{"url_path":"/sec/ilal/10-k/2026/item-1a","section_key":"item-1a","section_title":"Item 1A Risk Factors.**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-04-27","source_url":"https://www.sec.gov/Archives/edgar/data/1657214/0001493152-26-019199-index.html","accession_number":"0001493152-26-019199","cik":"0001657214","ticker":"ILAL","issuer_name":"International Land Alliance Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1657214/0001493152-26-019199-index.html","primary_entity_key":"0001657214","primary_entity_name":"International Land Alliance Inc."},"word_count":7708,"has_tables":true,"body_markdown":"**Item\n1A. Risk Factors.**\n\n \n\nAn\ninvestment in our securities is highly speculative and subject to numerous and substantial risks. Readers are encouraged to review these\nrisks carefully before making any investment decision.\n\n \n\nIn\naddition to the other information provided in this filing, you should carefully consider the following risk factors in evaluating our\nbusiness before purchasing any of our common stock. All material risks are discussed in this section.\n\n \n\n**RISKS\nRELATED TO OUR BUSINESS AND OPERATIONS**\n\n \n\n**There\nis substantial doubt about our ability to continue as a going concern. If we do not continue as a going concern, investors will lose\ntheir entire investment.**\n\n \n\nOur\nconsolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction\nof liabilities in the normal course of business. Our auditor’s report reflects that the ability of the Company to continue as a\ngoing concern is dependent upon our ability to repay or refinance our obligations, to raise additional capital and, ultimately, the achievement\nof significant operating revenues. If we are unable to continue as a going concern, stockholders will lose their investment. We will\nbe required to seek additional capital to fund future growth and expansion. No assurance can be given that such financing will be available\nor, if available, that it will be on commercially favorable terms. Moreover, favorable financing may be dilutive to investors.\n\n \n\nThe\nCompany has an accumulated deficit of $38.4 million as of December 31, 2025 and a net loss of $14.3 million for the year ended December\n31, 2025. This deficit and loss may impact the future of the Company in many ways including, but not limited to, making it more difficult\nto borrow money, sell stock or to maintain a good trading price for our common stock.\n\n \n\n**Our\nCertificate of Incorporation and Bylaws limit the liability of, and provide indemnification for, our officers and directors.**\n\n \n\nOur\nCertificate of Incorporation generally limits our officers’ and directors’ personal liability to the Company and its stockholders\nfor breach of fiduciary duty as an officer or director except for breach of the duty of loyalty or acts or omissions not made in good\nfaith, or which involve intentional misconduct or a knowing violation of law. Our Certificate of Incorporation and Bylaws, provide indemnification\nfor our officers and directors to the fullest extent authorized by the Wyoming Business Corporation Act against all expense, liability,\nand loss, including attorney’s fees, judgments, fines excise taxes or penalties and amounts to be paid in settlement reasonably\nincurred or suffered by an officer or director in connection with any action, suit or proceeding, whether civil or criminal, administrative\nor investigative (hereinafter a “Proceeding”) to which the officer or director is made a party or is threatened to\nbe made a party, or in which the officer or director is involved by reason of the fact that he is or was an officer or director of the\nCompany, or is or was serving at the request of the Company whether the basis of the Proceeding is an alleged action in an official capacity\nas an officer or director, or in any other capacity while serving as an officer or director. Thus, the Company may be prevented from\nrecovering damages for certain alleged errors or omissions by the officers and directors for liabilities incurred in connection with\ntheir good faith acts for the Company. Such an indemnification payment might deplete the Company’s assets. Stockholders who have\nquestions regarding the fiduciary obligations of the officers and directors of the Company should consult with independent legal counsel.\nIt is the position of the Securities and Exchange Commission that exculpation from and indemnification for liabilities arising under\nthe Securities Act and the rules and regulations there under, is against public policy and therefore unenforceable.\n\n \n\n**We\nwill need additional capital, which we may be unable to obtain.**\n\n \n\nOur\ncapital requirements in connection with our development activities of our residential property’s operations have been and will\ncontinue to be significant. We may require additional funding for more than one year in order to continue development. construction of\nhouses, infrastructure and marketing activities associated with our properties. There can be no assurances that additional funding in\nthe future or our current cash position will be sufficient to fund any future plans to accelerate our commercialization efforts or that\nfinancing will be available in amounts or on terms acceptable to us, if at all.\n\n \n\n8\n\n \n\n \n\nWe\nare dependent on the sale of our securities or debt to fund our operations and will remain so until we generate sufficient revenues to\npay for our operating costs. Our officers and directors have made no written commitments with respect to providing a source of liquidity\nin the form of cash advances, loans and/or financial guarantees. There can be no guarantee that we will be able to successfully sell\nour equity or debt securities.\n\n \n\n**We\nhave a potential conflict of interest with a company controlled by one of our officers and directors.**\n\n \n\nWe\nhave and will continue to enter into agreements with firms owned or controlled by our officers and directors. A conflict of interest\nwill arise should a dispute occur with the respect of our rights and obligations pursuant to the agreements and those firms. Under Wyoming\nlaw, a conflict-of-interest transaction is not voidable if the transaction was fair at the time it was entered into or is approved in\nadvance by the vote of the board of directors not having an interest in the transaction if the material facts of the transaction and\nthe director’s interest are disclosed or known to the board prior to the vote. Each officer and director owe a fiduciary duty to\nthe Company to present business opportunities to the Company. We do not believe, however, that the fiduciary duties or contractual obligations\nof our officers or directors to other entities will materially affect our ability to identify and pursue business opportunities or to\ncomplete our initial business objectives.\n\n \n\n**Our\nrelatively short period of operations history in the industry makes evaluating our business difficult.**\n\n \n\nWe\nhave a short period of time in terms of operational history in our industry. Accordingly, our operations are subject to the risks inherent\nin the establishment of a new business enterprise, including access to capital, successful implementation of our business plan and limited\nrevenue from operations. We cannot assure you that our intended activities or plan of operation will be successful or result in revenue\nor profit to us and any failure to implement our business plan may have a material adverse effect on the business of the Company.\n\n \n\nTo\nbe profitable, we must:\n\n \n\n●\ndevelop\nand identify new prospective purchasers of our real estate\n\n●\ncompete\nwith larger, more established competitors in the real estate development industry;\n\n●\nmaintain\nand enhance our brand recognition; and\n\n●\nadapt\nto meet changes in our markets and competitive developments.\n\n \n\nWe\nmay not be successful in accomplishing these objectives. Further, our lack of operating history makes it difficult to evaluate our business\nand prospects. Our prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered\nby companies in their early stages of development, particularly companies in highly competitive industries. The historical information\nin this report may not be indicative of our future financial condition and future performance. For example, we expect that our future\nannual growth rate in revenues will be moderate and likely be less than the growth rates experienced in the early part of our history.\n\n \n\n**There\nis no guarantee that the Company will be able to complete development of its proposed properties and profitably sell any units.**\n\n \n\nThe\nCompany has acquired properties and thereafter, the Company intends to construct and develop proposed resort properties as well as other\nresidential and commercial property. There can be no assurance that the Company will complete the expected development plans or undertake\nto develop other resorts or complete such development if undertaken. Risks associated with the Company’s development and construction\nactivities may include the risks that: (i) acquisition and/or development opportunities may be abandoned; (ii) construction costs of\na property may exceed original estimates, possibly making the resort uneconomical or unprofitable; and (iii) construction may not be\ncompleted on schedule, resulting in decreased revenues and increased carrying cost such as taxes and interest expense. In addition, the\nCompany’s construction activities will typically be performed by third-party contractors, the timing, quality and completion of\nwhich the Company will be unable to control.\n\n \n\n9\n\n \n\n \n\n**Investors\nwill have no discretion in management’s real estate investment decisions.**\n\n \n\nOur\nmanagement will have complete discretion in making investments on our behalf in a range of real estate, which may include all types of\nproperties. Consequently, prospective investors will not be able to evaluate for themselves the merits of the specific properties that\nmay be acquired in the future and may not like the properties acquired. You will not be entitled to a return of your investment if you\ndo not approve the properties purchased. Our investment decisions are not made through reliance on sophisticated mathematical models\nor arbitrage programs. Instead, investors are relying on the judgment of our management alone to locate suitable properties that meet\nour investment criteria.\n\n \n\n**Our\nproposed ownership of real estate may result in losses if demand for property declines.**\n\n \n\nFrom\nour current real estate projects and any future real estate project acquired, we will be subject to risks incident to the ownership of\nreal estate, including: changes in general economic or local conditions, such as a decrease in demand for residential, commercial and\nindustrial space due to a decrease in population or employment or changes in technology or adverse downturns in the general economy;\nchanges to preferences that reduce the attractiveness of our properties to end users; fluctuation in mortgage rates, building ownership\nor operating expenses; rises and falls in undeveloped land values; costs of infrastructure, construction or other development costs;\nchanges in supply or demand of competing properties in an area; changes in interest rates, zoning and other governmental regulations\nand availability of permanent mortgage funds that may render the sale of a property difficult or unattractive; increases in the cost\nof adequate maintenance, insurance and other operating costs, including real estate taxes, associated with one or more properties, which\nmay occur even when a property is not generating revenue; inflation; and changes in tax laws and rates. A negative change in any of these\nrisks could reduce the demand for any properties we may acquire and a reduction in demand could result in a loss to us in the operation\nof or upon the sale of any such properties we may acquire.\n\n \n\n**Property\nimprovement costs are difficult to estimate and if costs exceed our budget, we may lose money on the development and sale of a property.**\n\n \n\nAcquisition\nof any properties for improvement, repositioning and sale entails risks such as those contemplated by us that include the following,\nany of which could adversely affect our financial performance and the value of your investment: Our estimate of the costs of improving\nor repositioning an acquired property may prove to be too low, and, as a result, the property may fail to meet our estimates of the profitability\nof the property, either temporarily or for a longer time. Our pre-acquisition evaluation of each new investment may not detect certain\nrequirements, limitations, defects or necessary improvements until after the property is acquired, which could significantly increase\nour total costs.\n\n \n\n**Our\noperating results may suffer because of potential development and construction delays and resultant increased costs and risks which could\nreduce our revenues or lead to the loss of your investment.**\n\n \n\nWe\nmay develop properties, including unimproved real properties, upon which we will construct improvements. We may be subject to uncertainties\nassociated with re-zoning for development, environmental concerns of governmental entities and/or community groups, and our builders’\nability to build in conformity with plans, specifications, budgeted costs and timetables. A builder’s performance may also be affected\nor delayed by conditions beyond the builder’s control. Delays in completing construction could also give tenants the right to terminate\npreconstruction leases. We may incur additional risks when we make periodic progress payments or other advances to builders before they\ncomplete construction. These and other factors can result in increased costs of a project or loss of our investment.\n\n \n\n10\n\n \n\n** **\n\n**Our\nreal estate development strategies may not be successful which could reduce our revenues or lead to the loss of your investment.**\n\n \n\nWe\nmay in the future engage in development activities to the extent attractive development projects become available. To the extent that\nwe engage in development activities, we will be subject to risks associated with those activities that could adversely affect our financial\ncondition, results of operations, cash flows and ability to pay distributions on, and the market price of, our common stock, including,\nbut not limited to:\n\n \n\n●\ndevelopment\nprojects in which we have invested may be abandoned and the related investment will be impaired;\n\n●\nwe\nmay not be able to obtain, or may experience delays in obtaining, all necessary zoning, land-use, building, occupancy and other governmental\npermits and authorizations;\n\n●\nwe\nmay not be able to obtain land on which to develop;\n\n●\nwe\nmay not be able to obtain financing for development projects, or obtain financing on favorable terms;\n\n●\nconstruction\ncosts of a project may exceed the original estimates or construction may not be concluded on schedule, making the project less profitable\nthan originally estimated or not profitable at all (including the possibility of contract default, the effects of local weather conditions,\nthe possibility of local or national strikes and the possibility of shortages in materials, building supplies or energy and fuel\nfor equipment);\n\n●\nupon\ncompletion of construction, we may not be able to obtain, or obtain on advantageous terms, permanent financing for activities that\nwe financed through construction loans; and\n\n●\nwe\nmay not achieve sufficient occupancy levels and/or obtain sufficient rents to ensure the profitability of a completed project.\n\n \n\nMoreover,\nsubstantial development activities, regardless of their ultimate success, typically require a significant amount of management’s\ntime and attention, diverting their attention from our other operations.\n\n \n\n**The\nreal estate market is cyclical, and a downturn of the market could increase the risk of loss of your investment.**\n\n \n\nInvestment\nin real estate involves a high degree of business and financial risk, which can result in substantial losses and accordingly should be\nconsidered speculative. The market for property in Mexico and the United States tends to be cyclical, with periods in which the prices\nof properties rise and fall. Prices have fallen in the past and have done so for a significant period of time. Any downturn in the real\nestate market in the U.S. or Mexico may have a negative effect on our operations and reduce any return generated upon the sale of our\nproperty.\n\n \n\n**Many\nreal estate costs are fixed and must be paid even if the property is not generating revenue which could increase your risk of loss of\nyour investment.**\n\n \n\nOur\nfinancial results depend primarily on being able to add value and then sell properties to others on favorable terms. Many costs associated\nwith real estate investment, such as debt service, real estate taxes and maintenance costs, generally are not reduced even when a property\nis not fully improved or used. Thus, even a small increase in the time to which a real estate property can be sold can result in a significant\nincrease in the carry costs of the property. New properties that we may acquire may not produce any significant revenue immediately,\nand the cash flow from existing operations may be insufficient to pay the operating expenses and debt service associated with that property\nuntil the property is sold.\n\n \n\n**Because\nthere is no liquid market for our properties, we may be unable to sell a property when it planned to, which could increase your risk\nof loss of your investment.**\n\n \n\nLiquidity\nrelates to our ability to sell a property in a timely manner at a price that reflects the fair value of that property. The illiquidity\nof properties may adversely affect our ability to dispose of such properties in a timely manner and at a fair price at times when we\ndeem it necessary or advantageous. The timing and likelihood of liquidation events is uncertain and unpredictable and affected by general\neconomic and property-specific conditions. There may not be a market, or the market may be very limited, for the real estate that we\nwill try to sell, even though we will make appropriate efforts to cover the available market. Investments in real properties are generally\nnot liquid. We may not be able to dispose of future properties within its anticipated time schedule and the sales of such properties\nmay not be made at the prices projected by us.\n\n \n\n**We\nare subject to zoning and environmental controls that may restrict the use of our property.**\n\n \n\nGovernmental\nzoning and land use regulations may exist or be promulgated that could have the effect of restricting or curtailing certain uses of our\nreal estate. Such regulations could adversely affect the value of any of our properties affected by such regulations. In recent years\nreal estate values have also sometimes been adversely affected by the presence of hazardous substances or toxic waste on, under or in\nthe environs of the property. A substance (or the amount of a substance) may be considered safe at the time the property is purchased\nbut later classified by law as hazardous. Owners of properties have been liable for substantial expenses to remedy chemical contamination\nof soil and groundwater at their properties even if the contamination predated their ownership. Although we intend to exercise reasonable\nefforts to assure that no properties are acquired that give rise to such liabilities, chemical contamination cannot always be detected\nthrough readily available means, and the possibility of such liability cannot be excluded.\n\n \n\n11\n\n \n\n \n\nUnder\nvarious foreign, federal, state and local laws, ordinances and regulations, we may be required to investigate and clean up certain hazardous\nor toxic substances released on or in properties we own or operate, and also may be required to pay other costs relating to hazardous\nor toxic substances. This liability may be imposed without regard to whether we knew about the release of these types of substances or\nwere responsible for their release. The presence of contamination or the failure to remediate property’ contaminations at any of\nour properties may adversely affect our ability to sell or lease the properties or to borrow using the properties as collateral. The\ncosts or liabilities could exceed the value of the affected real estate. We have not been notified by any governmental authority, however,\nof any non-compliance, liability or other claim in connection with any of our properties, and we are not aware of any other environmental\ncondition with respect to any of our properties that management believes would have a material adverse effect on our business, assets\nor results of operations taken as a whole.\n\n \n\nAlthough\nwe will attempt to determine the environmental condition of each property as part of our due diligence, we cannot be certain that this\ninvestigation will reveal all conditions that may impose an obligation on us to mitigate the environmental condition. If we were subject\nto environmental liability, which could be imposed based on our ownership of its property; such liability could adversely affect the\nvalue of your investment.\n\n \n\n**We\nmay be subject to partially uninsured losses that may require substantial payments which could reduce the value of your investment.**\n\n \n\nWe\ncurrently carry a $2,000,000 general liability policy for the Company. On Emerald Grove we have a comprehensive homeowner’s policy\nwhich also extends to the three (3) vacant parcels. Any ILA, vacant lot buyers or homebuyers will be encouraged to carry their own individual\ninsurance policies. In addition, if losses occur, they may exceed insurance policy limits, and policies may contain exclusions with respect\nto various types of losses or other matters. Consequently, all or a portion of our properties may not be covered by disaster insurance\nand insurance may not cover all losses which could reduce the value of your investment.\n\n \n\n**We\ncannot control certain factors affecting the performance and value of a property, which may cause the value of that property and your\ninvestment to decline.**\n\n \n\nThe\neconomic performance and value of our real estate assets will be subject to the risks described below that are normally associated with\nchanges in national, regional, and local political, economic and market conditions. These factors may adversely affect the ability of\nour customers to buy our real estate. Other local economic conditions that may affect the performance and value of the properties include\nthe local economy of a given real estate project; competition for buyers, including competition based on attractiveness and location\nof the property; and the quality of amenities a project has to offer. In addition, other factors may affect the performance and value\nof a property adversely, including changes in laws and governmental regulations (including those governing usage, zoning and taxes),\nchanges in interest rates (including the risk that increased interest rates may result in a decline in the liquidity of our properties),\ndeclines in housing or commercial property purchases and the availability of financing. Adverse changes in any of these factors, each\nof which is beyond our control, could reduce the cash flow that we receive from our properties, and adversely affect the value of your\ninvestment.\n\n \n\n**If\nwe choose to carry debt, inability to make secured debt payments could result in loss of mortgaged property and reduce the value of your\ninvestment.**\n\n \n\nThe\nCompany carries secured and unsecured promissory notes. Debt financing carries many risks, including refinancing difficulties, loss of\nmortgaged properties, reduced ability to obtain new financing and increases in interest. We may choose to use debt financing in connection\nwith future properties. If we cannot meet our secured debt obligations, the lender could take the collateral and we would lose both the\nsecured property and the income, if any, it produces. Foreclosure on mortgaged properties or an inability to refinance existing indebtedness\nwould likely have a negative impact on our financial condition and results of operations. We could have to pay substantial legal costs\nin connection with foreclosure of a property, and thus be subject to a deficiency judgment if the foreclosure sale amount is insufficient\nto satisfy the mortgage.\n\n \n\n12\n\n \n\n \n\n**Rising\ninterest rates could adversely affect our interest expense and cash flow and reduce the value of your investment.**\n\n \n\nWe\nmay borrow money at variable interest rates in the future to finance operations. Increases in interest rates would increase our interest\nexpense on our variable rate debt, which would adversely affect cash flow and our ability to service our debt and make distributions\nto our stockholders.\n\n \n\n**Our\nlack of an established brand name and relative lack of resources could negatively impact our ability to effectively compete in the real\nestate market, which could reduce the value of your investment.**\n\n \n\nWe\ndo not have an established brand name or reputation in the real estate business. We also have a relative lack of resources to conduct\nour business operations. Thus, we may have difficulty effectively competing with companies that have greater name recognition and resources\nthan we do. Presently, we have no patents, copyrights, trademarks and/or service marks that would protect our brand name or our proprietary\ninformation, nor do we have any current plans to file applications for such rights. Our inability to promote and/or protect our brand\nname may have an adverse effect on our ability to compete effectively in the real estate market.\n\n \n\n**We\nmay make changes to our business, investment, leverage and financing strategies without stockholder consent, which could reduce the value\nof your investment.**\n\n \n\nOur\ndiscussions with various individuals concerning various properties or projects have included general discussions of acquiring properties\ndirectly either ourselves or in a joint venture with others or of developing properties either ourselves or in a joint venture with others.\nThere is no limitation in the amount of funds we may invest in either property acquisition or property development. There is no limitation\non or percentage allocation of funds or assets between property acquisition and property development, or between 100% ownership and joint\nventure ownership. Further, as the market evolves, we may change our business, investment and financing strategies without a vote of,\nor notice to, our stockholders, which could result in our making investments and engaging in business activities that are different from,\nand possibly riskier than, the investments and businesses described in this filing. In particular, a change in our investment strategy,\nincluding the manner in which we allocate our resources across our portfolio or the types of assets in which we seek to invest, may increase\nour exposure to interest rate risk, default risk and real estate market fluctuations. In addition, we may in the future use leverage\nat times and in amounts deemed prudent by our management in its discretion, and such decision would not be subject to stockholder approval.\nChanges to our strategies with regards to the foregoing could materially and adversely affect our financial condition, results of operations.\n\n \n\n**We\ndepend heavily on key personnel, and turnover of key senior management could harm our business.**\n\n \n\nOur\nfuture business and results of operations depend in significant part upon the continued contributions of our Chief Executive Officer,\nChief Financial Officer and Chairman of the Board. If we lose their services or if they fail to perform in their current position, or\nif we are not able to attract and retain skilled employees as needed, our business could suffer. Significant turnover in our senior management\ncould significantly deplete our institutional knowledge held by our existing senior management team. We depend on the skills and abilities\nof these key officers in managing the product acquisition, marketing and sales aspects of our business, any part of which could be harmed\nby turnover in the future.\n\n \n\n**Our\nfuture results and reputation may be affected by litigation or other liability claims.**\n\n \n\nWe\nhave procured a $2,000,000 general liability insurance policy for our business. In addition, we procured a $1,000,000 executive and corporate\nsecurities liability policy. To the extent that we suffer a loss of a type which would exceed our limit, we could incur significant expenses\nin defending any action against us and in paying any claims that result from a settlement or judgment against us. Adverse publicity could\nresult in a loss of consumer confidence in our business or our securities.\n\n \n\n13\n\n \n\n \n\n**We\nmay be subject to regulatory inquiries, claims, suits prosecutions which may impact our profitability.**\n\n \n\nAny\nfailure or perceived failure by us to comply with applicable laws and regulations may subject us to regulatory inquiries, claims, suits\nand prosecutions. We can give no assurance that we will prevail in such regulatory inquiries, claims, suits, and prosecutions on commercially\nreasonable terms or at all. Responding to, defending and/or settling regulatory inquiries, claims, suits, and prosecutions may be time-consuming\nand divert management and financial resources or have other adverse effects on our business. A negative outcome in any of these proceedings\nmay result in changes to or discontinuance of some of our services, potential liabilities or additional costs that could have a material\nadverse effect on our business, results of operations, financial condition, and future prospects.\n\n \n\n**We\nare vulnerable to concentration risks because we intend to focus on the residential rather than commercial market.**\n\n \n\nWe\nintend to focus on residential rather than commercial properties. Economic shifts affect residential and commercial property markets,\nand thus our business, in different ways. A developer with diversified projects in both sectors may be better able to survive a downturn\nin the residential market if the commercial market remains strong. Our focus on the residential sector can make us more vulnerable than\na diversified developer.\n\n \n\n**RISKS\nRELATED TO OUR MEXICAN OPERATIONS**\n\n \n\n**General\neconomic conditions in Mexico may have an adverse effect on our operations and reduce our revenues.**\n\n \n\nGeneral\neconomic conditions in Mexico, such as inflation, high energy prices, expensive telecommunication services, the scarcity of skilled labor,\nand the Mexican government’s inability to regulate these input markets may diminish Mexico’s comparative advantage and earning\ncapacity in key industries such as real estate; additionally, weakening of the U.S. dollar versus the Mexican Peso and tax fluctuations\nin Mexico, may have an adverse impact on our business and financial results. The global economy in general and the economic conditions\nin Mexico remain uncertain. Weak economic conditions could result in lower demand for our properties, resulting in lower sales, earnings,\nand cash flows.\n\n \n\n**The\nvalue of our securities may be affected by the foreign exchange rate between U.S. dollars and the currency of Mexico.**\n\n \n\nThe\nvalue of our common stock may be affected by the foreign exchange rate between U.S. dollars and the Mexican Peso, and between those currencies\nand other currencies in which our revenues, expenses, assets, and liabilities may be denominated. For example, to the extent that we\nneed to convert the U.S. dollars into the Mexican Pesos for our operational needs, should the Mexican Peso appreciate against the U.S.\ndollar at that time, our financial position, our business, and the price of our common stock may be harmed. Conversely, if we decide\nto convert the Mexican Pesos into the U.S. dollars for the purpose of declaring dividends on our common stock or for other business purposes\nand the U.S. dollar appreciates against the Mexican Peso, the U.S. dollar equivalent of our earnings from our subsidiaries in Mexico\nwould be reduced.\n\n \n\n**We\nare subject to anti-corruption laws in the jurisdictions in which we operate, including the U.S. Foreign Corrupt Practices Act (the “FCPA”),\nas well as trade compliance and economic sanctions laws and regulations. Our failure to comply with these laws and regulations could\nsubject us to civil and criminal penalties, harm our reputation and materially adversely affect our business, financial condition and\nresults of operations.**\n\n \n\nDoing\nbusiness in Mexico requires us to comply with the laws and regulations of numerous jurisdictions. These laws and regulations place restrictions\non our operations and business practices. In particular, we are subject to the FCPA, which generally prohibits companies and their intermediaries\nfrom providing anything of value to foreign officials for the purpose of obtaining or retaining business or securing any improper business\nadvantage, along with various other anti-corruption laws. As a result of doing business in Mexico, we are exposed to a heightened risk\nof violating anti-corruption laws. Although we have implemented policies and procedures designed to ensure that we, our employees and\nother intermediaries comply with the FCPA and other anti-corruption laws to which we are subject, there is no assurance that such policies\nor procedures will work effectively all of the time or protect us against liability under the FCPA or other laws for actions taken by\nour employees and other intermediaries with respect to our business or any businesses that we may acquire. Any continued international\nexpansion, and any development of new partnerships and joint venture relationships worldwide, increases the risk of FCPA violations in\nthe future.\n\n \n\n14\n\n \n\n \n\nViolations\nof anti-corruption laws, export control laws and regulations, and economic sanctions laws and regulations are punishable by civil penalties,\nincluding fines, as well as criminal fines and imprisonment. If we fail to comply with the FCPA or other laws governing the conduct of\ninternational operations, we may be subject to criminal and civil penalties and other remedial measures, which could materially adversely\naffect our business, financial condition, results of operations and liquidity. Any investigation of any potential violations of the FCPA\nor other anti-corruption laws, export control laws and regulations, and economic sanctions laws and regulations by the United States\nor foreign authorities could also materially adversely affect our business, financial condition, results of operations and liquidity,\nregardless of the outcome of the investigation.\n\n \n\n**Our\noperations may be affected by social instability in Mexico.**\n\n \n\nBecause\nwe have Mexican operations, we are subject to social instability risks which could materially adversely affect our business and our results\nof operations. Specifically, our business is exposed to the risk of crime that is currently taking place in certain areas in Tijuana.\nRecent increases in kidnapping and violent drug related criminal activity in Mexico, and in particular Mexican States bordering the United\nStates, may adversely affect our ability to carry on business safely.\n\n \n\n**RISKS\nRELATED TO OUR COMMON STOCK**\n\n \n\n**We\nwill be subject to penny stock regulations and restrictions, and you may have difficulty selling shares of our common stock.**\n\n \n\nThe\nSEC has adopted regulations which generally define so-called “penny stocks” to be an equity security that has a market price\nless than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. We are a “penny stock”,\nand we are subject to Rule 15g-9 under the Exchange Act, or the “Penny Stock Rule”. This rule imposes additional sales practice\nrequirements on broker-dealers that sell such securities to persons other than established customers. For transactions covered by Rule\n15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written\nconsent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and\nmay affect the ability of purchasers to sell any of our securities in the secondary market.\n\n \n\nFor\nany transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure\nschedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable\nto both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are\nrequired to be sent disclosing recent price information for the penny stock held in the account and information on the limited market\nin penny stock.\n\n \n\nWe\nmay qualify for an exemption from the Penny Stock Rule. In any event, even if our common stock were exempt from the Penny Stock Rule,\nwe would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating\nin a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.\n\n \n\n**Because\nwe do not have an audit or compensation committee, shareholders will have to rely on the entire board of directors, none of which are\nindependent, to perform these functions.**\n\n \n\nWe\ndo not have an audit or compensation committee comprised of independent directors. These functions are performed by the board of directors\nas a whole. No members of the board of directors are independent directors. Thus, there is a potential conflict in that board members\nwho are also part of management will participate in discussions concerning management compensation and audit issues that may affect management\ndecisions.\n\n \n\n15\n\n \n\n \n\n**We\nmay, in the future, issue additional shares of common stock, which would reduce investors’ percentage of ownership and may dilute\nour share value.**\n\n \n\nOur\nArticles of Incorporation authorize the issuance of 250,000,000 shares of common stock. As of the date of this filing, we had 4,664,667\nshares of common stock outstanding. Accordingly, we may issue approximately 245,335,333 additional shares of common stock subject to\nlimitation on reserve amounts for other securities outstanding. The future issuance of common stock may result in substantial dilution\nin the percentage of our common stock held by our then existing shareholders. We may value any common stock issued in the future on an\narbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting\nthe value of the shares held by our investors and might have an adverse effect on any trading market for our common stock.\n\n \n\n**We\nare subject to compliance with securities law, which exposes us to potential liabilities, including potential rescission rights.**\n\n \n\nWe\nmay offer to sell our common stock to investors pursuant to certain exemptions from the registration requirements of the Securities Act,\nas well as those of various state securities laws. The basis for relying on such exemptions is factual; that is, the applicability of\nsuch exemptions depends upon our conduct and that of those persons contacting prospective investors and making the offering. We may not\nseek any legal opinion to the effect that any such offering would be exempt from registration under any federal or state law. Instead,\nwe may elect to relay upon the operative facts as the basis for such exemption, including information provided by investor themselves.\n\n \n\nIf\nany such offering did not qualify for such exemption, an investor would have the right to rescind its purchase of the securities if it\nso desired. It is possible that if an investor should seek rescission, such investor would succeed. A similar situation prevails under\nstate law in those states where the securities may be offered without registration in reliance on the partial preemption from the registration\nor qualification provisions of such state statutes under the National Securities Markets Improvement Act of 1996. If investors were successful\nin seeking rescission, we would face severe financial demands that could adversely affect our business and operations. Additionally,\nif we did not in fact qualify for the exemptions upon which we relied, we may become subject to significant fines and penalties imposed\nby the SEC and state securities agencies.\n\n \n\n**Because\nwe do not intend to pay any cash dividends on our common stock, our stockholders will not be able to receive a return on their shares\nunless they sell them.**\n\n \n\nWe\nintend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends\non our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their\nshares unless they sell them. There is no assurance that stockholders will be able to sell shares when desired.\n\n \n\n16\n\n \n\n \n\n**We\nexpect to experience volatility in the price of our common stock, which could negatively affect stockholders’ investments.**\n\n \n\nThe\ntrading price of our common stock may be highly volatile and could be subject to wide fluctuations in response to various factors, some\nof which are beyond our control. The stock market in general has experienced extreme price and volume fluctuations that have often been\nunrelated or disproportionate to the operating performance of companies with securities traded in those markets. Broad market and industry\nfactors may seriously affect the market price of companies’ stock, including ours, regardless of actual operating performance.\nAll of these factors could adversely affect your ability to sell your shares of common stock or, if you are able to sell your shares,\nto sell your shares at a price that you determine to be fair or favorable.\n\n \n\n**Financial\nIndustry Regulatory Authority (“FINRA”) sales practice requirements may also limit a stockholder’s ability to buy and\nsell our common stock, which could depress the price of our common stock.**\n\n \n\nFINRA\nhas adopted rules that require a broker-dealer to have reasonable grounds for believing that the investment is suitable for that customer\nbefore recommending an investment to a customer. Prior to recommending speculative low-priced securities to their non-institutional customers,\nbroker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment\nobjectives, and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative\nlow-priced securities will not be suitable for at least some customers. Thus, the FINRA requirements make it more difficult for broker-dealers\nto recommend that their customers buy our common stock, which may limit your ability to buy and sell our shares of common stock, have\nan adverse effect on the market for our shares of common stock, and thereby depress our price per share of common stock.\n\n \n\n**Anti-takeover\neffects of certain provisions of Wyoming state law may hinder a potential takeover of us.**\n\n \n\nWyoming\nhas a business combination law that prohibits certain business combinations between Wyoming corporations and “interested stockholders”\nfor two years after an “interested stockholder” first becomes an “interested stockholder,” unless the corporation’s\nboard of directors approves the combination in advance. For purposes of Wyoming law, an “interested stockholder” is any person\nwho is (i) the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the outstanding voting shares\nof the corporation or (ii) an affiliate or associate of the corporation and at any time within the three previous years was the beneficial\nowner, directly or indirectly, of ten percent or more of the voting power of the then outstanding shares of the corporation. The definition\nof the term “business combination” is sufficiently broad to cover virtually any kind of transaction that would allow a potential\nacquirer to use the corporation’s assets to finance the acquisition or otherwise to benefit its own interests rather than the interests\nof the corporation and its other stockholders.\n\n \n\nThe\neffect of Wyoming’s business combination law is potentially to discourage parties interested in taking control of us from doing\nso if they cannot obtain the approval of our Board. Both of these provisions could limit the price investors would be willing to pay\nin the future for shares of our common stock.\n\n \n\nOur stock is thinly traded, so you may\nbe unable to sell your shares at or near the quoted bid prices if you need to sell a significant number of your shares.\n\n \n\nThe\nshares of our common stock are thinly traded on the OTCQB Marketplace, meaning that the number of persons interested in purchasing our\ncommon stock at or near bid prices at any given time may be relatively small or non-existent. As a consequence, there may be periods\nof several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a\nlarge and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We\ncannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained,\nor that current trading levels will be sustained. Due to these conditions, we can give you no assurance that you will be able to sell\nyour shares at or near bid prices or at all if you need money or otherwise desire to liquidate your shares.\n\n \n\n17\n\n \n\n \n\n**Shares\neligible for future sale may adversely affect the market.**\n\n \n\nFrom\ntime to time, certain of our stockholders may be eligible to sell all or some of their shares of common stock by means of ordinary brokerage\ntransactions in the open market pursuant to Rule 144 promulgated under the Securities Act, subject to certain limitations. In general,\npursuant to amended Rule 144, non-affiliate stockholders may sell freely after six months subject only to the current public information\nrequirement. Affiliates may sell after six months subject to Rule 144 volume, manner of sale (for equity securities), and current public\ninformation and notice requirements. Any substantial sales of our common stock pursuant to Rule 144 may have a material adverse effect\non the market price of our common stock.\n\n \n\n**We\ncould issue additional common stock, which might dilute the book value of our common stock.**\n\n \n\nOur\nBoard of Directors has authority, without action or vote of our shareholders, to issue all or a part of our authorized but unissued shares.\nSuch stock issuances could be made at a price that reflects a discount or a premium from the then-current trading price of our common\nstock. In addition, in order to raise capital, we may need to issue securities that are convertible into or exchangeable for a significant\namount of our common stock. These issuances would dilute the percentage ownership interest, which would have the effect of reducing your\ninfluence on matters on which our shareholders vote and might dilute the book value of our common stock.\n\n \n\n**Our\ncommon stock could be further diluted as a result of the issuance of convertible securities, warrants or options.**\n\n \n\nIn\nthe past, we have issued convertible securities (such as convertible debentures and notes), warrants and options in order to raise money\nor as compensation for services and incentive compensation for our employees and directors. We have shares of common stock reserved for\nissuance upon the exercise of certain of these securities and may increase the shares reserved for these purposes in the future. Our\nissuance of these convertible securities, options and warrants could affect the rights of our stockholders, could reduce the market price\nof our common stock or could result in adjustments to exercise prices of outstanding warrants (resulting in these securities becoming\nexercisable for, as the case may be, a greater number of shares of our common stock), or could obligate us to issue additional shares\nof common stock to certain of our stockholders.\n\n \n\n**Our\narticles of incorporation allow for our board of directors to create new series of preferred stock without further approval by our stockholders,\nwhich could adversely affect the rights of the holders of our common stock.**\n\n \n\nOur\nboard of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors\nhas the authority to issue up to 2,010,000 shares of our preferred stock without further stockholder approval (including 200,000 shares\nthat have been designated Series A, 1,000 shares that have been designated Series B, 15,000 shares that have been designated Series C,\nand 20,000 shares that have been designated Series D) (see “Description of Capital Stock”). As a result, our board of directors\ncould authorize the issuance of a new series of preferred stock that would grant to holders of preferred stock the right to our assets\nupon liquidation, or the right to receive dividend payments before dividends are distributed to the holders of common stock. In addition,\nour board of directors could authorize the creation of a new series of preferred stock that has greater voting power than our common\nstock or that is convertible into our common stock, which could decrease the relative voting power of our common stock or result in dilution\nto our existing stockholders."}