The purchase of real estate involves risk and should be regarded as speculative. The purchase of real estate should be considered only by persons who can afford a loss of their entire investment. The following risk factors should be considered carefully before purchasing real estate. Additional risks and uncertainties not presently known to the Grupo Mariana or that it currently deems immaterial may also impair Grupo Mariana’s business and operations. If any of the following actually occur, the value of the purchased real estate could be materially and adversely affected.

Risks of Forward Looking Financial Statement. Provided with any Information Memorandum are forward-looking statements that involve risks and uncertainties. Such forward-looking statements contemplate, without limitation, projected improvements to a property, demand for real estate and general business and economic conditions. The forward-looking statements provided are subject to numerous uncertainties and should not be relied upon. There is no representation that these projections or forecasts will be realized in whole or in part. Actual results may differ from the results discussed in such forward-looking statements. Variations between any projections and the actual results may be material and adverse to Grupo Mariana, and therefore, adversely affect the value of the investment made by a Purchaser.

Restrictions on Transfer of Interests; Lack of Liquidity. The purchase of real estate is sometimes an illiquid asset because the real estate is subject to certain exceptions set forth in the Club Membership Documents. Memberships are not transferable except under certain conditions set forth in the Club Membership Documents. The real estate will not be registered for public sale under the United States Securities Act of 1933 and Grupo Mariana has no present intention of registering such real estate and/or Memberships in the future. Such real estate is being sold pursuant to the exemptions from registration contained in Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated under the Act, and pursuant to exemptions from registration and qualification requirements contained in state securities laws. Without such registration and resale of the Memberships by Grupo Mariana, which depends on the market for Memberships, the Memberships may not be resold, transferred or otherwise disposed of by Members, except in accordance with the Club Membership Documents. Purchasers will be required to represent that they are purchasing a real estate unit for their own account and that they are aware of the restrictions imposed on the transferability of Memberships. In connection with the offer and sale of the real estate hereunder, Grupo Mariana undertakes no obligation to register or qualify, or to assist in the registration or qualification of, the real estate in the future. Accordingly, an investor may be unable to liquidate an investment in the real estate and should be prepared to bear the economic risk of investment in the real estate for an indefinite period of time and should be able to withstand a total loss of his investment.

Risks Related to the Grupo Mariana and the Club

Prior Operating History. Grupo Mariana has been created to own and oversee the development of properties, and therefore has no prior operating experience or history. Although the Developer has numerous properties under development, the probability of Grupo Mariana’s success cannot be gauged on any prior experience of Grupo Mariana or the prior experiences of its principals. Additionally, Grupo Mariana has no material assets other than their properties itself.

The Club is newly organized with no prior operating history, and may be in competition with other companies having greater experience and/or financial resources in connection with the development and marketing of the Club. As a startup business, the Club may incur substantial operating deficits before it achieves a full complement of members in order to maintain member dues at a competitive level during the membership marketing phase of Club development.

Risk Associated with Current Development. The ultimate value of real estate and of a purchaser’s enjoyment of the property will depend on the successful development of the property. While development of their properties is currently progressing, planning and financing work must be completed if Grupo Mariana’s vision for their properties is to be realized. Accordingly, there can be no assurance that the proposed projects will be completed in whole or in part or that purchasers of real estate will in fact be able to enjoy their Memberships or home sites, villas, townhomes and condominiums should they chose to acquire them. If Grupo Mariana does not complete development of their properties in substantial part, or if Grupo Mariana is unsuccessful in selling Memberships, regular memberships, home sites, villas, townhomes and condominiums, a purchaser of real estate may lose some or all of his or her investment.

Property History. Grupo Mariana has the authority to enter into agreement with the proposed “purchasers”, to sell freehold title to certain lands (the “Lands”).  Grupo Mariana represents the Vendor, the owner of lots within the development known as Isla Mariana Beachfront Retreat S.A. (hereinafter referred to as “Isla Mariana”) located in the Municipality of Leon, along the Pacific Coast in the Republic of Nicaragua, commonly known as Isla Real de Las Penas and legally described in the Leon registry under number: 21,580, Entry 919, Volume 1021, Pages 292 and 295 at the Public Registry in the City of Leon, Nicaragua. The lots are not under a Horizontal Property Regime and subject general rules applicable to all owners within the project, which request payment of common expenses fees among other regulations established to guarantee high standards of quality within the Isla Mariana project.

Property History. Grupo Mariana has the authority to enter into agreement with the proposed “purchasers”, to sell freehold title to certain lands (the “Lands”) situated in the municipalities of San Rafael and Diriamba, Nicaragua, and legally duly registered at the Property Public Registry of the Department of Managua under number: 4,251 for San Rafael and the Department of Carazo under number: 18,352 for Diriamba. In this property, Grupo Mariana is developing a mix-use real estate development project.

Financing. Full development of the property will require capital far in excess of that to be raised in pre-sales of home sites. Grupo Mariana has not yet firmly identified persons who would become Founder Members, regular members, potential lenders or any other source of funds. However, Grupo Mariana has had preliminary talks with various financial institutions, including the International Finance Corporation (“IFC”), a member of the World Bank Group, the Central American Bank for Economic Integration (“BCIE”) and Banco de la Produccion (“Banpro”). The IFC provides loans, equity structured finance and risk management products to build the private sector in developing countries. The BCIE is considered the leading source of multilateral financing for the integration and development of Central America. Banpro is Nicaragua’s largest commercial bank. Although Grupo Mariana believes that prospects for financing are positive, there is no guarantee that financing will be available on terms that would be beneficial to the project. The inability to find sources of funding for the property will adversely impact the value of purchaser’s investment in real estate and benefits associated therewith, and may result in a total loss of the investment.

Real Estate Development Risks. Grupo Mariana can provide no assurance that the property will be completed on time or within budget. Investments in real estate are subject to numerous risks which are subject to change outside the control of Grupo Mariana. These risks include changes in the supply or demand for real property, changes in available financing, changes in interest rates, increases in property operating and maintenance costs, adverse use of neighboring real estate, changes in applicable zoning, tax, eminent domain, environmental and other laws and regulations, changes in applicable tax rates and assessments, adverse developments in general or local demographic, political or economic conditions and fires or natural disasters, any of which might delay or prevent construction of the property or impair the financial viability of the property.

In the event of development of a golf course, golf course projects are subject to particular risks related to soil and other environmental conditions, droughts, water table problems and the like. Demand for private golf course memberships is variable and there is substantial competition for members among luxury golf communities, both established and planned, in Central America and elsewhere. While Grupo Mariana believes that the property’s location, amenities and competitive pricing will provide advantages, there can be no assurance that its amenities, location, pricing, and other features will be competitive with other golf communities.

In particular, development of the property, like any new project development, will be subject to various timing, budgeting and other risks. These risks include:

• construction delays or cost overruns that may increase project costs;
• failure to obtain, or delays in obtaining, building, occupancy, environmental and other required governmental permits and authorizations;
• unforeseen engineering, environmental, water or geological problems;
• “acts of God” such as hurricanes, earthquakes, floods or fires;
• interruptions or shortages in the supply of, or increases in the costs of, utilities, material, equipment and labor;
• failure to coordinate construction activities of various contractors with each other and with obtaining required permits and authorizations;
• failure to raise additional capital to complete the development of the Property; and
• The assertion of claims against the Company for construction defects caused by architects or contractors.

Dependence on Third Parties. The success of the development’s business will depend in large part on Grupo Mariana’s ability to retain qualified employees, consultants, architects, contractors, marketing professionals and development managers, among others. The success of the development will be dependent on the efforts and performance of such third parties. For example, since the design, planning and construction of the property will be performed by third-party contractors, the timing, quality and completion of such activities will not be within the full control of Grupo Mariana. The operation of the completed development will also be dependent on the efforts of others, including individuals or firms engaged by the Company to market home sites and Club memberships or manage, maintain and operate the contemplated facilities. The underperformance or loss of services of any of these parties could have a material adverse effect on the prospects for the property and adversely impact the value of a purchaser’s investment. Further, there is no obligation that any member of Grupo Mariana or their affiliates makes any capital contributions to Grupo Mariana to benefit purchasers.

Environmental Regulation Risks. Environmental regulations could make Grupo Mariana and/or its affiliates liable for cleaning up hazardous substances. Environmental laws, ordinances and regulations of various federal or local governments will regulate certain of Grupo Mariana’s operations and could make Grupo Mariana and/or its affiliates liable for the costs of managing, removing or cleaning up hazardous or toxic substances on, under or in the property. Such laws could impose liability without regard to whether Grupo Mariana or its affiliates knew of, or was responsible for, the presence of hazardous or toxic substances. The presence of hazardous or toxic substances, or the failure to properly clean up such substances when present, could jeopardize the development or use of the property. If Grupo Mariana or its affiliates arranges for the disposal or treatment of hazardous or toxic wastes, it could be liable for the costs of removing or cleaning up wastes at the disposal or treatment facility. Certain laws and regulations, particularly those governing the management or preservation of wetlands, and threatened or endangered species, could limit the development or use of the property.

Casualty Risks. If there is an uninsured loss, the property could be adversely affected. Grupo Mariana intends to use commercially reasonable efforts to maintain customary insurance for Club activities, the property and the planned improvements. Certain extraordinary losses such as those caused by earthquakes and floods may be uninsurable or too expensive to insure. If an uninsured loss occurs, Grupo Mariana could lose its capital investment as well as anticipated revenues, and would still owe any indebtedness related to the property. This type of an event would negatively impact the value of the purchaser’s investment.

Economic Risks. Domestic and foreign economic conditions may negatively impact the development and operation of the property. The current global economic climate could, among other things, reduce the number of persons willing to acquire property at the development and to become members of the Club or the frequency of members’ visits to the Club and, consequently, the revenues generated from property buyers and members.

Pricing. The purchaser’s allocation of capital to real estate have been arbitrarily determined by Grupo Mariana. The allocation of the price of Membership is based on the Grupo Mariana’s belief that Club memberships will be marketed to the public at least at such price. There is no assurance, however that such minimum prices will be attained or that the prices of Club Memberships or real estate units will appreciate.

Refunds. The refunds to which purchasers are entitled as members in the Club, as provided in the Summary of Membership Program will depend on the Club’s ability to operate and successfully sell regular Memberships. This is due to the fact that a purchaser is not entitled to a refund following resignation of a Membership until a replacement regular Member takes his or her position in the Club. There is no guarantee that the Club will be able to successfully operate or sell Memberships and therefore, it is possible the purchasers may not enjoy their Membership and that Memberships will have little or no value. In the event the organization of the Club is not ultimately successful, Members may suffer the loss of the benefits of membership in the Club, including the loss of the portion of the contribution allocated to the Membership.

Lack of Management Rights. The Club will be a private club owned and operated by a designated company by Grupo Mariana, or its affiliates. Purchaser’s will have no rights to manage the Club, directly or indirectly. Grupo Mariana will control the operation of the Club through its ability to appoint the Board of Directors. Although the owners of Grupo Mariana may consult informally with some or all of those persons who ultimately become Members with respect to issues affecting the development and marketing of the Club in an effort to obtain their suggestions, Grupo Mariana will be entitled to decide all matters of policy for the Club without any direct input from any of the Club members. Accordingly, investors should not subscribe for a Membership unless they are willing to entrust all aspects of the development and management of the Club to Grupo Mariana, Developer, their affiliates, agents and principals. Purchasers should be aware that even if the Club is successfully organized, memberships are being issued without any guarantee or commitment as to future changes to facilities or changes to the membership documents, subject to the provisions of the membership plan documents. Any changes may negatively impact the use or enjoyment of the Club’s facilities and the member’s membership in the Club.

Risk of Raising Insufficient Capital. Grupo Mariana’s future capital requirements will depend on many factors, including but not limited to construction costs and expenses and long-term facility maintenance. If the net proceeds of real estate sales will not provide Grupo Mariana with sufficient funds, it may need to raise additional funds through equity or debt financing or from other sources. No assurance can be given that additional financing will be available or that, if available, it can be obtained on terms favorable to Grupo Mariana. Failure to obtain necessary financing could have a material adverse effect on Grupo Mariana’s business, financial condition or results of operations.

Potential Risk of Leveraged Development. There can be no assurance that Grupo Mariana will be able to fund all or substantially all of the anticipated costs of development and improvements from the proceeds from real estate sales. Grupo Mariana’s future capital requirements will depend on many factors, including but not limited to construction costs and expenses and long term facility maintenance. If the net proceeds of real estate sales will not provide Grupo Mariana with sufficient funds, it may elect to fund any shortfall by utilizing third party debt financing, in which case Grupo Mariana will have all of the normal risks which can be anticipated from a use of leverage to develop real estate. The ultimate ability of Grupo Mariana to repay any outside debt financing incurred by them will be dependent upon Grupo Mariana’s efforts to market and sell real estate and memberships in the Club, townhomes condominiums and home sites sufficient to repay such financing when due. As a condition to obtaining outside debt financing, an unaffiliated lender would likely require Grupo Mariana to provide a mortgage on its property to secure the repayment of such financing. Although Grupo Mariana presently believes that proceeds from Memberships, home sites, townhomes and condominiums will be sufficient to fully satisfy Grupo Mariana’s obligations to service any debt financing obtained by Grupo Mariana or its affiliates from third parties in connection with the project, in the event that such proceeds are insufficient to pay the obligations of Grupo Mariana as they become due, there can be no assurance that Grupo Mariana will generate sufficient current cash receipts during any fiscal period in excess of current costs, expenses and reserves to enable Grupo Mariana or its affiliates to repay in full or refinance on a timely basis any third party debt incurred by them to fund such activities. Even if Grupo Mariana were ultimately successful in obtaining a satisfactory work out of any such default, any collection efforts undertaken by a lender prior to the time satisfactory arrangements were concluded could have an adverse effect upon the business reputation and financial condition of Grupo Mariana. Although Grupo Mariana believes that its ability or the ability of any of its affiliates to undertake third party debt in connection with the development or operation of the Club would necessarily involve consideration by a lender of the financial resources available to the borrower and the anticipated financial results of the Club at the time such obligations are incurred, the decision of Grupo Mariana to obtain debt financing in connection with this project may materially increase the risk to Investors.

Risk of Losing Certain Key Members of the Company’s Management Team. Grupo Mariana is dependent to a significant extent on the continued efforts and abilities of Grupo Mariana’s Chairman, Kevin Fleming, its President Maria Rueda, and other key executives, managers and consultants. If Grupo Mariana was to lose the services of Mr. Fleming, Mrs. Rueda or other key executives, managers or consultants before a qualified replacement or replacements could be obtained, Grupo Mariana’s business could be materially adversely affected. Grupo Mariana believes that its future success will also depend upon its ability to hire, train and retain other highly skilled personnel. Competition for quality personnel is intense, and qualified personnel may not be available in Nicaragua, or may be difficult to relocate there. Grupo Mariana cannot be sure that it will be successful in hiring, relocating, assimilating or retaining the necessary personnel, and its failure to do so could adversely affect Grupo Mariana’s business and financial condition.

Risks Related to the Development of the Club and the Residential Units.

Risks Associated with Development. Risks associated with construction of the Club and a residential community include, without limitation:

• Construction or other costs may exceed estimates, possibly making development and operation of the Club uneconomical;
• Sale of memberships, townhomes, condominium and home sites may not be sufficient to fund the development or operation of the Club;
• Construction may not be completed on time resulting in delayed operation of the Club; and
• Construction may be delayed by acts of nature, including hurricanes, or of any governing body, strikes, or other delays beyond Grupo Mariana’s control.

Additionally, construction activities will typically be performed by third-party contractors, increasing the complexity and Developer’s control of such key factors as the timing, quality and completion of construction projects. Development activities typically require a substantial portion of management’s time and attention which may distract Grupo Mariana management from management of the Club and its Facilities. The construction, use and occupancy of any golf course are also subject to risks relating to the inability of the project to obtain, or delays in obtaining, all other necessary building, occupancy and other required governmental permits and authorizations.

Reliance upon Future Membership and Home Site Sales. Grupo Mariana intends to utilize proceeds received from real estate sales to complete infrastructure improvements such as water distribution systems, roads, waste water treatment facilities and waste water transportation facilities, power and communication facilities and other infrastructure. Additionally, funds received from real estate sales will be used for planning and design, administrative costs and any golf course construction. The ability of Grupo Mariana to achieve the levels of sales required to support the development and operation of the Club, and the time required by Grupo Mariana to achieve such levels, will depend upon the ability of Grupo Mariana to execute its plans for the marketing of Memberships in the Club and homes in the project to a number individuals and the ability of available markets to support the sales required to achieve such plans. In the event that Grupo Mariana is not successful in its efforts to market Memberships in the Club and home sites in the project, such event may in the worst case, result in the loss of their entire investment in the real estate. In the event that an investor acquires a Membership in the Club, such investor will not be required to pay membership dues in the Club from the date of issuance of such membership and continuing until five (5) years after the issuance of such membership. The inability of the Club to sell sufficient Club memberships to sustain a viable operation after such an investor has acquired his or her Membership will have a direct negative impact upon the benefits enjoyed by such investors with respect to any such Membership. Fluctuation in the membership levels, real estate sales and operating expenses can adversely affect operating results and net cash flow and could impair the operation of the Club facilities.

Risks Associated with Club Operations. Grupo Mariana or its contractors intends to manage the Club and its facilities in such a manner as to assure that payments for dues and charges are used to build the quality and reputation of the Club. Future operating revenues may be insufficient to recover any losses sustained in connection with development of the Club facilities. The failure of the Club to operate on a positive cash flow basis could impair continued operation of the Club facilities and adversely affect Club Members’ use and enjoyment of such facilities. Cash flow may be adversely affected by disproportionate increases in fixed charges and operating costs, such as real estate taxes, labor, and golf course maintenance.

Risks Related to Potential Membership Benefits. The primary benefit from such an investment is anticipated to be the opportunity for a purchaser to become a Member to enjoy the unique privileges extended to the Club under the Membership Agreement, Membership Plan and Club Rules, including the non-payment of membership dues for up to five (5) years. The ultimate economic value of a Membership will further depend upon the ability of the Club to establish and sustain the presently anticipated levels of memberships for its Club Memberships in the face of future events and market conditions beyond the control of Grupo Mariana. While Grupo Mariana intends to honor its contractual obligations to purchaser’s to provide those benefits as outlined in the applicable Membership Documents and the current Club Rules, and believes that it will be able to do so, any membership rights which might ultimately be acquired by a subscriber could be adversely impacted if unanticipated circumstances occur during the development of the Club Facilities or marketing of Club memberships which prevent Grupo Mariana from fulfilling its obligations as set out in the Membership Documents and Club Rules.  Members will remain subject to the risks associated with any events or circumstances which impact the ability of Grupo Mariana to fulfill its obligations according to the Membership Documents applicable to such membership. In the event the organization of the Club is not ultimately successful, any subscribers who acquire Memberships may suffer the entire loss of the benefits of the membership rights obtained by them. Purchaser’s should also be aware that, even if the Club is successfully organized, memberships are being issued without guarantee or commitment of any kind by the Company as to future changes to the Club Facilities and Club Rules (which may be amended in the discretion of Grupo Mariana except as otherwise expressly provided in the Membership Documents), any of which changes may have a negative effect upon subscribers’ future personal enjoyment of the rights and privileges appurtenant to any Membership as contemplated by a purchaser at such time, if any, as such subscriber elects to obtain such membership rights. The sole recourse of a purchaser who is dissatisfied with any future changes in the Club Facilities or operations of the Club will be resignation as a Member of the Club.

Certain Economic Risks. Continued operation of the Club facilities and use and enjoyment of the Club facilities by members will depend upon the results of operations of the Club and upon sales of real estate. Fluctuations in membership levels, real estate sales and operating expenses can adversely affect operating results and net cash flow and could impair the operation of the Club. No assurances can be given with respect to the level of memberships in the Club or costs of operating the Club and/or Grupo Mariana facilities since such matters will depend on events and factors beyond the control of the Club. Such factors include the public image of the club, competition from other golf clubs or other properties in the market areas served by the Club, the financial resources of Club members and their continued ability to pay ongoing fees as required by the Club Membership Documents, the availability of goods and services necessary for the management, maintenance and periodic upgrading of the Club property and facilities at reasonable costs, and the public’s interest in recreational clubs and resort communities in general. Other risks typically associated with the purchase of a membership generally include but are not limited to local population trends, local and national economic conditions, the supply and demand for facilities such as those provided by the Club, interest rates, real estate tax rates, inflation, governmental regulations (including the effects of enactment of unfavorable real estate, environmental or zoning laws), changes in tax laws, and uninsured losses.

Uncertainty of the Real Estate Industry. The appreciation of the Club is closely related to the state of the economy in general, the “second home” or resort development industry and the local real estate industry in particular. It is impossible to predict with any degree of certainty the future economic trend of the resort development/real estate industries. Uncertainty in the real estate industry nationally and in Central America, may have a materially adverse effect on Grupo Mariana and the Club. Moreover, although the demand for quality resort development has increased substantially during the past several years, it is possible that the market has been inflated and that a decline in the relative market value of resort housing and real estate will occur. In the event of adverse economic conditions, the amount of money available for the purchase of resort homes or club memberships, for example, may decrease. Uncertainty in the international real estate development industry, and particularly in Nicaragua, may have a materially adverse effect on Grupo Mariana. Because Grupo Mariana’s operations and Club facilities are located in a geographically concentrated area, its operating results are vulnerable to negative economic, competitive, demographic, natural and other conditions specifically affecting Nicaragua and Latin America.

Market factors. Grupo Mariana’s financial stability will be subject to factors beyond our control, including economic downturns and changes in the local real estate market. Grupo Mariana’s inability to successfully react to market factors could have a material adverse effect on Grupo Mariana’s financial condition.

Competitive Environment. The success of Grupo Mariana depends largely on its ability to compete with other recreational communities located in Nicaragua, elsewhere in Central America and the Caribbean, and in the United States. Other areas may be more developed than Managua, Nicaragua, and may offer comparable facilities and amenities, or be considered easier to reach. In addition, Grupo Mariana will compete in Central America with other development projects that may be developed by competing developers as well as with owners of existing homes or lots who may be able to sell their properties at prices or on terms which may be more attractive than those offered by Grupo Mariana and its affiliates. Competitive conditions may also limit Grupo Mariana’s ability to maintain or increase the price of home sites, initiation fees or membership dues, attract new homeowners and members and keep existing members, and could adversely affect Grupo Mariana’s business, financial condition and results of operation.

Risks Related to Other Activities of Management. Other entities may in the future be formed by affiliates of Grupo Mariana, acting separately or together with others, to engage in the development of any golf clubs and related real estate projects which may dilute the value of their association with the Club or compete with Grupo Mariana for membership sales or quality staff. In addition, the management and staff of Grupo Mariana are free to conduct and engage in other real estate development, operation, management and investment activities, and the attention given by them to such other activities may conflict with, reduce or otherwise impact their ability to provide management services to Grupo Mariana.

Risk Related to Governmental Regulations, Including Environmental Regulations. As a developing nation, Nicaragua’s local and federal governments are actively pursuing a wide range of laws, ordinances and regulations that may apply to Grupo Mariana’s operations. While Grupo Mariana has been proactive in participating in the process, and have had the support of local governments and the national government to date, there can be no assurance that such laws or regulations will not detrimentally effect Grupo Mariana or the project, including related to the following matters:

• land usage and zoning;
• membership matters and contracts, including the advertising, sale, financing and collection of membership fees and dues;
• health, liquor and building accessibility and safety;
• street and highway usage;
• waste management;
• water rights; and
• health and environmental matters.

In many instances, Grupo Mariana may be required to have various certificates, permits or licenses in order to conduct its business. Grupo Mariana’s failure to maintain required certificates, permits or licenses or to comply with applicable governmental requirements could result in substantial fines or possible revocation of its authority to conduct some of its operations. Delays in obtaining approvals for the transfer or grant of certificates, permits or licenses, or failure to obtain new certificates, permits or licenses, could impede the implementation of Grupo Mariana’s business. Grupo Mariana’s compliance with amended, new or more stringent requirements, stricter interpretations of existing requirements or the future discovery of environmental conditions may require Grupo Mariana to make material expenditures it currently does not anticipate. Government regulations may delay the start or completion of club facilities, condominiums and home sites, increase Grupo Mariana’s expenses or limit Grupo Mariana’s construction activities, which could have a negative impact on Grupo Mariana’s operations.

Risks Related to Government Fees and Taxes. Increases in real estate taxes and other local government fees, such as impact fees imposed on developers to fund schools, open space or road improvements, could increase costs and have an adverse effect on Grupo Mariana’s operations. In addition, increases in local real estate taxes could adversely affect Grupo Mariana’s potential customers who may consider those cost in determining whether to make a home site purchase and decide, as a result, not to purchase a condominium, townhome or home site, which in turn could reduce Grupo Mariana sales and hurt operating results.

Risks Related to Development in a Third World Nation. In 2007, the World Bank’s Daily Business Report ranked Nicaragua as the easiest location in which to start a business in the Central America region. Nicaragua has distinguished itself by becoming one of the first two recipients of the U.S. government’s Millennium Challenge Account grant awarded only to countries that “rule justly, invest in their people, and encourage economic freedom.” In 2006, Nicaragua registered a GDP growth rate of 3.7% and an increase of GDP per capita of 7.8%. While Nicaragua has seen an 18% increase in direct foreign investment in 2006, and a nearly 50% increase in the number of tourists visiting the country over the last five (5) years, the fact remains that Nicaragua’s history has been marked by instability and poverty among the working class. Nicaragua has had an elected president and National Assembly since 1985. Prior to that time, it was led by a Marxist Junta which assumed power in 1979, supported by the Marxist-oriented Sandinista National Liberation Front (Frente Sandinista de Liberación Nacional or “FSLN”). The Sandista’s had taken control after a long dictatorial reign of the Somoza family, which had lasted 43 years. In recent years, many Sandinista policies have been reversed. The Sandinistas retained some influence, however, through trade unions, peasant organizations, and what was left of the army. The FSLN regained power after the party’s leader, Daniel Ortega, won the 2006 presidential election. Nicaragua has embraced capitalism, foreign investment and tourism which have resulted in economic development. Today, more than 80,000 Americans visit Nicaragua each year, according to the U.S. State Department and approximately 7,000 Americans reside in Nicaragua. The Inter-American Human Rights Institute and a survey of police forces in the Americas have named Nicaragua as the safest country in Central America and among the safest in the Americas. Managua is rated the safest capital in the region. However, there can be no guarantee that the government of Nicaragua will remain stable in the long-term, and any instability in the government can have a detrimental effect on the Nicaraguan-based Grupo Mariana and its operations. Additionally, Grupo Mariana will rely on a combination of public and private sources for infrastructure, such as water and electric, and the reliability of these sources are not readily determinable. Also, Grupo Mariana intends to hire and train local employees, and bring in experienced staff from other locations, but there is no guarantee that Grupo Mariana will be able to attract, train or retain adequate staff and employees to assist in the development and operations of the project.

Risks Related to Title Issues in Nicaragua. The 1979-90 Sandinista government expropriated some 30,000 properties, many of which are still involved in disputes or claims. Land title remains unclear in many cases. Although the government has resolved several thousand claims by U.S. citizens for compensation or return of properties, there remain hundreds of unresolved claims registered with the U.S. Embassy. Potential investors should engage competent local legal representation and investigate their purchases thoroughly in order to reduce the possibility of property disputes. According to the U.S. Embassy, the Nicaraguan judicial system offers little relief when the purchase of a property winds up in court. There have been numerous cases reported in which buyers purchase property supported by what appear to be legal titles only to see themselves subsequently embroiled in legal battles when the titles are contested by an affected or otherwise interested third party. Many coastal properties have been tied up in courts recently, leaving the ‘buyer’ unable to proceed with the intended development pending lengthy and uncertain litigation. Although Grupo Mariana believes it has sufficiently and legally cleared title to all of the property in the development and has obtained a complete master policy of title insurance from First American Title Insurance and a second policy from Stewart Title Insurance, any title issues could have a materially detrimental effect on the value of investor’s investment and the success of the development. Although the Developer’s legal counsel has cleared title on the project lands to as far back as 1904, Investors are encouraged to discuss title issues with local counsel and to obtain an owner’s policy of title insurance for their protection should any unforeseen title defects arise.

Risks Related to Certain Claims Regarding Health and Safety Risks. Use of the Club facilities may pose some potential health or safety risks to members or guests through exertion and use of Club services and facilities. Claims against Grupo Mariana for death or injury suffered by members or guests while using the Club might be asserted. Grupo Mariana might not be able to successfully defend such claims. Additionally, Grupo Mariana might not be able to maintain its general liability insurance on acceptable terms in the future or in amounts sufficient to provide adequate coverage against potential claims.

Risks Related to Industry Factors. Factors that may contribute to variability include, but are not limited to:

• The timing of the development of the property, home deliveries and land sales;
• The timing of receipt of regulatory approvals for the development of the property and the construction of homes and amenities, including any golf course;
• Changes in the governmental or regulatory environment particularly with respect to zoning and land use;
• The condition of the real estate and resort development markets and general economic conditions, which can be adversely affected by national and international events, such as the tragic events of September 11, 2001;
• The cyclical nature of the home building and resort development industries;
• Weather conditions, particularly unseasonable weather trends or hurricanes; and
• The cost and availability of materials and labor.

Risks Related to Conflicts of Interest. Grupo Mariana and its management do not believe that they will encounter any material conflict of interests in fulfilling their duties to the Club and its members. There can be no assurance, however, that possible conflicts of interest will not arise, including:

Competition for Management Services. Kemper Sports Management will devote as much of their time to the development of the property as is reasonably required in their judgment and management contract. They may potentially have conflicts of interest in allocating management time, services and functions among Grupo Mariana and any other ventures, including real estate ventures, which they organize or in which they are involved.

Services by Affiliates. Affiliates of Grupo Mariana may provide services to Grupo Mariana or the resort. While the charges for such services must be reasonable in relation to the value of the services provided and comparable to the charges of unaffiliated parties providing comparable services in arms’-length transactions, conflicts may arise in the selection of affiliates of the Managing Member over independent third parties and in the determination of such affiliates’ charges and the other terms and conditions of any such arrangement.

Sale Services. Currently, real estate sales firms have the right to market, advertise and sell real estate on behalf of Grupo Mariana with written permission.

Common Management. The Club and the residential development will both be managed by Kemper Sports Management. As a result, there will be no independent review of various matters of policy with respect to the allocation of assets, personnel, and legal obligations between the Club and the residential development. This may have a direct impact on the marketing and/or future operations of the Club and the residential development and may impact the value of a purchaser’s investment in real estate.