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 March 31, 2009




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
June 15, 2009, there were 150,208,861
shares of 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
            
            22ITEM 3
            
            QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK
            
            28ITEM 4
            
            CONTROLS AND PROCEDURES
            
            28ITEM 4T
            
            CONTROLS AND PROCEDURES
            
            28PART
      II
            
            29ITEM 1
            
            LEGAL PROCEEDINGS
            
            29ITEM 1A
            
            RISK FACTORS
            
            29ITEM 2
            
            UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS
            
            32ITEM 3
            
            DEFAULTS UPON SENIOR SECURITIES
            
            33ITEM 4
            
            SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS
            
            33ITEM 5
            
            OTHER INFORMATION
            
            33ITEM 6
            
            EXHIBITS
            
            34SIGNATURES
            
            36EXHIBIT31.1
            
            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
      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 2008 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 MARCH 31, 2009
AND 2008
 
  4
 Table of Content
  CONTENTS
 ______________________________________________________________________________________
 
 Consolidated
      Balance Sheets as of March 31, 2009 (Unaudited) and December 31, 2008
              Page  
      6
 
 Consolidated
      Statements of Operations for the three months ended March 31, 2009 and
      2008 (Unaudited)
              7
 
 Consolidated
      Statements of Cash Flows for the three months ended March 31, 2009 and
      2008 (Unaudited)
              8
 
 Notes
      to Consolidated Financial Statements (Unaudited)
              10
 5
 Table of Content
  ROYAL
      INVEST INTERNATIONAL CORP. AND SUBSIDIARIESCONSOLIDATED
      BALANCE SHEETSMarch
      31.
                  
                  December
      31,2009
                  
                  2008(Unaudited)ASSETSRental
      PropertyLand
                  $
                  23,110,469
                  
                  $
                  24,665,981Buildings
                  
                  101,677,895
                  
                  
                  108,521,600Improvements
                  
                  2,076,802
                  
                  
                  2,216,586Equipment
                  
                  100,768
                  
                  
                  105,429126,965,934
                  
                  
                  135,509,596Less
      - accumulated depreciation
                  
                  (3,431,158
                  )
                  
                  (2,940,478
                  )Net Investment in Rental Property
                  
                  123,534,776
                  
                  
                  132,569,118Cash
      and Cash Equivalents
                  
                  798,067
                  
                  
                  278,817Current
      Rents Receivable, Net of Allowance for Doubtful Accounts of
      $190,195
      as of March 31, 2009 and $130,524 as of December 31, 2008
                  
                  713,451
                  
                  
                  521,540Prepaid
      Expenses
                  
                  292,746
                  
                  
                  187,759Deposits
                  
                  2,729
                  
                  
                  -Deferred
      Financing Costs, Net
                  
                  2,289,324
                  
                  
                  2,573,184Total Assets
                  $
                  127,631,093
                  
                  $
                  136,130,418LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIT)LIABILITIESMortgages
      Payable
                  $
                  108,005,426
                  
                  $
                  115,377,702Accounts
      Payable
                  
                  3,840,416
                  
                  
                  4,675,622Net
      VAT Payable
                  
                  124,349
                  
                  
                  101,722Accrued
      Expenses and Other Liabilities
                  
                  74,994
                  
                  
                  81,499Accrued
      Interest
                  
                  4,815,162
                  
                  
                  3,512,371Accrued
      Interest - Related Parties
                  
                  435,393
                  
                  
                  312,217Income
      Taxes Payable
                  
                  148,714
                  
                  
                  113,947Loans
      Payable - Related Parties
                  
                  1,622,077
                  
                  
                  1,774,449Loans
      Payable - Other
                  
                  198,120
                  
                  
                  211,455Notes
      Payable - Related Parties
                  
                  6,064,132
                  
                  
                  6,472,295Convertible
      Notes
                  
                  370,852
                  
                  
                  426,000Rents
      Received in Advance
                  
                  921,903
                  
                  
                  409,070Deferred
      Income Taxes
                  
                  1,078,872
                  
                  
                  1,175,358Total Liabilities
                  
                  127,700,410
                  
                  
                  134,643,707Commitments
      and Contingencies
                  
                  -
                  
                  
                  -STOCKHOLDERS'
      EQUITY (DEFICIT)Preferred
      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 shares
      issued and outstanding
                  
                  150,209
                  
                  
                  150,209Additional
      Paid-In Capital
                  
                  22,282,703
                  
                  
                  22,282,703Accumulated
      Other Comprehesive Loss
                  
                  (498,801)
                  
                  
                  (373,061
                  )Accumulated
      Deficit
                  
                  (22,571,679
                  )
                  
                  (21,141,391
                  )Total RIIC Stockholders' Equity (Deficit)
                  
                  (637,567
                  )
                  
                  918,461Non-controlling
      interests, preferred stock of subsidiaries
                  
                  568,250
                  
                  
                  568,250Total
      Stockholders' Equity (Deficit)
                  
                  (69,317
                  )
                  
                  1,486,711Total Liablities and Stockholders' Equity (Deficit)
                  $
                  127,631,093
                  
                  $
                  136,130,418The
      accompanying notes to consolidated 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 ENDEDMARCH
      31,2009
            
            
            2008REVENUESBase
      Rents
            
            $
            2,399,600
            
            
            $
            2,734,256Real
      Estate Services
            
            
            102,666
            
            
            
            116,612Other
      Income
            
            
            613,248
            
            
            
            441,8933,115,514
            
            
            
            3,292,761EXPENSESOperating
      Services
            
            
            1,031,942
            
            
            
            768,100Real
      Estate Taxes
            
            
            39,750
            
            
            
            45,550General
      and Administrative
            
            
            840,413
            
            
            
            981,411Depreciation
            
            
            669,559
            
            
            
            782,328Total
      Expenses
            
            
            2,581,664
            
            
            
            2,577,389OPERATING
      INCOME
            
            
            533,850
            
            
            
            715,372OTHER
      INCOME (EXPENSES)Interest
      Income
            
            
            -
            
            
            
            310Interest
      Expense
            
            
            (1,796,582
            )
            
            
            (2,033,796
            )Amortization
      - Deferred Financing Costs
            
            
            (120,407
            )
            
            
            (135,625
            )Currency
      Loss
            
            
            (84
            )
            
            
            (24,547
            )Change
      in Value of Derivative Liabilty
            
            
            -
            
            
            
            2,467,844Amortization
      - Debt Discount
            
            
            -
            
            
            
            (270,557
            )(1,917,073
            )
            
            
            3,629(Loss)
      Income Before Income Taxes
            
            
            (1,383,223
            )
            
            
            719,001Provision
      for Income Taxes
            
            
            47,065
            
            
            
            15,636NET
      (LOSS) INCOME
            
            $
            (1,430,288
            )
            
            $
            703,365Net
      (Loss) Income Per Common Share:Basic
      and diluted
            
            $
            (0.01
            )
            
            $
            0.00Weighted
      Average CommonShares
      Outstanding:Basic
      and diluted
            
            
            150,208,861
            
            
            
            150,208,861


The
accompanying notes to consolidated financial statements are an integral part of
these statements.




7


Table of Content




ROYAL
      INVEST INTERNATIONAL CORP. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CASH FLOWS (UNAUDITED)FOR
      THE THREE MONTHS ENDEDMARCH
      31,2009
              
              
              2008CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      (Loss) Income
              
              $
              (1,430,288
              )
              
              $
              703,365Adjustments
      to reconcile net (loss) income to net cash provided by operating
      activities:Depreciation
              
              
              669,559
              
              
              
              782,328Currency
      Loss
              
              
              84
              
              
              
              24,547Amortization
      - Deferred Financing Costs
              
              
              120,407
              
              
              
              135,625Provision
      for Doubtful Accounts
              
              
              59,671
              
              
              
              37,444Deferred
      Income Tax
              
              
              (96,486
              )
              
              
              (26,741
              )Change
      in Value of Derivative Liability
              
              
              -
              
              
              
              (2,467,844
              )Amortization
      - Debt Discount
              
              
              -
              
              
              
              270,557Other
              
              
              -
              
              
              
              2,267Changes
      in operating assets and liabilities(Increase)
      Decrease in:Current
      Rents Receivable
              
              
              (289,864
              )
              
              
              (299,776
              )Prepaid
      Expenses
              
              
              (115,695
              )
              
              
              (203,592
              )Deposits
              
              
              (2,729
              )
              
              
              (749
              )Other
      Receivables
              
              
              -
              
              
              
              (14,781
              )Net
      VAT Receivable
              
              
              -
              
              
              
              161,339Income
      Tax Receivable
              
              
              -
              
              
              
              32,269Advance
      Payment on Property Purchase
              
              
              -
              
              
              
              (374,443
              )Increase
      (Decrease) in:Accounts
      Payable
              
              
              (535,106
              )
              
              
              55,075Net
      VAT Payable
              
              
              28,760
              
              
              
              -Accrued
      Expenses and Other Liabilities
              
              
              (1,352
              )
              
              
              52,920Accrued
      Interest
              
              
              1,509,508
              
              
              
              1,997,106Accrued
      Interest - Related Parties
              
              
              141,480
              
              
              
              -Income
      Taxes Payable
              
              
              41,546
              
              
              
              9,852Rents
      Received in Advance
              
              
              533,406
              
              
              
              (333,447
              )Net
      cash provided by operating activities
              
              
              632,901
              
              
              
              543,321CASH
      FLOWS FROM INVESTING ACTIVITIESProperty
      Acquired
              
              
              (1,970
              )
              
              
              (42,596
              )Net
      cash used in investing activities
              
              
              (1,970
              )
              
              
              (42,596
              )CASH
      FLOWS FROM FINANCING ACTIVITIESPayments
      on Mortgages Payable
              
              
              (95,272
              )
              
              
              (79,449
              )Payments
      on convertible notes
              
              
              (55,148
              )
              
              
              -Payments
      on loans payable - related parties
              
              
              (40,077
              )
              
              
              (55,875
              )Proceeds
      from loans payable -other
              
              
              -
              
              
              
              67,847Payments
      on loans payable - other
              
              
              -
              
              
              
              (98,936
              )Net
      cash used in financing activities
              
              
              (190,497
              )
              
              
              (166,413
              )Net
      increase in cash and cash equivalents
              
              
              440,434
              
              
              
              334,312Adjustment
      for change in exchange rate
              
              
              78,816
              
              
              
              26,920Cash
      and cash equivalents, beginning of period
              
              
              278,817
              
              
              
              176,765Cash
      and cash equivalents, end of period
              
              $
              798,067
              
              
              $
              537,997


The
accompanying notes to cosolidated 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 THREE MONTHS ENDEDMARCH
      31,2009
            
            
            2008SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONCASH
      PAID FORInterest
            
            $
            145,594
            
            
            $
            36,690Taxes
            
            
            102,005
            
            
            
            84,498The
      accompanying notes to consolidated financial statements are an integral
      part of these statements.





9




Table of Content


ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2009
 (UNAUDITED)
 
 
 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 December 31, 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 March 31,
2009, and for the three months ended March 31, 2009 and 2008 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 March 31, 2009, the consolidated results
of operations and consolidated cash flows for the three months ended March 31,
2009 and 2008.  The results of operations for the three months ended
March 31, 2009 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2009.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-K for the year ended December 31,
2008.
 
 Changes
in Classifications
 In
December 2007, the FASB issued SFAS No. 160, '“Non-controlling 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 non-controlling
interest be clearly identified and presented on the face of the consolidated
statement of income. When a subsidiary is deconsolidated, any retained
non-controlling 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 non-controlling 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 non-controlling
owners. The Company adopted the provisions of SFAS No. 160 effective January 1,
2009 and as a result, reclassified the preferred stock in subsidiaries,
representing non-controlling interests, to the equity section of the balance
sheet. The preferred shares do not have interests, with the exception of the
possible payment of dividends,  in the income or loss of the
Company.
   NOTE
2 – GOING CONCERN
  The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of
business.  The Company has incurred a net operating loss of $1,430,288
for the three months ended March 31, 2009, has an accumulated deficit of
$22,571,679 at March 31, 2009, and there are existing uncertain conditions which
the Company faces relative to its obtaining financing and capital in the equity
markets. These conditions raise substantial doubt about the Company’s ability to
continue as a going concern.  The accompanying consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
 
 The
Company is presently working to raise additional capital to meet its working
capital needs and is restructuring operating costs to be more in line with
revenues.  There can be no assurances, however, that it will be
successful in its efforts to raise capital or to reduce operating costs to a
level where it will attain profitability.
 
 10
 Table of Content
 ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2009
 (UNAUDITED)
  NOTE 3 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
 
 Other
accounting policies are set forth in Note 3 of the audited consolidated
financial statements included in the Company’s Form 10-K for the year ended
December 31, 2008.
 
 Principals
of Consolidation
 The
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries.  All significant intercompany accounts and
transactions have been eliminated.
 
 Foreign
Currency Translation
 The
Company considers the EURO (“€”) to be its functional currency. Assets and
liabilities were translated into US dollars (“US$”) as of March 31, 2009 and
December 31, 2008 at the period end exchange rates of €1.00 to US $1.32080 and €
1.00 to US $1.4097, respectively. Statement of Operations amounts for the three
months ended March 31, 2009 and 2008 were translated using the average rates
during the periods of € 1.00 to US $1.30799 and € 1.00 to US $1.49777,
respectively.
  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). The impact of the adoption
of FIN 48 had no material effect on the Company’s results of operations or
financial position.
  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.
  11
 Table of Content
 ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARIES
   NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2009
 (UNAUDITED)
 
 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.
  Fair
Value
 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.  At March 31, 2009 and December
31, 2008, there are no assets or liabilities that are measured at fair value on
a recurring basis.
  Recently
Adopted Accounting Pronouncements
 
 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 Company adopted the provisions of SFAS No. 141(R)
effective January 1, 2009. The adoption by the Company of SFAS No. 141(R) did
not have any impact on its consolidated 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 Company
adopted the provisions of SFAS No. 161 effective January 1, 2009. The adoption
by the Company of SFAS No. 161 did not have any impact on its consolidated
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.  FASB No. 162 became
effective November 2008.
  12
 Table of Content
 ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARIES
   NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2009
 (UNAUDITED)
 
 
 NOTE
4 – NOTES PAYABLE - RELATED PARTIES AND 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
March 31, 2008 amounted to US $1,442,605.
 
 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 March 31,
2008:
 
 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%).
  13
 Table of Content
 ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARIES
   NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2009
 (UNAUDITED)
 
 The
binomial models were valued with the following inputs:
 
 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 3-31-2008.
 
 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 $0.60 for March
31, 2008.
 
 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 2.753 years in March 31,
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 3.2% at March 31,
2008.
 
 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%
approximately US $141,000 (€ 100,000) 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 quarter ended
March 31, 2009, approximately US $55,000 (€ 35,000) was paid on the note. The
balance outstanding at March 31, 2009 is US $85,852 (€ 65,000).
 
 During
the period March 1, 2005 to July 31, 2005, the Company issued convertible
promissory notes aggregating US $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 US $0.75 per share.  The Company converted US
$542,067 of notes plus interest into 849,176 shares of common stock. The
outstanding notes of approximately US $65,000 are currently in
default.
 
 During
the period January 1, 2006 to June 30, 2006, the Company issued additional
convertible promissory notes aggregating US $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 US $0.75 per share. These notes
are currently in default.
 
 NOTE
5 – MORTGAGES PAYABLE
 
 The
Company has mortgages which are collateralized by most of the Company’s rental
properties. As of March 31, 2009 and December 31, 2008 all of the Company’s
properties, with a total book value of approximately US $124 million and US $133
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
not in compliance with as of March 31, 2009. The amount outstanding at March 31,
2009 and December 31, 2008 is US $104,268,968 (€ 78,943,798) and US $111,287,072
(€ 78,943,798), respectively. The remaining amount of the facility at €
20,310,100 can be used for financing other properties (85% LTV/LTC). The
mortgage is currently in default and as of May 2009 approximately US $4,635,000
(€ 3,543,650) of interest due is in arrears.
 
 The
Company has an additional mortgage payable to SNS Bank. The amount outstanding
on this mortgage at March 31, 2009 and December 31, 2008 is US $3,736,458 (€
2,828,935) and US $4,090,630 (€ 2,901,774), 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. The mortgage is currently in default as the balloon payment due
at maturity was not paid.  The Company continues to make monthly
payments.  The Company is currently in negotiations with SNS Bank to
refinance the mortgage.
  14
 Table of Content
 ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARIES
  NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2009
 (UNAUDITED)
 At
      December 31, 2008, minimum future principal payments over the next five
      years and in the aggregate are as
follows:
  Amount
      to be paid
                
                
                Total
      PercentageYear
                
                Yearly
                
                
                To
      be paid Yearly *2009
                
                $
                1,882,911
                
                
                
                1.50
                %2010
                
                
                1,953,124
                
                
                
                1.50
                %2011
                
                
                2,374,400
                
                
                
                2.00
                %2012
                
                
                2,514,825
                
                
                
                2.00
                %2013
                
                
                2,514,825
                
                
                
                2.00
                %Thereafter
                
                
                104,137,617
                
                
                
                89.75
                %Total
                
                $
                115,377,702
                
                
                
                98.75
                %
 
 *  Bank of Scotland
Facility
 
  NOTE
6 - TENANT LEASES
 
 At March
31, 2009 and December 31, 2008, 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.
 At
December 31, 2008 future minimum rentals to be received under non-cancelable
operating leases over the next five years were as follows:
 Year
                
                Amount2009
                
                $
                10,050,5502010
                
                
                5,573,3592011
                
                
                4,836,5282012
                
                
                4,201,1372013
                
                
                3,231,920Total
                
                $
                27,893,494
 15
 Table of Content
 ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARIES
   NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2009
 (UNAUDITED)
 
 NOTE
7 – INCOME TAXES
 
 Income
tax expense consists of the following:
 For
      The Three Months EndedMarch
      31,2009
                
                
                2008(Unaudited)
                
                
                (Unaudited)Current:United States
                
                $
                --
                
                
                $
                --Foreign
                
                
                143,551
                
                
                
                42,377143,551
                
                
                
                42,377Deferred:United States
                
                
                --
                
                
                
                --Foreign
                
                
                (96,486
                )
                
                
                (26,741
                )(96,486
                )
                
                
                (26,741
                )Totals
                
                $
                47,065
                
                
                $
                15,636
 
 Pre-tax
income (loss) consisted of the following:
 
 For
      The Three Months EndedMarch
      31,2009
                
                
                2008United
      States
                
                $
                (221,388
                )
                
                $
                2,000,327Foreign
                
                
                (1,161,835
                )
                
                
                (1,281,326
                )$
                (1,383,223
                )
                
                $
                719,001
 16
 Table of Content
 ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARIES
   NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2009
 (UNAUDITED)
 
 
 The
income tax expense differs from the amount computed by applying the United
States statutory corporate income tax rate as follows:
 For
      The Three Months EndedMarch
      31,2009
                
                
                2008(Unaudited)
                
                
                (Unaudited)United
      States Statutory CorporateIncome
      Tax Rate
                
                
                (34.0
                )%
                
                
                34.0
                %Permanent
      Differences
                
                
                --
                %
                
                
                --
                %Change
      in Valuation Allowance onDeferred
      Tax Assets
                
                
                34.0
                %
                
                
                (34.0
                )%Effect
      of Foreign Earnings, Net ofAllowable
      Credits
                
                
                0.3
                %
                
                
                2.0
                %Income Tax
    (Benefit)
                
                
                0.3
                %
                
                
                2.0
                %
 
 The
components of deferred tax assets (liabilities) at March 31, 2009 and December
31, 2008 are as follows:
 March
      31,
                
                
                December
      31,2009
                
                
                2008(Unaudited)Deferred
      Tax Assets (Liabilities) – Long TermNet Operating
      Losses
                
                $
                814,000
                
                
                $
                739,000Property
                
                
                (1,078,872
                )
                
                
                (1,175,358
                )Valuation
    Allowance
                
                
                (814,000
                )
                
                
                (739,000
                )Net Deferred Tax
      Liability
                
                $
                (1,078,872
                )
                
                $
                (1,175,358
                )
  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
$75,000 and $71,000 in the three months ended March 31, 2009 and the year ended
December 31, 2008.
 
 As of
March 31, 2009, there are approximately $2.2 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.
 
 In the
past, RIGP1, RIDP1 AND RIDP2, wholly-owned subsidiaries 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.
  17
 Table of Content
 ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARIES
   NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2009
 (UNAUDITED)
 
 NOTE
8 – 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 March 31, 2009 and December 31, 2008 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. The preferred shares were issued in
conjunction with the MTMN B.V. property acquisition.
 
 NOTE
9 – RELATED PARTY TRANSACTIONS
 
 At March
31, 2009 and December 31, 2008, the Company had loans payable to related parties
of US $1,622,077 and US $ 1,774,449, respectively, of which US $1,259,678 and US
1,344,465, respectively, was payable to two note holders.  The US
$1,259,678 at March 31, 2009, is payable on demand and bears interest at
8%.
 
 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. The
Company incurred approximately US $59,000 in expense under this agreement during
the three months ended March 31, 2009.
 
 On
October 22, 2008, the Company entered into a new Legal Services Agreement with
SEC ATTORNEYS LLC in which Jerry Gruenbaum, the CEO of the Company is the
Managing Member.  Under said Legal Services 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.
The Company incurred approximately US $49,000 in expense under this agreement in
the three months ended March 31, 2009 and approximately US $51,000 under a
similar agreement in the three months ended March 31, 2008. There is
approximately US $235,000 and US $200,000 payable as of March 31, 2009 and
December 31, 2008.
 
 
 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 US $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.
 
 Loans
totaling US $295,787 and US $317,965 at March 31, 2009 and December 31, 2008 are
unsecured and bear a variable interest rate (Eurobor + 2%).
 
 18
 Table of Content
 ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2009
 (UNAUDITED)
 
 NOTE
10 – LOANS PAYABLE - OTHER
 
 In August
2008, the Company borrowed € 150,000 (US $198,120 and US $211,455 at March 31,
2009 and December 31, 2008, respectively) from an unrelated party. The loan is
unsecured, bears interest at 6% per annum and is due August 2009.
 
 NOTE
11 – NON-CONTROLLING INTEREST
 
 The
Company’s subsidiary, Royal Invest Europe B.V., has non-cumulative preference
shares outstanding valued at € 166,500 (US $219,913) which are owned by minority
shareholders.  The shareholders are entitled to 6% of the nominal
value of these shares annually (approximately US $13,000) 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 (US $295,859) which are owned by minority
shareholders.  The shareholders are entitled to 6% of the nominal
value of these shares annually (approximately US $18,000) 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 (US $16,642) which are owned by minority
shareholders.  The shareholders are entitled to 6% of the nominal
value of these shares annually (approximately US $1,000) payable from the
profits of AmogB B.V. No amount is payable if AmogB B.V.’s operations result in
a loss.
  NOTE
12 - COMMITTMENTS AND CONTINGENCIES
 
 On or
about June 19, 2007 the Company signed a Contract with Bloemers Onroerend Goed
B.V. (“Bloemers”) 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
$9,163,000), € 6,000,000 (US $8,458,000) in cash and € 500,000 (US $704,850) 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 $704,850) which will be forfeited if the closing does not take place
and to pay a fee of 7% of the € 6,000,000 (US $8.458,000) financing on a monthly
basis less applicable rental income received. In addition the Company has agreed
to reimburse Bloemers for the interest incurred on the property loans and
certain other operating costs until the deal is closed. As at December 31, 2008,
the Company paid € 446,688 (US $629,696) of the deposit and incurred an expense
of € 487,684 (US $717,549) for the fee, of which € 454,825 (US $641,167) has
been paid. Additionally, during 2008, the Company has paid € 293,016 (US
$431,126) in interest and accrued € 300,000 (US $441,402) in other operating
costs. In the fourth quarter of 2008, due to the current economic climate, the
Company charged the deposit to operations and at December 31, 2008, there is a
balance due for the fee and deposit of €86,171 (US $121,475). In the three
months ended March 31, 2009, the Company paid US $137,339 (€ 105,000) in
interest and approximately US $54,830 (€ 41,920) in other operating
costs.
 
 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 $614,000) 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 $645,000)
and the other tenants pay a total of €93,510 , €22,231 and €30,945
(approximately US $138,000, US $33,000 and US $46,000, respectively) for a total
of €585,320 (approximately US $862,000), for a combined rental income of
€1,002,910 (approximately US $1,476,000).  The properties are being
purchased for €13,750,000 (approximately US $20,797,000) 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 $3,524,250 in additional investment).
On May 26, 2008, the Company signed a definitive and binding Purchase Agreement
with Stedekroon, B.V. Due to the current economic climate the Company could not
obtain adequate financing and the Purchase Agreement was terminated. As provided
in the Purchase Agreement, the Company incurred a penalty of 10% of the purchase
price, €1,375,000 (US $2,023,093), in the fourth quarter of 2008. At December
31, 2008, €250,000 (US $352,425) has been paid and €1,150,000 (US $1,621,155),
including €25,000 (US $35,243) of interest has been accrued for this
amount.  [See Note 13]
  19
 Table of Content
 ROYAL
INVEST INTERNATIONAL CORP. AND SUBSIDIARIES
  NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2009
 (UNAUDITED)
 
 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 €15,000,000
(approximately US $21,000,000 excluding transfer costs which are to be paid by
the Company.  The purchase price is to be paid as follows: notes
payable in the amount of €12,000,000 (approximately US $17,000,000) and cash and
shares of the Company's common stock in the amount of €3,000,000 (approximately
US $4,000,000).  The amount of Company common stock issued in the
purchase is limited to €1,500,000 (approximately US $2,000,000) with a 24 month
lock-up period and will be based on $1.25 per share.  Glacier owns
five (5) commercial rental properties in Budapest, Hungary.
  NOTE
13 – SUBSEQUENT EVENTS
 
 On April
24, 2009, the Company, through its wholly-owned subsidiary RIE, and Stedekroon
BV mutually agreed to the following:
 
 On April
25, 2009 RIE will pay Stedekroon BV € 60,000 (approximately US
$79,000).
 On or
before July 15, 2009, RIE will pay Stedekroon BV € 60,000 (approximately US
$79,000)
 On or
before October 15, 2009, RIE will pay Stedekroon BV € 60,000 (approximately US
$79,000)
 On or
before December 15, 2009, RIE will pay Stedekroon BV € 120,000 (approximately US
$158,000)
 
 If the
Company makes these payments timely, Stadekroon BV will release the Company from
any and all liabilities that have arisen from the purchase agreement dated May
26, 2008. If any payment is not made on or before its due date, the original
penalty of € 1,375,000 (approximately US $1,816,000) net of the payments already
made by the Company will be immediately due and payable.
  20


21


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.
 
 22
 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.




23


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 provided by operating activities increased from $543,321 for the
quarter ended March 31, 2008 to $623,901 for the quarter ended
March 31, 2009.  The increase is primarily the result of a 
decrease in operating income from $703,365 for the quarter ended
March 31, 2008 to $(1,430,288) for the quarter ended March 31, 2009,
an increase in rents received in advance from $(333,447) for the
quarter ended March 31, 2008 to $533,406 for the quarter ended March
31, 2009,  an increase in accrued interest - related
party from $0 for the quarter ended March 31, 2008
to $141,480 for the quarter ended March 31, 2009, and a decrease in
accounts payable from $55,075 for the quarter ended March 31,
2008 to $(535,106) for the quarter ended March 31, 2009.  One of
the most significant components of this increase is an increase in
change in value of derivative liability from $(2,467,844) for the
quarter ended March 31, 2008 to $0 for the quarter ended
March 31, 2009, and a decrease in amortization - debt discount
from $270,557 for the quarter ended March 31, 2008 to $0 for
the quarter ended March 31, 2009.




Cash
Flow from Investing Activities




Net
cash used in investing activities increased from $(42,596) for
the quarter ended March 31, 2008 to ($1,970) for the quarter ended
March 31, 2009.




Cash
Flow from Financing Activities




Net
cash provided by financing activities decreased  from $(166,413) for
the quarter ended March 31, 2008 to ($190,497) for the quarter ended
March 31, 2008.  The decrease is primarily the result of a
decrease on payments on convertible notes from $0 for the quarter ended
March 31, 2008 to ($55,148) for the quarter ended March 31,
2009,  a decrease in proceeds from loans payable -
other from $67,847 for the quarter ended March 31, 2008
to $0 for the quarter ended March 31, 2009, and an increase from payments
on loans payable - other from $(98,936) for the quarter ended
March 31, 2008 to $0 for the quarter ended March 31,
2009.




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 as shown
on our balance sheet, were $798,067 on March 31,
2009.




Property
Transactions




Acquisitions




During
the quarter ended March 31, 2009, we had no property
acquisitions.




Dispositions




During the quarter ended March 31, 2009, we had no property
disposition.




24


Table of Content


RESULTS
OF OPERATIONS




QUARTER
ENDED MARCH 31, 2009 AS COMPARED TO MARCH 31, 2008




This
section includes our actual results of operations for the quarter ended
March 31, 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.




March 31,2009
            
            
            2008Revenues
            
            $
            3,115,514
            
            
            $
            3,292,761Operating
      Services
            
            
            1,031,942
            
            
            
            768,100Real
      Estate Taxes
            
            
            39,750
            
            
            
            45,550General
      and Administrative
      Expenses
            
            
            840,413
            
            
            
            981,411Depreciation
            
            
            669,559
            
            
            
            782,328Operating Income
      (Loss)
            
            
            533,850
            
            
            
            715,372Net
      Other Income
      (Expenses)
            
            
            1,917,073
            
            
            
            (3,629
            )Net
      Income (Loss) Before
      Taxes
            
            
            (1,383,223
            )
            
            
            719,001Provision
      for Income
      Taxes
            
            
            47,065
            
            
            
            15,636Net
      (Loss) Income
            
            $
            (1,430,288
            )
            
            $
            703,365






Our
net income (loss) for the two quarters ended March 31, 2009 and
2008 was $(1,430,288), and $703,365,
respectively.  Revenues decreased from $3,292,761 for the
quarter ended March 31, 2008 to $3,115,514 for the quarter ended March
31, 2009.




Rental
Income and Tenant Reimbursements




Rental
income from continuing operations for the quarter ended March 31, 2009 and
2008 were $2,399,600 and $2,734,256,
respectively.




General
and Administrative Expenses




General
and administrative expenses from continuing operations for the quarter
ended March 31, 2009 and 2008 were $840,413 and $981,411,
respectively.





25


Table of Content




Property
Taxes




Property
taxes from continuing operations for the quarter ended March 31, 2009
and 2008 were $39,750 and $45,550, respectively.






Depreciation




Depreciation expense
from continuing operations for the quarter ended March 31, 2009 and 2008
were $669,559 and $782,328, respectively.






Interest
Expense




Interest
expense from continuing operations for the quarter ended March 31, 2009 and
2008 were $1,796,582 and $2,033,796,
respectively.




26
 Table of Content




Contractual
Obligations and Commercial Commitments




Following
is an overview of the Company’s mortgages as of December
31, 2008:


Principal
      Balance atInterest
                  
                  
                  December
      31, 2008Lender
                  
                  Rate
                  
                  
                  in
      Euros
                  
                  
                  in
      Dollars****
                  
                  MaturityBank
      of Schotland PLC
                  
                  
                  *
                  
                  
                  €
                  78,943,797
                  
                  
                  $
                  111,287,071
                  
                  December
      27, 2013SNS
      Bank
                  
                  
                  **
                  
                  
                  
                  2,901,774
                  
                  
                  
                  4,090,631
                  
                  Mature
      ***€
                  81,845.571
                  
                  
                  $
                  115,377,702
  *
                  Variable
      Interest Rate (Quarterly Euribor + 1,32%).**
                  Variable
      Interest Rate (Monthly Euribor + 2%).***
                  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 December 31, 2008 EUR € to US $ =
      1.4097
  At
December 31, 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 over the
next five years:
  Year
                    
                    Amount2009
                    
                    
                    10,050,5502010
                    
                    
                    5,573,3592011
                    
                    
                    4,836,5282012
                    
                    
                    4,201,1372013
                    
                    
                    3,231,920Total
                    
                    $
                    27,893,494


27
 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 March 31, 2009,
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 March 31,
2009.
  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 March 31, 2009.  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 March 31,
2009.
  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, 2009,that has
materially affected, or is reasonablylikely to materially affect, our
internal control over financial
reporting.
  ITEM
4TCONTROLS 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.
  28


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 1A          
 RISK 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.
  29
 Table of Content
  Our control shareholders may effectively exercise control over
matters requiring shareholder approval.
  As of December 31, 2008, 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.
  30
 Table of Content
  The
value of our propertiesare
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.
  31
 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


The Company has
not sold any equity securities during the quarter ended March 31,
2009.  Information with respect to previously reported sales prior to
January 1, 2008 may be found in the Company’s prior filings.
 
  32
 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 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 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





No
matters were submitted to a vote of security holders, through the solicitation
of proxies or otherwise, during the first quarter of the year ended March 31,
2009.






ITEM 5 OTHER
INFORMATION
  None.
  33
 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.
 
 34
 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.





35


Table of Content




Reports
on Form 8-K:


None.







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: June 15,
      2009
            
            By:/s/ JERRY
      GRUENBAUMJerry
      GruenbaumChief
      Executive Officer andDate: June 15,
      2009
            
            By:/s/ NATHAN
      LAPKINNathan LapkinPresident and Chief 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
      & Chairman
            
            June
      15, 2009of
      the Board/s/Nathan
      Lapkin
            
            Nathan
      Lapkin
            
            President,
      CFO,
            
            June
      15, 2009&
      Director





36