UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington, D.C.
20549





FORM
10-Q


QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d)
OF


THE
      SECURITIES EXCHANGE ACT OF
1934





For
the quarter year ended September 30, 2008




Commission file
number 000-27097




ROYAL INVEST INTERNATIONALCORP.(Exact
      name of registrant as specified in its
  charter)





Delaware
            
            98-0215778(State
      or other jurisdictionof
      incorporation or organization)
            
            (I.R.S.
      Employer Identification No.)





595 Fifth Avenue, 4th
      FloorNew York, New York,
      USA
            
            10017(Address of
      principal executive offices)
            
            (Zip
      Code)





Registrant's telephone
number including area code (203)
557-3845







Indicate
by check mark whether the registrant (1) has filed all reports
required t o be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes x No





Indicate by
check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or small reporting company.  See the
definition of "large accelerated filer," "accelerated filer" and "small
reporting company" in Rule 12b-2 of the Exchange Act.




Large
      accelerated filer
            Accelerated
      filer    
            Non-accelerated
      filer     
            Smaller
      reporting company    x




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).Yes  
   No  x




As of
November 19, 2008, there were 150,208,861
common stock of the registrant issued and outstanding.





1


ROYAL INVEST INTERNATIONAL
CORP.




FORM 10-Q




TABLE OF CONTENT







Item #
            
            Description
            
            Page
    NumbersPART
      I
            
            4ITEM 1
            
            FINANCIAL STATEMENTS
            
            4ITEM 2
            
            MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
      AND RESULTS OF OPERATIONS
            
            24ITEM 3
            
            QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK
            
            30ITEM 4
            
            CONTROLS AND PROCEDURES
            
            30ITEM 4T
            
            CONTROLS AND PROCEDURES
            
            30PART
      II
            
            31ITEM 1
            
            LEGAL PROCEEDINGS
            
            31ITEM 1A
            
            RISK FACTORS
            
            31ITEM 2
            
            UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS
            
            34ITEM 3
            
            DEFAULTS UPON SENIOR SECURITIES
            
            35ITEM 4
            
            SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS
            
            35ITEM 5
            
            OTHER INFORMATION
            
            35ITEM 6
            
            EXHIBITS
            
            36SIGNATURES
            
            38EXHIBIT31.1
            
            SECTION 302 CERTIFICATION OF CHIEF EXECUTIVE
      OFFICEREXHIBIT 31.2
            
            SECTION 302 CERTIFICATION OF CHIEF FINANCIAL
      OFFICEREXHIBIT 32.1
            
            SECTION 906 CERTIFICATION OF CHIEF EXECUTIVE
      OFFICEREXHIBIT 32.2
            
            SECTION 906 CERTIFICATION OF CHIEF FINANCIAL
      OFFICER






2


Table of
Content
 INFORMATION REGARDING FORWARD-LOOKING
DISCLOSURE
   This
quarterly report on Form 10-Q contains forward-looking statements. Statements in
this report that are not historical facts, including statements about
management’s beliefs and expectations, constitute forward-looking statements.
These statements are based on current plans, estimates and projections, and are
subject to change based on a number of factors, including those outlined under
Item 1A, Risk Factors, in our most recent annual report on Form 10-K, and any
updated risk factors we include in our quarterly reports on Form 10-Q and other
filings with the SEC. Forward-looking statements speak only as of the date they
are made, and we undertake no obligation to update publicly any of them in light
of new information or future events.
   Forward-looking
statements involve inherent risks and uncertainties. A number of important
factors could cause actual results to differ materially from those contained in
any forward-looking statement. Such factors include, but are not limited to, the
following:
  •
              risks
      arising from material weaknesses in our internal control over financial
      reporting, including material weaknesses in our control
      environment;•
              our
      ability to attract new clients and retain existing
  clients;•
              our
      ability to retain and attract key employees;•
              risks
      associated with assumptions we make in connection with our critical
      accounting estimates;•
              potential
      adverse effects if we are required to recognize impairment charges or
      other adverse accounting-related developments;•
              potential
      adverse developments in connection with the ongoing Securities and
      Exchange Commission (“SEC”) investigation;•
              potential
      downgrades in the credit ratings of our securities;•
              risks
      associated with the effects of global, national and regional economic and
      political conditions, including fluctuations in economic growth rates,
      interest rates and currency exchange rates; and•
              developments
      from changes in the regulatory and legal environment for advertising and
      marketing and communications services companies around the
      world.
  Investors
should carefully consider these factors and the additional risk factors outlined
in more detail under Item 1A, Risk Factors, in our 2007 Annual Report on Form
10-K and other filings with the SEC.
   3


Table of Content




PART
I





ITEM
1           FINANCIAL
STATEMENTS


ROYAL INVEST INTERNATIONAL CORP. AND
SUBSIDIARIES
 
 UNAUDITED FINANCIAL
STATEMENTS
 
 FOR THE QUARTER ENDED SEPTEMBER 30,
2008 AND 2007
 
  4
 Table
of Content
  CONTENTS
 ______________________________________________________________________________________
 
 Consolidated
      Balance Sheets as of Septemner 30, 2008 (Unaudited) and December 31, 2007
      (Audited)
              Page
      1
 
 Consolidated
      Statements of Operations for the three months and nine months ended
      September 30, 2008 and 2007 (Unaudited)
              2
 
 Consolidated
      Statements of Cash Flows for the nine months ended September 31, 2008 and
      2007 (Unaudited)
              3
  Consolidated
      Statement of Changes in Stockholders' Equity (Deficit) as of
      September 30, 2008 (Unaudited)
                4
  Notes
      to Consolidated Financial Statements (Unaudited)
              5
 5
 Table of Content
  ROYAL
      INVEST INTERNATIONAL CORP. AND SUBSIDIARIESCONSOLIDATED
      BALANCE SHEETSSeptember
      30,
                  
                  
                  December
      31,2008
                  
                  
                  2007ASSETS
                  (Unaudited)Rental
      PropertyLand
                  
                  $
                  24,690,770
                  
                  
                  $
                  25,169,240Buildings
                  
                  
                  118,202,753
                  
                  
                  
                  122,386,233Improvements
                  
                  
                  2,241,919
                  
                  
                  
                  2,154,076Equipment
                  
                  
                  95,616
                  
                  
                  
                  78,072145,231,058
                  
                  
                  
                  149,787,621Less
      - accumulated depreciation
                  
                  
                  (2,348,790
                  )
                  
                  
                  (73,307
                  )Net
      Investment in Rental Property
                  
                  
                  142,882,268
                  
                  
                  
                  149,714,314OTHER ASSETSCash
      and Cash Equivalents
                  
                  
                  188,989
                  
                  
                  
                  176,765Current
      Rents Receivable, Net of Allowance for Doubtful Accounts of$65,020
      as of September 30, 2008 and $-0- as of December 31, 2007
                  
                  
                  339,284
                  
                  
                  
                  681,492Other
      Receivables
                  
                  
                  323,369
                  
                  
                  
                  153,124Net
      VAT Receivable
                  
                  
                  -
                  
                  
                  
                  196,553Income
      Tax Receivable
                  
                  
                  7,721
                  
                  
                  
                  167,559Advance
      Payment on Property Purchase
                  
                  
                  645,419
                  
                  
                  
                  -Prepaid
      Expenses
                  
                  
                  291,876
                  
                  
                  
                  296,169Security
      Deposits
                  
                  
                  74,457
                  
                  
                  
                  221,767Deferred
      Financing Costs, Net
                  
                  
                  2,751,738
                  
                  
                  
                  3,194,726Total
      Assets
                  
                  $
                  147,505,121
                  
                  
                  $
                  154,802,469LIABILITIES
      AND STOCKHOLDERS' EQUITYLIABILITIESMortgage
      Payable
                  
                  $
                  118,706,865
                  
                  
                  $
                  121,899,165Accounts
      Payable
                  
                  
                  3,019,658
                  
                  
                  
                  3,072,789Net
      VAT Payable
                  
                  
                  33,512
                  
                  
                  
                  -Accrued
      Expenses and other Liabilities
                  
                  
                  82,358
                  
                  
                  
                  28,519Accrued
      Interest
                  
                  
                  1,791,048
                  
                  
                  
                  77,977Income
      Tax Payable
                  
                  
                  99,299
                  
                  
                  
                  73,363Loans
      Payable - Related Party
                  
                  
                  1,352,086
                  
                  
                  
                  110,835Loans
      Payable - Other
                  
                  
                  532,760
                  
                  
                  
                  381,662Notes
      Payable
                  
                  
                  6,633,907
                  
                  
                  
                  -Convertible
      Notes
                  
                  
                  429,490
                  
                  
                  
                  5,354,130Rents
      Received in Advance
                  
                  
                  333,905
                  
                  
                  
                  327,910Deferred
      Income Taxes
                  
                  
                  1,287,078
                  
                  
                  
                  1,391,165Minority
      Interest
                  
                  
                  582,439
                  
                  
                  
                  593,726Derivative
      Liability
                  
                  
                  -
                  
                  
                  
                  3,645,379Total
      Liabilities
                  
                  
                  134,884,405
                  
                  
                  
                  136,956,620STOCKHOLDERS'
      EQUITYPreferred
      Stock, $0,001 par value, 1,000,000 shares authorized; 1,000 shares issued
      and outstanding
                  
                  
                  1
                  
                  
                  
                  1Common
      Stock, $0.001 par value; 300,000,000 shares authorized; 150,208,861 issued
      and outstanding at September 30, 2008 and December 31, 2007,
      respectively
                  
                  
                  150,209
                  
                  
                  
                  150,209Additional
      Paid-In Capital
                  
                  
                  22,282,703
                  
                  
                  
                  22,282,703Accumulated
      Other Comprehesive Income
                  
                  
                  46,854
                  
                  
                  
                  234,828Accumulated
      Deficit
                  
                  
                  (9,859,051
                  )
                  
                  
                  (4,821,892
                  )Total
      Stockholders' Equity
                  
                  
                  12,620,716
                  
                  
                  
                  17,845,849Total
      Liablities and Stockholders' Equity
                  
                  $
                  147,505,121
                  
                  
                  $
                  154,802,469The
      accompanying notes to financial statements are an integral part of these
      statements.


6


Table of Content




ROYAL
      INVEST INTERNATIONAL CORP. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF OPERATIONS (UNAUDITED)FOR
      THE THREE MONTHS ENDED
              
              
              FOR
      THE NINE MONTHS ENDEDSEPTEMBER
      30,
              
              
              SEPTEMBER
      30,2008
              
              
              2007
              
              
              2008
              
              
              2007REVENUESBase
      Rents
              
              $
              3,463,990
              
              
              $
              128,897
              
              
              $
              9,477,260
              
              
              $
              128,897Real
      Estate Services
              
              
              63,220
              
              
              
              -
              
              
              
              329,693
              
              
              
              -Other
      Income
              
              
              202,304
              
              
              
              -
              
              
              
              1,422,927
              
              
              
              -3,729,514
              
              
              
              128,897
              
              
              
              11,229,880
              
              
              
              128,897EXPENSESOperating
      Services
              
              
              864,091
              
              
              
              30,452
              
              
              
              2,582,458
              
              
              
              30,452Real
      Estate Taxes
              
              
              54,894
              
              
              
              4,254
              
              
              
              166,256
              
              
              
              4,254Fair
      Value Adjustment on Property
              
              
              1,941,239
              
              
              
              -
              
              
              
              1,941,239
              
              
              
              -General
      and Administrative
              
              
              753,596
              
              
              
              476,436
              
              
              
              2,401,340
              
              
              
              925,477Depreciation
              
              
              793,096
              
              
              
              27,066
              
              
              
              2,399,221
              
              
              
              27,066Total
      Expenses
              
              
              4,406,916
              
              
              
              538,208
              
              
              
              9,490,514
              
              
              
              987,249OPERATING
      INCOME (LOSS)
              
              
              (677,402
              )
              
              
              (409,311
              )
              
              
              1,739,366
              
              
              
              (858,352
              )OTHER
      INCOME (EXPENSES)Interest
      Income
              
              
              (2
              )
              
              
              -
              
              
              
              325
              
              
              
              -Interest
      Expense
              
              
              (2,350,689
              )
              
              
              (81,678
              )
              
              
              (6,677,384
              )
              
              
              (95,928
              )Change
      in Value of Derivative Liabilty
              
              
              -
              
              
              
              -
              
              
              
              2,313,130
              
              
              
              -Loss
      on Debt Modification
              
              
              -
              
              
              
              -
              
              
              
              (1,416,852
              )
              
              
              -Amortization
      - Debt Discount
              
              
              -
              
              
              
              -
              
              
              
              (541,096
              )
              
              
              -Currency
      Gain (Loss)
              
              
              57,709
              
              
              
              8,549
              
              
              
              58,082
              
              
              
              8,549Amortization
      - Deferred Financing Costs
              
              
              (136,208
              )
              
              
              -
              
              
              
              (411,821
              )
              
              
              -(2,429,190
              )
              
              
              (73,129
              )
              
              
              (6,675,616
              )
              
              
              (87,379
              )Loss
      Before Income Taxes
              
              
              (3,106,592
              )
              
              
              (482,440
              )
              
              
              (4,936,250
              )
              
              
              (945,731
              )Provision
      for Income Taxes
              
              
              14,069
              
              
              
              5,021
              
              
              
              100,909
              
              
              
              5,021NET
      LOSS
              
              $
              (3,120,661
              )
              
              $
              (487,461
              )
              
              $
              (5,037,159
              )
              
              $
              (950,752
              )Net
      Loss Per Common Share:Basic
      and diluted
              
              $
              (0.02
              )
              
              $
              (0.05
              )
              
              $
              (0.03
              )
              
              $
              (0.14
              )Weighted
      Average CommonShares
      Outstanding:Basic
      and diluted
              
              
              150,208,861
              
              
              
              10,718,273
              
              
              
              150,208,861
              
              
              
              6,878,624The
      accompanying notes to financial statements are an integral part of these
      statements.




7


Table of Content


ROYAL
      INVEST INTERNATERNATIONAL CORP. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CASH FLOWS (UNAUDITED)FOR
      THE NINE MONTHS ENDEDSEPTEMBER
      30,2008
              
              
              2007CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Loss
              
              $
              (5,037,159
              )
              
              $
              (950,752
              )Adjustments
      to reconcile net loss to net cash from operating
    activities:Depreciation
              
              
              2,399,221
              
              
              
              28,730Change
      in Value of Derivative Liability
              
              
              (2,313,130
              )
              
              
              -Loss
      on Debt Modification
              
              
              1,416,852
              
              
              
              -Currency
      Gain
              
              
              (58,082
              )
              
              
              -Amortization
      - Debt Discount
              
              
              541,096
              
              
              
              -Amortization
      - Deferred Financing Costs
              
              
              411,821
              
              
              
              -1,941,239Provision
      for Doubtful Accounts
              
              
              66,024
              
              
              
              -Deferred
      Income Tax
              
              
              (81,813
              )
              
              
              -Stock
      Based Compensation
              
              
              -
              
              
              
              237,104Other
              
              
              2,267
              
              
              
              -Changes
      in operating assets and liabilitiesIncrease
      in Accounts Receivable
              
              
              (467,078
              )
              
              
              -Increase
      in Other Receivables
              
              
              (182,551
              )
              
              
              -Decrease
      in Net VAT Receivable
              
              
              203,177
              
              
              
              -Decrease
      Income Tax Receivable
              
              
              165,021
              
              
              
              -Increase
      in Prepaid Expenses
              
              
              (1,409
              )
              
              
              (396,311
              )Decrease
      in Security Deposits
              
              
              150,783
              
              
              
              -Increase
      (Decrease) in Accounts Payable
              
              
              (23,980
              )
              
              
              384,176Increase
      in Net VAT Payable
              
              
              35,313
              
              
              
              -Increase
      in Accrued Expenses and Other Liabilities
              
              
              57,303
              
              
              
              314Increase
      in Accrued Interest
              
              
              2,082,118
              
              
              
              21,375Increase
      in Income Taxes Payable
              
              
              28,799
              
              
              
              -Increase
      in Rents Received in Advance
              
              
              12,886
              
              
              
              -Net
      cash provided by (used in) operating activities
              
              
              1,348,718
              
              
              
              (675,364
              )CASH
      FLOWS FROM INVESTING ACTIVITIESAdvance
      Payment on Property Purchase
              
              
              (680,100
              )
              
              
              (1,216,781
              )Property
      Acquired
              
              
              (155,763
              )
              
              
              -Net
      cash used in investing activities
              
              
              (835,863
              )
              
              
              (1,216,781
              )CASH
      FLOWS FROM FINANCING ACTIVITIESCash
      acquired in Acquisition
              
              
              -
              
              
              
              46,227Loans
      payable - related party,net
              
              
              286,727
              
              
              
              1,515,868Proceeds
      from sale of Common Stock
              
              
              -
              
              
              
              500,000Payments
      on Mortgages Payable
              
              
              (921,999
              )
              
              
              (66,000
              )Proceeds
      from loans payable - other
              
              
              296,665
              
              
              
              -Payments
      on loans payable -other
              
              
              (141,450
              )
              
              
              -Net
      cash used in financing activities
              
              
              (480,057
              )
              
              
              1,996,095Net
      increase in cash and cash equivalents
              
              
              32,798
              
              
              
              103,950Adjustment
      for change in exchange rate
              
              
              (20,574
              )
              
              
              (45,379
              )Cash
      and cash equivalents, beginning of period
              
              
              176,765
              
              
              
              -Cash
      and cash equivalents, end of period
              
              $
              188,989
              
              
              $
              58,571The
      accompanying notes to financial statements are an integral part of these
      statements.




8


Table of Content




ROYAL
      INVEST INTERNATERNATIONAL CORP. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CASH FLOWS (UNAUDITED)FOR
      THE NINE MONTHS ENDEDSEPTEMBER
      30,2008
              
              
              2007SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONCASH
      PAID FORInterest
              
              $
              4,595,266
              
              
              $
              74,470Taxes
              
              $
              -
              
              
              $
              -NON-CASH
      INVESTING AND FINANCING ACTIVITIES:Accounts
      Receivable Settled with Amounts Due to Related Parties
              
              $
              747,999
              
              
              $
              -Accrued
      Interest Classified to Amounts Due to Related Parties
              
              $
              287,332
              
              
              $
              -Acquisition
      of Rico Staete B.V.:Land
              
              
              
              
              
              $
              (600,723
              )Buildings
              
              
              
              
              
              $
              (6,019,350
              )Receivables
              
              
              
              
              
              $
              (353,516
              )Mortgage
      Payable
              
              
              
              
              
              $
              4,970,594Note
      Payable on Acquisition
              
              
              
              
              
              $
              1,482,817Other
      Payables
              
              
              
              
              
              $
              473,951Cash
      Acquired
              
              
              
              
              
              $
              46,227The
      accompanying notes to financial statements are an integral part of these
      statements.




9


Table of Content




ROYAL
      INVEST INTERNATIONAL CORP.CONSOLIDATED
      STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)September
      30, 2008AccumulatedAditional
              
              Other
              
              
              
              
              TotalPreferred
      Stock
              
              
              
              
              Common
      Stock
              
              
              
              
              Paid-In
              
              Comprehensive
              
              Accumulated
              
              Stockholders'Shares
              
              
              Amount
              
              Shares
              
              Amount
              
              
              Capital
              
              Income
              
              
              Deficit
              
              Equity
      (Deficit)Balance
      at December 31, 2005
              -
              
              $
              -
              
              4,236,372
              
              $
              4,236
              
              $
              580,696
              
              $
              -
              
              $
              (654,322
              )
              $
              (69,390
              )Reduction
      of accured interest
              
              
              
              
              
              
              
              
              
              
              
              30,067
              
              
              
              
              
              
              
              
              30,067Net
      Loss for the Year Ended December 31, 2006
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (340,374
              )
              
              (340,374
              )Balance
      at December 31, 2006
              -
              
              
              -
              
              4,236,372
              
              
              4,236
              
              
              610,763
              
              
              -
              
              
              (994,696
              )
              
              (379,697
              )Issuance
      of common stock for cash at $0.10 per share
              
              
              
              
              
              5,000,000
              
              
              5,000
              
              
              495,000
              
              
              
              
              
              
              
              
              500,000Issuance
      of common stock to CEO and CFO for services rendered at $0.12 per
      share
              
              
              
              
              
              1,975,868
              
              
              1,976
              
              
              235,128
              
              
              
              
              
              
              
              
              237,104Conversion
      of debt to common stock at $0.75 per share
              
              
              
              
              
              544,000
              
              
              544
              
              
              407,456
              
              
              
              
              
              
              
              
              408,000Issuance
      of common stock for the acquisition of Amogb B.V. at $1.00 per
    share
              
              
              
              
              
              2,190,000
              
              
              2,190
              
              
              2,187,810
              
              
              
              
              
              
              
              
              2,190,000Issuance
      of common stock for the acquisition of Alfang B.V. at $1.20 per
      share
              
              
              
              
              
              1,687,500
              
              
              1,687
              
              
              2,023,313
              
              
              
              
              
              
              
              
              2,025,000Issuance
      of common stock for the acquisition of properties at $0.2078 per
      share
              
              
              
              
              
              21,465,885
              
              
              21,466
              
              
              4,439,145
              
              
              
              
              
              
              
              
              4,460,611Issuance
      of common stock for debt owed for RIGP1 B.V. acquisition at $0.10 per
      share
              
              
              
              
              
              15,282,696
              
              
              15,283
              
              
              1,512,987
              
              
              
              
              
              
              
              
              1,528,270Issuance
      of preferred and common stock for the acquisition of properties at $0.10
      per share
              1,000
              
              
              1
              
              97,202,653
              
              
              97,203
              
              
              9,623,061
              
              
              
              
              
              
              
              
              9,720,265Issuance
      of common stock for the acquisition of property at $1.20 per
      share
              
              
              
              
              
              623,887
              
              
              624
              
              
              748,040
              
              
              
              
              
              
              
              
              748,664Foreign
      Currency Translation
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              234,828
              
              
              
              
              
              234,828Net
      Loss for the Year Ended December 31, 2007
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (3,827,196
              )
              
              (3,827,196
              )Balance
      at December 31, 2007
              1,000
              
              
              1
              
              150,208,861
              
              
              150,209
              
              
              22,282,703
              
              
              234,828
              
              
              (4,821,892
              )
              
              17,845,849Foreign
      Currency Translation
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (187,974
              )
              
              
              
              
              (187,974
              )Net
      Loss for the Nine Months ended September 30, 2008
    [Unaudited]
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (5,037,159
              )
              
              (5,037,159
              )Balance
      at September 30, 2008 [Unaudited]
              1,000
              
              $
              1
              
              150,208,861
              
              $
              150,209
              
              $
              22,282,703
              
              $
              (46,854
              )
              $
              (9,859,051
              )
              $
              12,620,716The
      accompanying notes to financial statements are an integral part of these
      statements.




10


Table of Content




ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED)
 SEPTEMBER
30, 2008
  
 NOTE
1 – ORGANIZATION AND BASIS OF PRESENTATION
 
 Organization
 Royal
Invest International Corp., a Delaware corporation, (formerly “Wah King Invest
Corp”) together with its subsidiaries (collectively, the “Company”), owns,
operates and manages real estate, in Europe. On September 30, 2008, the Company
owned 18 properties. The properties aggregate approximately 88,077 square meters
(approximately 948,053 square feet), which are comprised of office buildings and
business centers.  The properties are located in Germany and the
Netherlands.
 
 Basis
of Presentation
 The
accompanying unaudited interim consolidated financial statements as of
September 30, 2008, and for the three and nine months ended September 30, 2008
and 2007 have been prepared in accordance with generally accepted accounting
principles and in accordance with the instructions for Form 10-Q and Item
210.8-03 of Regulation S-X.  Accordingly, they do not include all the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statement
presentation.  In the opinion of management, the financial statements
contain all adjustments (consisting only of normal recurring accruals) necessary
to present fairly the consolidated financial position as of September 30, 2008,
the consolidated results of operations and consolidated cash flows for the nine
months ended September 30, 2008 and 2007.  The results of operations
for the nine months ended September 30, 2008 are not necessarily indicative of
the results that may be expected for the year ending December 31, 2008.These interim financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto of the Company and management’s discussion and
analysis of financial condition and results of operations included in the
Company’s annual report on Form 10-KSB for the year ended December 31,
2007.
 
 NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Foreign
Currency Translation
 The
Company considers the EURO (“€”) to be its functional currency. Assets and
liabilities were translated into US dollars (“US$”) as of September 30, 2008 and
December 31, 2007 at the period end exchange rates of €1.00 to US $1.4449 and €
1.00 to US $1.47290, respectively. Statement of Operations amounts for the nine
months ended September 30, 2008 and 2007 were translated using the average rates
during the periods of € 1.00 to US $1.52254 and € 1.00 to US $1.34454,
respectively.
 
 Rental
Property
 Rental
properties are stated at cost less accumulated depreciation. Costs directly
related to the acquisition of rental properties are capitalized. Ordinary
repairs and maintenance are expensed as incurred; major replacements and
betterments, which improve or extend the life of the asset, are capitalized and
depreciated over their estimated useful lives.
 
 Properties
are depreciated using the straight-line method over the estimated useful lives
of the assets. The estimated useful lives are as follows:
 
 Buildings                                                                   25-40
years
 Improvements                                                               
10 years
 Equipment                                                                        5
years
 
 Upon
acquisition of rental property, the Company estimates the fair value of acquired
tangible assets, consisting of land, building and improvements.The Company allocates
the purchase price to the assets acquired and liabilities assumed based on their
relative fair values.
 
 11
 Table of Content
  ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARIES
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 SEPTEMBER
30, 2008
 
 On a
periodic basis, management assesses whether there are any indicators that the
value of the Company’s real estate properties held for use may be impaired. A
property’s value is impaired only if management’s estimate of the aggregate
future cash flows (undiscounted and without interest charges) to be generated by
the property is less than the carrying value of the property. To the extent
impairment has incurred, the loss shall be measured as the excess of the
carrying amount of the property over the fair value. The Company’s estimates of
aggregate future cash flows expected to be generated by each property are based
on a number of assumptions that are subject to economic and market uncertainties
including, among others, demand for space, competition for tenants, changes in
market rental rates, and costs to operate each property. As these factors are
difficult to predict and are subject to future events that may alter
management’s assumptions, the future cash flows estimated by management in its
impairment analyses may not be achieved.  At December 31, 2007, one of
the rental properties had a carrying amount which exceeded its fair
value.  As a result the company had a charge to operations for US
$200,467 to adjust the carrying amount to fair value. At September 30, 2008, as
a result of the current global economy and its effect on real estate, management
assessed that there were factors that may impair the value of the Company’s real
estate properties. Based on a calculation using the above assumptions, a
charge to operations of US $1,941,239 (€ 1,275,000) was recorded at September
30, 2008.
 
 Cash and
Cash Equivalents
 All
highly liquid investments with a maturity of six months or less when purchased
are considered to be cash equivalents.
 
 Revenue
Recognition
 Base
rental revenue is recognized on a straight-line basis over the terms of the
respective leases. Included in current rents receivable are unbilled rents
receivable representing the amounts by which straight-line rental revenue
exceeds rents currently billed in accordance with the lease terms. Escalations
and recoveries from tenants are received from tenants for certain costs as
provided in the lease agreements. These costs generally include utilities,
insurance, common area maintenance and other recoverable costs. Other income
includes income from parking spaces leased to tenants, income from tenants for
additional services arranged for by the Company and income from tenants for
early lease terminations.
 
 Allowance
for Doubtful Accounts
 Management
periodically performs a detailed review of amounts due from tenants to determine
if accounts receivable balances should be impaired based on factors affecting
the collectability of those balances.  Management’s estimate of the
allowance for doubtful accounts requires management to exercise significant
judgment about the timing, frequency and severity of collection losses, which
affects the allowance and net income.
 
 Income
and Other Taxes
 Royal
Invest Europe B.V. (“RIE”), a Dutch corporation and a subsidiary of the Company,
presently owns nine real estate properties located in the Netherlands. Since RIE
is a Dutch corporation, it is subject to the Dutch tax laws and therefore needs
to do income tax declarations in the Netherlands.
 Royal
Invest Germany Properties 1 BV (“RIGP1”) (formerly Rico Staete B.V.), a Dutch
corporation and one of the subsidiaries of the Company presently owns one real
estate property located in Germany. The rental income is originating from a
German tenant in Germany and therefore subject to German tax laws. RIGP1
declares and pays the income tax according to German tax rules. Since RIGP1 is a
Dutch corporation, it is also subject to Dutch tax laws and therefore also needs
to do income tax declarations in the Netherlands. The difference between the
German and the Dutch income tax is payable in the Netherlands.
 Alfang
B.V. trading as Royal Invest Dutch Properties 1 B.V. (“RIDP1”), a Dutch
corporation and one of the subsidiaries of the Company presently owns five real
estate properties located in the Netherlands.  Since RIDP1 B.V. is a
Dutch corporation, it is subject to the Dutch tax laws and therefore needs to do
income tax declarations in the Netherlands.
 AmogB
B.V. trading as Royal Invest Dutch Properties 2 B.V. (“RIDP2”), a Dutch
corporation and one of the subsidiaries of the Company presently owns three real
estate properties located in the Netherlands.  Since RIDP2 B.V. is a
Dutch corporation, it is subject to the Dutch tax laws and therefore needs to do
income tax declarations in the Netherlands.
 On
January 1, 2007, the Company adopted Financial Accounting Standards Board (FASB)
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an
interpretation of FASB Statement No. 109" (FIN 48).  At the adoption date
of January 1, 2007, the Company did not have any unrecognized tax
benefits.  The Company's practice is to recognize interest and/or
penalties related to income tax matters in income tax expense.  As of
January 1, 2007, the Company had no accrued interest or
penalties.  The Company  currently has no federal or state
tax  examinations  in progress  nor has it
had  any  federal  or  state  tax  examinations  since  its
inception.  All of the Company's tax years are subject to federal and
state tax examination.
  12
 Table of Content
 
 ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 SEPTEMBER
30, 2008
 
 
 Comprehensive
Income
 SFAS No.
130 establishes standards for the reporting and disclosure of comprehensive
income and its components which will be presented in association with a
company's financial statements.  Comprehensive income is defined as
the change in a business enterprise's equity during a period arising from
transactions, events or circumstances relating to non-owner sources, such as
foreign currency translation adjustments and unrealized gains or losses on
available-for-sale securities.  It includes all changes in equity
during a period except those resulting from investments by or distributions to
owners.  Comprehensive income is accumulated in accumulated other
comprehensive income, a separate component of stockholders' equity, in the
balance sheet.
 
 Use
of Estimates
 The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from those
estimates.
 
 Deferred
Financing Costs
 Costs
incurred in obtaining financing are capitalized and amortized on a straight-line
basis, which approximates the effective interest rate, over the term of the
related indebtedness. Amortization of such costs is US $136,208 and US $411,821
for the three and nine months ended September 30, 2008, respectively. There were
no deferred financing costs in the three and nine months ended September 30,
2007.
 
 Derivative
Instruments
 The
Company measures derivative instruments, including certain derivative
instruments embedded in other contracts, at fair value and records them as an
asset or liability, depending on the Company’s rights or obligations under the
applicable derivative contract. For derivatives designated and qualifying as
fair value hedges, the changes in the fair value of both the derivative
instrument and the hedged item are recorded in earnings. For derivatives
designated as cash flow hedges, the effective portions of the derivative are
reported in other comprehensive income and are subsequently reclassified into
earnings when the hedged item affects earnings. Changes in fair value of
derivative instruments not designated as hedging and ineffective portions of
hedges are recognized in earnings in the affected period.
 
 Earnings
(Loss) Per Share
 The
Company presents both basic and diluted earnings (loss) per share (“EPS”). Basic
EPS excludes dilution and is computed by dividing net income available to common
shareholders by the weighted average number of shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock, where such exercise or conversion would result in a lower EPS
amount.
 
 Advertising
Expense
 The
Company expenses advertising costs as incurred.  Advertising expense
in the three and nine months ended September 30, 2008 was approximately US
$25,000 and US $50,000, respectively. Advertising expense in the three and nine
months ended September 30, 2007 was approximately US $12,000 and US $29,000,
respectively.
 
 Share-based
Compensation
 SFAS No.
123R, “Share-Based Payment”, a revision of SFAS No. 123, “Accounting for Stock
Based Compensation”, requires companies to recognize the cost of employee
services received in exchange for awards of equity instruments, based on the
grant date fair value of those awards, in the financial statements. SFAS 123R
also requires that the benefits associated with the tax deductions in excess of
recognized compensation cost be reported as a financing cash flow, rather than
as an operating cash flow as previously required.The Company currently does not
have an employee stock option plan and there are no options or warrants
outstanding.
 
 Fair
Value
 Effective
January 1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements,”
which defines fair value, establishes a framework for measuring fair value under
other accounting pronouncements that permit or require fair value measurements,
changes the methods used to measure fair value and expands disclosures about
fair value measurements. In particular, disclosures are required to provide
information on the extent to which fair value is used to measure assets and
liabilities; the inputs used to develop measurements; and the effect of certain
of the measurements on earnings (or changes in net assets).
  13
 Table of Content  ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARIES
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 SEPTEMBER
30, 2008
 
 
 Recent
Accounting Pronouncements
 
 In
February 2007, the FASB issued SFAS No. 159,The Fair Value Option for Financial
Assets and Financial Liabilities (“SFAS 159”). SFAS 159 allows entities
to measure at fair value many financial instruments and certain other assets and
liabilities that are not otherwise required to be measured at fair value. SFAS
159 is effective for fiscal years beginning after November 15, 2007. The Company
has not determined what impact, if any, that adoption will have on results of
operations, cash flows or financial position.
 
 In
December 2007, the FASB issued SFAS No. 160, '“Noncontroling Interests in
Consolidated Financial Statements - an amendment of ARB No. 51”.  The
objective of this Statement is to improve the relevance, comparability, and
transparency of the financial information that a reporting entity provides in
its consolidated financial statements by establishing accounting and reporting
standards that require the following changes.  The ownership interests
in subsidiaries held by parties other than the parent be clearly identified,
labeled, and presented in the consolidated statement of financial position
within equity, but separate from the parent's equity.  The amount of
consolidated net income attributable to the parent and to the noncontroling
interest should be clearly identified and presented on the face of the
consolidated statement of income. When a subsidiary is deconsolidated, any
retained noncontroling equity investment in the former subsidiary is initially
measured at fair value.  The gain or loss on the deconsolidation of
the subsidiary is measured using the fair value of any noncontroling equity
investment rather than the carrying amount of that retained investment and
entities provide sufficient disclosures that clearly identify and distinguish
between the interests of the parent and the interests of the noncontroling
owners.  The changes to current practice resulting from the
application of SFAS No. 160 is effective for financial statements issued for
fiscal years beginning after December 15, 2008, and interim periods within those
fiscal years.  The adoption of SFAS No. 160 before December 15, 2008
is prohibited.  The Company is in the process of determining the
effect that SFAS No. 160 will have on its financial
statements.
 
 In
December 2007, the FASB issued SFAS No. 141(R), 'Business Combinations -
Revised,' that improves the relevance, representational faithfulness, and
comparability of the information that a reporting entity provides in its
financial reports about a business combination and its
effects.   To accomplish that, this statement establishes
principles and requirements how the acquirer recognizes and measures in its
financial statements the identifiable assets acquired, the liabilities assumed,
and any noncontroling interest in the acquiree, recognizes and measures the
goodwill acquired in the business combination or a gain from a bargain purchase,
and determines what information to disclose to enable users of the financial
statements to evaluate the nature and financial effects of the business
combination.  The changes to current practice resulting from the
application of SFAS No. 141(R) are effective for financial statements issued for
fiscal years beginning after December 15, 2008.  The adoption of SFAS
No. 141(R) before December 15, 2008 is prohibited.  The Company does
not expect the adoption of SFAS No. 141(R) to have a material effect on its
financial statements.
 
 In March
2008, the FASB issued SFAS No. 161,Disclosures about Derivative
Instruments and Hedging Activities—an amendment of FASB Statement No.
133. SFAS No. 161 gives financial statement users better information
about the reporting entity's hedges by providing for qualitative disclosures
about the objectives and strategies for using derivatives, quantitative data
about the fair value of and gains and losses on derivative contracts, and
details of credit-risk-related contingent features in their hedged positions.
The standard is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged, but not required. We presently do not anticipate the adoption of
SFAS No. 161 will have a material effect on the Company’s financial
statements.
 
 In May
2008, the Financial Accounting Standard Board (FASB) issued Statement of
Financial Accounting Standards No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.”  The new standard is intended to improve
financial reporting by identifying a consistent framework, or hierarchy, for
selecting accounting principles to be used in preparing financial statements
that are presented in conformity with U.S. generally accepted accounting
principles (GAAP) for non-governmental entities.  We are currently
evaluating the effects, if any, that SFAS No. 162 may have on our financial
reporting.
  14
 Table of Content  ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 SEPTEMBER
30, 2008
 
 
 NOTE
3 - CONVERTIBLE PROMISSORY NOTES
  In
December 2007, the Company issued 8% convertible promissory notes to ECM
Participations (formerly, ECM Hoff Holding B.V) and Muermans Vast Goed Roemond
B.V. in the amounts of € 1,091,257 (US $1,724,186) and € 3,500,000 (US
$5,530,000), respectively, as part of the consideration for the purchase price
of properties acquired. The notes are due December 31, 2010, but are convertible
at any time into shares of common stock, along with any accrued and unpaid
interest, at a conversion price of $1.60 per share, unless the price of common
stock on the date of conversion is $1.60 or less. If the price of common stock
on the date of conversion is $1.60 or less, than the conversion price will be
the average price of the common stock over the 90 days prior to the conversion
date reduced by 25%.
 
 The
Company accounts for the fair value of the conversion feature of its convertible
notes in accordance with SFAS No. 133 “Accounting For Derivative Instruments And
Hedging Activities” and EITF Issue No. 00-19 “Accounting For Derivative
Financial Instruments Indexed To And Potentially Settled In A Company’s Own
Stock” which requires the Company to bifurcate and separately account for the
conversion features as embedded derivatives contained in the Company’s
convertible notes. Pursuant to SFAS No. 133, the Company bifurcated the fair
value of the conversion feature from the convertible notes, since the conversion
features were determined to not be clearly and closely related to the debt host.
In addition, since the effective registration of the securities underlying the
conversion feature is an event outside of the control of the Company, pursuant
to EITF Issue No. 00-19, the Company recorded the fair value of the conversion
feature as either short-term or long-term liabilities (based on the underlying
term of the notes) as it was assumed that the Company would be required to
net-cash settle the underlying securities. The Company is required to carry
these embedded derivatives on its balance sheet at fair value and unrealized
changes in the values of these embedded derivatives are reflected in the
consolidated statement of operations. The derivative liability calculated as of
June 30, 2008 and December 31, 2007 amounted to US $1,597,227 and US $3,645,379,
respectively.
 
 Effective
on June 30, 2008, the Company and note holders modified the terms of the
promissory notes where as the conversion features on the notes were waived in
consideration for the company agreeing to pay the note holders a premium on the
original notes. Such premium is calculated based on 21% of the original note
principal plus interest accrued through June 30, 2008.  The
modifications are accounted for as a debt extinguishment with the modified terms
representing new notes.  The premiums amounted to € 238,534 (US
$376,820) and € 765,053 (US $1,208,708), respectively.  The Company
recognized a net loss on the modification of € 896,799 (US $1,416,852) at June
30, 2008, based on the fair value of the notes after the modification compared
to the carrying value of the notes under the original terms (which included the
derivative liability). As a result of the modification, the Company no longer
has a derivative liability.
 
 The
Company used the following valuation methodologies for the embedded derivatives
related to the issuance of two convertible promissory notes on June 30, 2008
(prior to the modifications) and December 31, 2007:
 
 Embedded derivative
-  Conversion Features:
 
 The
Conversion Features were valued as American call options using a binomial option
pricing model.
 
 To take
into account the floating strike price (and the floating number of shares based
on conversion price), the payoff at each node is modified from the standard
Cox-Ross-Rubenstein binomial model to include:
 
 1-  The
      conversion price is $1.60 unless the price of the Common Stock on the date
      of the Conversion  Notice is $1.60 or less, then the Conversion
      Price is adjusted to be the average price of the Common Stock for 90 days
      prior to the Conversion Notice date reduced by 25% (subject to adjustment
      as hereinafter provided).
 
 2-  Unlike
      standard binomial, the minimum payoff is higher than zero, and calculated
      as follow:
 
 a)
                  if
      the stock price is greater than $1.60 then (stock price -
      $1.60).
 
 b)
                  in
      the event the stock price is lower or equal to $1.60, then the minimum
      payoff is (the stock price - average price of the Common Stock for 90 days
      prior to the Conversion Notice date reduced by
  25%).
 
 The
binomial models were valued with the following inputs:
 
 15
 Table of Content
 ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 SEPTEMBER
30, 2008
  
 Stock
Price. The stock price was based on the closing price of the Company’s
common stock as of the Valuation Date. Stock prices ranged from $1.75 to $0.80
for 1-1-2008 through 6-30-2008 and from $1.29 to $1.75 for 12-21-2007 through
12-31-2007.
 
 Fixed Strike
Price.$1.60 as provided by the Convertible Promissory
Notes.
 
 Floating Strike
Price -After implementing the Cox-Ross-Rubenstein binomial modified
model the implied strike price under the Black Scholes Model is $0.68 June 30,
2008 and $1.011and $1.2 for 12-21-2007 and 12-31-2007.
 
 Time to
Maturity. The time to maturity was determined based on the length of time
between the Valuation Date and maturity of the promissory notes.  Time
to maturity ranged from 3 years in 12-21-2007 to 2.975 years in 12-31-2007 to
2.504 years in June 30, 2008.
 
 Risk-Free Rate.The risk free rate used in the analysis was based on the Treasury Note
rates as of the Valuation Dates with term commensurate with the remaining term
of the Promissory Notes. The risk free rate of return was 2.63%.
 
 Volatility.The volatility input was based on the historical volatility of the
certain comparable companies as historical volatility of the Company was not
useful in developing the expected volatility. The average volatility for the
comparable companies was 40%.
 
 On
October 9, 2007, the board of directors approved the issuance of a 6% $142,864
convertible promissory note which can be converted prior to October 9, 2010 at
the option of the holder into shares of common at a fixed conversion price of
$1.25 per share.
 
 During
the period March 1, 2005 to July 31, 2005, the Company issued convertible
promissory notes aggregating $589,000. The notes are unsecured and bear interest
at a rate of 10% per annum. The principal and interest was due June 27,
2006.  On November 16, 2005, a majority of holders of the outstanding
notes opted to convert the principal and interest on their notes into common
shares of the Company at $0.75 per share.  The Company converted
$542,067 of notes plus interest into 849,176 shares of common stock. The
outstanding notes of approximately $65,000 are currently in
default.
 
 During
the period January 1, 2006 to June 30, 2006, the Company issued additional
convertible promissory notes aggregating $220,000.  The notes are
unsecured and bear interest at a rate of 10% per quarter.  The
principal and interest is due 90 days after the issuance of the notes, but
automatically renews and continues to accrue interest. The notes are convertible
into shares of common stock of the company at $0.75 per share. These notes are
currently in default.
 
 NOTE
4 – MORTGAGES PAYABLE
 
 The
Company has mortgages which are collateralized by most of the Company’s rental
properties. As of September 30, 2008 and December 31, 2007 all of the Company’s
properties, with a total book value of approximately $145 million and $150
million respectively, are encumbered by the Company’s mortgages. Payments on
mortgages are generally due in quarterly installments of principal and interest,
or interest only.
 
 The
Company’s properties are primarily mortgaged through a € 100,000,000 financing
agreement with the Bank of Scotland. The terms call for a pay down based on a
percentage of the outstanding amount utilized (1.25% in year 1; 1.50% in years 2
& 3; 2.0% in years 4, 5 & 6) with maturity at 6 years from the initial
drawdown which was December 27, 2007. Interest is due quarterly at Euribor +
1.32%. The agreement contains customary financial covenants which the Company is
in compliance with as of September 30, 2008 and December 31, 2007. The amount
outstanding at September 30, 2008 and December 31, 2007 is US $114,425,723 (€
79,192,832) and US $117,376,727 (€ 79,690,900), respectively. The remaining
amount of the facility at € 20,310,100 can be used for financing other
properties (85% LTV/LTC).
 
 The
Company has an additional mortgage payable to SNS Bank. The amount outstanding
on this mortgage at September 30, 2008 and December 31, 2007 is US $4,281,142 (€
2,962,933) and $4,522,438 (€ 3,070,431), respectively. The SNS Bank Mortgage is
payable in monthly installments of $ 22,335. The mortgage bears a variable
interest rate (monthly Euribor + 2%). The mortgage is collateralized by the land
and buildings.
  16
 Table of Content
 ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 SEPTEMBER
30, 2008
 
 
 
 At
      December 31, 2007, minimum future principal payments over the next five
      years and in the aggregate are as
follows:
 
 Year
                  
                  Amount
      to be paid
                  
                  
                  Total
      PercentageYearly
                  
                  
                  To
      be paid Yearly *2008
                  
                  $
                  1,735,229
                  
                  
                  
                  1.25
                  %2009
                  
                  
                  2,028,671
                  
                  
                  
                  1.50
                  %2010
                  
                  
                  2,028,671
                  
                  
                  
                  1.50
                  %2011
                  
                  
                  2,615,555
                  
                  
                  
                  2.00
                  %2012
                  
                  
                  2,615,555
                  
                  
                  
                  2.00
                  %Thereafter
                  
                  
                  110,875,484
                  
                  
                  
                  91.75
                  %Total
                  
                  $
                  121,899,165
                  
                  
                  
                  100.00
                  %
 
 *  Bank of Scotland
Facility
  
 NOTE
5 - TENANT LEASES
 
 At
December 31, 2007, the Properties are leased to tenants under various operating
leases expiring through 2023. The leases provide for annual base rents and
the pass-through of charges for electrical usage. On an ongoing basis lease
contracts are renegotiated and extended.
 
 Future
minimum rentals to be received under non-cancelable operating leases at December
31, 2007 are as follows:
 
 Year
                  
                  Amount2008
                  
                  $
                  11.169.3932009
                  
                  
                  10.075.8982010
                  
                  
                  7.179.7682011
                  
                  
                  5.648.0262012
                  
                  
                  5.543.337Total
                  
                  $
                  39.616.422
  17
 Table of Content
  ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 SEPTEMBER
30, 2008
 
 
 NOTE
6 – INCOME TAXES
 
 Income
tax expense (benefit) consisted of the following:
 
 For
      the Three Months Ended
                  
                  
                  For
      The Nine Months EndedSeptember
      30,
                  
                  
                  September
      30,2008
                  
                  
                  2007
                  
                  
                  2008
                  
                  
                  2007Current:United States
                  
                  $
                  --
                  
                  
                  $
                  --
                  
                  
                  $
                  --
                  
                  
                  $
                  --Foreign
                  
                  
                  41,097
                  
                  
                  
                  6,755
                  
                  
                  
                  182,722
                  
                  
                  
                  6,75541,097
                  
                  
                  
                  6,755
                  
                  
                  
                  182,722
                  
                  
                  
                  6,755Deferred:United States
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  --Foreign
                  
                  
                  (27,028
                  )
                  
                  
                  (1,734
                  )
                  
                  
                  (81,813
                  )
                  
                  
                  (1,734
                  )(27,028
                  )
                  
                  
                  (1,734
                  )
                  
                  
                  (81,813
                  )
                  
                  
                  (1,734
                  )Totals
                  
                  $
                  14,069
                  
                  
                  $
                  5,021
                  
                  
                  $
                  100,909
                  
                  
                  $
                  5,021
 
 Pre-tax
income (loss) consisted of the following:
 
 For
      the Three Months Ended
                  
                  
                  For
      The Nine Months EndedSeptember
      30,
                  
                  
                  September
      30,2008
                  
                  
                  2007
                  
                  
                  2008
                  
                  
                  2007United
      States
                  
                  $
                  (202,665
                  )
                  
                  $
                  (390,994
                  )
                  
                  $
                  (47,810
                  )
                  
                  $
                  (708,547
                  )Foreign
                  
                  
                  (2,903,927
                  )
                  
                  
                  (91,446
                  )
                  
                  
                  (4,888,440
                  )
                  
                  
                  (237,184
                  )$
                  (3,106,592
                  )
                  
                  $
                  (482,440
                  )
                  
                  $
                  (4,936,250
                  )
                  
                  $
                  (945,731
                  )
  18
  ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 SEPTEMBER
30, 2008
 
 
 The
income tax expense (benefit) differs from the amount computed by applying the
United States statutory corporate income tax rate as follows:
 
 For
      the Three Months Ended
                  
                  
                  For
      The Nine Months EndedSeptember
      30,
                  
                  
                  September
      30,2008
                  
                  
                  2007
                  
                  
                  2008
                  
                  
                  2007United
      States Statutory CorporateIncome
      Tax Rate
                  
                  
                  (34.0
                  )%
                  
                  
                  (34.0
                  )%
                  
                  
                  (34.0
                  )%
                  
                  
                  (34.0
                  )%Permanent
      Differences
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  --Change
      in Valuation Allowance onDeferred
      Tax Assets
                  
                  
                  34.0
                  %
                  
                  
                  34.0
                  %
                  
                  
                  34.0
                  %
                  
                  
                  34.0
                  %Effect
      of Foreign Earnings, Net ofAllowable
      Credits
                  
                  
                  0.4
                  %
                  
                  
                  1.0
                  %
                  
                  
                  2.0
                  %
                  
                  
                  0.5
                  %Income Tax
    (Benefit)
                  
                  
                  0.4
                  %
                  
                  
                  1.0
                  %
                  
                  
                  2.0
                  %
                  
                  
                  0.5
                  %
 
 The
components of deferred tax assets (liabilities) at September 30, 2008 and
December 31, 2007 are as follows:
 
 Sept.
      30, December 31,2008
                  
                  
                  2007Deferred
      Tax Assets (Liabilities) – Long TermNet Operating
      Losses
                  
                  $
                  798,000
                  
                  
                  $
                  668,000Depreciation
                  
                  
                  (1,287,078
                  )
                  
                  
                  (1,391,165
                  )Valuation
    Allowance
                  
                  
                  (798,000
                  )
                  
                  
                  (668,000
                  )Net Deferred Tax
      Liability
                  
                  $
                  (1,287,078
                  )
                  
                  $
                  (1,391,165
                  )
 
  The
Company has established a full valuation allowance on its deferred tax asset
because of a lack of sufficient positive evidence to support its
realization.  The valuation allowance increased by approximately
$130,000 and $330,000 in the nine months ended September 30, 2008 and the year
ended December 31, 2007.
 
 As of
September 30, 2008, there are approximately $2.3 million in US net operating
loss carryforwards expiring through 2028.  Section 382 of the Internal
Revenue Code limits the utilization of these losses when there is a change in
ownership, as defined in the code. As a result of stock issued for acquisitions
and properties purchased, the utilization of net operating loss carryforwards
are limited.
 
 On
January 1, 2007, the Company adopted Financial Accounting Standards Board (FASB)
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an
interpretation of FASB Statement No. 109" (FIN 48). There was no impact on the
Company's  consolidated  financial  position,  results
of operations or cash flows at December 31, 2006 and for the year then ended, as
a result of  implementing  FIN 48. At the adoption date of
January 1, 2007, the Company did not have any unrecognized tax
benefits.  The Company's practice is to recognize interest and/or
penalties related to income tax matters in income tax expense.  As of
January 1, 2007, the Company had no accrued interest or
penalties.  The Company  currently has no federal or state
tax  examinations  in progress  nor has it
had  any  federal  or  state  tax  examinations  since  its
inception.  All of the Company's tax years are subject to federal and
state tax examination.
 
 In the
past, RIGP1, a wholly owned subsidiary of the Company, sold certain properties
at a profit. Dutch tax law allows Real Estate Investment Trusts to postpone the
payment of income tax resulting from the sale of properties by setting up a
replacement reserve to purchase another property within a certain time. A
portion of the original profit is not allowed to be postponed. The postponed
income tax payable is shown as deferred tax in the balance
sheet.
  19
 Table of Content  ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 SEPTEMBER
30, 2008
 
 NOTE
7 – STOCKHOLDERS’ EQUITY
 
 The
Company is authorized to issue 1,000,000 shares of preferred stock, par value
$0.001 and 300,000,000 shares of common stock, par value $0.001 per
share.   At September 30, 2008 and December 31, 2007 there were
1,000 shares of preferred stock and 150,208,861 common shares issued and
outstanding.  The preferred shareholders have the right to appoint one
member to the Board of Directors and the right to request the Board of Directors
to call for a shareholders’ meeting.
 
 On June
5, 2007, the Company sold five million (5,000,000) shares of common stock at
$0.10 per share for a total of five-hundred-thousand dollars ($500,000) to
Muermans Vast Goed Roermond B.V.
 
 On July
23, 2007, the Company issued 1,975,868 shares of its Common Stock to the Chief
Executive Officer and the Chief Financial Officer for services rendered. The
shares were valued at $ 0.12 per share for a total consideration of $
237,104.
 
 On
October 26, 2007, the board of directors approved the conversion of $408,000 of
loans from related parties to 544,000 shares of the Company’s Common Stock at a
conversion price of $0.75 per share.
 
 On
December 27, 2007, the Company issued the following shares of common stock in
consideration of various acquisitions:
 
 Alfang
B.V.                               
                      1,687,500
shares at $1.20 per share
 AmogB
B.V.                                         
           2,190,000
shares at $1.00 per share
 Muermans
Vast Goel
BV                          21,465,885
shares at $0.2078 per share
 ECM
Participations                             
       112,485,349 shares at $0.10 per
share
 Kuiper
Groep
B.V.                                
             623,887
shares at $1.20 per share
 
 The
preferred shares were issued in conjunction with the MTMN B.V. property
acquisition.
 
 NOTE
8 – RELATED PARTY TRANSACTIONS
 
 Principal
stockholders of the Company have loaned to the Company US $1,528,230 as at
September 30, 2007 to fund operations. The loans are unsecured and bear interest
at the rate of 6% per annum. On October 24, 2007, the board approved a
resolution allowing these shareholders to convert US $408,000 of the debt to
544,000 shares of common stock of the Company. The balance of the loans is to be
repaid in cash. On December 27, 2007, as part of the acquisition of RIDP1
(Alfang BV) an amount of US $1,009,395 has been repaid. At December 31, 2007 the
balance of the loans is US $110,835. At September 30, 2008, the Company has
loans payable to related parties of US $1,352,086, of which US $1,246,779 is
payable to two note holders of the Company. The US $1,246,779 is payable on
demand and bears interest at 8%. At June 30, 2008, US $227,311 and US $728,890,
respectively, of this balance represented the premium (See Note3) and accrued
interest through June 30, 2008 on the two notes reduced by amounts which were
offset to certain accounts receivable which had been guaranteed by the note
holders. During the three months ended September 30, 2008, the Company borrowed
US $216,735 (€ 150,000) and had net repayments of US $161,829 (€ 112,000) with
one of the note holders.
 
 On May
25, 2007 the Company entered into a Management Services Agreement with
Statenconsult B.V., which per the agreement included the services of the
Managing Director of the Company's subsidiary Royal Invest Europe B.V.
[“RIE”].  Under said Management Service Agreement, the Company agreed
to pay to Statenconsult approximately €10,000 (approximately US $15,000)
per month, commencing January 1, 2007, for an indefinite period, subject to one
month written notice by either party,  to provide management services
for Royal Invest Europe BV, the operating subsidiary of the Company. The Company
incurred approximately US $253,000 in expense under this agreement and for other
related services in 2007 and approximately US $231,000 during the nine months
ended September 30, 2008.  There is approximately US $61,000 and US
$101,000 payable as of September 30, 2008 and December 31, 2007, respectively.
Effective October 22, 2008, this agreement was mutually terminated and as of
this date neither Statenconsult B.V. nor the resigning Managing Director of RIE
would be considered related parties of the Company. [See Note 13]
 
 20
 Table of Content
  ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 SEPTEMBER
30, 2008
 
 
 
 On May
25, 2007 the Company entered into a Legal Service Agreement with SEC ATTORNEYS
LLC in which Jerry Gruenbaum, the CEO of the Company is the Managing
Member.  Under said Legal Service Agreement, the Company agreed to pay
SEC ATTORNEYS LLC €12,000 (approximately US $17,000) per month for one year and
thereafter for an indefinite period subject to one month written notice by
either party to provide legal service to the Company and to provide a CEO and
CFO for the Company. The Company incurred approximately US $120,000 in expense
under this agreement and for other related services in 2007 and approximately US
$157,000 during the nine months ended September 30, 2008. There is approximately
US $161,000 and US $68,000 payable as of September 30, 2008 and December 31,
2007, respectively. [See Note 13]
 
 On May
25, 2007 the Company entered into a Consulting Agreement with ECM Participations
B.V. [formerly ECM Hoff B.V.] in which the then Managing Director of the
Company's subsidiary Royal Invest Europe B.V. is a shareholder, to secure
financing for the Company and to fund its planned acquisitions.  ECM
was to be paid up to a 2% finders fee for securing funding from a bank, and up
to 8% finder's fee for securing funding from investors for the Company. The
Company incurred a fee of approximately $1,594,000 upon the successful
completion of funding with the Bank of Scotland. Effective May 20, 2008, the
Company and ECM mutually agreed to cancel the Consulting Agreement as it relates
to future funding arrangements.  Commissions earned prior to the
effective date of the cancellation agreement are due and payable to ECM. [See
Note 13]
 
 NOTE
9 – LOANS PAYABLE - OTHER
 
 The
Company has other loans payable to unrelated parties of US $532,760 and US
$381,662 at September 30, 2008 and December 31, 2007, respectively. In August
2008, the Company borrowed US $216,735 (€ 150,000) from an unrelated party. The
loan is unsecured, bears interest at 6% per annum and is due August 2008. Loans
totaling $316,025 at September 30, 2008 are unsecured and bear a variable
interest rate (Eurobor + 2%).
 
 NOTE
10 – MINORITY INTEREST
 
 The
Company’s subsidiary, Royal Invest Europe B.V., has non-cumulative preference
shares outstanding valued at € 166,500 ($240,575 USD) which are owned by
minority shareholders.  The shareholders are entitled to 6% of the
nominal value of these shares annually (approximately $14,000 USD) payable from
the profits of RIE. No amount is payable if RIE’s operations result in a
loss.
 
 The
Company’s subsidiary, Alfang B.V., has non-cumulative preference shares
outstanding valued at € 224,000 ($323,658 USD) which are owned by minority
shareholders.  The shareholders are entitled to 6% of the nominal
value of these shares annually (approximately $19,000 USD) payable from the
profits of Alfang B.V.  No amount is payable if Alfang B.V.’s
operations result in a loss.
 
 The
Company’s subsidiary, AmogB B.V., has non-cumulative preference shares
outstanding valued at € 12,600 ($18,206 USD) which are owned by minority
shareholders.  The shareholders are entitled to 6% of the nominal
value of these shares annually (approximately $1,000 USD) payable from the
profits of AmogB B.V. No amount is payable if AmogB B.V.’s operations result in
a loss.
  21
 Table of Content  ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 SEPTEMBER
30, 2008
  
 NOTE
11 - COMMITTMENTS AND CONTINGENCIES
 
 On or
about June 19, 2007 the Company signed a Contract with Bloemers Onroerend Goed
B.V. to purchase a commercial warehouse and office building known as
J.C.Beetslaan 153 at 2131 AL Hoofddorp, the Netherlands for € 6,500,000 (US
$10,270,000), € 6,000,000 (US $9,480,000) in cash and € 500,000 (US $790,000) in
Company common stock.  In addition the Company will pay any real
estate transfer tax and notary transfer expenses.  This binding
contract required the property to be transferred by October 1,
2007.  While awaiting new equity funding, the transfer has been
postponed until December 1, 2008. In connection with the postponement of the
acquisition to December 1, 2008, the Company has agreed to make a deposit of €
500,000 (US $790,000) which will be forfeited if the closing does not take place
and to pay a fee of 7% of the € 6,000,000 (US $9,480,000) financing on a monthly
basis less applicable rental income received. As at September 30, 2008, the
Company paid € 446,688 (US $645,419) of the deposit and incurred an expense of €
487,684 (US $742,518) for the fee, of which € 454,825 (US $642,489) has been
paid.
 
 On June
14, 2007 the Company signed a Contract with Stedekroon B.V. to acquire
two commercial properties, one is a 8,713 square meters (approx. 93,688
square feet) office building in Amersfoort, the Netherlands which has an annual
rental income of €417,590 (approximately US $625,000) with Norit N.V. a
subsidiary of a publicly traded tenant that has a lease contract until December
20, 2016 and the other, is a 4,402 square meters (approx. 47,333 square
feet) office building with a shopping strip in Emmen, the Netherlands which has
an annual rental income from four tenants, including from the national
government of the Netherlands which pays €438,634 (approximately US $657,000)
and the other tenants pay a total of €93,510 , €22,231 and €30,945
(approximately US $140,000, US $33,000 and US $46,000, respectively) for a total
of €585,320 (approximately US $876,000), for a combined rental income of
€1,003,270 (approximately US $1,501,000).  The properties are being
purchased for €13,750,000 (approximately US $21,725,000) for
cash.  The Contract has been approved by the Board of
Directors.  In addition the Company will pay any real estate transfer
tax and notary transfer expenses. Negotiations are currently taking place with
the current owner concerning rent increases and contract renewals in conjunction
with extensive upgrades requested by the national government of the Netherlands
(requiring approximately € 2,500,000 or US $3,949,750 in additional investment).
On May 26, 2008, the Company signed a definitive and binding Purchase Agreement
with Stedekroon, B.V. The Company is currently working with Stadekroon B.V. to
secure financing for the acquisitions, however, due to the current economic
climate it may not be possible to obtain adequate financing and the acquisition
agreement may be terminated.
 
 On
September 7, 2007, the Company entered into a binding Memorandum of Agreement to
acquire all of the issued and outstanding shares of Glacier Gazdasagi Tanacsado
es Szolgaltato Korlatolt Felelossegu Tarsagag (“Glacier”) for approximately
$20,400,000 excluding transfer costs which are to be paid by the
Company.  The purchase price is to be paid as follows: cash in the
amount of $16,320,000 and a note payable and shares of the Company's common
stock in the amount of $4,080,000.  The amount of common
stock
 issued in
the purchase is limited to $2,040,000 and will be based on $1.25 per
share.  Glacier owns five (5) commercial rental properties in
Budapest, Hungary.
 
 NOTE
12 – FAIR VALUE MEASUREMENTS
 
 Effective
January 1, 2008, the Company adopted SFAS 157, Fair Value Measurements
(SFAS 157). SFAS 157 clarifies the definition of fair value, prescribes methods
for measuring fair value, and establishes a fair value hierarchy to classify the
inputs used in measuring fair value.  Effective June 30, 2008, the
conversion feature on certain promissory notes was waived (Note
3).  At September 30, 2008, there are no assets or liabilities that
are measured at fair value on a recurring basis.
  22
 Table of Content  ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 SEPTEMBER
30, 2008
 
  NOTE
13 – SUBSEQUENT EVENTS
 
 On
October 22, 2008, the shareholders of Royal Invest Europe, B.V. [“RIE”] and
Royal Invest Development & Services, B.V. [“RIDS”] , two Dutch subsidiaries
of the Company, approved the resignation of Mr. David Havenaar as the Managing
Director of these subsidiaries, effectively terminating the Management Services
Agreement with Statenconsult B.V. [Note 8]  Mr. David Havenaar has
also given his resignation as Managing Director of ECM Participations, which was
formerly known as ECM Hoff B.V., the major stockholder of the
Company.
 
 Effective
October 22, 2008, the shareholders approved the appointment of Mr. Lambert
Kassing as the new Managing Director of RIE and RIDS.  Mr. Kassing is
to provide management services to the Company, as defined in the agreement, for
compensation of €15,000 (approximately US $22,000) per month, commencing
October 22, 2008, for an indefinite period (with a minimum term of one
year),  subject to one month written notice by either
party.
 
 On
October 22, 2008, the Company entered into a new Legal Service Agreement with
SEC ATTORNEYS LLC in which Jerry Gruenbaum, the CEO of the Company is the
Managing Member.  Under said Legal Service Agreement, the Company
agreed to pay SEC ATTORNEYS LLC €12,500 (approximately US $18,000) per month for
one year and thereafter for an indefinite period subject to one month written
notice by either party to provide legal service to the Company and to provide a
CEO and CFO for the Company. The new agreement is effective December 1,
2008.
  23
 Table of
Content


ITEM
2.            
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


Management’s
Discussion and Analysis of Financial Condition and Results of Operations should
be read in conjunction with the financial statements in Item 1 and the
cautionary statements below.
  Executive
Summary
  We were incorporated in the State of Delaware as part of a reorganization
on May 2, 2005.  In January 2007 we changed our name to Royal Invest
International Corp. (“Royal Invest”) and we trade on the OTC under the stock
symbol “RIIC”.  We were originally organized on October 30, 1980,
under the laws of the State of Florida as C.N.W.
Corp.
  On July
19, 2007 through our subsidiary Royal Invest Europe B.V. we
acquired the shares of Rico Staete B.V. which owns a
commercial real estate property located at Tackenweide 48, in Emmerich, Germany,
consists of approximately 9.005 m2 rentable floor surface business accommodation
as well as 1.478 m2 rentable floor surface office space.  
In December
18, 2007 we acquired a new subsidiary called Vastgoed
Beleggings Mij. Bunnik I B.V.  Thereafter, Royal
Invest Europe B.V., our subsidiary transfered Royal Invest Germany Properties 1
B.V.,a subsidiary of Royal Invest Europe B.V. to our
subsidiary Vastgoed Beleggings Mij. Bunnik I
B.V.With the addition of Vastgoed Beleggings Mij. Bunnik I
B.V., we have a total of three subsidiaries in the Netherlands,
including Royal Invest Europe B.V., and Royal Invest Development and Services
B.V.  Vastgoed Beleggings Mij. Bunnik I B.V.hasfiled with the Chamber of Commerce at The Hague
allowing it to use the trade name Royal Invest Europe
2.
  On
December 27, 2007 through our subsidiary Royal Invest Europe B.V., we
acquired a 2,680 m2
(approximately 28,817 square feet) commercial office building known as Sloterweg
22 in Badhoevedorp, the Netherlands, we acquired a 5,150m2(approximately 55,434 square feet) commercial office building known as
Emmakade 59-60 in Leeuwarden, the Netherlands, we
acquired 6 properties in the Netherlands, located atMijlweg
7, in Vianen, the Netherlands;Berenkoog
53, in Alkmaar, the Netherlands;Keulsekade
21, in Utrecht, the Netherlands;Edisonweg
9, in Woerden, the Netherlands;De Schans
1802, in Lelystad, the Netherlands; andFranciscusweg
8-10, in Hilversum, the Netherlands, we
acquired an 18,338 m2
(approximately 197,183 square feet) commercial office building known as
Schepersmaat 4, 9405 TA Assen, the Netherlands, we acquired the
shares of Alfang B.V.of Eindhoven, the Netherlands which owns a series
of mortgaged commercial properties located atParallelweg
29 in Beverwijk, The Netherlands;Kriuisweg
855, 857, 859 in Hoofddorp, The Netherlands;Schinkelwaard
20 in Alkmaar , The Netherlands; Willemstraat
47, 67, 69 in Hengelo, The Netherlands;Zuidermolenweg
7 in Amsterdam, The Netherlands; andProduktieweg
119 in Wormerveer, The Netherlands and we acquired the shares
ofAmogB
B.V. which owns a portfolio of mortgaged commercial properties in the
Netherlands.
 Business
and Investment Objectives and Operating Strategies
  Since our
formation, our business and investment objectives have been to:
  ·obtain capital gain
on the sale of any properties;
 ·make new investments in
properties or joint ventures, including by, directly or indirectly, developing
new properties; and
 ·preserve and protect the
shareholders’ capital.
  Our board
of directors in their sole discretion, may change these investment
objectives as it deems appropriate and in our best interests.  Prior to
changing any of the investment objectives, the board of directors will consider,
among other factors, expectations, changing market trends, management expertise
and ability and the relative risks and rewards associated with any
change.
  We intend
to reach our business and investment objectives through our acquisition and
operating strategies. Our acquisition and operating strategies are
to:
  ·focus on Continental
European and Great Britain markets;
 ●maintain a
portfolio which is diversified by property type and to some degree by
geographical location;
 ·achieve and maintain high
occupancy and increase rental rates through: (1) efficient leasing strategies,
and (2) providing quality maintenance and services to tenants;
 ·control operating expenses
through operating efficiencies and economies of scale;
 ·attract and retain high
quality tenants;
 ·invest in properties that
we believe offer significant growth opportunity; and
 ·emphasize regular repair
and capital improvement programs to enhance the properties’ competitive
advantages in their respective markets.
  Competition
  We
compete with other entities to locate suitable properties for acquisition, to
locate purchasers for our properties and to locate tenants to rent space at each
of our properties.  Although our business is competitive, it is not
seasonal.  While the markets in which we compete are highly fragmented with
no dominant competitors, we face substantial competition.  This competition
is generally for the retention of existing tenants at lease expiration or for
new tenants when vacancies occur.  There are numerous other similar types
of properties located in close proximity to each of our properties.  We
maintain the suitability and competitiveness of our properties primarily on the
basis of effective rents, amenities and services provided to tenants.  The
amount of leasable space available in any market could have a material adverse
effect on our ability to rent space and on the rents charged.  Competition
to acquire existing properties from institutional investors and other publicly
traded real estate limited partnerships and real estate investment trusts has
increased substantially in the past several years.  In many of our markets,
institutional investors, owners and developers of properties compete vigorously
to acquire, develop and lease space.  Many of these competitors have
substantially more resources than we do.
 
 24
 Table of Content
 Critical
Accounting Policies




General




A
critical accounting policy is one that would materially affect our operations or
financial condition, and requires management to make estimates or judgments in
certain circumstances.  These judgments often result from the need to make
estimates about the effect of matters that are inherently uncertain. 
Critical accounting policies discussed in this section are not to be confused
with accounting principles and methods disclosed in accordance with U.S.
generally accepted accounting principles (‘‘GAAP’’).  GAAP requires
information in financial statements about accounting principles, methods used
and disclosures pertaining to significant estimates.  The following
disclosure discusses judgments known to management pertaining to trends, events
or uncertainties known which were taken into consideration upon the application
of those policies and the likelihood that materially different amounts would be
reported upon taking into consideration different conditions and
assumptions.




Impairment
and Valuation




Statement
of Financial Accounting Standards (‘‘SFAS’’) No. 144 “Accounting for the
Impairment or Disposal of Long-Lived Assets,’’ specifies circumstances in which
certain long-lived assets must be reviewed for impairment.  If this review
indicates that the carrying amount of an asset exceeds the sum of its expected
future cash flows, the asset’s carrying value must be written down to fair
value.  In determining the value of an investment property and whether the
investment property is impaired, management considers several factors such as
projected rental and vacancy rates, property operating expenses, capital
expenditures, interest rates and recent appraisals when available.  The
capitalization rate used to determine property valuation is based on among
others, the market in which the investment property is located, length of
leases, tenant financial strength, the economy in general, demographics,
environment, property location, visibility, age and physical condition. 
All of these factors are considered by management in determining the value of
any particular investment property.  The value of any particular investment
property is sensitive to the actual results of any of these factors, either
individually or taken as a whole.  If the actual results differ from
management’s judgment, the valuation could be negatively or positively
affected.




The
mergers was accounted for using the purchase method of accounting in accordance
with SFAS No. 141 ‘‘Business Combinations.’’  Royal Invest Europe BV
was treated as the purchasing entity.  For the merger, the portion of the
assets and liabilities acquired from unaffiliated third parties was adjusted to
reflect its fair market value.  That portion owned by affiliates of the
Company was reflected at historical cost.




In
accordance with SFAS No. 141, we allocate the purchase price of each
acquired investment property among land, buildings and improvements, other
intangibles, including acquired above market leases, acquired below market
leases and acquired in place lease origination cost which is the market cost
avoidance of executing the acquired leases.  Allocation of the purchase
price is an area that requires complex judgments and significant
estimates.  We use information contained in third-party appraisals as the
primary basis for allocating the purchase price between land and
buildings.  A pro rata portion of the purchase price is allocated to the
value of avoiding a lease-up period for acquired in-place leases.  The
value of in-place leases is amortized to expense over the remaining initial term
of the respective leases.  A portion of the purchase price is allocated to
the estimated lease origination cost based on estimated lease execution costs
for similar leases and considered various factors including geographic location
and size of leased space.  We then evaluate acquired leases based upon
current market rates at the acquisition date and various other factors including
geographic location, size and the location of leased space within the property,
tenant profile and the credit risk of the tenant in determining whether the
acquired lease is above or below market.  After acquired leases are
determined to be at, above or below market, we allocate a pro rata portion of
the purchase price to any acquired above or below market lease based upon the
present value of the difference between the contractual lease rate and the
estimated market rate.  We also consider an allocation of purchase price to
in-place leases that have a customer relationship intangible value.  The
characteristics we consider in allocating these values include the nature and
extent of existing business relationships with the tenant, growth prospects for
developing new business with the tenant and the tenant’s credit quality and
expectations of lease renewals.  We did not have any tenants with whom we
have identified a developed relationship that we believe had any intangible
value.




Recognition
of Rental Income




Under
GAAP, we are required to recognize rental income based on the effective monthly
rent for each lease.  The effective monthly rent is equal to the average
monthly rent during the term of the lease, not the stated rent for any
particular month.  The process, known as ‘‘straight-lining’’ or
‘‘stepping’’ rent generally has the effect of increasing rental revenues during
the early phases of a lease and decreasing rental revenues in the latter phases
of a lease.  If rental income calculated on a straight-line basis
exceeds the cash rent due under the lease, the difference is recorded as an
increase in deferred rent receivable and included as a component of accounts
receivable on the relevant balance sheet.  If the cash rent due under the
lease exceeds rental income calculated on a straight-line basis, the difference
is recorded as a decrease in deferred rent receivable and is recorded as a
decrease of accounts receivable on the relevant balance sheet.  We defer
recognition of contingent rental income, such as percentage or excess rent,
until the specified target that triggers the contingent rental income is
achieved.  We periodically review the collectability of outstanding
receivables.  Allowances are generally taken for tenants with outstanding
balances due for a period greater than ninety days and tenants with outstanding
balances due for a period less than ninety days but that we believe are
potentially uncollectible.




Recognition
of Lease Termination Income




We
recognize lease termination income upon receipt of the income.  We accrue
lease termination income if there is a signed termination agreement, all of the
conditions of the agreement have been met and the tenant is no longer occupying
the property.




Cost
Capitalization and Depreciation
Policies




We
review all expenditures and capitalize any item exceeding $2,500 deemed to be an
upgrade or a tenant improvement with an expected useful life greater than one
year.  Land, buildings and amenities are stated at cost.  Depreciation
expense is computed using the straight-line method over the estimated useful
lives of the assets.  Buildings and improvements have estimated useful
lives between 25-40 years, land improvements have estimated useful lives of 10
years and amenities have estimated useful lives of 5 years.  Acquired above
and below market leases are amortized on a straight-line basis over the life of
the related leases as an adjustment to rental income.  Acquired in place
lease origination cost is amortized over the life of the lease as a component of
amortization expense.




25


Table of Content




Liquidity
and Capital Resources




Our
most liquid asset is our cash.  Operating income generated by the
properties will be the primary source from which we generate
cash.  Our main uses of cash will relate to capital expenditures,
required payments of mortgages and notes payable, distributions and property
taxes.




Cash
Flow from Operating Activities




Net
cash used in operating activities increased from approximately ($675,364) for the
nine months ended September 30, 2007 to approximately $1,348,718 for the
nine months ended September 30, 2008.  The increase is primarily the result
of a decreased operating income from approximately $(950,752) for the
nine months ended September 30, 2007 to approximately ($5,037,159)for
the nine months ended September 30, 2008, an increase in depreciation from
approximately $28,730 for the
nine months ended September 30, 2007 to approximately $2,399,221for the
nine months ended September 30, 2008, a decrease in change in value of
derivative liability from approximately $0 for nine months
ended September 30, 2007 to approximately ($2,313,130) for the nine months ended
September 30, 2008, an increase in loss on debt modification from approximately
$0 for the nine months ended  September 30, 2007 to approximately
$1,416,852 for the nine months ended September 30, 2008, an increase in
amortization - debt discount from approximately $0 for the nine months
ended September 30, 2007 to approximately $541,096 for the nine months ended
September 30, 2008, an increase in amortization - deferred financing
costs from approximately $0 for the nine months ended September 30, 2007 to
approximately 411,821 for the nine months ended September 30, 2008, an
increase in fair value adjustment on property from approximately $0 for the
nine months ended September 30, 2007 to approximately 1,941,239 for the nine
months ended September 30, 2008, an increase in accounts
receivable from approximately $0 for the nine months ended September 30,
2007 to approximately ($467,078) for the nine months ended September 30, 2008,
and an increase in accrued interest from approximately $21,375 for the nine
months ended September 30, 2007 to approximately $2,082,118 for the nine months
ended September 30, 2008.




Cash
Flow from Investing Activities




Net
cash used in investing activities increased from approximately
($1,216,781) for the nine months ended September 30, 2007 to approximately
($835,863) for the nine months ended September 30, 2008.  The increase is
primarily the result of an increase in advance payment on property
purchase from approximately $($1,216,781) for the nine months ended
September 30, 2007 to approximately ($680,100) for the nine months ended
September 30, 2008.




Cash
Flow from Financing Activities




Net
cash provided by financing activities decreased  from approximately
$1,996,095 for the nine months ended September 30, 2007 to approximately
($480,057) for the nine months ended September 30, 2008.  The
decrease is primarily the result of a decrease on payments on
mortgages payable from ($66,000) for the nine months ended September 30,
2007 to approximately ($921,999) for the nine months ended September 30, 2008
and a decrease in loans payable - related party, net from approximately
$1,515,868 for the nine months ended September 30, 2007 to approximately
$286,727 for the nine months ended September 30,
2008.




Future
Liquidity




Our
future liquidity depends significantly on our properties’ occupancy remaining at
a level which allows us to make debt payments and have adequate working capital,
currently and in the future.  If occupancy were to fall below that level
and remain at or below that level for a significant period of time, our ability
to make payments due under our debt agreements and to continue paying daily
operational costs would be greatly impaired.  In the next twelve months, we
intend to operate the properties in a similar manner to their operation in
recent years.  Cash reserves, which consist of unrestricted cash and cash
equivalents as shown on our balance sheet, were approximately $188,989 on
September 30, 2008.




Property
Transactions




Acquisitions




During
the quarter ended September 30, 2008, we had no property
acquisitions.




Dispositions




During the quarter ended September 30, 2008, we had no property
disposition.




26


Table of Content


RESULTS
OF OPERATIONS




QUARTER
ENDED SEPTEMBER 30, 2008 AS COMPARED TO SEPTEM BER 30, 2007




This
section includes our actual results of operations for the quarter ended
September 30, 2008 and 2007.  As of December 31, 2007, we owned
wholly 18 commercial properties.  We generate substantially all of our
operating income from property
operations.




September 30,2008
            
            
            2007Revenues
            
            $
            3,729,514
            
            
            $
            128,897Operating
      Services
            
            
            864,091
            
            
            
            30,452Real
      Estate Taxes
            
            
            54,894
            
            
            
            4,254Fair
      Value Adjustment on Property
            
            
            1,941,239
            
            
            
            -General
      and Administrative
      Expenses
            
            
            753,596
            
            
            
            476,436Depreciation
            
            
            793,096
            
            
            
            27,066Operating Income
      (Loss)
            
            
            (677,402
            )
            
            
            (409,311
            )Net
      Other
      Expenses
            
            
            (2,429,190
            )
            
            
            (73,129
            )Net
      Income (Loss) Before
      Taxes
            
            
            (3,106,592
            )
            
            
            (482,440
            )Provision
      for Income
      Taxes
            
            
            14,096
            
            
            
            5,021Net
      Loss
            
            $
            (3,120,661
            )
            
            $
            (487,461
            )






Our
net income (loss) for the quarters ended September 30, 2008 and
2007 were ($3,120,661), and ($487,461),
respectively.  Operating income decreased by $268,091 due to an
increase in revenues by approximately $3,600,617 from approximately
$128,897 for the quarter ended September 30, 2007 to approximately
$3,729,514 for the quarter ended September 30, 2008, decrease in the
fair value on the property by approximately $1,941,239 from approximately
$0 for the quarter ended September 30, 2007 to approximately $1,941,239 for
the quarter ended September 30, 2008.




Rental
Income and Tenant Reimbursements




Rental
income from continuing operations for the quarter ended September 30, 2008 and
2007 were approximately $3,463,990 and $128,897, respectively.  The
increase of approximately $3,335,093, was primarily the result of the
acquisitions of various real properties late in
2007.




General
and Administrative Expenses




General
and administrative expenses from continuing operations for the quarter
ended September 30, 2008 and 2007 were approximately $753,596 and $476,436,
respectively.  The increase of approximately $277,160 was primarily the
result of the acquisitions of various real properties late in
2007.





27


Table of Content




Property
Taxes




Property
taxes from continuing operations for the quarter ended September 30, 2008
and 2007 were approximately $54,894 and $4,254, respectively.  The increase
of $50,640, was primarily the result of the acquiring of properties in Late in
2007.






Depreciation




Depreciation expense
from continuing operations for the quarter ended September 30, 2008 and 2007 was
approximately $793,096 and $27,066 respectively.  The increase of $766,030,
is primarily the result of the acquiring of properties in Late in
2007.






Interest
Expense




Interest expense from continuing operations for
the quarter ended September 30, 2008 and 2007 was approximately $2,350,689 and
$81,678, respectively.  The increase of $2,269,011, was primarily the
result of acquiring additional debt with the 2007 acquisitions of various
real estate properties in The Netherlands for a total market value of
€99.336.000 (approximately $156,950,880 US) which was financed by a
new mortgage for €82,761,331 (approximately $121,899,164 US) from the Bank of
Scotland and SNS Bank.




28
 Table of Content




Contractual
Obligations and Commercial Commitments




Following
is an overview of the Company’s mortgages as of September 30,
2008:




Principal
      Balance atInterest
              
              
              September
      30, 2008Property
      Name
              Lender
              
              Rate
              
              
              in
      Euros
              
              
              in
      Dollars
              
              MaturityKruisweg
      855-859
              Bank
      of Schotland PLC
              
              
              *
              
              
              €
              2,465,000
              
              
              $
              3,894,700
              
              December
      27, 2013Willemstraat
      47, 67 en 69
              Bank
      of Schotland PLC
              
              
              *
              
              
              
              1,769,700
              
              
              
              2,796,126
              
              December
      27, 2013Parallelweg
      29
              Bank
      of Schotland PLC
              
              
              *
              
              
              
              3,581,050
              
              
              
              5,658,059
              
              December
      27, 2013Schinkelwaard
      20
              Bank
      of Schotland PLC
              
              
              *
              
              
              
              3,521,550
              
              
              
              5,564,049
              
              December
      27, 2013Zuidermolenweg
      7
              Bank
      of Schotland PLC
              
              
              *
              
              
              
              1,099,900
              
              
              
              1,737,842
              
              December
      27, 2013Productieweg
      1
              Bank
      of Schotland PLC
              
              
              *
              
              
              
              3,223,200
              
              
              
              5,092,656
              
              December
      27, 2013Stuartweg
      2
              Bank
      of Schotland PLC
              
              
              *
              
              
              
              5,965,300
              
              
              
              9,425,174
              
              December
      27, 2013Nieuwzeelandweg
      10
              Bank
      of Schotland PLC
              
              
              *
              
              
              
              1,903,150
              
              
              
              3,006,977
              
              December
      27, 2013Edisonweg
      9
              Bank
      of Schotland PLC
              
              
              *
              
              
              
              657,900
              
              
              
              1,039,482
              
              December
      27, 2013Mijlweg
      7
              Bank
      of Schotland PLC
              
              
              *
              
              
              
              2,185,350
              
              
              
              3,452,853
              
              December
      27, 2013Keulsekade
      216
              Bank
      of Schotland PLC
              
              
              *
              
              
              
              3,723,000
              
              
              
              5,882,340
              
              December
      27, 2013De
      Schans 1802
              Bank
      of Schotland PLC
              
              
              *
              
              
              
              2,397,850
              
              
              
              3,788,603
              
              December
      27, 2013De
      Berenkoog 53
              Bank
      of Schotland PLC
              
              
              *
              
              
              
              1,241,850
              
              
              
              1,962,123
              
              December
      27, 2013Franciscusweg
      8-10
              Bank
      of Schotland PLC
              
              
              *
              
              
              
              16,233,300
              
              
              
              25,648,614
              
              December
      27, 2013Sloterweg
      22
              Bank
      of Schotland PLC
              
              
              *
              
              
              
              3,002,200
              
              
              
              4,743,476
              
              December
      27, 2013Emmakade
      59-60
              Bank
      of Schotland PLC
              
              
              *
              
              
              
              5,210,500
              
              
              
              8,232,590
              
              December
      27, 2013Schepersmaat
      4
              Bank
      of Schotland PLC
              
              
              *
              
              
              
              21,510,100
              
              
              
              33,985,958
              
              December
      27, 2013Tachenweide
      12
              SNS
      Bank
              
              
              **
              
              
              
              3,017,387
              
              
              
              4,767,471
              
              Mature
      ***Total
      Mortgages
              
              
              
              
              
              
              €
              82,708,287
              
              
              $
              130,679,093*
              Variable
      Interest Rate (Quarterly Euribor + 1,32%). First Interest Payment was due
      at April 15, 2008**
              Variable
      Interest Rate (Monthly Euribor + 2%). At December 31, 2007 this was 6,822
      %***
              Royal
      Invest Europe is currently negotiating with the Bank of Schotland to
      refinance this object under the terms
      of the current Facility Agreement****
              Currency
      Exchange rate for September 30, 2008 EUR (€) to US ($) =
      1,58000


At
September September 30, 2008, the Properties are leased to tenants under
operating leases with various expiring dates through 2023. The lease
provides for annual base rents and the pass-through of charges for electrical
usage.
 
 Future
minimum rentals to be received under non-cancelable operating leases at December
31, 2007 are as follows:
  Year
              
              Amount2008
              
              $
              11.169.3932009
              
              $
              10.075.8982010
              
              $
              7.179.7682011
              
              $
              5.648.0262012
              
              $
              5.543.337Total
              
              $
              39.616.422
 
 29
 Table of
Content


ITEM 3    QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
  Our
primary market risk exposure with regard to financial instruments is expected to
be our exposure to changes in interest rates.  We refinanced substantially
all of our debt acquired at the time of our merger with instruments, which bear
a variable interest set quarterly at Euribor +1,32%.  A minimum of 65%
of the facility is subject to a hedging contract; 20% is capped, and the
remaining 15% is subject to market conditions.


ITEM 4    CONTROLS AND
PROCEDURES
  Disclosure Controls and
Procedures - As of September 30, 2008,
we, under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, evaluated the
effectiveness of our disclosure controls and procedures as defined in Exchange
Act Rules 13a-15(e) and 15(d)-15(e).  Based upon that evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that the
disclosure controls and procedures were effective as of September 30,
2008.
  Management’s Report on Internal
Control Over Financial Reporting - Management is responsible for establishing and
maintaining adequate internal control over financial reporting as defined in
Rule 13a-15(f) under the Exchange Act.  Our internal control
system is designed to provide reasonable assurance regarding the preparation and
fair presentation of published financial statements.  Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements.  Therefore, even those systems determined to be
effective can provide only reasonable assurance with respect to financial
statement preparation and presentation.  Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that
compliance with the policies or procedures may deteriorate or be
circumvented.
  Management assessed the effectiveness of our
internal control over financial reporting as of September 30, 2008.  In
making this assessment, management used the criteria established in Internal
Controls-Integrated Frameworkissued by the Committee of Sponsoring Organizations
of the Treadway Commission, or COSO.  Based on management’s assessment and
the criteria established by COSO, management believes that we maintained
effective internal control over financial reporting as of September 30,
2008.
  Changes in
Internal Control Over Financial Reporting- There has been no
change in our internal control over financial reporting during the quarter ended
March 31, 2008,that has
materially affected, or is reasonablylikely to materially affect, our
internal control over financial
reporting.
  ITEM 4T CONTROLS AND PROCEDURES
  This
quarterly report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting. 
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the SEC that permit us to
provide only management’s report in this quarterly
report.
  30


Table of Content
 PART
II
 ITEM
1.             LEGAL
PROCEEDINGS





In the
normal course of our business, we and/or our subsidiaries are named as
defendants in suits filed in various state and federal courts.  We
believe that none of the litigation matters in which we, or any of our
subsidiaries, are involved would have a material adverse effect on our
consolidated financial condition or operations.





There is
no other past, pending or, to the Company’s knowledge, threatened litigation or
administrative action which has or is expected by the Company’s management to
have a material effect upon our Company’s business, financial condition or
operations, including any litigation or action involving our Company’s officers,
directors, or other key personnel.





ITEM 1ARISK FACTORS
  Factors
That May Affect Our Future Results
  Cautionary
Statements under the Private Securities Litigation Reform Act of
1995.
  Certain
information included in this report or in other materials we have filed or will
file with the Securities and Exchange Commission (the “SEC”) (as well as
information included in oral statements or other written statements made or to
be made by us) contains or may contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended. You can
identify these statements by the fact that they do not relate strictly to
historical or current facts. They contain words such as “anticipate,”
“estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “may,” “can,”
“could,” “might” and other words or phrases of similar meaning in connection
with any discussion of future operating or financial performance. Such
statements include information relating to anticipated operating results,
financial resources, changes in revenues, changes in profitability, interest
expense, growth and expansion, anticipated income to be realized from our
investments in unconsolidated entities, the ability to acquire land, the ability
to gain approvals and to open new communities, the ability to sell properties,
the ability to secure materials and subcontractors, the ability to produce the
liquidity and capital necessary to expand and take advantage of opportunities in
the future, and stock market valuations. From time to time, forward-looking
statements also are included in our other periodic reports on Forms 10-Q and
8-K, in press releases, in presentations, on our website and in other material
released to the public.
  Any or
all of the forward-looking statements included in this report and in any other
reports or public statements made by us may turn out to be inaccurate.
 This can occur as a result of incorrect assumptions or as a consequence of
known or unknown risks and uncertainties.  Many factors mentioned in this
report or in other reports or public statements made by us, such as government
regulation and the competitive environment, will be important in determining our
future performance. Consequently, actual results may differ materially from
those that might be anticipated from our forward-looking
statements.
  We
undertake no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise. However, any
further disclosures made on related subjects in our subsequent reports on Forms
10-K, 10-Q and 8-K should be consulted. The following cautionary discussion of
risks, uncertainties and possible inaccurate assumptions relevant to our
business includes factors we believe could cause our actual results to differ
materially from expected and historical results. Other factors beyond those
listed below, including factors unknown to us and factors known to us, which we
have not determined to be material, could also adversely affect us. This
discussion is provided as permitted by the Private Securities Litigation Reform
Act of 1995, and all of our forward-looking statements are expressly qualified
in their entirety by the cautionary statements contained or referenced in this
section.
  31
 Table of Content
  Our
control shareholders may effectively exercise control over matters requiring
shareholder approval.
  As of
December 31, 2007, ECM Hoff Holding BV beneficially owns approximately 49.6% of
our outstanding common shares and Muermans Vast Goed Roermond
BV beneficially owns approximately 39.5% of our outstanding common
shares.  Together they effectively have the power to elect all of the
directors and control the management, operations and affairs of our Company.
  Our
cash flows and results of operations could be adversely affected if legal claims
are brought against us and are not resolved in our favor.
  Claims
have been brought against us in legal proceedings, which have not had, and
are not expected to have, a material adverse effect on our business or financial
condition.  Should claims be filed in the future, it is possible that our
cash flows and results of operations could be affected, from time to time, by
the negative outcome of one or more of such matters.
  Risks
Related to Our Business and Properties
  We
may suffer losses at our properties that are not fully covered by
insurance.
  We carry
comprehensive liability, fire, extended coverage, terrorism and rental loss
insurance covering all of our properties.  We believe the policy
specifications and insured limits are appropriate given the relative risk of
loss, the cost of the coverage and industry practice.  None of the entities
carry insurance for generally uninsured losses such as losses from riots, war,
acts of God or mold.  Some of the policies, like those covering losses due
to terrorism and floods, are insured subject to limitations involving large
deductibles or co-payments and policy limits, which may not be sufficient to
cover losses.  If we experience a loss which is uninsured or which exceeds
policy limits, we could lose the capital invested in the damaged property as
well as the anticipated future cash flows from that property.  In addition,
if the damaged property is subject to recourse indebtedness, we would continue
to be liable for the indebtedness, even if it was irreparably
damaged.
  Future
terrorist attacks in Europe could harm the demand for and the value of our
properties.
  Future
terrorist attacks in Europe, such as the attacks that occurred in London and
Madrid, and other acts of terrorism or war could harm the demand for, and the
value of, our properties.  A decrease in demand could make it difficult for
us to renew or re-lease our properties at lease rates equal to, or above,
historical rates.  Terrorist attacks also could directly impact the value
of our properties through damage, destruction, loss, or increased security
costs, and the availability of insurance for these acts may be limited or
costly.  To the extent that our tenants are impacted by future attacks,
their ability to honor obligations under their existing leases with us could be
adversely affected.
  32
 Table of Content
  The
value of our properties are
subject to risks associated with real estate assets and with the real estate
industry in general.
  We depend
on our ability to generate revenues in excess of expenses, scheduled principal
payments on debt and capital expenditure requirements. Events and conditions
generally applicable to owners and operators of real property that are beyond
our control that could impact the value of our
properties include:
  ·local oversupply,
increased competition or reduction in demand for office, business centers or
multifamily properties;
 ·inability to collect rent
from tenants;
 ·vacancies or our inability
to rent space on favorable terms;
 ·increased operating costs,
including insurance premiums, utilities and real estate taxes;
 ·costs of complying with
changes in governmental regulations;
 ·the relative illiquidity
of real estate investments;
 ·changing market
demographics; and
 ·inability to acquire and
finance properties on favorable terms.
  In
addition, periods of economic slowdown or recession, rising interest rates
subject to a cap limitations or declining demand for real estate, or the
public perception that any of these events may occur, could result in a general
decline in rents or in increased defaults under existing leases, which could
adversely affect our financial condition, results of operations, cash
flow, and ability to satisfy our debt service obligations.
  We
face significant competition, which may decrease the occupancy and rental rates
of our properties.
  We
compete with several developers, owners and operators of commercial real estate,
many of which own properties similar to ours.  Our competitors may be
willing to make space available at lower prices than the space in our
properties.  If our competitors offer space at rental rates below current
market rates, we may lose potential tenants and be pressured to reduce our
rental rates to retain an existing tenant when its lease expires.  As a
result, our financial condition, results of operations, cash flow, and
ability to satisfy our debt service obligations could be adversely
affected.
  Our
debt level could expose us to the risk of default under our debt
obligations.
  Payments
of principal and interest on borrowings could leave us with insufficient cash
resources to operate our properties.  Our level of debt could have
significant adverse consequences, including:
  ·cash flow may be
insufficient to meet required principal and interest payments;
 ·we may be unable to borrow
additional funds as needed or on favorable terms;
 ·we may be unable to
refinance our indebtedness at maturity or the terms may be less favorable than
the terms of our original indebtedness;
 ·we may be forced to
dispose of one or more of our properties, possibly on disadvantageous
terms;
 ·we may default on our
obligations and the lenders or mortgagees may foreclose on the properties
securing their loans or receiving an assignment of rents and
leases;
 ·we may violate restrictive
covenants in our loan documents, which would entitle the lenders to accelerate
our debt obligations; and
 ·default under any one of
the mortgage loans with cross default provisions could result in a default on
other indebtedness.
  If any
one of these events were to occur, our financial condition, results of
operations, cash flow, our ability to satisfy our debt service
obligations could be adversely affected.
  33
 Table of Content
  We
could incur significant costs related to government regulation and private
litigation over environmental matters.
  Under
various laws, ordinances and regulations relating to the protection of the
environment, a current or previous owner or operator of real estate may be held
liable for contamination resulting from the presence or discharge of hazardous
or toxic substances at that property, and may be required to investigate and
clean up any contamination at, or emanating from, that property. These laws
often impose liability, which may be joint and several, without regard to
whether the owner or operator knew of, or was responsible for, the presence of
the contaminants. The presence of contamination, or the failure to remediate
contamination, may adversely affect the owner’s ability to sell, lease or
develop the real estate or to borrow using the real estate as collateral. In
addition, the owner or operator of a site may be subject to claims by third
parties based on personal injury, property damage or other costs, including
costs associated with investigating or cleaning up the environmental
contamination present at, or emanating from, a site.
  These
environmental laws also govern the presence, maintenance and removal of asbestos
containing building materials, or “ACBM.”  These laws require that ACBM be
properly managed and maintained, and may impose fines and penalties on building
owners or operators who fail to comply with these requirements. These laws may
also allow third parties to seek recovery from owners or operators for personal
injury associated with exposure to asbestos fibers. Some of our properties could
contain ACBM.
  Some of
the properties in our portfolio contain or could have contained, or are adjacent
to or near other properties that have contained or currently contain underground
storage tanks used to store petroleum products or other hazardous or toxic
substances.  These operations create a potential for the release of
petroleum products or other hazardous or toxic substances.
  Recent
news accounts suggest that there is an increasing amount of litigation over
claims that mold or other airborne contaminants have damaged buildings or caused
poor health.  Mold and certain other airborne contaminants occur
naturally and are present in some quantity in virtually every structure. A
plaintiff could successfully establish that mold or another airborne contaminant
at one of our properties causes or exacerbates certain health conditions. 
We generally have no insurance coverage for the cost of repairing or replacing
elements of a building or its contents that are affected by mold or other
environmental conditions, or for defending against this type of
lawsuit.
  We
may incur significant costs complying with other regulations.
  Our
properties are subject to various regulatory requirements, such
as fire and life safety requirements. If we fail to comply with these
various requirements, we may be fined or have to pay private damage
awards.  We believe that our properties materially comply with all
applicable regulatory requirements.  These requirements could change in the
future requiring us to make significant unanticipated expenditures that could
adversely impact our financial condition, results of operations, cash flow, the
value of the Units, our ability to satisfy our debt service obligations and to
pay distributions.
  We
may invest in joint ventures, which add another layer of risk to our
business.
  We may
acquire properties through joint ventures, which could subject us to certain
risks, which may not otherwise be present, if we made the investments directly.
These risks include:
  ·the potential that our
joint venture partner may not perform;
 ·the joint venture partner
may have economic or business interests or goals that are inconsistent with or
adverse to our interests or goals;
 ·the joint venture partner
may take actions contrary to our requests or instructions or contrary to our
objectives or policies;
 ·the joint venture partner
might become bankrupt or fail to fund its share of required capital
contributions;
 ·we and the joint venture
partner may not be able to agree on matters relating to the property;
and
 ·we may become liable for
the actions of our third-party joint venture partners.
  Any
disputes that may arise between joint venture partners and us may result in
litigation or arbitration that would increase our expenses and prevent us from
focusing our time and effort on the business of the joint
venture.


ITEM
2.            UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


There were
no securities of the Company sold during the quarter ended September
30, 2008.  Information with respect to previously reported sales prior
to January 1, 2008 may be found in the Company’s
prior filings.
 
  34
 Table of Content
 ITEM 3 DEFAULT UPON SENIOR
SECURITIES
 During
the period March 1, 2005 to July 31, 2005, the Company issued convertible
promissory notes aggregating $589,000. The notes are unsecured and bear interest
at a rate of 10% per annum. The principal and interest was due September 27,
2006.  On November 16, 2005, a majority of holders of the outstanding
notes opted to convert the principal and interest on their notes into common
shares of the Company at $0.75 per share.  The Company converted
$542,067 of notes plus interest into 849,176 shares of common stock. The
outstanding notes of approximately $65,000 are currently in
default.
  During the period January 1, 2006 to March 31, 2006, the Company issued
additional convertible promissory notes aggregating $220,000.  The
notes are unsecured and bear interest at a rate of 10% per
quarter.  The principal and interest is due 90 days after the issuance
of the notes, but automatically renews and continues to accrue interest. The
notes are convertible into shares of common stock of the company at $0.75 per
share. These notes are currently in default.






ITEM
4           SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS




None.






ITEM 5 OTHER INFORMATION
  None.
  35
 Table of Content
  ITEM
6             EXHIBITS






Exhibit
No.                 Document
Description





3.1
            Certificate
      of Incorporation of C.N.W. Corp. as filed with the Florida Secretary of
      State on October 30, 1980, incorporated by reference to the Company’s
      Registration Statement on Form 10SB12G filed with the Securities and
      Exchange Commission on August 20,
1999.





3.2
            Amended
      Certificate of Incorporation of C.N.W. Corp. to change name to C.N.W. of
      Orlando, Inc., increased its capitalization from 1,000 common shares to
      50,000,000 common shares and changed its par value from $1.00 to $0.001 as
      filed with the Florida Secretary of State on July 21, 1998, incorporated
      by reference to the Company’s Registration Statement on Form 10SB12G filed
      with the Securities and Exchange Commission on August 20,
      1999.





3.3
            Amended
      Certificate of Incorporation of C.N.W. of Orlando, Inc. to change name to
      GlobalNetCare, Inc. as filed with the Florida Secretary of State on
      December 28, 1998, incorporated by reference to the Company’s Registration
      Statement on Form 10SB12G filed with the Securities and Exchange
      Commission on August 20, 1999.





3.4
            Amended
      Certificate of Incorporation of GlobalNetCare, Inc. to change name to
      BusinessWay International Corp., and increased its authorized capital to
      300,000,000 common shares as filed with the Florida Secretary of State on
      January 31, 2001, incorporated by reference to the Company’s Form DEF 14C
      filed with the Securities and Exchange Commission on February 14,
      2001.





3.5
            Amended
      Certificate of Incorporation of BusinessWay International Corp. to change
      name to ICBS International Corp. and added restrictions on newly issued
      shares as filed with the Florida Secretary of State on September 29, 2004,
      incorporated by reference to the Company’s Current Report on Form 8-K
      filed with the Securities and Exchange Commission on September 29,
      2004.





3.6
            Amended
      Certificate of Incorporation of ICBS International Corp. to remove the
      restrictions on newly issued shares that were added on September 29, 2005
      as filed with the Florida Secretary of State on February 14, 2005,
      incorporated by reference to the Company’s Current Report on Form 8-K
      filed with the Securities and Exchange Commission on February 14,
      2005




3.7
            Certificate
      of Incorporation of Wah King Invest Corp., authorizing 300,000,000 common
      shares and 1,000,000 blank check preferred shares as filed with the
      Delaware Secretary of Sate on May 2, 2005, incorporated by reference to
      the Registrant's Form DEC 14C, as filed with the Securities and
      Exchange Commission on May 20,
2005.





3.8
            Articles
      of Merger of ICBS International Corp., a Florida corporation into Wah King
      Invest Corp, a Delaware corporation as filed with the Florida Secretary of
      State on May 9, 2005, incorporated by reference to the Registrant's Form
      DEC 14C, as filed with the Securities and Exchange Commission on May
      20, 2005.





3.9
            Certificate
      of Merger of ICBS International Corp., a Florida corporation into Wah King
      Invest Corp, a Delaware corporation as filed with the Delaware Secretary
      of State on May 9, 2005, incorporated by reference to the Registrant's
      Form DEC 14C, as filed with the Securities and Exchange Commission on
      May 20, 2005.




3.10
              Amended
      Certificate of Incorporation of Wah King Invest Corp. to change name
      tp Royal Invest International Corp. as filed with the Delaware Secreatry
      of State on Janmuary 26, 2007, iincorporated by reference to the
      Registrant's Current Report on Form 8-K, as filed with the Securities
      and Exchange Commission on June 7,
2007


10.1
            Agreementto
      purchase
      Vastgoed Beleggings
      Mij. Bunnik I B.V.,dated December 18, 2007,
      incorporated by reference to the Registrant's Curent Report on Form 8-K,
      as filed with the Securities and Exchange Commission on January 14,
      2008.


10.2
              Transfer of Royal Invest Germany
      Properties 1 B.V.,by Royal Invest Europe B.V. to
      Vastgoed Beleggings
      Mij. Bunnik I B.V. dated December 18, 2007, incorporated by reference to
      the Registrant's Curent Report on Form 8-K, as filed with the
      Securities and Exchange Commission on January 14,
      2008.
 
 36
 Table of Content
 10.3
              Bank
      of Scotland Term Sheet € 100.000.000 dated November 23, 2007,
      incorporated by reference to the Registrant's Current Report on Form
      8-K, as filed with the Securities and Exchange Commission on November
      23, 2007.
 
 10.4
              Contract
      for Sloterweg 22 in Badhoevedorp, The Netherlands incorporated by
      refernce to the Registrant's Current Report on Form 8-K, as
      filed with the Securities and Exchange Commission on June 12, 2007.
  10.5
                Deed
      of Transfer for Sloterweg 22 in Badhoevedorp, The Netherlands dated
      December 27, 2007, incorporated by reference to the Registrant's
      Curent Report on Form 8-K, as filed with the Securities and Exchange
      Commission on January 14,
  2008.
 10.6
              Contract
      for MTMN BV et al dated May 25, 2007, incorporated by reference to
      the Registrant’s Current Report on Form 8-K, as filed with the
      Securities and Exchange Commission on May 25, 2007.


10.7
              Deed
      of Transfer for MTMN BV et al dated December 27, 2007, incorporated by reference to the Registrant's
      Curent Report on Form 8-K, as filed with the Securities and Exchange
      Commission on January 14,
2008.
 
 10.8
              Contract for
      Schepersmaat 4, 9405 TA Assen , The Netherlands, incorporated by reference
      to the Registrant’s Current Report on Form 8-K, as filed with the
      Securities and Exchange Commission on July 12, 2007.
 10.9
                Management
      Agreement with Statenconsult B.V. dated May 25, 2007 for the services of
      David Havenaar as Managing Director of the Registrant's subsidiary Royal
      Invest Europe B.V. incorporated by reference to the Registrant's Current
      Report on Form 8-K, as filed with the Securities and Exchange Commission
      on August 13, 2007.
  10.10
                Legal Service Agreement with Sec Attorneys, LLC dated May 25, 2007
      incorporated by reference to the Registrant's Current Report on Form 8-K,
      as filed with the Securities and Exchange Commission on August 13,
      2008.
 10.11
              Deed
      of Transfer for Schepersmaat 4, 9405 TA Assen , The Netherlands dated
      December 27, 2007, incorporated by reference to the Registrant's
      Curent Report on Form 8-K, as filed with the Securities and Exchange
      Commission on January 14,
2008.
  10.12
                Contract
      for Alfang B.V. dated July 25, 2007, incorporated by reference
      to the Registrant’s Current Report on Form 8-K, as
      filed with the Securities and Exchange Commission on August 15, 2007.
 10.13
              Deed
      of Sale for Alfang B.V. dated December 27, 2007, incorporated by reference to the Registrant's
      Curent Report on Form 8-K, as filed with the Securities and Exchange
      Commission on January 14,
2008.




10.14
              Deed
      of Sale and Transfer of AmogB B.V. dated December 27, 2007, incorporated by reference to the Registrant's
      Curent Report on Form 8-K, as filed with the Securities and Exchange
      Commission on January 14,
2008.
 
 10.15
              Convertible
      8% Note with Muermans Vast Goed Roermond B.V for  €3.500.000
      dated December 21, 2007, incorporated by reference to the Registrant's
      Curent Report on Form 8-K, as filed with the Securities and Exchange
      Commission on January 14, 2008.
 
 10.16
              €100.000.000
      Term Loan Agreement with Bank of Scotland dated December 21,
      2007, incorporated by reference to the Registrant's
      Curent Report on Form 8-K, as filed with the Securities and Exchange
      Commission on January 14,
2008.
  10.17
                Convertible 8% Note with ECM Hoff Holding
      B.V. for  €1.091.257 dated December 21, 2007, incorporated by reference to the Registrant's
      Curent Report on Form 8-K, as filed with the Securities and Exchange
      Commission on January 14,
  2008.
 10.18
              Mortgage
      Deed with Bank of Scotland dated December 27, 2007, incorporated by reference to the Registrant's
      Curent Report on Form 8-K, as filed with the Securities and Exchange
      Commission on January 14,
2008.


10.19
              Mortgage
      Deed with Bank of Scotland for Alfong B.V. dated December 27,
      2007, incorporated by reference to the Registrant's
      Curent Report on Form 8-K, as filed with the Securities and Exchange
      Commission on January 14,
2008.
 
 10.20
              Mortgage
      Deed with Bank of Scotland for AmogB B.V. dated December 27,
      2007, incorporated by reference to the Registrant's
      Curent Report on Form 8-K, as filed with the Securities and Exchange
      Commission on January 14,
2008.




21.1
              Subsidiaries
      of the Company, incorporated by reference to the Registrant's Annual
      Report on Form 10-K, as filed with the Securities and Exchange
      Commission on April 15, 2008.


31.1
            Certification
      of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
      of the Securities Exchange Act, as
amended.





31.2
            Certification
      of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
      of the Securities Exchange Act, as
  amended.





32.1
            Certification
      of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted
      Pursuant to Section 906 of the Sarbanes Oxley Act of
  2002.





32.2
            Certification
      of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted
      Pursuant to Section 906 of the Sarbanes Oxley Act of
  2002.





37


Table of Content




Reports
on Form 8-K:


The Company filed a Form 8-K on July 17, 2008 - Item 8.02.  Other
Event -relating
to the May 27, 2008 Annual Meeting of the Shareholders of the
Registrant.







SIGNATURES





In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, there unto duly
authorized.





ROYAL INVEST
      INTERNATIONAL CORP.(Registrant)Date: November
      19, 2008
            
            By:/s/ JERRY
      GRUENBAUMJerry
      GruenbaumChief
      Executive Officer and DirectorDate: November
      19, 2008
            
            By:/s/ NATHAN
      LAPKINNathan LapkinChief
      Financial Officerand Director








In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.








SIGNATURE
            
            NAME
            
            TITLE
            
            DATE/s/Jerry
      Gruenbaum
            
            Jerry
      Gruenbaum
            
            CEO
      & Director
            
            November
      19, 2008/s/Nathan
      Lapkin
            
            Nathan
      Lapkin
            
            CFO
      & Director
            
            November
      19, 2008





38