Company Quick10K Filing
Quick10K
Arvana
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
ILG ILG 4,173
FMFG Farmers & Merchants Bancshares 52
DUOT Duos Technologies Group 12
SMGI SMG Industries 10
APRI Apricus Biosciences 8
GAHR Griffin-American Healthcare REIT III 0
HDHC High Desert Holding 0
GMER Good Gaming 0
OXF Westmoreland Resource Partners 0
CHPII CNL Healthcare Properties II 0
AVNI 2019-06-30
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31 ex31.htm
EX-32 ex32.htm

Arvana Earnings 2019-06-30

AVNI 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 avni063019form10q.htm FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

 

þ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15D of the Securities Exchange Act of 1934 for the quarterly period ended JUNE 30, 2019.

 

o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to .

 

Commission file number: 0-30695

 

ARVANA INC.

(Exact name of registrant as specified in its charter)

 

Nevada
(State or other jurisdiction of
incorporation or organization)

87-0618509

(I.R.S. Employer
Identification No.)

 

299 S. Main Street, 13th Floor, Salt Lake City, Utah 84111

(Address of principal executive offices) (Zip Code)

 

(801) 232-7395

(Registrant’s telephone number, including area code)

 

n/a

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to 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 ☒  No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☐  No ☒

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☒
  Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☒  No ☐

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. The number of shares outstanding of the issuer’s common stock, $0.001 par value (the only class of voting stock), at August 14, 2019, was 1,034,030.

 

 1 

 

 

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION  
Item 1. Financial Statements 3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosure About Market Risk 18
Item 4. Controls and Procedures 18
PART II OTHER INFORMATION  
Item 1. Legal Proceedings 19
Item 1A. Risk Factors 19
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Mine Safety Disclosures 19
Item 5. Other Information 19
Item 6. Exhibits 19
Signatures   20

 2 

 

ITEM 1. FINANCIAL STATEMENTS

 

As used herein, the terms “Company,” “we,” “our,” “us,” “it,” and “its” refer to Arvana Inc., a Nevada corporation, unless otherwise indicated. In the opinion of management, the accompanying unaudited condensed financial statements included in this Form 10-Q reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for the periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.

 

 3 

 

  

Arvana Inc.

Balance Sheets

(Expressed in US Dollars)

 

   June 30,  December 31,
   2019  2018
ASSETS          
Current assets:          
Cash  $617   $815 
Total assets  $617   $815 
LIABILITIES AND STOCKHOLDERS' DEFICIENCY          
Current liabilities          
Accounts payable and accrued liabilities  $1,056,905   $1,012,714 
Convertible loan (net of discount of $16,159 and $45,059 respectively (Note 8)   91,641    62,741 
Loans payable to stockholders (Note 3)   584,289    583,593 
Loans payable to related party (Note 3)   130,089    129,231 
Loans payable (Note 3)   58,741    47,330 
Amounts due to related parties (Note 7)   500,586    491,171 
Total current liabilities   2,422,251    2,326,780 
Stockholders' deficiency          
Common stock, $0.001 par value 5,000,000 authorized, 1,034,030 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively   1,034    1,034 
Additional paid-in capital   21,283,517    21,283,517 
Deficit   (23,702,849)   (23,607,180)
    (2,418,298)   (2,322,629)
Less: Treasury stock – 2,085 common shares at
June 30, 2019 and December 31, 2018, respectively
   (3,336)   (3,336)
Total stockholders’ deficiency   (2,421,634)   (2,325,965)
   $617   $815 

The accompanying notes are an integral part of these condensed interim financial statements.

 4 

 

 

Arvana Inc.

Statements of Operations and Comprehensive Income (Loss)

(Expressed in US Dollars)

 

   Three Months Ended  Six Months Ended
   June 30,  June 30,
   2019  2018  2019  2018
Operating expenses                    
General and administrative   2,590    3,343    5,196    6,884 
Professional fees   4,875    6,675    9,594    10,213 
Total operating expenses  $7,465   $10,018   $14,790   $17,097 
Loss from operations   (7,465)   (10,018)   (14,790)   (17,097)
Interest expense   (28,575)   (12,771)   (58,348)   (25,784)
Foreign exchange gain (loss)   (20,759)   48,268    (22,531)   52,450 
Net income (loss) and comprehensive income (loss)  $(56,799)  $25,479   $(95,669)  $9,569 
Per common share information - basic and diluted:                    
Weighted average shares outstanding   1,034,030    1,034,030    1,034,030    1,034,030 
Net income (loss) per common shares – basic and diluted  $(0.05)  $0.02   $(0.09)  $0.01 

The accompanying notes are an integral part of these condensed interim financial statements.

 5 

 

 

Arvana Inc.

Statements of Cash Flows

(Expressed in US Dollars)

 

  

 

Six Months Ended

   June 30,
   2019  2018
Cash flows from operating activities          
Net income (loss)  $(95,669)  $9,569 
           
Item not involving cash:          
Amortization of discount on convertible loan   28,900    —   
Interest expense   29,448    —   
Unrealized foreign exchange   22,531    28,669 
Changes in non-cash working capital:          
Accounts payable and accrued liabilities   1,795    (34,007)
Amounts due to related parties   1,697    (18,309)
Net cash used in operations   (11,298)   (14,078)
           
Cash flows from investing activities          
Net cash used in investing activities   —      —   
           
Cash flows from financing activities          
Proceeds of loans payable   11,100    10,000 
Net cash provided by financing activities   11,100    10,000 
           
Change in cash   (198)   (4,078)
Cash, beginning of period   815    4,730 
Cash, end of period  $617   $652 
           
Supplementary information          
Cash paid for interest  $—     $—   
Cash paid for income taxes  $—     $—   

There were no non-cash investing or financing transactions for the six month periods ended June 30, 2019 and 2018.

The accompanying notes are an integral part of these condensed interim financial statements.

 6 

 

Arvana Inc.
Notes to Condensed Interim Financial Statements
June 30, 2019
(Unaudited)

1. Nature of Business and Ability to Continue as a Going Concern

Arvana Inc. (“our”, “we”,”us” and the “Company”) was incorporated under the laws of the State of Nevada as Turinco, Inc. on September 16, 1977. On July 24, 2006, the shareholders approved a name change from Turinco, Inc. to Arvana Inc. The reporting currency and functional currency of the Company is the United States dollar (“US Dollar”) and the accompanying financial statements have been expressed in US Dollars.

 

On March 17, 2016, the Company entered into a non-binding Memorandum of Understanding (“MOU”) with CaiE Food Partnership Ltd. (“CaiE”) for the purpose of acquiring CaiE as a wholly-owned subsidiary. CaiE is in the business of manufacturing and distributing fresh Dim Sum food products from a facility based in Sparks, Nevada. In the event that the Company does not complete the acquisition of CaiE, its intention will be to identify and evaluate alternative business opportunities that might be a good match for the Company.

 

These condensed financial statements have been prepared on a going concern basis, which assumes the realization of assets and the settlement of liabilities in the normal course of business. For the six-month period ended June 30, 2019, the Company recognized a net loss of $95,669 as a result of general administrative expenses, professional fees, interest expenses and foreign exchange. At June 30, 2019, the Company had a working capital deficiency of $2,421,634. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company will require continued financial support from its shareholders and creditors until it is able to generate sufficient cash flow from operations on a sustained basis. There is substantial doubt that the Company will be successful at achieving these results. Failure to obtain the ongoing support of its shareholders and creditors may make the going concern basis of accounting inappropriate, in which case the Company’s assets and liabilities would need to be recognized at their liquidation values. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might arise from this uncertainty.

 

2. Summary of Significant Accounting Policies

 

a) Basis of presentation

The Company is in the process of evaluating CaiE Food Partnership Ltd. (“CaiE”) as a business opportunity and has minimal operating expenses. The Company’s fiscal year end is December 31. The accompanying condensed interim financial statements of Arvana Inc. for the three and six months ended June 30, 2019 and 2018, have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) for financial information with the instructions to Form 10-Q and Regulation S-X. The condensed interim financial statements and notes appearing in this report should be read in conjunction with our audited financial statements and related notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission (“SEC”) on April 15, 2019. Results are not necessarily indicative of those which may be achieved in future periods.

 

 7 

 

 

Arvana Inc.
Notes to Condensed Interim Financial Statements
March 31, 2019
(Unaudited)

 

2. Summary of Significant Accounting Policies (continued)

 

b) Estimates

The preparation of financial statements in conformity with US GAAP 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 the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates include the recognition of deferred tax assets based on the change in unrecognized deductible temporary tax differences.

 

c) Financial instruments

The Company uses the following methods and assumptions to estimate the fair value of each class of financial instruments for which it is practicable to estimate such values:

 

Cash - the carrying amount approximates fair value because the amounts consist of cash held at a bank.

  

Accounts payable and accrued liabilities, convertible loan, loans payable and amounts due to related parties - the carrying amount approximates fair value due to the short-term nature of the obligations.

 

The estimated fair values of the Company's financial instruments as of June 30, 2019 and December 31, 2018 are as follows:

   June 30, 2019  December 31, 2018
  

Carrying

Amount

 

Fair

Value

 

Carrying

Amount

 

Fair

Value

Cash  $617   $617   $815   $815 
Accounts payable and accrued liabilities   1,056,905    1,056,905    1,012,714    1,012,714 
Convertible loan   91,641    91,641    62,741    62,741 

Loans payable to stockholders

   584,289    584,289    583,593    583,593 
Loans payable to related party   130,089    130,089    129,231    129,231 

Loans payable

   58,741    58,741    47,330    47,330 
Amounts due to related parties   500,586    500,586    491,171    491,171 

 

The following table presents information about the assets that are measured at fair value on a recurring basis as of June 30, 2019, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and included situations where there is little, if any, market activity for the asset:

  

June 30,

2019

  Quoted Prices
in Active
Markets
(Level 1)
  Significant
Other
Observable
Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
Assets:                    
Cash   $617   $617   $—     $—   

 

The fair value of cash is determined through market, observable and corroborated sources

 

 8 

 

 

Arvana Inc.
Notes to Condensed Interim Financial Statements
March 31, 2019
(Unaudited)

 

2. Summary of Significant Accounting Policies (continued)

 

d) Recent accounting pronouncements

 

New and amended standards adopted by the Company

The following new and amended standards were adopted by the Company for the first time in this reporting period.

 

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-02, Leases (Topic 842). The standard requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. The standard requires lessors to classify leases as either sales-type, finance or operating. A sales-type lease occurs if the lessor transfers all the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer of control, the lease is treated as a financing lease. If the lessor does not convey risks and rewards or control, which results in an operating lease. The standard became effective for the Company beginning January 1, 2019. The adoption of this standard did not have a material impact on the Company’s results of operations, financial condition, cash flows, and financial statement disclosures.

 

In July 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2017-11, requiring certain changes to the presentation and disclosures of changes to liability or equity classification of financial instruments. The amendments are effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The adoption of this standard did not have a material impact on the Company’s results of operations, financial condition, cash flows, and financial statement disclosures.

 

In June 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2018-07, requiring certain changes to nonemployee share-based payment accounting. The amendments are effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The adoption of this standard did not have a material impact on the Company’s results of operations, financial condition, cash flows, and financial statement disclosures.

 

New standards and interpretations not yet adopted by the Company

 

Several new standards and amendments to standards and interpretations are effective for annual periods beginning after the closing date of this report and have not been applied in preparing these condensed interim financial statements:

 

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, requiring certain changes to the recognition and measurement as well as disclosure of incurred and expected credit losses. The standard will become effective for the Company beginning January 1, 2020. The Company is currently assessing the impact that the adoption of this standard will have on its results of operations, financial condition, cash flows, and financial statement disclosures.

 

 9 

 

 

Arvana Inc.
Notes to Condensed Interim Financial Statements
March 31, 2019
(Unaudited)

 

2. Summary of Significant Accounting Policies (continued)

d) Recent Accounting Pronouncements (continued)

 

New standards and interpretations not yet adopted by the Company (continued)

 

In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2018-13 which changes the fair value measurement disclosure requirements of ASC 820. The amendments in this ASU are the result of a broader disclosure project known as FASB Concepts Statement, Conceptual Framework for Financial Reporting – Chapter 8: Notes to Financial Statements. The amendments are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company is currently assessing the impact that the adoption of this standard will have on its results of operations, financial condition, cash flows, and financial statement disclosures.

 

3. Loans Payable

 

As of June 30, 2019, the Company had received loans of $584,289 (€225,000; CAD$ 72,300; $273,107) (December 31, 2018 - $583,593: €225,000; CAD$ 72,300; $273,107) from stockholders; loans of $130,089 (CAD$ 27,600; $109,000) (December 31, 2018 – $129,231: CAD$ 27,600; $109,000) from a related party and loans of $58,741 (CAD$ 10,000; $51,100) (December 31, 2018 – $47,330: CAD$ 10,000; $40,000) from unrelated third parties. All of the loans bear interest at 6% per annum. The loans were made in 3 different currencies, Euros, Canadian Dollars and US Dollars. All amounts reflected on these financial statements are expressed in US Dollars. Repayment of the loans is due on closing of any future financing arrangement by the Company. The balance of accrued interest of $495,026 and $470,192 is included in accounts payable and accrued expenses at June 30, 2019 and December 31, 2018, respectively. Interest expense recognized on these loans was $11,430 for the three months ended June 30, 2019, compared to $12,771 for the three months ended June 30, 2018, respectively. Interest expense recognized on these loans was $24,058 for the six months ended June 30, 2019, compared to $25,784 for the six months ended June 30, 2018, respectively.

 

4. Stock Options

 

At June 30, 2019 and December 31, 2018, there were no stock options outstanding. No options were granted, exercised or expired during the period ended June 30, 2019 and during the year ended December 31, 2018.

 

5. Common stock

 

During the six months ended June 30, 2019 and year ended December 31, 2018, the Company had issued nil shares respectively.

 

6. Segmented Information

 

The Company has no reportable segments.

 

 10 

 

 

Arvana Inc.
Notes to Condensed Interim Financial Statements
March 31, 2019
(Unaudited)

  

7. Related Party Transactions and Amounts Due to Related Parties

 

At June 30, 2019, and December 31, 2018, the Company had amounts due to related parties of $500,586 and $491,171, respectively. This amount includes $136,100 at June 30, 2019 and December 31, 2018, payable to two former directors and a current director for services rendered during 2007. This amount is to be paid part in cash and part in stock at a future date with the number of common shares determined by the fair value of the shares on the settlement date. The amounts owing bear no interest, are unsecured, and have no fixed terms of repayment.

 

The Company incurred consulting fees of $5,394 (2018 - $4,481) paid to a company controlled by our chief executive officer during the six months ended June 30, 2019.

 

Our former chief executive officer and former director entered into a consulting arrangement on a month to month basis that provided for a monthly fee of CAD$5,000. These amounts have been accrued and are currently unpaid. This consulting arrangement ended on May 24, 2013. As of June 30, 2019, our former chief executive officer was owed $273,004 and $262,705 as of December 31, 2018 which are unsecured non-interest bearing amounts due on demand.

 

Our former chief financial officer and former director had entered into a consulting agreement on a month to month basis that provides for a monthly fee of $2,000. These amounts have been accrued and are currently unpaid. This consulting arrangement ended on June 14, 2013. As of June 30, 2019 and December 31, 2018, our former chief financial officer was owed $58,870 for services rendered as an officer.

 

Our former chief executive officer and former director entered into a debt assignment agreement effective January 1, 2012, with a corporation with a former director in common and thereby assigned $154,928 (CAD$202,759) of unpaid amounts payable.

 

Our former chief executive officer and former director entered into a debt assignment agreement effective January 1, 2012, with an unrelated third party and thereby assigned $53,357 of unpaid amounts payable and $100,000 of unpaid loans.

 

Our former chief executive officer and former director is owed $130,089 for unsecured amounts bearing 6% interest due on demand loaned to the Company as of June 30, 2019, compared to $129,653 as of December 31, 2018. Total interest expense of $74,981 (December 31, 2018 - $70,711) is included in accounts payable and accrued liabilities as at June 30, 2019.

 

Our former chief executive officer and former director entered into a debt assignment agreement effective December 31, 2016, to assume $100,000 in unpaid loans and $83,357 in unpaid amounts payable from a third party.

 

Our other former officers are owed a total of $32,474 for their prior services rendered as officers as at June 30, 2019, compared to $31,153 as of December 31, 2018.

 

 11 

 

 

Arvana Inc.
Notes to Condensed Interim Financial Statements
March 31, 2019
(Unaudited)

  

8. Convertible Loans

 

On May 18, 2016, the Company issued a convertible promissory note (“Convertible Note”) pursuant to which the Company received $50,000 from CaiE due on November 17, 2017. The $50,000 Convertible Note is convertible into common stock, in whole or in part, at any time and from time to time before maturity at the option of the holder at a fixed price of $0.20 per share. Due to the conversion price being lower than the closing share price on the issuance date, a beneficial conversion feature was recognized as a discount against the convertible note. The Convertible Note accrues interest at a rate equal to 10% per year. During the three and six months ended June 30, 2019 and 2018, $nil and $nil of the discount was amortized as interest expense, respectively. Interest expense recognized on this loan was $1,250 for the three months ended June 30, 2019, compared to $1,250 for the three months ended June 30, 2018. Interest expense recognized on this loan was $2,500 for the six months ended June 30, 2019, compared to $2,500 for the six months ended June 30, 2018. As at June 30, 2019 and December 31, 2018, the balance of the Convertible Note was $50,000. On November 17, 2017, the Company entered into an amending agreement to extend the maturity date to March 31, 2018; all other terms remained unchanged. On March 31, 2018, the Company entered into an additional amending agreement to further extend the maturity date of the Convertible Note to March 31, 2019. All other terms remained unchanged. On March 31, 2019, the Company entered into an additional amending agreement to further extend the maturity date of the Convertible Note to March 31, 2020. All other terms remained unchanged.

 

On October 12, 2018, the Company issued an additional convertible note with CaiE pursuant to which the Company received $27,800 during the year ended December 31, 2017 and $30,000 during the year ended December 31, 2018. The $57,800 convertible note is due on October 11, 2019 and is convertible into common stock, in whole or in part, at any time and from time to time before maturity at the option of the holder at a fixed price of $0.20 per share. Due to the conversion price being lower than the closing share price on the issuance date, a beneficial conversion feature was recognized as a discount against the convertible note. The convertible note accrues interest at a rate equal to 10% per year. During the three months ended June 30, 2019 and 2018, $14,450 and $nil of the discount was amortized as interest expense, respectively. During the six months ended June 30, 2019 and 2018, $28,900 and $nil of the discount was amortized as interest expense, respectively. Interest expense recognized on this loan was $1,445 for the three months ended June 30, 2019, compared to $nil for the three months ended June 30, 2018. Interest expense recognized on this loan was $2,890 for the six months ended June 30, 2019, compared to $nil for the six months ended June 30, 2018. As at June 30, 2019 and December 31, 2018, the balance of the convertible note was $57,800.

 

9. Subsequent Events

 

The Company evaluated its June 30, 2019, financial statements for subsequent events through the date the financial statements were issued. The Company is not aware of any subsequent events which would require recognition or disclosure in its financial statements.

 

 12 

 

 

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

 

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this quarterly report contain forward-looking statements that involve risks and uncertainties. Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,” “plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include but are not limited to those discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition below. The following discussion should be read in conjunction with our financial statements and notes thereto included in this report. Our fiscal year end is December 31. All information presented herein is based on the three and six months ended June 30, 2019 and June 30, 2018.

 

Overview

 

The Company was incorporated in the State of Nevada on June 16, 1977, as “Turinco, Inc.” to engage in any legal undertaking. On July 24, 2006, the Company’s name was changed from Turinco, Inc. to Arvana Inc. to reflect the acquisition of Arvana Networks, Inc., a telecommunications business. We discontinued efforts related to our telecommunications business as of December 31, 2009. We have since been in the process of seeking and identifying other business opportunities.

 

Our office is located at 299 S. Main Street, 13th Floor, Salt Lake City, Utah 84111, and our telephone number is (801) 232-7395. Our registered agent is JAD Communications LLC., 5209 West Gowan Road, Las Vegas, Nevada 89130.

 

The Company currently is traded on the OTC Markets Group, Inc.’s Pink Sheets Current Information over the counter market platform under the symbol “AVNI.”

 

Company

 

On March 17, 2016, the Company entered into a non-binding Memorandum of Understanding (“MOU”) with CaiE Food Partnership Ltd. (“CaiE”) for the purpose of acquiring CaiE as a wholly owned subsidiary. CaiE is in the business of manufacturing and distributing fresh Dim Sum food products from a facility based in Sparks Nevada. The MOU anticipates that the Company will issue, subject to shareholder approval, a fully diluted sixty-seven percent (67%) interest in its common stock in exchange for CaiE. The MOU further provides that CaiE lend the Company fifty thousand dollars ($50,000) on a convertible basis prior to the consummation of the transaction. The anticipated transaction will require the Company to convert existing debt into shares of its common stock, increase the number of authorized common shares, elect a new Board of Directors and change its name to reflect the new business. CaiE has loaned the Company $116,400 as of the filing date of this report.

 

In the event that the Company does not complete the acquisition of CaiE, its intention will be to identify and evaluate alternative business opportunities that might be a good match for the Company. We will not be able to develop any identified business opportunities without additional financing. Our Board of Directors is actively pursuing financing to maintain operations.

 

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Plan of Operation

 

The Company’s plan of operation over the next twelve months is to acquire CaiE as a wholly owned subsidiary on those terms to be provided within definitive agreements based on the MOU and thereafter to focus on CaiE’s business model. We will require a minimum of $50,000 in funding over the next 12 months to maintain operations and acquire CaiE. On completing the acquisition of CaiE, the Company may need additional capital to grow CaiE’s business. The amount of funding that may be required for this purpose is not determinable at this time.

 

Should the Company not complete the anticipated transaction with CaiE then it will seek to identify an alternative business opportunity for which purpose it will require a minimum of $25,000 in funding over the next 12 months. The Company will most likely need additional funding to complete any alternative transaction that might be identified within this time frame.

 

We anticipate that the required prospective funding in the near term will be in the form of convertible debt financing from CaiE. Should the Company not complete the anticipated transaction with CaiE, then requisite funding may come from the sale of our common shares or unsecured shareholder loans. The Company does not have any alternative financing arranged and cannot be certain that it will be able to realize funding from the sale of equity or that shareholders will continue to provide loans. Accordingly, we will require continued financial support from our shareholders and creditors until the Company is able to generate sufficient cash flow to maintain operations on a sustained basis. There is substantial doubt that the Company will be successful in maintaining operations unless it completes the acquisition of CaiE.

 

Results of Operations

 

During the three and six months ended June 30, 2019, the Company satisfied periodic public disclosure requirements and continued to finance its operations with convertible loans from CaiE.

 

Our operations for the three and six months ended June 30, 2019 and 2018 are summarized below.

 

   Three months
Ended
June 30, 2019
  Three months
Ended
June 30, 2018
  Six months
Ended
June 30, 2019
  Six months
Ended
June 30, 2018
Expenses:                    
   General and administration   (2,590)  ($3,343)   (5,196)   (6,884)
   Professional fees   (4,875)   (6,675)   (9,594)   (10,213)
   Interest   (28,575)   (12,771)   (58,348)   (25,784)
   Foreign exchange gain (loss)   (20,759)   48,268    (22,531)   52,450 
Net income (loss) and comprehensive income (loss) for the period   (56,799)   25,479    (95,669)   9,569 

 

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Net Losses

 

Net loss for the three months ended June 30, 2019, was $56,799 as compared to net income of $25,479 for the three months ended June 30, 2018. The transition from net income to net loss over the three-month period ended June 30, 2019, when compared to the three-month period ended June 30, 2018, can be primarily attributed to the foreign exchange loss as compared to a foreign exchange gain in the comparable three month period, and the increase in interest expense on outstanding debt offset by small decreases in general administrative expenses and professional fees. The loss or gain on foreign exchange is due to an increase or decrease in the value of foreign currencies against the US dollar, the volatility of which can negatively or positively impact the cost of those expenses payable in foreign currencies.

 

Net loss for the six months ended June 30, 2019 was $95,669 as compared to net income of $9,569 for the six months ended June 30, 2018. The transition from net income to net loss over the six-month period ended June 30, 2019, when compared to the six-month period ended June 30, 2018, can likewise primarily be attributed to the foreign exchange loss as compared to a foreign exchange gain in the comparable six month period, and the increase in interest expense on outstanding debt, offset by small decreases in general administrative expenses and professional fees. The loss or gain on foreign exchange is due to an increase or decrease in the value of foreign currencies against the US dollar, the volatility of which can negatively or positively impact the cost of those expenses that are payable in foreign currencies.

 

We did not generate revenue during this period and expect to incur losses over the next twelve months until such time as we are able to conclude the acquisition of CaiE Foods or develop a new business opportunity that produces net income.

 

Capital Expenditures

 

The Company expended no amounts on capital expenditures for the six-month period ended June 30, 2019.

 

Impact of Inflation

 

The Company believes that inflation has had a negligible effect on operations over the past three years.

 

Liquidity and Capital Resources

 

Since inception, the Company has experienced significant changes in liquidity, capital resources, and stockholders’ deficiency.

 

The Company had assets of $617 as of June 30, 2019, consisting of cash and a working capital deficit of $2,421,634, as compared to assets of $815, consisting of cash and a working capital deficit of $2,325,965 as of December 31, 2018. Net stockholders' deficit in the Company was $2,421,634 at June 30, 2019, as compared to a net stockholder’s deficit in the Company of $2,325,965 at December 31, 2018.

 

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Cash Used in Operating Activities

 

Net cash flow used in operating activities for the six-month period ended June 30, 2019 was $11,298 as compared to $14,078 for the six-month period ended June 30, 2018. Changes in net cash used in operating activities in the current six-month period can be attributed primarily to a number of items that are book expense items which do not affect the total amount relative to actual cash used such as unrealized foreign exchange, interest expense and the amortization of discount on convertible loans. Balance sheet accounts that actually affect cash, but are not income statement related items that are added or deducted to arrive at net cash used in operating activities, include accounts payable and accrued liabilities, in addition to amounts due to related parties.

 

We expect to continue to use net cash flow in operating activities over the next twelve months or until such time as the Company can generate sufficient revenue to offset operating expenses.

 

Cash Used in Investing Activities

 

We expect to use net cash flow in investing activities in connection with the prospective acquisition of CaiE. However, until such time as such transaction is concluded, we do not expect to use net cash flows in investing activities.

 

Cash Flows from Financing Activities

 

Cash flow provided by financing activities for the six months ended June 30, 2019, was $11,100 as compared to $10,000 for the six months ended June 30, 2018. The cash flows provided from financing activities in both comparative six-month periods can be attributed to loans from CaiE.

 

We expect to continue to use cash flow provided by financing activities to maintain operations and acquire CaiE. In the event the prospective acquisition of CaiE is not completed, the Company will seek to identify an alternative business opportunity.

 

The Company’s current assets are insufficient to conduct its plan of operation over the next twelve (12) months, as it will need at least $50,000 to maintain operations and acquire CaiE. The Company secured a convertible loan of $50,000 in 2016, an additional convertible loan in the aggregate amount of $57,800 in 2017 and 2018, in addition to loans of $11,100 in the first six months of 2019 from CaiE. Despite these loans, the Company has no commitments or arrangements for the funding necessary to complete the acquisition of CaiE. The Company’s shareholders or CaiE are the most likely sources of funding, though none have made any commitment for future investment. The Company’s inability to obtain sufficient funding to maintain operations would have a material adverse effect on its ability to continue operations.

 

The Company does not intend to pay cash dividends in the foreseeable future.

 

The Company had no lines of credit or other bank financing arrangements as of June 30, 2019.

 

The Company had no commitments for future capital expenditures that were material at June 30, 2019.

 

The Company has no defined benefit plan or contractual commitment with any of its officers or directors.

 

The Company has no current plans for the purchase or sale of any plant or equipment.

 

The Company has no current plans to make any changes in the number of employees.

 

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Off-Balance Sheet Arrangements

 

As of June 30, 2019, we have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to stockholders.

 

Future Financings

We anticipate continuing to rely on debt or equity sales of our shares of common stock in order to continue to fund our business operations. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund operations.

Critical Accounting Policies

 

In Note 2 to the audited financial statements for the years ended December 31, 2018 and 2017, included in our Form 10-K, the Company discusses those accounting policies that are considered to be significant in determining the results of operations and its financial position. The Company believes that the accounting principles utilized by it conform to accounting principles generally accepted in the United States.

 

The preparation of financial statements requires Company management to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. By their nature, these judgments are subject to an inherent degree of uncertainty. On an on-going basis, the Company evaluates estimates. The Company bases its estimates on historical experience and other facts and circumstances that are believed to be reasonable, and the results form the basis for making judgments about the carrying value of assets and liabilities. The actual results may differ from these estimates under different assumptions or conditions.

 

Going Concern

Management of the Company has expressed an opinion as to the Company’s ability to continue as a going concern as a result of an accumulated deficit of $23,702,849 since inception and negative cash flows from operating activities as of June 30, 2019. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is subject to the ability of the Company to obtain funding from outside sources. Management’s plan to address the Company’s ability to continue as a going concern includes obtaining funding from the private placement of equity or through debt financing. Management believes that it will be able to obtain funding to allow the Company to remain a going concern through the methods discussed above, though there can be no assurances that such methods will prove successful.

 

Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition

The statements contained in the section titled Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this current report, with the exception of historical facts, are forward-looking statements. Forward-looking statements reflect our current expectations and beliefs regarding our future results of operations, performance, and achievements. These statements are subject to risks and uncertainties and are based upon assumptions and beliefs that may or may not materialize. These statements include, but are not limited to, statements concerning:

 

our anticipated financial performance and business plan;
the sufficiency of existing capital resources;
our ability to raise capital to fund cash requirements for future operations;
uncertainties related to the Company’s intention to acquire CaiE;
the volatility of the stock market and;
general economic conditions.

 

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We wish to caution readers that our operating results are subject to various risks and uncertainties that could cause our actual results to differ materially from those discussed or anticipated. We also wish to advise readers not to place any undue reliance on the forward-looking statements contained in this report, which reflect our beliefs and expectations only as of the date of this report. We assume no obligation to update or revise these forward-looking statements to reflect new events or circumstances or any changes in our beliefs or expectations, other than as required by law.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not required for smaller reporting companies.

 

Item 4. Controls and Procedures

 

Disclosure Controls and Procedures

 

In connection with the preparation of this quarterly report, an evaluation was carried out by the Company’s management, with the participation of the chief executive officer and the acting chief financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)) as of June 30, 2019. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.

 

Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s rules and forms, and such information was accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.

 

Changes in Internal Control over Financial Reporting

 

There have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended June 30, 2019, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

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PART II

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

Not required.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

 

Item 6. Exhibits

 

Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page 21 of this Form 10-Q, and are incorporated herein by this reference.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

    ARVANA INC.
     
August 14, 2019 By:  /s/ Ruairidh Campbell
    Ruairidh Campbell
    Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer

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INDEX TO EXHIBITS

 

Regulation

S-K Number

Exhibit
2.1 Agreement and Plan of Reorganization between the Company, Arvana Networks, Inc. and the Shareholders of Arvana Networks, Inc. dated August 18, 2005(1)
3.1 Articles of Incorporation(2)
3.2 Bylaws, as amended(2)
3.3 Amendment to Articles of Incorporation (3)
14.1 Code of Ethics (4)
31 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act (5)
32 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(d) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(5)
101.INS XBRL Instance Document(6)
101.PRE XBRL Taxonomy Extension Presentation Linkbase(6)
101.LAB XBRL Taxonomy Extension Label Linkbase(6)
101.DEF XBRL Taxonomy Extension Label Linkbase(6)
101.CAL XBRL Taxonomy Extension Label Linkbase(6)
101.SCH XB RL Taxonomy Extension Label Linkbase(6)

  

(1) Previously filed with the SEC as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on August 19, 2005.
(2) Previously filed with the SEC as exhibits to the Company’s registration statement on Form 10- SB filed with the SEC on May 24, 2000.
(3) Previously filed with the SEC as an exhibit to the Company’s registration statement on Form 8-K filed with the SEC on October 12, 2010.
(4) Previously filed with the SEC as an exhibit to the Company’s Annual Report on Form 10-KSB filed with the SEC on April 16, 2007.
(5) Filed as exhibits to this Periodic Report on Form 10-Q.
(6) Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.

 

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