| COMMITMENTS AND CONTINGENCIES |
NOTE 11 – COMMITMENTS AND CONTINGENCIES
From time to time, the Company may be subject to legal proceedings and claims in the ordinary course of business. The Company is currently not aware of any legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on its consolidated financial statements.
The Company has agreed to indemnify its directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by the Company, arising out of that person’s services as the Company’s director or officer or that person’s services provided to any other company or enterprise at the Company’s request. The Company may also be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions.
ITSQuest Contingent Divestiture
As more fully discussed in Note 6, the acquisition
of ITSQuest included a contingent divestiture clause where if certain trigger events are not achieved by December 31, 2025, ITSQuest
would divest back to its founders. If the Company is not able to achieve such trigger events, the Company’s business, financial
condition, results of operations and liquidity will be materially impacted as ITSQuest represented Company assets of $10,185
thousand, revenues of $3,904
thousand, and generated gross margins of $739
thousand as of and for the three months ended March 31, 2025, respectively.
Asset
Swap Agreements
As
of March 31, 2025, and through the filing date of this Quarterly Report on Form 10-Q, the Company has signed certain asset swap agreements
where consideration consisted of unicoins. Because the unicoin has not been delivered and listed for trading yet, management cannot yet
ascertain control over the assets included in such asset swap agreements. Accordingly, management has not recorded these transactions
in the consolidated balance sheet. In certain cases, the agreements include project failure or escrow provisions tied to a token launch
timeline. Where such conditions have lapsed without fulfillment, the agreements are considered terminated or abandoned in accordance
with their terms. Management is currently evaluating next steps, including the legal and accounting implications of such terminations,
as well as whether to engage counterparties to renegotiate or revive any of the affected transactions under revised terms. The following
represents summaries of each transaction:
| ● | “Restrepo”:
On July 29, 2024, the Company entered into an asset swap agreement (as amended) with Grupo Spira S.A.S., a company organized under the
laws of Colombia, pursuant to which the seller agreed to transfer 100% ownership of certain real estate assets to the Company in exchange
for rights to receive 4,340,000 unicoin tokens. Pursuant to the terms of the asset swap agreement, the seller is required to transfer
the asset by deed. While due diligence has been completed, the transfer of title has not yet occurred. Accordingly, management has determined
that the criteria for recognition of this transaction on the consolidated balance sheet has not been met. |
| ● | “Buona
Vista”: On June 26, 2024, the Company entered into an Asset Swap Agreement (the “Agreement”)
pursuant to its 140 Program with Victor Raul Montenegro Criado, an individual citizen of
Peru, and Villa Paradiso S.A.C., a company organized under the laws of Peru (collectively
referred to in this paragraph only as the “Seller”). Under the Agreement, the
Seller agreed to transfer 100% of the ownership interest in Buona Vista – Casas Club
& Resort S.A.C., a Peruvian entity holding certain real estate assets, to the Company
in exchange for rights to receive 61,795,216 unicoin tokens. The unicoin token rights will
be issued in three tranches, contingent upon the achievement of specified construction milestones
related to the real estate assets. The initial ICO date was set for September 30, 2024, and
was subsequently extended to March 30, 2025, pursuant to an amendment dated October 23, 2024.
The Company did not proceed with the ICO by the extended deadline of March 30, 2025. Accordingly,
on April 23, 2025, the parties executed a second amendment to revive and amend the original
Agreement, extending the ICO deadline to December 31, 2025. The Company has instructed local
counsel to initiate steps to move the transaction to escrow. As of the date of this report,
the transaction has not yet moved to escrow; title to the assets has not transferred, and no unicoin
rights have been issued in connection with the transaction. Accordingly, management has determined
that the criteria for recognition of this transaction on the consolidated balance sheet has
not been met. |
| ● | “Bahamas”: On January 24, 2024, the Company entered into two Asset Swap Agreements pursuant to its 140 Program to acquire
the beneficial interest in two Bahamian entities, Long Island Investments Ltd. and Newport Harbour Ltd. (collectively referred to in this
paragraph only as the “Landholding Companies”), which collectively own specified real estate parcels in the Bahamas. In exchange,
the Company agreed to issue a total of 1,108,863,283 unicoin rights. On March 25, 2024, the parties executed an amendment clarifying certain
rights and obligations, including provisions related to the conversion of the beneficial interest into full legal ownership. Under the
Agreements, as amended, the Company obtained a beneficial interest in the Landholding Companies through a trust declaration, with the
option to convert its beneficial interest into full legal ownership of the entities. The Agreements also included a rescission clause
stipulating that if the unicoin tokens are not created and listed on crypto exchanges within six months, the Agreements would terminate,
and the assets and unicoin rights would revert to the Investors and Company, respectively. The Company did not proceed with the ICO as
anticipated under the original Agreements. Accordingly, on September 27, 2024, the parties executed a second amendment extending the ICO
deadline to December 31, 2024, and establishing the following interim obligations: (i) Finalize the technical procedures for transferring
unicoins to New World Properties SPV Inc.’s crypto wallet; (ii) Facilitate the Company’s ongoing due diligence on the Investor
Company and the Properties; and (iii) Complete the conversion of beneficial ownership of shares into full legal ownership of the Landholding
Companies, thereby granting the Company full control over the Properties. The second amendment further provides that if, by January 30,
2025, the parties are unable to agree on a new ICO date and no regulatory delay is in effect, the Agreement shall be deemed null and void
ab initio, releasing all parties from any liabilities or obligations. The Company did not proceed with the ICO by the extended deadline
of December 31, 2024. On May 21, 2025, counsel for New World Properties SPV Inc. notified the Company of its withdrawal from representation,
citing the pending SEC lawsuit against the Company as one of the reasons for his withdrawal. In the notice, counsel stated its belief
that the transaction between Unicoin and the SPV could not proceed to closing under the current circumstances. This withdrawal abruptly
halted the progress that had been made between the parties’ legal counsel toward finalizing an extension of the transaction deadline
and completing the conversion of the Company’s beneficial interest into full legal ownership of the Landholding Companies. As a
result, the Company must now reengage directly with the relevant investors to assess the status of the transaction and determine whether
a path forward remains feasible. However, there is no assurance that the transaction will be consummated. |
| | Due to the existence of the rescission provision in the agreements, and because the Company has not completed the process of converting
beneficial ownership into full legal ownership, management has concluded that the criteria for recognition of this transaction in the
consolidated balance sheet have not been met. |
| |
● |
“Greenmall Venezuela”: On November 1, 2023, the Company entered into an asset swap agreement with Shine Investment Corp. a company organized under the laws of Panama (referred to in this paragraph only as the “Seller”), pursuant to which the seller agreed to transfer 100% of the ownership interest in Inversiones Inmobiliarias Petroin CA, a Venezuelan entity owning certain real estate assets, to the Company, in exchange for rights to receive 11,496,800 unicoin rights. Under the terms of the asset swap agreement, all corporate documents related to the transaction were deposited in escrow pending the transfer of the consideration to the designated wallet. As of the date of this report, although the agreement remains in effect, the escrow period has lapsed, the escrow agent has returned the corporate documents to the Seller, and the transaction has not been consummated. Accordingly, management has determined that the criteria for recognition of this transaction in the consolidated balance sheet has not been met. |
| ● | “Colorado”:
On October 23, 2023, the Company entered into an Asset Swap Agreement (as amended) with Bart
M. Gould and Rozalyn S. Gould, husband and wife residing in the United States (collectively
referred to in this paragraph only as the “Sellers”), pursuant to which the Company
agreed to acquire certain real estate assets in exchange for 11,564,000 unicoins. On April
23, 2024, the parties amended the Agreement to include a condition requiring that the deed
to the assets be released to the Company upon the issuance of the unicoins to the Sellers
and their subsequent listing and tradability on a token trading platform or exchange. As
of the date of this report, the transaction has not closed, title has not been transferred,
and no unicoin rights have been issued in connection with the transaction. Accordingly, management
has not met the control criteria for recognition of this transaction in the consolidated
balance sheet. |
| ● | “Club
51”: On October 20, 2023, the Company entered into an asset swap agreement with International
Mame Industry SAPI de CV, a company organized under the laws of Mexico, pursuant to which
the Company agreed to acquire 20% of the equity interest in the Club 51 business, controlled
by International Mame Industry SAPI de CV and its subsidiaries. The Club 51 business, which
consists of a series of exclusive business clubs, is currently distributed among multiple
entities, and is to be reorganized and consolidated prior to closing, such that the Company
is to receive a 20% ownership interest in the Club 51 businesses, in exchange for 100,000,000
unicoins. This transaction remains in the due diligence phase, as the corporate consolidation
of the Club 51 entities remains incomplete. Accordingly, management has not met control criteria
for recognition of this transaction in the consolidated balance sheet. |
| ● | “Antigua”:
On October 16, 2023, the Company entered into an asset swap agreement with Five Island Lands
Trust (referred to in this paragraph only as the “Investor”) pursuant to the
Company’s 140 Program. The agreement provided that the Company, as the issuer of unicoins,
warranted that the ICO would be launched on or before November 15, 2023. If the ICO did not
occur by the specified date, the Agreement required the parties to negotiate a new ICO date
in good faith within 45 days of the original ICO date. The parties were unable to reach an
agreement on a new ICO date. While the agreement does not expressly state that the failure
to launch by the ICO date would terminate the Agreement, it does provide that “failure
to effect the planned ICO” permits the parties to “challenge the agreement.”
As of the date of this report, the transaction has not closed, title to the assets has not
transferred, no unicoin rights have been issued, and the agreement remains subject to potential
challenge. Accordingly, management has not met the control criteria for recognition of this
transaction in the consolidated balance sheet. |
| ● | “Eden
Grand Resort”: On August 31, 2023 the Company entered into an asset swap agreement
with Mr. Mohammad Al Saeed Adnan and Mr. Chai Trongchitnimit, pursuant to which the Company
agreed to acquire certain real estate assets in Chonburri, Thailand in exchange for 671,206,755
unicoins. The assets are to be delivered to Genniwine Inc., a corporation organized under
the laws of Thailand, of which the Company controls 49% pursuant to a shareholder agreement
in which Alex Konanykhin, acting for the Company, receives the full economic benefits of
Genniwine. The assets consist of a development project for a 6-story condominium resort which
is under construction, with the unicoins payable in three tranches: (i) 34% deliverable at
closing and transfer of title to the Property; (ii) 33% deliverable when construction of
the structures proposed to be built on the property is 50% complete; and (iii) 33% deliverable
when construction of the structures proposed to be built on the property is 100% complete.
Deeds to the assets are currently held in escrow pending delivery of unicoin tokens. The
escrow arrangement terminates if tokenized coins not delivered by April 30, 2024, but only
with notice from the escrow agent that the transaction is terminated, which notice has not
yet been provided. Accordingly, management has not met control criteria for recognition of
this transaction in the consolidated balance sheet. |
| ● | “Finca
La Esperanza”: On July 27, 2023, the Company entered into an agreement with Eugenio
de la Torre (referred to in this paragraph only as the “Investor”), pursuant
to which the Company agreed to issue 36,400,000 Unicoin rights in exchange for real estate
assets consisting of the agricultural farm known as “Finca La Esperanza,” located
in Cumaribo, Vichada, Colombia. The assets were transferred to the Company by deed on October
23, 2023, and recorded with the local registry in February 2024. The agreement includes a
project failure clause, which stipulates that if the Unicoin token was not both tokenized
and released for trading within 12 months of the agreement date, the transaction would be
deemed terminated, requiring each party to return their respective contributions. As the
12-month period has now lapsed without the token being released for trading, the agreement
is deemed terminated in accordance with its terms. This triggers reversionary rights: the
real estate assets are to be returned to the Investor, and the 36,400,000 Unicoin rights
are to be returned to the Company. Management is currently evaluating next steps, including
the legal and logistical process for effecting the reversals, the accounting implications
of the transaction, and whether it may be appropriate to engage the Investor in discussions
regarding the potential modification or removal of the clawback provisions under the agreement.
Accordingly, management has not met control criteria for recognition of this transaction
in the consolidated balance sheet. |
| ● | “Thai
Villas”: On May 5, 2023, the Company entered into an asset swap agreement with M.E.
Construction, a company organized under the laws of Thailand, pursuant to which the Company
agreed to acquire certain real estate assets in Chonburri, Thailand in exchange for 12,800,000
unicoins. The assets are to be delivered to Genniwine Inc., a corporation organized under
the laws of Thailand, of which the Company controls 49% pursuant to a shareholder agreement
in which Alex Konanykhin, acting for the Company, receives the full economic benefits of
Genniwine. The assets are eight villas under construction, with the unicoins payable in two
tranches: (i) 60% payable upon execution of the transaction, and (ii) 40% payable upon completion
of construction and delivery of the completed assets to the Company. Deeds to the assets
are currently held in escrow pending delivery of unicoin tokens. The escrow arrangement terminates
if tokenized coins not delivered by April 30, 2024, but only with notice from the escrow
agent that the transaction is terminated, which notice has not yet been provided. Accordingly,
management has not met control criteria for recognition of this transaction in the consolidated
balance sheet. |
| ● | “Philippine
Property Interests”: As of the date of this report, Unicoin Inc. holds contractual
rights and certain beneficial interests in various real estate properties located in the
Philippines, pursuant to a series of Asset Swap Agreements (“ASAs”) and related
instruments entered into with third parties. These agreements contemplate the contribution
of real estate assets in exchange for future rights to receive unicoins. However, due to
legal restrictions under Philippine law prohibiting foreign entities from holding title to
land, Unicoin Inc. is not named as the transferee in any of the Conditional Deeds of Sale
associated with these transactions. Legal title is instead expected to be transferred to
affiliated Philippine entities. As a result, Unicoin Inc. may not hold direct legal title
to, nor a formal, enforceable beneficial interest in, the properties contributed under these
ASAs. |
Although a separate agreement referencing
one such affiliate, UH Properties Inc., provides for certain coordination with Unicoin Inc., it may not expressly secure Unicoin Inc.’s
economic rights in the underlying assets once title is transferred. This arrangement may require amendment or replacement to establish
a legally enforceable interest. The Company is therefore actively exploring structural and contractual mechanisms to preserve and realize
the economic value of these property contributions. Until such mechanisms are implemented and formalized, the Company cannot guarantee
its ability to control, monetize, or otherwise benefit from these real estate assets. These interests form part of Unicoin’s broader
asset accumulation strategy but are not currently generating revenue or being utilized in active operations.
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