S-1: International Land Alliance Seeks Nasdaq Listing with Proposed Common Stock Offering

International Land Alliance, a residential land development company, is planning a public offering of its common stock to facilitate a listing on the Nasdaq Capital Market.

Summary

• International Land Alliance, Inc. is a residential land development company focused on properties in Baja California, Mexico, and Southern California.
• The company's main activities include purchasing land, obtaining necessary zoning, securing financing, improving infrastructure, and selling plots to various buyers.
• The company is planning a public offering of common stock, with the number of shares and price to be determined, and has applied to list on the Nasdaq Capital Market under the symbol ILAL.
• The offering is contingent upon the approval of the Nasdaq listing application.
• A reverse stock split, with a ratio between 1-for-2 and 1-for-___, will be completed to meet Nasdaq's minimum stock price requirement.
• The company intends to use the net proceeds from the offering for general corporate purposes, including specific allocations for certain projects and working capital.
• The company has an accumulated deficit of $27.2 million as of December 31, 2023, and has never operated at a profit.
• The company's loss for the year ended December 31, 2023, was $2.1 million.
• The company has a working capital deficit of $13.8 million as of September 30, 2024.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While there are positive aspects such as the company's growth strategy and market opportunity, the significant financial challenges, including the accumulated deficit, working capital deficit, and dependence on external funding, create a negative sentiment. The risks associated with the company's operations and the potential for dilution further contribute to a cautious outlook.

Positives

• The company has a portfolio of residential, resort, and commercial properties in Mexico and Southern California.
• The company offers financing options to buyers, which may increase sales.
• The company has made progress on the Oasis Park Resort project, including the completion of the access road and community entrance.
• The company has a partnership with a similar development company in Baja California, which may help with marketing and sales.
• The company has seen a significant improvement in the real estate market in Northern Baja California.

Negatives

• The company has a history of losses and a significant accumulated deficit.
• The company has a working capital deficit.
• The company is dependent on the sale of securities or debt to fund operations.
• The company has a potential conflict of interest with a company controlled by one of its officers and directors.
• The company has a relatively short period of operations history in the industry.
• The company is subject to risks associated with real estate development and construction activities.
• The company is subject to zoning and environmental controls that may restrict the use of its property.
• The company is subject to partially uninsured losses.
• The company is vulnerable to concentration risks because it intends to focus on the residential rather than commercial market.
• The company is subject to anti-corruption laws in the jurisdictions in which it operates.
• The company's operations may be affected by social instability in Mexico.
• The company's stock is thinly traded, so investors may have difficulty selling shares.
• The company does not intend to pay any cash dividends on its common stock.

Risks

• There is substantial doubt about the company's ability to continue as a going concern.
• The company may need additional capital, which it may be unable to obtain.
• The company has a potential conflict of interest with a company controlled by one of its officers and directors.
• The company's relatively short period of operations history in the industry makes evaluating its business difficult.
• The company may not be able to complete development of its proposed properties and profitably sell any units.
• The company's proposed ownership of real estate may result in losses if demand for property declines.
• Property improvement costs are difficult to estimate and if costs exceed the budget, the company may lose money.
• The real estate market is cyclical, and a downturn of the market could increase the risk of loss of investment.
• The company may be subject to partially uninsured losses that may require substantial payments.
• The company carries debt through mortgages and the inability to make secured debt payments could result in loss of mortgaged property.
• The company's lack of an established brand name and relative lack of resources could negatively impact its ability to effectively compete.
• The company may make changes to its business, investment, leverage and financing strategies without stockholder consent.
• The company depends heavily on key personnel, and turnover of key senior management could harm its business.
• The company's operations may be affected by social instability in Mexico.
• The company will experience immediate and substantial dilution as a result of this offering and may experience additional dilution in the future.
• The company will be subject to penny stock regulations and restrictions, and investors may have difficulty selling shares of its common stock.
• The company's directors own a significant percentage of its outstanding voting securities which could reduce the ability of minority shareholders to effect certain corporate actions.
• The company may, in the future, issue additional shares of common stock, which would reduce investors percentage of ownership and may dilute its share value.
• The company is subject to compliance with securities law, which exposes it to potential liabilities, including potential rescission rights.
• The company does not intend to pay any cash dividends on its common stock.
• The company expects to experience volatility in the price of its common stock.
• The company's stock is thinly traded, so investors may be unable to sell their shares at or near the quoted bid prices.
• Shares eligible for future sale may adversely affect the market.
• The company could issue additional common stock, which might dilute the book value of its common stock.
• The company's common stock could be further diluted as a result of the issuance of convertible securities, warrants or options.
• The company's Articles of Incorporation allow for its board of directors to create new series of preferred stock without further approval by its stockholders, which could adversely affect the rights of the holders of its common stock.
• The reverse stock split may decrease the liquidity of the shares of the company's common stock.
• There is a limited market for the company's common stock, and investors may find it difficult to buy and sell its shares.

Future Outlook

The company anticipates generating increased revenues over the next twelve months, as it continues to market the sale of plots held for sale at its various projects and generate cash from the sale of house construction at its properties.

Management Comments

• Management believes that the transfer of title to the land will be approved and transferred by the end of our fiscal year of 2023, there is no assurance that such transfer of title will be approved in that time frame or at all.

Industry Context

The Mexican real estate industry has experienced growth due to foreign investment, regulatory changes, competitive land prices, and the expansion of new business centers. The demand for properties has been fueled by both a strong domestic market and international buyers seeking affordable retirement alternatives.

Comparison to Industry Standards

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

Related Party Transactions

• The company has and will continue to enter into agreements with firms owned or controlled by its officers and directors.
• The company has funded an aggregate amount of $1.4 million for construction on residential lots, projects amenities and towards the acquisition of land to companies controlled by its Chief Executive Officer.
• The land for the Plaza Bajamar and Valle Divino is currently owned by two entities controlled by the Chief Executive Officer.
• The company's Chief Financial Officer is also the managing member of Six Twenty Management LLC, an entity that has historically provided ongoing capital support to the company.
• The company has a promissory note with RAS, LLC, a company controlled by a relative of the company's Chief Financial Officer.
• Lisa Landau, a relative of the company's Chief Financial Officer, has advanced funds to the company for general corporate expenses.

Stakeholder Impact

• Shareholders will experience immediate and substantial dilution as a result of this offering.
• Shareholders may have difficulty selling shares of the company's common stock due to penny stock regulations and restrictions.
• Shareholders will not be able to receive a return on their shares unless they sell them, as the company does not intend to pay any cash dividends.
• The company's stock is thinly traded, so shareholders may be unable to sell their shares at or near the quoted bid prices.
• The company's directors own a significant percentage of its outstanding voting securities which could reduce the ability of minority shareholders to effect certain corporate actions.
• The company's future results and reputation may be affected by litigation or other liability claims.
• The company may be subject to regulatory inquiries, claims, suits and prosecutions which may impact its profitability.
• The company is vulnerable to concentration risks because it intends to focus on the residential rather than commercial market.
• The company's operations may be affected by social instability in Mexico.

Next Steps

• The company will complete a reverse stock split to meet Nasdaq's minimum stock price requirement.
• The company will finalize the public offering price through negotiations with the underwriters.
• The company will seek approval for its Nasdaq listing application.
• The company will use the net proceeds from the offering for general corporate purposes, including specific allocations for certain projects and working capital.

Key Dates

Keywords

real estate development, residential land, Baja California, Southern California, Nasdaq listing, common stock offering, reverse stock split, property sales, land acquisition, real estate investment