Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operation.

This Annual Report on Form 10-K contains forward-looking statements. Our actual results could differ materially from those set forth as a result of general economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read together with the audited financial statements and accompanying notes and the other financial information appearing elsewhere in this Annual Report on Form 10-K. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events.

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 Northern Baja California has continued to significantly improve and has fully recovered 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 Resort is a 497-acres master planned real estate community including 1,344 residential home sites, south of San Felipe, Baja California, which offers a 180-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. As of the date of this report, 85 of the 1,344 planned residential lots were pre-sold to initial shareholders. The Company has made significant progress on the project, which included the completion of the two-mile access road and the community entrance structure. The Company also started construction of the waterfront clubhouse, and model homes.
	■	Valle Divino is a self-contained solar 650-home site project in Ensenada, Baja California, with test vineyard at the property. This resort includes 137 residential lots and 3 commercial lots on 20 acres of land. This represents an estimated $60 million in gross sales opportunity.
	■	Plaza Bajamar Resort is an 80-unit project located at the internationally renowned Bajamar Ocean front hotel and golf resort. The Bajamar oceanfront golf resort is a master planned golf community located 45 minutes south of the San Diego-Tijuana border along the scenic toll road to Ensenada. The first Phase will include 22 "Merlot" 1,150 square-foot single-family homes that features two bedrooms and two baths. The home includes two primary bedroom suites - one on the first floor and one upstairs, as well as fairway and ocean views from a rooftop terrace. The Merlot villas will come with the installation of solar packages.
	■	Emerald Grove Estates is the Company's newly renovated Southern California property, used for organized events at this 8,000 square foot event venue.
	■	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. RCVD 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 RCVD in exchange for $100,000 and 60,000 shares of the Company's common stock, and such investment was initially recorded as an equity-method investment in the Company's condensed consolidated financial statements. On January 3, 2023, the Company acquired the remaining 75% membership interest in RCVD for a contractual consideration of $13.5 million, paid through $8,900,000 secured convertible note, 400,000 shares of common stock and 660,000 common stock warrants. This transaction was recorded pursuant to ASC 805 Business Combinations. In December 2025, the Company acquired an additional 300 acres of land for their RCVD location for a total consideration of $1.65 million. This purchase is subdivided into 7 parcels and consists of approximately 300 residential homesites, 12 existing tiny homes, and 2 completed homes.

Summary of key operational and financial events:

	■	The Company has collected an aggregate amount of $312,175 from house construction at the Plaza Bajamar project, which was initially recorded and presented as contract liability in the consolidated balance sheets. However, the Company offset the balance with the additional cash funded for the construction of amenities at Bajamar, with the net balance presented as impairment loss in the consolidated statement of operations in the previous year. There were no collections during 2025.
	■	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 of Oasis Park Resort in San Felipe was assumed during 2019. We are expecting the transfer of title on Valle Divino in Ensenada, Baja California and Plaza Bajamar in Ensenada, Baja California before the end of our second fiscal quarter of 2026, as we continue to follow the necessary steps to complete this legal process.

Results of Operations for the year ended December 31, 2025, compared to the year ended December 31, 2024

		For the years ended
		December 31, 2025				December 31, 2024
Revenues and lease income		$	2,434,413			$	8,094,940
Cost of revenue			1,618,529				1,242,057
Gross profit			815,884				6,852,883
Operating expenses
Sales and marketing			848,140				866,607
Impairment loss			-				-
General and administrative expenses			7,129,788				1,864,249
Total operating expenses			7,977,928				2,730,857
Income (loss) from operations			(7,162,044	)			4,122,027
Other income (expense)
Loss from conversion of debt to equity			(1,976,914	)			-
Recapture of debt			228,950
Change in fair value derivative liability			(2,800,243	)			338,311
Interest expense			(2,587,933	)			(1,412,556	)
Total other expense, net			(7,136,140	)			(1,074,245	)
Net income (loss)		$	(14,298,184	)		$	3,047,782

Revenues

Revenue decreased by $5,660,527 to $2,434,413 for the year ended December 31, 2025, from $8,094,940 for the year ended December 31, 2024. The revenue recognized during the year ended December 31, 2025, includes real estate sales, interest from financed sales, financing fees, and components of home construction.

Cost of Revenues

Cost of revenue increased by $376,472 to $1,618,529 for the year ended December 31, 2025, from $1,242,057 for the year ended December 31, 2024. Cost of revenue includes land cost and related land improvements including infrastructure, construction and subdivision costs.

Operating Expenses

Operating expenses increased by $5,247,071 to $7,977,928 for the year ended December 31, 2025, from $2,730,857 for the year ended December 31, 2024.

Such increase mainly relates to a large increase in stock-based compensation expenses of $2,794,632 during 2025 which totaled $3,702,669 compared to $908,037 in the prior year. In addition, general and administrative increased for professional fees and other general and administrative expenses during 2025, due to the lack of capital available during the year ended December 31, 2024. Sales and marketing remained relatively flat, decreasing $18,468 during 2025, from the year ended December 31, 2024. Sales costs are related to real estate's sales commissions. Marketing costs include advertising, prospective customers' education, travel, and accommodation.

Other expenses

Other expenses increased by $6,061,895 to $7,136,140 for the year ended December 31, 2025, from $1,074,245 during ended December 31, 2024. Such change is primarily due to the change in fair value of the Company's derivative liability of $2,800,243 and loss on debt extinguishment of $1,976,914, with interest expense increasing $1,175,377 year over year.

Net Loss

As a result of the foregoing, the Company finished the year ended December 31, 2025, with net loss of $14,298,184, as compared to net income of $3,047,781 for the year ended December 31, 2024.

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 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 $4,186 and $26,120 as of December 31, 2025 and 2024, respectively. As shown in the accompanying financial statements, we recorded loss of $14.3 million for year ended December 31, 2025. Our working capital deficit as of December 31, 2025, was $24.3 million. 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 increased revenues over the next twelve months, as we continue to market the sale of plots held for sale at our various projects, generate cash from the sale of house construction at our properties.

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 year ended December 31, 2025, was $998,582 which resulted primarily due to net loss of $14,298,184, off-set by non-cash share-based compensation of $3,702,669, loss on debt conversion of $1,976,914, change in fair value of derivative liability of $2,800,243, and by a positive net change in assets and liabilities of $3,035,516.

Net cash flows used in operating activities for the year ended December 31, 2024, was $384,680 which resulted primarily due to net income of $3,047,781, non-cash share-based compensation of $908,037, depreciation of $87,250, and change in fair value of derivative liability of $338,311, offset by a negative net change in assets and liabilities of $4,089,436.

Investing Activities

Net cash flows used in investing activities was $3,101,938 for the year ended December 31, 2025. The funds were used for the development of the various projects and additional investment for land development, as well as an increase in long-term accounts receivable.

Net cash flows used in investing activities was $513,138 for the year ended December 31, 2024. The funds were used for the development of the various projects and additional investment for land development.

Financing Activities

Net cash flows provided by financing activities for the year ended December 31, 2025, was $4,078,586, primarily from cash proceeds from other loans of $1,497,217, cash proceeds from convertible notes of $4,297,100, cash proceeds from the issuance of Series C Preferred stock of $250,000, and cash proceeds from promissory notes of $100,000, primarily offset by cash payments on other loans of $1,751,465, dividends paid of $132,054, and cash payments on convertible notes of $329,414.

Net cash flows provided by financing activities for the year ended December 31, 2024, was $738,691, primarily from cash proceeds from related parties for aggregate amount of $242,875, cash proceeds from convertible notes of $456,130, cash proceeds from other loans for $666,363, cash proceeds from promissory notes of $75,000, dividends paid of $91,678, and cash payments on promissory notes of $565,000.

As a result of these activities, we experienced a decrease in cash of $21,934 for the year ended December 31, 2025. Our ability to continue as a going concern is dependent on our success in obtaining additional financing from investors or from the sale of our common shares.

Critical Accounting Polices

In December 2001, the SEC requested that all registrants list their "critical accounting polices" in the Management Discussion and Analysis. The SEC indicated that a "critical accounting policy" is one which is both important to the portrayal of a company's financial condition and results, and requires management's most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our accounting policies are disclosed in Note 2 of our audited consolidated financial statements included herein. We consider the following accounting policies critical to the understanding of the results of our operations:

■	Going concern. It requires to rely on management's representation on financial forecast.
■	Revenue recognition. It requires judgement to determine when a contract exists, when performance obligations are met and the estimated variable consideration if any.
■	Issuance of debt with attached financial instruments. Some instruments carry embedded features that require bifurcation from host instrument and accounting as derivative liability.
■	Accounting of the Company's equity-method investment. Indeed, it requires judgement by management to determine whether there is significant influence or control over the Company's investee. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over these policies.

Off-balance Sheet Arrangements

During the year ended December 31, 2025, we have not engaged in any off-balance sheet arrangements.

Recent Accounting Pronouncements

The recent accounting pronouncements that are material to our financial statements are disclosed in Note 2 of our consolidated audited financial statements included herein.