,235 969,093
Operating expenses (813,386 ) (1,405,504 )
Other Expense (305,223 ) (490,968 )
Net loss $ (728,374 ) $ (927,379 )

Balance sheet
Current assets $ 2,540,698 $ 2,385,458
Non-current assets $ 4,769,524 $ 4,683,273
Current liabilities $ 10,494,874 $ 10,379,269
Non-Current liabilities $ 5,621,352 $ 5,694,471

Based on its ~~25%~~25% equity investment, the Company has recorded a loss from equity investment of $~~182,093~~231,845 for the ~~six~~nine months ended ~~June~~September 30, 2022, which has decreased the carrying value of the investment as of ~~June~~September 30, 2022, to $~~2,329,737~~2,279,985.

NOTE 9 – COMMITMENTS AND CONTINGENCIES

Commitment to Purchase Land (Valle Divino)

The land project consisting of 20 acres to be acquired from Baja Residents Club (a Company controlled by our CEO Roberto Valdes) and developed into Valle Divino resort in Ensenada, Baja California, the acquisition of title to the land for this project is subject to approval from the Mexican government in Baja, ~~California.~~California. Although management believes that the transfer of title to the land will be approved before the end of the Company’s ~~third~~fourth fiscal quarter of 2022, there is no assurance that such transfer of title will be approved in that time frame or at all. The Company has promised to transfer title to the plots of land to the investors who have invested in the Company once the Company receives an approval of change in transfer of title to the Company. As of ~~June~~September 30, 2022, and December 31, 2021, the Company has entered into ~~thirteen (13)~~fourteen (14) contracts for deed agreements to sell lots of land. The proceeds are presented under contract liability in the consolidated balance sheets as of ~~June~~September 30, 2022, and December 31, 2021.

Land purchase- Plaza Bajamar.

On September 25, 2019, the Company, entered into a definitive Land Purchase Agreement with Valdeland, S.A. de C.V., a Company controlled by our CEO Roberto Valdes, to acquire approximately one acre of land with plans and permits to build 34 units at the Bajamar Ocean Front Golf Resort located in Ensenada, Baja California. Pursuant to the terms of the agreement, the total purchase price is $1,000,000, payable in a combination of preferred stock ($600,000); common stock ($250,000/250,000 common shares at $1.00/share); a promissory note ($150,000); and an initial construction budget of $150,000 payable upon closing. A recent appraisal valued the land “as is” for $1,150,000. The closing is subject to obtaining the necessary approval by the City of Ensenada and transfer of title, which includes the formation of a wholly owned Mexican subsidiary. As of ~~June~~September 30, 2022, and December 31, 2021, the agreement has not yet closed.

Commitment to Sell Land (IntegraGreen)

On September 30, 2019, the Company entered into a contract for deed agreement with IntegraGreen whose principal is also a creditor. Under the agreement the Company agreed to the sale of 20 acres of vacant land and associated improvements located at the Emerald Grove property in Hemet, California for a total purchase price of $630,000. $63,000 was paid upon execution and the balance is payable in a balloon payment on October 1, 2026, with interest only payments of $3,780 due on the 1st of each month beginning April 1, 2020. During the duration of the agreement the Company retains title and is allowed to encumber the property with a mortgage at its discretion, however IntegraGreen has the right to use the property. The Company may also evict IntegraGreen from the premises in the case of default under the agreement.

Due to the nature of the agreement, the Company’s management deemed that there was an embedded lease feature in the agreement in accordance with ASC 842. As a result, the initial payment of $63,000 was classified as a deposit. Upon an event of default, the payment is non-refundable, and the Company no longer has any obligation to provide access to the land. The interest payments will be recognized monthly as lease income. During the ~~six~~nine months ended ~~June~~September 30, 2022, and 2021, the Company recognized $0 and $~~17,559~~25,900 in lease income, respectively.

2021

Effective on October 1, 2021, management determined that the agreement met the definition of a contract pursuant to the guidance in ASU 2014-09 Revenue from Contracts with Customers (Topic 606). During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company recognized $~~16,680~~25,020 of interest income related to the seller carryback financing and approximately $~~13,320~~19,980 as interest income related to the financing component of the consideration exchange pursuant to ASU 2014-09. As of September 30, 2022, the principal owed by IntegraGreen is $417,020.

Oasis Park Resort construction budget

During the year ended December 31, 2021, the Company engaged a general contractor to complete phase I of the project including the two-mile access road and the community entrance structure. The contractor also commenced phase II construction including the waterfront clubhouse, casitas, , and model homes. The total budget was established at approximately $~~512,000~~642,000, of which approximately $~~106,600~~118,600 has been paid, leaving a firm commitment of approximately $~~405,400~~523,400 as of ~~June~~September 30, 2022.

Litigation Costs and Contingencies

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business. Management is currently not aware of any such legal proceedings or claims that could have, individually or in the aggregate, a material adverse effect on our business, financial condition, or operating results.

NOTE 10 – STOCKHOLDERS’ EQUITY

The Company’s equity at ~~June~~September 30, 2022, consisted of 150,000,000 authorized shares of common stock and 2,000,000 authorized shares of preferred stock, both with a par value of $0.001 per share. As of ~~June~~September 30, 2022, and December 31, 2021, there were ~~36,138,029~~36,471,365 and 31,849,327 shares of common stock issued and outstanding, respectively. As of ~~June~~September 30, 2022, and December 31, 2021, 28,000 shares of Series A Preferred Stock were issued and outstanding and 1,000 shares of Series B Preferred Stock were issued and outstanding, respectively.

On October 14, 2021, the Board of Directors approved an amendment to the Company’s articles of incorporation to increase the Company’s authorized common stock from 75,000,000 shares to 150,000,000 and to carry out a reverse split in a ratio of not less than 1 for 2 and not more than 1 for 12. The Company has not yet initiated any reverse split as of ~~June~~September 30, 2022.

The Company has reserved a total of 3,000,000 shares of the authorized common stock for issuance under the 2020 Equity Incentive Plan (the “2020 Plan”). During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company has granted 1,300,000 options under the 2020 Plan and 1,300,000 options were exercised, leaving a balance of 1,700,000 options issued and outstanding as of ~~June~~September 30, 2022.

On February 11, 2019, the Company’s Board of Directors approved a 2019 Equity Incentive Plan (the “2019 Plan”). In order for the 2019 Plan to grant “qualified stock options” to employees, it required approval by the Company’s shareholders within 12 months from the date of the 2019 Plan. The 2019 Plan was never approved by the shareholders. Therefore, any options granted under the 2019 Plan will be “non-qualified”. Pursuant to the 2019 Plan, the Company has reserved a total of 3,000,000 shares of the Company’s common stock to be available under the 2019 Plan. No options under the 2019 Plan were issued, cancelled, forfeited, or exercised during the three and ~~six~~nine months ended ~~June~~September 30, 2022. The Company has 2,150,000 options issued and outstanding under the 2019 Plan as of ~~June~~September 30, 2022, and December 31, 2021.

All shares of common stock issued during the three and ~~six~~nine months ended ~~June~~September 30, 2022, and 2021, were unregistered.

2122

Activity during the ~~six~~nine months ended ~~June~~September 30, 2022

During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company issued an aggregate of 450,000 commitment shares pursuant to securities purchase agreements with two accredited investors ~~(See~~(see note 6) for a total fair value of approximately $202,000.

During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company issued 1,300,000 shares of common stock from option exercise for total cash consideration of $1,300.

During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company issued ~~2,449,714~~2,783,050 shares of common stock pursuant to consulting agreements for total fair value of approximately $~~1,177,163~~1,310,497.

During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company issued 88,988 shares of common stock pursuant to a finders’ fee agreement with respect to the financing in the Company’s first fiscal quarter for total fair value of approximately $40,490.

Activity during the ~~six~~nine months ended ~~June~~September 30, 2021

During the ~~six~~nine months ended ~~June~~September 30, 2021, the Company issued 350,000 shares pursuant to consulting and employment agreement valued at $478,000
During the nine months ended September 30, 2021, the Company received cash of $65,000 for ~~140,000~~500,000 shares of common stock.

During the ~~six~~nine months ended ~~June 30, 2021, the Company issued~~ ~~200,000~~ ~~shares per a consulting agreement valued at $280,000~~.
~~During the six months ended June 30, 2021, the Company issued~~ ~~50,000~~ ~~shares to the Company’s President in accordance with an executed employment agreement valued at $66,000~~.
~~During the six months ended June 30, 2021, the Company issued an aggregate of~~ ~~100,000~~ ~~shares to two consultants in accordance with executed consulting and real estate sales agreements valued at $132,000~~.
~~During the six months ended June 30, 2021, the Company issued~~ ~~45,946~~ ~~shares per advisory agreement with registered broker-dealer valued at $61,108~~.
~~During the six months ended June~~September 30, 2021, the Company issued 160,000 shares of common stock for total consideration of $50,000 from warrants exercise.

During the ~~six~~nine months ended ~~June~~September 30, 2021, the Company issued 1,000,000 shares of common stock from option exercise for total consideration of $50,000.

~~On December 8, 2020,~~During the nine months ended September 30, 2021, the Company ~~received cash proceeds of $~~issued ~~20,000~~ ~~for~~ ~~50,000~~170,000 shares of common stock along with plots of land to ~~be issued to a third-party investor. In conjunction with this sale of shares, the Company also attached one (1) plot of land. The~~investors for total cash ~~proceeds~~consideration of $~~20,000~~85,000 ~~was allocated based upon the relative fair value of the shares and one (1) promised plot of land in the following amounts: shares were valued at $11,890; and plot of land was valued at $8,110. The shares were issued during the six months ended June 30, 2021.~~

~~On December 31, 2020,~~During the nine months ended September 30, 2021, the Company ~~received cash proceeds of $~~issued ~~30,000~~ ~~for~~ ~~50,000~~45,946 shares ~~of common stock to be issued to a third-party investor. In conjunction~~per advisory agreement with ~~this sale of shares, the Company also attached one (1) plot of land. The total cash proceeds of $30,000~~ ~~was allocated based upon the relative fair value of the shares and one (1) promised plot of land in the following amounts: shares were~~registered broker-dealer valued at $~~20,622; and plot of land was valued at $9,378. The shares were issued during the six months ended June 30, 2021.~~
~~On April 22, 2021, the Company received cash proceeds of $35,000~~ ~~for~~ ~~70,000~~ ~~shares of common stock to be issued to a third-party investor. In conjunction with this sale of shares, the Company also attached one (1) plot of land. The total cash proceeds of $35,000~~ ~~was allocated based upon the relative fair value of the shares and one (1) promised plot of land in the following amounts: shares were valued at $29,521; and plot of land was valued at $5,479~~61,108.

~~In December 31, 2020,~~During the ~~Company executed amendments to promissory notes with six (6) existing investors to extend the maturity date for the issuance of an aggregate of~~ ~~23,000~~ ~~shares of common stock with a fair value of approximately $10,000. These shares were issued on January 1, 2021.~~
~~On January 1,~~nine months ended September 30, 2021, the Company issued ~~an aggregate of~~ ~~95,000~~261,000 shares of common stock in conjunction with ~~previously executed~~existing promissory ~~notes. These shares were previously recorded as stock payable for aggregate fair value of approximately $75,600~~.notes and senior secured convertible notes

~~On January 1, 2021,~~During the ~~Company issued an aggregate of~~ ~~23,000~~ ~~shares of common stock in conjunction with executed amendments to previously executed promissory notes. These shares were issued with an estimated fair value of $8,970~~.
~~On February 25, 2021, the Company issued~~ ~~85,000~~ ~~shares of common stock as commitment shares in accordance with the terms of one of its senior secured self-amortization convertible note with aggregate fair value of $130,900~~.
~~On May 14,~~nine months ended September 30, 2021, the Company issued 3,000,000 shares of common stock with a fair value of $2,580,000 for the acquisition of ~~25%~~25% of the membership interest of Rancho Costa Verde Development.

On July 26, 2021, the Company entered into securities purchase agreements with certain institutional and accredited investors for the issuance and sale of 3,000,000 shares of the Company’s common stock at a closing price of $0.68 per share. The issuance also includes an equivalent number of warrants convertible into an equivalent number of the Company’s common stock at a strike price of $0.68. The gross proceeds of the financing were $2,040,000 and the net proceeds were approximately $1,800,000
2223

Preferred Stock

On November 6, 2019, the Company authorized and issued 1,000 shares of Series B Preferred Stock (“Series B”) and 350,000 shares of common stock to CleanSpark Inc. in a private equity offering for $500,000. Management determined that the Series B should not be classified as liability per the guidance in ASC 480 Distinguishing Liabilities from Equity as of ~~June~~September 30, 2022, even though the conversion would require the issuance of variable number of shares since such obligation is not unconditional. As of ~~June~~September 30, 2022, and December 31, 2021, management recorded the value attributable to the Series B of $293,500 as temporary equity on the consolidated balance sheets since the instrument is contingently redeemable at the option of the holder. The Company recognized the beneficial conversion feature (“BCF”) that arises from a contingent conversion feature, since the instrument reached maturity during the year ended December 31, 2020. The Company recognized such BCF as a discount on the convertible preferred stock. The amortization of the discount created by a BCF recognized as a result of the resolution of the contingency is treated as a deemed dividend that reduced net income in arriving at income available to common stockholders. The holder can convert the Series B into shares of common stock at a discount of ~~35%~~35% to the market price.

The terms and conditions of the Series B include an in-kind accrual feature, which provides for a cumulative accrual at a rate of ~~12%~~12% per year of the face amount of the Series B. The Company has recognized $~~30,000~~45,000 of dividend on Series B during the ~~six~~nine months ended ~~June~~September 30, 2022. Such amount has been reported in Additional Paid In Capital on the Company’s consolidated balance sheets.

The Securities Purchase Agreement (“SPA”) states that the in-kind accrual rate should be increased by10% per year upon each occurrence of an event of default. In addition, the SPA further states that the conversion price initially set at a discount of 35% to the market price should be further increased by additional 10% upon each occurrence of an event of default. At the date of this Quarterly Report, the holder of the Series B Preferred Stock, CleanSpark, claims that the Company was in default in three instances triggering further discount to the market price for the conversion feature and additional accrual rate. The Company believes that it has never been in default of any covenant pursuant to the terms of the Securities Purchase Agreement. The Company has not been served with any notice of default stating the specific default events. As of the date of the filing of this Quarterly Report, the parties are cooperating to resolve this matter.

The Company did not issue any share of preferred stock during the ~~six~~nine months ended ~~June~~September 30, 2022.

Warrants

A summary of the Company’s warrant activity during the ~~six~~nine months ended ~~June~~September 30, 2022, is presented below:
SCHEDULE OF WARRANTS ACTIVITY
Weighted
Weighted
Average
Remaining
Contract
Weighted
Weighted
Average
Remaining
Contract

Number of
Warrants

Average
Exercise Price

Term
(Year)

Number of
Warrants

Average
Exercise Price

Term
(Year)

Outstanding at December 31, 2021 3,180,000 $ 0.69 5.08 3,180,000 $ 0.69 5.08
Granted 687,500 0.80 4.74 687,500 0.80 4.49
Exercised - - - - - -
Forfeited-Canceled - - - - - -
Outstanding at June 30, 2022 3,867,500 $ 0.71 4.61
Outstanding at September 30, 2022 3,867,500 $ 0.71 4.36

Exercisable at June 30, 2022 3,867,500
Exercisable at September 30, 2022 3,867,500
24

During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company issued 687,500 warrants, convertible into an equivalent number of shares of common stock, following the issuance of two (2) convertible promissory notes to two accredited investors ~~(note~~(see note 6).

The warrants have an exercise price of $0.80 per share ~~provided that if the Company consummates an up listing offering on or before June 28, 2022, the exercise price will equal~~ ~~125%~~ ~~of the offering price per share of common stock,~~and are immediately exercisable ~~and expire five and~~with a ~~half years~~five-year term from ~~the~~ issuance date. These warrants include an anti-dilution provision.

The aggregate intrinsic value as of ~~June~~September 30, 2022, and December 31, 2021, was $0.
23

The Company used the following assumptions to value the warrants issued during the ~~six~~nine months ended ~~June~~September 30, 2022:
SCHEDULE OF ASSUMPTIONS TO VALUE WARRANTS
June 2022
September
2022

Warrants Warrants

Risk free rate 0.23 % 0.23 %
Market price per share $ 0.45 $ 0.45
Life of instrument in years 2.50 years 2.50 years
Volatility 132.2 % 132.2 %
Dividend yield 0 % 0 %

Options

A summary of the Company’s option activity during the ~~six~~nine months ended ~~June~~September 30, 2022, is presented below:
SCHEDULE OF OPTION ACTIVITY
Weighted
Weighted
Average
Remaining
Contract
Weighted
Weighted
Average
Remaining
Contract

Number of
Options

Average
Exercise Price

Term
(Year)

Number of
Options

Average
Exercise Price

Term
(Year)

Outstanding at December 31, 2021 3,850,000 $ 0.41 4.30 3,850,000 $ 0.41 4.30
Granted 1,300,000 0.001 5.00 1,300,000 0.001 5.00
Exercised (1,300,000 ) (0.001 ) (5.00 ) (1,300,000 ) (0.001 ) (5.00 )
Forfeited-Canceled - - - - - -
Outstanding at June 30, 2022 3,850,000 $ 0.41 3.81
Outstanding at September 30, 2022 3,850,000 $ 0.41 3.56

Exercisable at June 30, 2022 3,550,000
Exercisable at September 30, 2022 3,850,000

Options outstanding as of ~~June~~September 30, 2022, and December 31, 2021, had aggregate intrinsic value of $0 and $716,000, respectively.

NOTE 11 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events for adjustment to or disclosure in its consolidated financial statements through the date of this report, and has not identified any recordable or disclosable events, not otherwise reported in these consolidated financial statements or the notes thereto, except for the following:

Subsequent to ~~June~~September 30, 2022, the Company ~~executed a binding letter~~issued 325,000 shares of ~~intent to acquire the remaining~~ ~~75%~~common stock [ ] ~~interest in the Company’s equity-method investment for $13,500,000~~ in a new series of the Company’s preferred stock. A definitive agreement has not yet been executed at the report date. The consideration was determined based on the estimated fair value of the remaining 75% of RCVD, subject to further due diligence and customary closing procedures.
~~Subsequent to June 30, 2022, the Company executed a convertible promissory note for principal of $85,000, of which $85,000~~ ~~was funded to the Company, carrying a one-year term and a coupon of~~ 9%~~. The promissory note is convertible at any time at the option of the holder. The convertible instrument is convertible at a discount to the market price.~~
~~Subsequent to June 30, 2022, the Company announced that it has listed its 20-acre of its 80-acre event venue at Emerald Grove, which was acquired in 2019 for $1.1million. The Company intends to subdivide the remaining 40 acres into 8 residential lots and benefit from the appreciated estate price.~~

2425
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview of Our Company

The Company was incorporated pursuant to the laws of the State of Wyoming on September 26, 2013. We are based in San Diego, California. We are a residential land development company with target properties located primarily in the Baja California Norte region of Mexico and Southern California. Our principal activities are purchasing properties, obtaining zoning and other entitlements required to subdivide the properties into residential and commercial building plots, securing financing for the purchase of the plots, improving the properties’ infrastructure and amenities, and selling the lots to homebuyers, retirees, investors, and commercial 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 a guaranteed acceptance on any purchase for every customer.

Overview

The real estate market in the Northern Baja California has continued to significantly improve and has fully recover from the negative impact of Covid-19. The housing prices has continued to rise in the Southwest U.S., and inventory has remained severely low, which generated additional attraction from home buyers seeking second homes or vacation homes.

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

■ Oasis Park Resortis 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 completed the construction of the waterfront clubhouse, and model homes. The Company has not sold any home sites during the ~~six~~nine months ended ~~June~~September 30, 2022, but has ~~not~~ received ~~any~~approximately $24,000 in additional payments from a home construction sold during the fourth quarter of 2021 for ~~its new home construction.~~purchase price of $99,000.

■ 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. 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. Management believes that this represents an estimated $60 million in gross sales opportunity. ~~There~~During the nine months ended September 30, 2022, the Company sold 6 land plots for total purchase price of $270,000, of which $2,250 has been ~~no additional sale of residential lots during~~collected. The amount collected was reported under contract liability in the ~~six months ended June 30, 2022.~~consolidated balance sheets.

■ Plaza Bajamar Resortis 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. The Company sold ~~six (6)~~seven (7) house construction for total contractual consideration of ~~$1,474,000~~$1,573,000 funded through seller’s carryback, of which ~~$181,300~~$282,570 was collected during the ~~six~~nine months ended ~~June~~September 30 ~~2022,~~ and ~~presented~~reported under contract liability in the consolidated balance sheets.

■
Emerald Grove Estates is the Company’s newly renovated Southern California property, used for organized events at this 8,000 square foot event venue. There was no activity during the ~~six~~nine months ended ~~June~~September 30, 2022. Define what is or was the idea of this property. The Company acquired 80-acre Emerald Grove in 2019 for $1.1 million. In 2021, the Company sold 20-acre for sale price of $630,000. As of September 30, 2022, the Company collected $212,980 and the financed amount remains at $417,020. The Company recently listed for sale its 20-acre event venue and is currently in the process of subdividing its remaining 40-acres into 8 residential lots for total price of $3.5 million.
26
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. During the nine months ended September 30, 2022, RCVD generated approximately $2 million in revenue for gross profit of approximately $1 million.

25
AsSummary of ~~June 30, 2022:~~key operational and financial events:

■ ~~The~~During the nine months ended September 30, 2022, the Company ~~executed residential plot sales agreements~~collected an aggregate amount of $282,570 from house construction at the Plaza Bajamar project resulting from the execution of seven (7) house construction contracts for ~~its Valle Divino project~~total contractual consideration of $1,573,000 payable over term of 120 months. cash received from the construction contract was recorded and ~~accepted several reservations for home sales to purchase twenty percent (20%) inventory for phase I project at its Plaza Bajamar.~~ presented as contract liability in the consolidated balance sheets.
■ As of ~~June~~September 30, 2022, the Company executed six (6) ~~construction contract~~contracts for the sale of vacant plots for total contractual consideration of ~~$1,474,000,~~$270,000, of which ~~$181,300 has been funded.~~ $2,250 was collected and presented as contractual liability in the consolidated balance sheets.
■ To avoid paying multiple title transfer fees and the extended time for each recording, the seller for both ~~parcels,~~properties, 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 performance obligations are satisfied, 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 ~~third~~our fourth fiscal quarter of 2022. As of June 30, 2022, the Company received approximately $288,464 from plot sales and house construction for Valle Divino and Plaza Bajamar, 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 tasting.
■ 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 project. The Company anticipates the grand opening of this project in the fourth quarter of 2022.~~
■ 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. As of June 30, 2022, the Company collected $212,980 and the financed amount remains at $417,020 as of June 30, 2020. The property includes the main parcel of land with existing structures along with three additional parcels of land which are vacant plots. The Company is currently in the process of subdividing two parcels into eight (8) lots for sale to benefit from the appreciated value of the land.

■ 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 development.

■ ~~Title~~The Company has raised $0.7 million financing through convertible promissory notes to continue the funding 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 Californiaits projects 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.~~for working capital.

■ The Company ~~has raised $0.6 million financing through debt structure~~executed a binding letter of intent to ~~continue~~acquire the ~~funding~~remaining 75% of its ~~projects~~equity-method investment in RCVD for a total purchase price of $13.5 million through the issuance of a new series of preferred stock.
■ The Company intends to raise up to $5 million from accredited investors under SEC Regulation D 506(c) offering to launch a new mortgage division. The majority of the funds will be allocated to finance loans to purchasers of the Company’s real estate, including home sites, home construction and finished homes, positioning itself as the first real estate developer to provide real estate financing to US citizen. This strategy is aimed at circumventing the difficulty for ~~working capital.~~US citizen to obtain property financing in Mexico

2627

Results of Operations for the Three Months Ended ~~June~~September 30, 2022, compared to the Three Months Ended ~~June~~September 30, 2021

For the three months ended For the three months ended
June 30,
2022 June 30,
2021
September 30,
2022

September 30,
2021

Revenue, net $ 16,973 $ 8,340 $ 16,973 $ 8,340

Cost of revenue - - - -

Gross profit 16,973 8,340 16,973 8,340

Operating expenses
Sales and marketing 772,405 1,198,300 100,600 61,000
General and administrative expenses 739,801 649,398 432,434 496,822
Total operating expenses 1,512,206 1,847,698 533,034 557,822

Loss from operations (1,495,233 ) (1,839,358 ) (516,061 ) (549,482 )

Other income (expense)
Other income 536 2,499 - 100,000
Income (Loss) from equity-method investment (140,989 ) 6,942
Income (loss) from equity-method investment (49,752 ) 32,270
Interest income - 1,534
Change in fair value of derivative 219,069 -
Interest expense (224,821 ) (144,913 ) (631,308 ) (226,379 )
Total other expense (365,274 ) (135,472 ) (461,991 ) (92,575 )

Net loss $ (1,860,507 ) $ (1,974,830 ) $ (978,052 ) $ (642,057 )

Revenue
Revenue increased by $8,633 to $16,973 for the three months ended ~~June~~September 30, 2022, from $8,340 for the three months ended ~~June~~September 30, 2021. The revenue recognized during the three months ended ~~June~~September 30, 2021, relates to the rental activity for the agreement executed with Integragreen as the Company determined that there was an embedded lease feature in the agreement pursuant to ASC 842. Effective on October 1, 2021, the Company determined that the agreement met the definition of a contract pursuant to the guidance in ASU 2014-09 and recognized to revenue $15,000 of interest income from the financing component of the lot sale to Integragreen as well as the coupon on the financed amount. The Company also recognized $1,973 of interest related to the note receivable with A&F Agriculture, LLC in the three months ended September 30, 2022.
Operating Expenses

Operating expenses decreased by ~~$335,492~~$24,788 to ~~$1,512,206~~$533,034 for the three months ended ~~June~~September 30, 2022, from ~~$1,847,698~~$557,822 for the three months ended ~~June~~September 30, 2021.

Sales and marketing costs ~~decreased~~increased by ~~$425,895,~~$39,600, to ~~$772,405~~$100,600 in the three months ended ~~June~~September 30, 2022, from ~~$1,198,300~~$61,000 in the three months ended ~~June~~September 30, 2021. Such ~~decrease~~increase mainly relates to the ~~fair value~~additional consulting agreements the Company entered into the third fiscal quarter to improve marketing efforts and drive sales of ~~the 1,000,000 stock options which were granted pursuant to a consulting and real estate sales agreement in the three months ended June 30, 2021.~~its existing projects.

General and administrative costs ~~increased~~decreased by ~~$90,403~~$64,388 in the three months ended ~~June~~September 30, 2022, compared to the three months ended ~~June~~September 30, 2021, primarily due to a decrease in investors relation fees by approximately $111,000, offset by an increase in ~~accounting and legal fees to ensure compliance with the Company’s on-going reporting obligations and on-going projects to further develop the business.~~stock-based compensation expense of approximately $55,000

Other expense

Other expense increased by approximately ~~$229,802~~$369,416 to ~~$365,274~~$461,991 in the three months ended ~~June~~September 30, 2022, from ~~$135,472~~$92,575 in the three months ended ~~June~~September 30, 2021. Such increase is related to an increase in loss from the Company’s equity-method investment ~~of $140,989~~by $82,022 and additional interest expense by $404,929 related to (i) the amortization of the debt discount generated from the embedded instruments in the promissory notes, ~~issued during~~(ii) the ~~first fiscal quarter~~excess of ~~2022.~~the fair value of the derivative attributable to the conversion feature of the new convertible notes over the carrying amount of the underlying debt instrument and (iii) additional coupon on the Company’s convertible notes, offset by a change in fair value of the derivative generating an income of approximately $219,000.

2728

Net Loss

The Company finished the three months ended ~~June~~September 30, 2022, with a net loss of ~~$1,860,507,~~$978,052, as compared to a net loss of ~~$1,974,830~~$642,057 for the three months ended ~~June~~September 30, 2021. The increase in our net loss resulted from the reasons outlined above.

Results of Operations for the ~~Six~~Nine Months Ended ~~June~~September 30, 2022, compared to the ~~Six~~Nine Months Ended ~~June~~September 30, 2021

For the six months ended For the nine months ended
June 30,
2022 June 30,
2021
September 30,
2022

September 30,
2021

Revenue, net $ 33,946 $ 17,559 $ 50,919 $ 25,899

Cost of revenue - - - -

Gross profit 33,946 17,559 50,919 25,899

Operating expenses
Sales and marketing 802,683 1,215,200 903,283 1,276,200
General and administrative expenses 2,073,747 1,420,245 2,506,181 1,917,067
Total operating expenses 2,876,430 2,635,445 3,409,464 3,193,267

Loss from operations (2,842,484 ) (2,617,886 ) (3,358,545 ) (3,167,368 )

Other income (expense)
Other income (expense) 536 (8,377 ) 536 91,624
Income (Loss) from equity-method investment (182,093 ) 6,942 (231,845 ) 39,212
Interest Income - 1,534
Change in fair value of derivative liability 219,069 -
Interest expense (329,188 ) (345,992 ) (960,496 ) (572,372 )
Total other expense (510,745 ) (347,427 ) (972,736 ) (440,002 )

Net loss $ (3,353,229 ) $ (2,965,313 ) $ (4,331,281 ) $ (3,607,370 )

Revenue
Revenue increased by ~~$16,387~~$25,020 to ~~$33,946~~$50,919 for the ~~six~~nine months ended ~~June~~September 30, 2022, from ~~$17,559~~$25,899 for the ~~six~~nine months ended ~~June~~September 30, 2021. The revenue recognized during the ~~six~~nine months ended ~~June~~September 30, 2021, relates to the rental activity for the agreement executed with Integragreen as the Company determined that there was an embedded lease feature in the agreement pursuant to ASC 842. Effective on October 1, 2021, the Company determined that the agreement met the definition of a contract pursuant to the guidance in ASU 2014-09 and recognized to revenue ~~$30,000~~$45,000 of interest income from the financing component of the lot sale to Integragreen as well as the coupon on the financed amount.
Operating Expenses

Operating expenses increased by ~~$240,985~~$216,197 to ~~$2,876,430~~$3,409,464 for the ~~six~~nine months ended ~~June~~September 30, 2022, from ~~$2,635,445~~$3,193,267 for the ~~six~~nine months ended ~~June~~September 30, 2021.

Sales and marketing costs decreased by ~~$412,517~~$372,917 to ~~$802,683~~$903,283 in the ~~six~~nine months ended ~~June~~September 30, 2022, from ~~$1,215,200~~$1,276,200 in the ~~six~~nine months ended ~~June~~September 30, 2021. Such decrease mainly relates to the fair value of the 1,000,000 stock options which were granted pursuant to a consulting and real estate sales agreement in the ~~three~~nine months ended ~~June~~September 30, 2021, offset by the issuance of restricted stock as compensation pursuant to consulting and real estate sales marketing agreements to drive traffic and interest into the various projects of the Company.

General and administrative costs increased by approximately ~~$653,502~~$589,114 to $2,506,181 in the ~~six~~nine months ended ~~June~~September 30, 2022, compared to $1,917,067 in the ~~six~~nine months ended ~~June~~September 30, 2021, primarily due to an increase in share-based compensation expense related to stock options granted to employees, affiliates, and consultants.

Other expense

Other expense increased by approximately ~~$163,318~~$532,734 to ~~$510,745~~$972,736 in the ~~six~~nine months ended ~~June~~September 30, 2022, from ~~$347,427~~$440,002 in the ~~six~~nine months ended ~~June~~September 30, 2021. Such increase is related to an increase in loss from the Company’s equity-method investment ofby approximately ~~$182,093 and~~$271,100, additional interest expense by approximately $ 388,120 related to (i) the amortization of the debt discount generated from the embedded additional instruments in the promissory notes, ~~issued during~~(ii) the ~~first fiscal quarter~~excess of ~~2022.~~the fair value of the derivative attributable to the conversion feature of the new convertible notes over the carrying amount of the underlying debt instrument and (iii) additional coupon on the Company’s convertible notes, offset by a positive change in fair value of the derivative by approximately $219,000.
2829

Net Loss

The Company finished the ~~six~~nine months ended ~~June~~September 30, 2022, with a net loss of ~~$3,353,229,~~$4,331,281, as compared to a net loss of ~~$2,965,313~~$3,607,370 for the ~~six~~nine months ended ~~June~~September 30, 2021. The increase in our net loss resulted from the reasons outlined above.

The factors that will most significantly affect future operating results will be:

■ The positive effect of implemented sales and marketing initiatives to drive opportunities into our various projects.
■ ~~The cost to construct a home on the plots to be transferred, and the quality of contruction.~~
■ The quality of our amenities.
■ The global economy and the demand for vacation homes.
■ The sale price of future plots and home construction compared to the sale price in other resorts in Mexico.
■ The prime location of our projects.

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

Capital Resources and Liquidity

Cash was ~~$5,534~~$95,841 and $56,590 as of ~~June~~September 30, 2022, and December 31, 2021, respectively. As shown in the accompanying financial statements, we recorded a loss of ~~$3,353,229~~$4,331,281 for the ~~six~~nine months ended ~~June~~September 30, 2022. Our working capital deficit as of ~~June~~September 30, 2022, was ~~$4,486,212~~$5,696,934 and net cash flows used in operating activities for the ~~six~~nine months ended ~~June~~September 30, 2022, were ~~$330,191.~~$506,041. These factors and our ability to raise additional capital to accomplish our objectives, raises substantial doubt about our ability to continue as a going concern. We expect our expenses will continue to increase during the foreseeable future as a result of increased operations, increased construction activity and the development of current and future projects which include our current business operations.

We anticipate generating revenues over the next twelve months, as we continue to market the sale of plots held for sale at our ~~Oasis Park Resort and we obtain~~various projects, generate cash from the sale of house construction at our properties. The above sale will trigger a corresponding revenue only when the Company obtains title of ~~our other projects (Valle~~the land at Valle Divino and Plaza ~~Bajamar),~~Bajamar, which we expect will occur in the Company’s third fiscal quarter of the year ended December 31, 2022.

If the Company is not successful with its marketing efforts to increase sales, the Company will continue to experience a shortfall in cash, 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 manner to avoid the need to curtail its future operations.

Operating Activities

Net cash flows used in operating activities for the ~~six~~nine months ended ~~June~~September 30, 2022, was ~~$330,191~~$506,041 which resulted primarily due to the loss of ~~$3,353,229~~$4,331,281 offset by non-cash share-based compensation of $1,281,976, fair value of equity securities issued for services of ~~$1,177,163,~~$1,310,497, amortization of debt discount of ~~$144,935,~~$291,374, loss from the Company’s equity-method investment of ~~$182,093,~~$231,845, positive change in fair value of derivative liability of $219,069 depreciation of ~~$26,472,~~$39,708, and net change in assets and liabilities of ~~$210,399.~~$532,124.

Net cash flows used in operating activities for the ~~six~~nine months ended ~~June~~September 30, 2021, was ~~$365,054~~$703,349 which resulted primarily due to the loss of ~~$2,965,313~~$3,607,370 offset by non-cash share-based compensation of ~~$1,922,536,~~$2,001,021, non-cash amortization of debt discount of ~~$136,975, depreciation~~284,616, an increase in accounts payable of ~~$23,387, $10,876 of loss on debt extinguishment,~~$287,596, increase in prepaid and ~~net change~~other current assets by $157,212 and increase in ~~assets and liabilities of $487,965, offset~~deposits by ~~income from the Company’s equity-method investment of $6,942.~~$137,980.

Investing Activities

Net cash flows used in investing activities was ~~$316,335~~$444,535 for the ~~six~~nine months ended ~~June~~September 30, 2022. The funds were used for the development of the various projects and the purchased house construction at Plaza Bajamar and Valle Divino.

Net cash flows used in investing activities was ~~$271,259~~$441,259 for the ~~six~~nine months ended ~~June~~September 30, 2021. The funds were used for the ~~acquisition and~~ development of the commercial agriculture at Emerald Grove ~~and Costa Bajamar properties~~resort for ~~$171,259, and~~$100,000, cash consideration of $100,000 for the ~~cash consideration~~acquisition of 25% of RCV accounted for as its equity-method investment and approximately $241,000 for construction at the Company’s ~~equity-method investment.~~projects.

2930

Financing Activities

Net cash flows provided by financing activities for the ~~six~~nine months ended ~~June~~September 30, 2022, was ~~$595,470~~$989,827 primarily from cash proceeds from issuance of promissory notes for aggregate amount of ~~$522,500,~~$663,250, cash proceeds from on-going funding from related party for aggregate amount of ~~$315,042,~~$677,347, offset by ~~$192,244~~$262,596 repayment of related party advances, and ~~$51,128~~$89,474 repayment of promissory notes.

Net cash flows provided by financing activities for the ~~six~~nine months ended ~~June~~September 30, 2021, was ~~$639,983~~$1,833,425 primarily from cash proceeds from issuance of promissory notes for aggregate amount of ~~$563,112,~~$1,052,686, net funding from refinancing of approximately $368,736, sale of common stocks of ~~$65,000,~~$1,804,750, exercise of warrants and options for $100,000, and offset by repayment on a promissory note of ~~$745,739.~~$1,492,747.

As a result of these activities, we experienced ~~a decrease~~an increase in cash ~~and cash equivalents~~ of ~~$51,056~~$39,251 for the ~~six~~nine months ended ~~June~~September 30, 2022.

Our ability to continue as a going concern is dependent on our success in obtaining additional financing from investors or from sale of our common shares.

Critical Accounting Polices

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

Off-balance Sheet Arrangements

During the period ended ~~June~~September 30, 2022, we have not engaged in any off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not required under Regulation S-K for “smaller reporting companies.”

Item 4. Controls and Procedures

The Company’s Principal Executive Officer and Principal Financial Officer (the Certifying Officers) are responsible for establishing and maintaining disclosure controls and procedures for the Company. An evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act) was carried out by us under the supervision and with the participation of our Certifying Officers. Based upon that evaluation, our Certifying Officers have concluded that as of ~~June~~September 30, 2022, our disclosure controls and procedures, that are designed to ensure (i) that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) that such information is accumulated and communicated to management, including our Certifying Officers, in order to allow timely decisions regarding required disclosure, were not effective.

As of ~~June~~September 30, 2022, based on evaluation of these disclosure controls and procedures, management concluded that our disclosure controls and procedures were not effective. We will be required to expend time and resources hiring and engaging additional staff and outside consultants with the appropriate experience to remedy the weaknesses described below. We cannot assure you that management will be successful in locating and retaining appropriate candidates or that newly engaged staff or outside consultants will be successful in remedying material weaknesses thus far identified or identifying material weaknesses in the future.

A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Management has identified the following two material weaknesses which have caused management to conclude that as of ~~June~~September 30, 2022, our disclosure controls and procedures were not effective at the reasonable assurance level:

■ inadequate internal controls relating to the authorization, recognition, capture, and review of transactions, facts, circumstances, and events that could have a material impact on the Company’s financial reporting process.

■ inadequate controls over maintenance of records.

Changes in Internal Control over Financial Reporting

There has been no change to our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

3031
PART II — OTHER INFORMATION

Item 1. Legal Proceedings

We are not party to, and our property is not the subject of, any material pending legal proceedings.

Item 1A. Risk Factors

See “Item 1A. Risk Factors” in Part I of the 2021 10-K for a detailed discussion of the risks we face. The risk factors described in the fiscal year ended 2021 Form 10-K have not materially ~~changed except for the addition of the following risk factor.~~changed.
~~The ongoing conflict between Russia and Ukraine, and the global response to it, may adversely affect our business and results of operations.~~
The ongoing conflict between Russia and Ukraine has resulted in the implementation of sanctions by the United States and other governments against Russia and has caused significant volatility and disruptions to the global markets. It is not possible to predict the short- or long-term implications of this conflict, which could include but are not limited to further sanctions, uncertainty about economic and political stability, increases in inflation rate and energy prices, supply chain challenges and adverse effects on currency exchange rates and financial markets. In addition, the United States government reported that United States sanctions against Russia in response to the conflict could lead to an increased threat of cyberattacks against United States companies. These increased threats could pose risks to the security of our information technology systems and networks, as well as the confidentiality, availability, and integrity of our data. A significant escalation or further expansion of the conflict’s current scope or related disruptions to the global markets could have a material adverse effect on our results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company issued an aggregate of 450,000 commitment shares of common stock for total fair value of $202,275 pursuant to securities purchase agreements with two accredited investors (See note 6).

During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company issued 1,300,000 shares of common stock from option exercises for total cash consideration of $1,300.

During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company issued ~~2,538,702~~2,872,038 shares of common stock pursuant to consulting agreements and finders’ fee ~~agreement.~~agreement for total fair value of $1,350,987.

In connection with the foregoing, we relied upon the exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended, for transactions not involving a public offering.

3132

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit No. Description
31.1* Certification of the Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated pursuant to the Securities Exchange Act of 1934, as amended.
31.2* Certification of the Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated pursuant to the Securities Exchange Act of 1934, as amended.
32.1* Certification of Chief Executive Officer pursuant to ~~Section 302 of the Sarbanes-Oxley Act of 2002~~
31.2* ~~Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
32.1** ~~Certification of Chief Executive Officer~~18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2** Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101 The following ~~materials~~financial information from ~~the Company’s~~ILAL, Inc.’s Quarterly ~~report~~Report on Form 10-Q for the ~~period~~quarter ended ~~June~~September 30, 2022, are formatted in ~~Extensible~~iXBRL (Inline eXtensible Business Reporting ~~Language (XBRL).~~Language): (i) Consolidated Statements of Operations, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows, and (v) related notes (submitted electronically with this Quarterly Report on Form 10-Q)

101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document (submitted electronically with this Quarterly Report on Form 10-Q)

101.SCH Inline XBRL Taxonomy Extension Schema Document (submitted electronically with this Quarterly Report on Form 10-Q)

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document (submitted electronically with this Quarterly Report on Form 10-Q)

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document (submitted electronically with this Quarterly Report on Form 10-Q)

101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document (submitted electronically with this Quarterly Report on Form 10-Q)

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document (submitted electronically with this Quarterly Report on Form 10-Q)

104 Cover Page Interactive Data File, ~~(embedded within the~~formatted in Inline XBRL ~~document)~~and contained in Exhibit 101

* ~~Filed Herewith~~
Exhibits designated by the symbol ** ~~Furnished herewith~~ are filed or furnished with this Quarterly Report on Form 10-Q

3233

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: ~~August 17,~~November 21, 2022 International Land Alliance, Inc.

By: /s/ Roberto Jesus Valdes
Principal Executive Officer and a Director

By: /s/ Jason Sunstein
Principal Financial and Accounting Officer and a Director

3334

Name of Consolidated Subsidiary or Entity	State or Other Jurisdiction of Incorporation or Organization	Attributable Interest
ILA Fund I, LLC	~~Wyoming~~		~~100~~	Wyoming	100	%
International Land Alliance, S.A. de C.V. (ILA Mexico)	~~Mexico~~		~~100~~	Mexico	100	%
Emerald Grove Estates, LLC	~~California~~		~~100~~	California	100	%
Plaza Bajamar LLC	~~Wyoming~~		~~100~~	Wyoming	100	%
Plaza Valle Divino, LLC	~~Wyoming~~		~~100~~	Wyoming	100	%

	●■	Useful life of buildings.
	●■	Assumptions used in valuing equity instruments.
	●■	Deferred income taxes and related valuation allowances.
	●■	Going concern.
	●■	Assessment of long-lived asset for impairment.
	●■	Significant influence or control over the Company’s investee.
	●■	Revenue ~~recognition~~recognition.

	Fair Value Measurements at September 30, 2022 Using
	Quoted Prices in Active Markets for		Significant Other		Significant
	Identical Assets		Observable Inputs		Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total

Derivative liability	$	-	$	-	$	278,466	$	278,466
Total	$	-	$	-	$	278,466	$	278,466

	■	Identification of the agreement or agreements with a buyer and/or investor.
	■	Identification of the performance obligations in the agreement(s) for the sale of plots including the delivering title to the property being acquired from ILA.
	■	Determination of the transaction price.
	■	Allocation of the transaction price to the plots purchased when issued with equity or warrants to purchase equity in the Company; and
	■	Recognition of revenue when, or as, we satisfy a performance obligation such as the transfer of control of the plots.

	For the six months ended June 30, 2022		For the six months ended June 30, 2021		For the nine months ended September 30, 2022		For the nine months ended September 30, 2021

Options		3,850,000		2,900,000		3,850,000		2,900,000
Warrants		3,867,500		200,000		3,867,500		3,330,000
Total potentially dilutive shares		7,717,500		3,100,000		7,717,500		6,230,000

	Useful life	June 30, 2022			December 31, 2021			Useful life	September 30, 2022			December 31, 2021
Land – Emerald Grove		$	203,419		$	203,419			$	203,419		$	203,419

Land held for sale – Oasis Park		$	647,399		$	647,399			$	647,399		$	647,399

Construction in Process (Divino – Bajamar)		$	1,168,355		$	852,020			$	1,296,555		$	852,020

Furniture & equipment	5 years	$	2,146		$	2,682		5 years	$	2,012		$	2,682

Building – Emerald Grove	20 years	$	1,048,138		$	1,048,138		20 years	$	1,048,138		$	1,048,138
Less: Accumulated depreciation			(158,190	)		(132,254	)			(171,291	)		(132,254	)

Building, net		$	889,948		$	915,884			$	876,847		$	915,884

	June 30, 2022			December 31, 2021
Cash Call Note payable, due August 2020 - past maturity/settled	$	24,785		$	24,785
Christopher Elder Note payable, 18% interest, due March 2020 - past maturity		1,500			1,500
Christopher Elder Note Payable, 15% interest, due March 2021 - past maturity		76,477			76,477
Redwood Trust Note payable, 12% interest, due February 2023		1,787,000			1,787,000
Sixth Street Lending Note payable, 10% interest, due February 2023		69,720			-
Mast Hill Note payable, 12% interest, due March 2023		250,000			-
Blue Lake Note payable, 12% interest, due March 2023		250,000			-
Total Notes Payable	$	2,459,482		$	1,889,762
Less discounts		(362,166	)		(51,462	)

Total Notes Payable		2,097,316			1,838,300

Less current portion		(2,097,316	)		(102,762	)

Total Notes Payable - long term	$	-		$	1,735,538

Income statement	June 30, 2022			September 30, 2022
Revenue	$	936,497		$	1,975,303
Cost of goods sold		(546,262	)		(1,006,210	)
Gross margin		390,235			969,093
Operating expenses		(813,386	)		(1,405,504	)
Other Expense		(305,223	)		(490,968	)
Net loss	$	(728,374	)	$	(927,379	)

Balance sheet
Current assets	$	2,540,698		$	2,385,458
Non-current assets	$	4,769,524		$	4,683,273
Current liabilities	$	10,494,874		$	10,379,269
Non-Current liabilities	$	5,621,352		$	5,694,471

			Weighted		Weighted Average Remaining Contract				Weighted		Weighted Average Remaining Contract
	Number of Warrants		Average Exercise Price		Term (Year)		Number of Warrants		Average Exercise Price		Term (Year)
Outstanding at December 31, 2021		3,180,000	$	0.69		5.08		3,180,000	$	0.69		5.08
Granted		687,500		0.80		4.74		687,500		0.80		4.49
Exercised		-		-		-		-		-		-
Forfeited-Canceled		-		-		-		-		-		-
Outstanding at June 30, 2022		3,867,500	$	0.71		4.61
Outstanding at September 30, 2022								3,867,500	$	0.71		4.36

Exercisable at June 30, 2022		3,867,500
Exercisable at September 30, 2022								3,867,500

	June 2022			September 2022
	Warrants			Warrants

Risk free rate		0.23	%		0.23	%
Market price per share	$	0.45		$	0.45
Life of instrument in years		2.50 years			2.50 years
Volatility		132.2	%		132.2	%
Dividend yield		0	%		0	%

				Weighted			Weighted Average Remaining Contract						Weighted			Weighted Average Remaining Contract
	Number of Options			Average Exercise Price			Term (Year)			Number of Options			Average Exercise Price			Term (Year)
Outstanding at December 31, 2021		3,850,000		$	0.41			4.30			3,850,000		$	0.41			4.30
Granted		1,300,000			0.001			5.00			1,300,000			0.001			5.00
Exercised		(1,300,000	)		(0.001	)		(5.00	)		(1,300,000	)		(0.001	)		(5.00	)
Forfeited-Canceled		-			-			-			-			-			-
Outstanding at June 30, 2022		3,850,000		$	0.41			3.81
Outstanding at September 30, 2022											3,850,000		$	0.41			3.56

Exercisable at June 30, 2022		3,550,000
Exercisable at September 30, 2022											3,850,000

	■	*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 completed the construction of the waterfront clubhouse, and model homes. The Company has not sold any home sites during the ~~six~~nine months ended ~~June~~September 30, 2022, but has ~~not~~ received ~~any~~approximately $24,000 in additional payments from a home construction sold during the fourth quarter of 2021 for ~~its new home construction.~~purchase price of $99,000.

	■	*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. 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. Management believes that this represents an estimated $60 million in gross sales opportunity. ~~There~~During the nine months ended September 30, 2022, the Company sold 6 land plots for total purchase price of $270,000, of which $2,250 has been ~~no additional sale of residential lots during~~collected. The amount collected was reported under contract liability in the ~~six months ended June 30, 2022.~~consolidated balance sheets.

	■	*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. The Company sold ~~six (6)~~seven (7) house construction for total contractual consideration of ~~$1,474,000~~$1,573,000 funded through seller’s carryback, of which ~~$181,300~~$282,570 was collected during the ~~six~~nine months ended ~~June~~September 30 ~~2022,~~ and ~~presented~~reported under contract liability in the consolidated balance sheets.

	■	*Emerald Grove Estates* is the Company’s newly renovated Southern California property, used for organized events at this 8,000 square foot event venue. There was no activity during the ~~six~~nine months ended ~~June~~September 30, 2022. Define what is or was the idea of this property. The Company acquired 80-acre Emerald Grove in 2019 for $1.1 million. In 2021, the Company sold 20-acre for sale price of $630,000. As of September 30, 2022, the Company collected $212,980 and the financed amount remains at $417,020. The Company recently listed for sale its 20-acre event venue and is currently in the process of subdividing its remaining 40-acres into 8 residential lots for total price of $3.5 million.

	■	~~The~~During the nine months ended September 30, 2022, the Company ~~executed residential plot sales agreements~~collected an aggregate amount of $282,570 from house construction at the Plaza Bajamar project resulting from the execution of seven (7) house construction contracts for ~~its Valle Divino project~~total contractual consideration of $1,573,000 payable over term of 120 months. cash received from the construction contract was recorded and ~~accepted several reservations for home sales to purchase twenty percent (20%) inventory for phase I project at its Plaza Bajamar.~~ presented as contract liability in the consolidated balance sheets.

	■	As of ~~June~~September 30, 2022, the Company executed six (6) ~~construction contract~~contracts for the sale of vacant plots for total contractual consideration of ~~$1,474,000,~~$270,000, of which ~~$181,300 has been funded.~~ $2,250 was collected and presented as contractual liability in the consolidated balance sheets.

	■	To avoid paying multiple title transfer fees and the extended time for each recording, the seller for both ~~parcels,~~properties, 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 performance obligations are satisfied, 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 ~~third~~our fourth fiscal quarter of 2022. As of June 30, 2022, the Company received approximately $288,464 from plot sales and house construction for Valle Divino and Plaza Bajamar, 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 tasting.

	■	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 project. The Company anticipates the grand opening of this project in the fourth quarter of 2022.~~

	■	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. As of June 30, 2022, the Company collected $212,980 and the financed amount remains at $417,020 as of June 30, 2020. The property includes the main parcel of land with existing structures along with three additional parcels of land which are vacant plots. The Company is currently in the process of subdividing two parcels into eight (8) lots for sale to benefit from the appreciated value of the land.

	■	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 development.

	■	~~Title~~The Company has raised $0.7 million financing through convertible promissory notes to continue the funding 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 Californiaits projects 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.~~for working capital.

	■	The Company ~~has raised $0.6 million financing through debt structure~~executed a binding letter of intent to ~~continue~~acquire the ~~funding~~remaining 75% of its ~~projects~~equity-method investment in RCVD for a total purchase price of $13.5 million through the issuance of a new series of preferred stock.

	■	The Company intends to raise up to $5 million from accredited investors under SEC Regulation D 506(c) offering to launch a new mortgage division. The majority of the funds will be allocated to finance loans to purchasers of the Company’s real estate, including home sites, home construction and finished homes, positioning itself as the first real estate developer to provide real estate financing to US citizen. This strategy is aimed at circumventing the difficulty for ~~working capital.~~US citizen to obtain property financing in Mexico

	■	The positive effect of implemented sales and marketing initiatives to drive opportunities into our various projects.
	■	~~The cost to construct a home on the plots to be transferred, and the quality of contruction.~~
	■	The quality of our amenities.
	■	The global economy and the demand for vacation homes.
	■	The sale price of future plots and home construction compared to the sale price in other resorts in Mexico.
	■	The prime location of our projects.

	■	inadequate internal controls relating to the authorization, recognition, capture, and review of transactions, facts, circumstances, and events that could have a material impact on the Company’s financial reporting process.

	■	inadequate controls over maintenance of records.

Exhibit No.		Description

31.1*		Certification of the Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated pursuant to the Securities Exchange Act of 1934, as amended.

31.2*		Certification of the Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated pursuant to the Securities Exchange Act of 1934, as amended.

32.1*		Certification of Chief Executive Officer pursuant to ~~Section 302 of the Sarbanes-Oxley Act of 2002~~
31.2*		~~Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
32.1**		~~Certification of Chief Executive Officer~~18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**		Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101		The following ~~materials~~financial information from ~~the Company’s~~ILAL, Inc.’s Quarterly ~~report~~Report on Form 10-Q for the ~~period~~quarter ended ~~June~~September 30, 2022, are formatted in ~~Extensible~~iXBRL (Inline eXtensible Business Reporting ~~Language (XBRL).~~Language): (i) Consolidated Statements of Operations, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows, and (v) related notes (submitted electronically with this Quarterly Report on Form 10-Q)

101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document (submitted electronically with this Quarterly Report on Form 10-Q)

101.SCH		Inline XBRL Taxonomy Extension Schema Document (submitted electronically with this Quarterly Report on Form 10-Q)

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document (submitted electronically with this Quarterly Report on Form 10-Q)

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document (submitted electronically with this Quarterly Report on Form 10-Q)

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document (submitted electronically with this Quarterly Report on Form 10-Q)

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document (submitted electronically with this Quarterly Report on Form 10-Q)

104		Cover Page Interactive Data File, ~~(embedded within the~~formatted in Inline XBRL ~~document)~~and contained in Exhibit 101

*		~~Filed Herewith~~

Exhibits designated by the symbol **		~~Furnished herewith~~ are filed or furnished with this Quarterly Report on Form 10-Q

Dated:	~~August 17,~~November 21, 2022	International Land Alliance, Inc.

		By:	/s/ Roberto Jesus Valdes
			Principal Executive Officer and a Director

		By:	/s/ Jason Sunstein
			Principal Financial and Accounting Officer and a Director