ARVANA INC - Annual Report: 2012 (Form 10-K)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2012.
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
87-0618509
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
90 Madison Street, Suite 701, Denver, Colorado 80206
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (303) 329-3008
Securities registered under Section 12(b) of the Act: none.
Securities registered under Section 12(g) of the Act: common stock (title of class), $0.0001 par value.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o No þ
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 þ No o
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 þ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule
12b-2 of the Exchange Act. Smaller reporting company þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes þ No o
The aggregate market value of the registrant’s common stock, $0.001 par value (the only class of voting stock), held by non-
affiliates (870,505 shares) was $139,280 based on the average of the bid and ask price ($0.16) for the common stock on April 1,
2013.
At April 1, 2013, the number of shares outstanding of the registrant’s common stock, $0.001 par value (the only class of voting
stock), was 885,130.
1
TABLE OF CONTENTS
PART I
Item1.
3
Item 1A.
6
Item 1B.
Unresolved Staff Comments
6
Item 2.
6
Item 3.
Legal Proceedings
7
Item 4.
(Removed and Reserved)
7
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of
8
Equity Securities
Item 6.
Selected Financial Data
10
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
10
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
15
Item 8.
Financial Statements and Supplementary Data
15
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
16
Item 9A.
Controls and Procedures
16
Item 9B.
Other Information
18
PART III
Item 10.
Directors, Executive Officers, and Corporate Governance
19
Item 11.
Executive Compensation
23
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
25
Matters
Item 13.
Certain Relationships and Related Transactions, and Director Independence
26
Item 14.
Principal Accountant Fees and Services
27
PART IV
Item 15.
Exhibits, Financial Statement Schedules
28
29
2
PART I
ITEM 1
As used herein the terms “Company,” “we,” “our,” and “us” refer to Arvana, Inc., its subsidiaries, and
its predecessor, unless context indicates otherwise.
FORWARD-LOOKING STATEMENTS
The information in this Annual Report on Form 10-K contains forward-looking statements. These
forward-looking statements involve risks and uncertainties, including statements regarding our capital
needs, business plans and expectations. Such forward-looking statements involve risks and uncertainties
regarding our planned business, availability of funds, government regulations, common share prices,
operating costs, capital costs, our ability to deploy our planned business and generate revenues and other
factors. Any statements contained herein that are not statements of historical facts may be deemed to be
forward-looking statements. In some cases, you can identify forward-looking statements by terminology
such as "may", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict",
"potential" or "continue", the negative of such terms or other comparable terminology. These statements
are based on certain assumptions and analyses made by our management in light of its experience and its
perception of historical trends, current conditions and expected future developments as well as other
factors they believe are appropriate in the circumstances. Actual events or results may differ materially. In
evaluating these statements, you should consider various factors, including the risks outlined below, and,
from time to time, in other reports we file with the SEC. These factors may cause our actual results to
differ materially from any forward-looking statement. We disclaim any obligation to publicly update
these statements, or disclose any difference between its actual results and those reflected in these
statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-
looking statements.
Overview
The Company was incorporated in State of Nevada on June 16, 1977 as “Turinco, Inc.” to engage in any
legal undertaking. On July 24, 2006, the shareholders approved a change of the Company’s name from
“Turinco, Inc.” to Arvana, Inc to reflect the acquisition of Arvana Networks, Inc and the decision to
operate a telecommunications business. We discontinued efforts related to our telecommunications
business as of December 31, 2009 and as of January 1, 2010 reentered the development stage. We have
since been in the process of seeking out other business opportunities.
Our office is located at 90 Madison Street, Suite 701, Denver, Colorado 80206, and our telephone number
is (303) 329-3008. Our registered agent is Gateway Enterprises, Inc. 3230 East Flamingo Road, Las
Vegas, Nevada 89121.
The Company currently trades on the OTC Markets Group, Inc. over the counter market platform under
the symbol “AVNI.”
The Company
Our present intent is to identify and evaluate industries and business opportunities that might prove to 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 and management are actively pursuing financing in
order to maintain operations while we evaluate potential businesses.
3
Selection of a Business
We will not restrict our consideration to any particular business or industry segment, and might consider,
among others, finance, brokerage, insurance, transportation, communications, research and development,
biotechnology, service, natural resources, manufacturing or high-technology. Management recognizes
that the Company’s inadequate financial resources limit the scope and number of suitable business
venture candidates that might otherwise be available.
The decision to participate in a specific business opportunity will be made upon management’s analysis
of the quality of the other firm’s management and personnel, the anticipated acceptability of new products
or marketing concepts, the merit of technological changes and numerous other factors which are difficult,
if not impossible, to analyze through the application of any objective criteria. In many instances, it is
anticipated that the historical operations of a specific venture may not necessarily be indicative of the
potential for the future because of the necessity to substantially shift a marketing approach, expand
operations, change product emphasis, change or substantially augment management, or make other
changes. We will to some extent be dependent upon the management of a business opportunity to identify
such problems and to implement, or be primarily responsible for the implementation of, required changes.
We will not acquire or merge with any company for which audited financial statements could not be
obtained. Nonetheless, it may be anticipated that any opportunity in which we determine to participate
would present certain risks to our shareholders. Risks might include the track record of management’s
effectiveness, failures to establish a consistent market for products or services, development stage, or to
realize profits. Many more of these risks may not be adequately identified prior to the selection of a
specific opportunity, and our shareholders must, therefore, depend on the ability of management to
identify and evaluate such risks as such become evident.
Acquisition of Business
We intend to become a party to a merger, consolidation, reorganization, joint venture, franchise or
licensing agreement with another corporation or entity. The Company may also purchase stock or assets
of an existing business. On the consummation of a transaction, it is possible that our present management
and shareholders would not be in control of the Company. In addition, our sole officer and directors may,
as part of the terms of any transaction, resign and be replaced by new officers and directors without a vote
of the Company’s shareholders.
The Company anticipates that any securities issued in any reorganization would be issued in reliance on
exemptions from registration under applicable federal and state securities laws. In some circumstances,
however, as a negotiated element of any transaction, the Company might agree to register securities either
at the time the transaction is consummated, under certain conditions, or at a specified time thereafter. The
issuance of substantial additional securities and their potential sale into any trading market would likely
have a depressive effect on our stock price.
While the actual terms of a transaction to which the Company may be a party cannot be predicted, it may
be expected that the parties to the business transaction would find it desirable to avoid the creation of a
taxable event and thereby structure the acquisition in a so called “tax-free” reorganization under Section
368(a)(1) of the Internal Revenue Code of 1986, as amended (the “Code”). In order to obtain tax-free
treatment under the Code, it may be necessary for the owners of the acquired business to own 80% or
more of the voting stock of the surviving entity. In such event, the shareholders of the Company would
retain less than 20% of the issued and outstanding shares of the surviving entity, which could result in
significant dilution in the equity of such shareholders.
4
In the event a merger or acquisition were to occur, our shareholders would in all likelihood hold a lesser
percentage ownership interest in the Company following any merger or acquisition. The percentage
ownership might be subject to significant reduction in the event we acquire a target company with
substantial assets. Any merger or acquisition effected by the Company can be expected to have a
significant substantial dilutive effect on the percentage of shares held by the Company’s then
shareholders.
Operation of Business after Acquisition
The Company's operation following a merger with or acquisition of a business would be dependent on the
nature of the business and the interest acquired. We are unable to determine at this time whether the
Company would be in control of the business or whether present management would be in control of the
Company following the acquisition. We could expect that any future business would present various
challenges that cannot be predicted at the present time.
Competition
Whatever the business opportunity is that we do ultimately acquire or develop, we are almost certain to be
involved in intense competition with other business entities, many of which will have a competitive edge
over us by virtue of their stronger financial resources and prior business experience.
Employees
The Company is a development stage company and currently has two employees. Zahir Dhanani, our
chief executive officer and a director and Arnold Tinter, our chief financial officer and a director, manage
the Company. The Company looks to Mr. Dhanani and Mr. Tinter for their entrepreneurial skills and
talents. Management uses consultants, attorneys and accountants as necessary and does not plan to
engage any full-time employees in the near future.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements and Labor Contracts
The Company currently operates under and holds no patents, trademarks, licenses, franchises,
concessions, or royalty agreements. We are not subject to any labor contracts.
Governmental and Environmental Regulation
General
The Company cannot at this time anticipate the government regulations, if any, to which the Company
may be subject following a merger or acquisition. However, we can be certain that the conduct of any
business subjects us to environmental, public health and safety, land use, trade, or other governmental
regulations and state or local taxation. In selecting a business in which to acquire an interest, management
would endeavor to ascertain the effects of such government regulation on a prospective business
opportunity. In certain circumstances, however, such as the acquisition of an interest in a new or start-up
business activity, it may not be possible to predict with any degree of accuracy the impact of government
regulation.
The Company believes that it is currently in compliance in all material respects with all laws, rules,
regulations and requirements that affect its business. Further, we believe that compliance with such
applicable laws, rules, regulations and requirements does not impose a material impediment on our ability
to conduct business.
5
Climate Change Legislation and Greenhouse Gas Regulation
Many studies over the past couple of decades have indicated that emissions of certain gases contribute to
warming of the Earth’s atmosphere. In response to these studies, many nations have agreed to limit
emissions of “greenhouse gases” or “GHGs” pursuant to the United Nations Framework Convention on
Climate Change, and the “Kyoto Protocol.”
Although the United States is not participating in the Kyoto Protocol, several states have adopted
legislation and regulations to reduce emissions of greenhouse gases. Additionally, the United States
Supreme Court has ruled, in Massachusetts, et al. v. EPA, that the EPA abused its discretion under the
Clean Air Act by refusing to regulate carbon dioxide emissions from mobile sources. As a result of the
Supreme Court decision the EPA issued a finding that serves as the foundation under the Clean Air Act to
issue other rules that would result in federal greenhouse gas regulations and emissions limits under the
Clean Air Act, even without Congressional action. Finally, acts of Congress, particularly those such as the
“American Clean Energy and Security Act of 2009” approved by the United States House of
Representatives, as well as the decisions of lower courts, large numbers of states, and foreign
governments could widely affect climate change regulation. Greenhouse gas legislation and regulation
could have a material adverse effect on our business, financial condition, and results of operations.
Research and Development
During the years ended December 31, 2012 and 2011, the Company spent no amounts on research and
development activities.
Reports to Security Holders
The Company’s annual report contains audited financial statements. We are not required to deliver an
annual report to security holders and will not automatically deliver a copy of the annual report to our
security holders unless a request is made for such delivery. We file all of our required reports and other
information with the Securities and Exchange Commission (the “Commission”). The public may read and
copy any materials that are filed by the Company with the Commission at the Commission’s Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on
the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The
statements and forms filed by us with the Commission have also been filed electronically and are
available for viewing or copy on the Commission maintained Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file electronically with the
Commission. The Internet address for this site can be found at http://www.sec.gov.
ITEM 1A.
Not required for smaller reporting companies.
ITEM 1B.
Not required for smaller reporting companies.
ITEM 2.
The Company maintains its offices at 90 Madison Street, Suite 701, Denver, Colorado 80206. We pay no
rent for the use of this office. We do not believe that we will need to maintain a larger office at any time
in the foreseeable future in order to carry out its operations.
6
ITEM 3.
We currently are not a party to any material legal proceedings and to our knowledge no such proceedings
are threatened or contemplated.
ITEM 4.
(REMOVED AND RESERVED)
Removed and reserved.
7
PART II
ITEM 5.
MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS,
AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common shares are quoted on the OTCQB under the symbol “AVNI”, a service maintained by the
OTC Market Group, Inc. Trading in the common stock in the over-the-counter market has been limited
and sporadic and the quotations set forth below are not necessarily indicative of actual market conditions.
The following table indicates the high and low bid prices of our common shares during the periods
indicated:
QUARTER
HIGH BID
LOW BID
ENDED
December 31, 2012
$
0.16
$
0.16
September 30, 2012
$
0.30
$
0.15
June 30, 2012
$
0.25
$
0.15
March 31, 2012
$
0.37
$
0.15
December 31, 2011
$
0.30
$
0.15
September 30, 2011
$
0.20
$
0.20
June 30, 2011
$
0.49
$
0.22
March 31, 2011
$
0.52
$
0.22
The market quotations provided reflect inter-dealer prices, without retail mark-up, markdown or
commission and may not represent actual transactions.
Capital Stock
The following is a summary of the material terms of the Company’s capital stock. This summary is
subject to and qualified by our articles of incorporation and bylaws.
Common Stock
As of April 1, 2013 there were 55 shareholders of record holding a total of 885,130 shares of fully paid
and non-assessable common stock of the 5,000,000 shares of common stock, par value $0.001,
authorized. The board of directors believes that the number of beneficial owners is substantially greater
than the number of record holders because a portion of our outstanding common stock is held in broker
“street names” for the benefit of individual investors. The holders of the common stock are entitled to one
vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the
common stock have no preemptive rights and no right to convert their common stock into any other
securities. There are no redemption or sinking fund provisions applicable to the common stock.
Warrants
As of April 1, 2013 the Company had no outstanding warrants to purchase shares of our common stock.
8
Stock Options
As of April 1, 2013 the Company had no outstanding stock options to purchase shares of our common
stock.
Convertible Securities
As of April 1, 2013 the Company had no outstanding stock options to purchase shares of our common
stock.
Securities Authorized for Issuance Under Equity Compensation Plans
The Company has not authorized any securities for issuance under any equity compensation plan.
Purchases of Equity Securities made by the Issuer and Affiliated Purchasers
The Company has not repurchased any shares of its common stock during the year ended December 31,
2012 or since that date through April 1, 2013.
Purchases of Equity Securities made by the Issuer and Affiliated Purchasers
The Company has not repurchased any shares of its common stock during the year ended December 31,
2012 or since that date through April 1, 2013.
Dividends
The Company has not declared any cash dividends since inception and does not anticipate paying any
dividends in the near future. The payment of dividends is within the discretion of the board of directors
and will depend on our earnings, capital requirements, financial condition, and other relevant factors.
There are no restrictions that currently limit the Company's ability to pay dividends on its common stock
other than those generally imposed by applicable state law.
Recent Sales of Unregistered Securities
During the quarter ended December 31, 2012, there were no sales of securities.
Trading Information
The Company’s common stock is currently approved for quotation under the symbol “AVNI”. The
information for our transfer agent is as follows:
Interwest Transfer Company
1981 E. Murray-Holladay Road
Holladay, Utah 84117–5164
(801) 272-9294.
9
Section 15(g) of the Securities Exchange Act of 1934
Our Company’s shares are covered by Section 15(g) of the Securities Exchange Act of 1934, as amended
that imposes additional sales practice requirements on broker/dealers who sell such securities to persons
other than established customers and accredited investors (generally institutions with assets in excess of
$5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000
or $300,000 jointly with their spouses). For transactions covered by the Rule, the broker/dealer must
make a special suitability determination for the purchase and have received the purchaser’s written
agreement to the transaction prior to the sale. Consequently, the Rule may affect the ability of
broker/dealers to sell our securities and also may affect your ability to sell your shares in the secondary
market.
Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny
securities. These rules require a one page summary of certain essential items. The items include the risk
of investing in penny stocks in both public offerings and secondary marketing; terms important to in
understanding of the function of the penny stock market, such as “bid” and “offer” quotes, a dealers
“spread” and broker/dealer compensation; the broker/dealer compensation, the broker/dealers duties to its
customers, including the disclosures required by any other penny stock disclosure rules; the customers
rights and remedies in causes of fraud in penny stock transactions; and, the NASD’s toll free telephone
number and the central number of the North American Administrators Association, for information on the
disciplinary history of broker/dealers and their associated persons.
The application of the penny stock rules may affect your ability to resell your shares.
ITEM 6.
SELECTED FINANCIAL DATA
Not required for smaller reporting companies.
ITEM 7.
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 annual 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.
Discussion and Analysis
The Company’s plan of operation over the next twelve months is to identify and acquire a suitable
business opportunity. We will require a minimum of $50,000 in funding over the next 12 months to
maintain current operations and seek out a suitable business opportunity. Should we identify a new
opportunity within this time frame, for acquisition or development, the Company will most likely need
additional funding to complete any given transaction. The amount of funding required will depend on the
opportunity and is not determinable at this time.
10
We anticipate that the required prospective funding will be in the form of equity financing from the sale
of our common stock since we have no assets with which to secure debt financing other than that
procured in small unsecured advances from shareholders. However, the Company does not have any
financing arranged and cannot provide any assurance that it will be able to realize sufficient funding from
the sale of our common stock to maintain operations. Management is currently considering all avenues
available to obtain the financing required to maintain operations while seeking out a suitable business
opportunity.
Accordingly, we will require continued financial support from our shareholders and creditors until we are
able to generate sufficient cash flow from operations to maintain operations on a sustained basis. There is
substantial doubt that we will be successful at achieving these results.
Results of Operations
During the year ended December 31, 2012, the Company (i) sought out prospective business
opportunities; and (ii) satisfied continuous public disclosure requirements.
Our operations for the years ended December 31, 2012 and 2011 are summarized below.
2012
2011
Operating Expenses:
General and Administration
$
257,539
$
300,764
Depreciation
$
-
$
-
Loss from operations
$
257,539
$
300,764
Interest expense
$
47,986
$
45,951
Foreign exchange (gain) loss
$
20,171
$
(35,266)
Comprehensive Loss for the Period
$
325,696
$
311,449
Comprehensive Losses for the Periods Presented
For the period from January 1, 2010, to December 31, 2011, the Company recorded a net loss of
$763,573. We realized a comprehensive loss for the year ended December 31, 2012 of $325,696
compared with a comprehensive loss of $311,449 for the year ended December 31, 2011. Our
comprehensive losses rose due to a significant increase in unrealized foreign exchange loss in the period
ended December 31, 2012 of $20,171 as compared to an unrealized foreign exchange gain of $35,266 in
the period ended December 31, 2011 due to the relative increase in the value of the Canadian currency
used to pay liabilities accrued in foreign currencies.
We did not generate revenue during this period and expect to continue to incur losses though expenses
over the next twelve months are expected to be comparable to the current year or until such time as a new
business opportunity is concluded.
11
Capital Expenditures
The Company expended no amounts on capital expenditures for the period from January 1, 2010, to
December 31, 2012.
Income Tax Expense (Benefit)
The Company has a prospective income tax benefit resulting from a net operating loss carry-forward and
start up costs that will offset any future operating profit.
Impact of Inflation
The Company believes that inflation has had a negligible effect on operations over the past three years
Liquidity and Capital Resources
The Company is in the development stage and, since inception, has experienced significant changes in
liquidity, capital resources, and stockholders’ deficit. The Company had current and total assets of $1,254
as of December 31, 2012, consisting solely of cash and a working capital deficit of $2,304,827 as
compared to current and total assets of $1,734, consisting solely of cash and a working capital deficit of
$1,979,131 as of December 31, 2011. Net stockholders' deficit in the Company was $2,304,827 at
December 31, 2012 as compared to a net stockholder’s deficit in the Company of $1,979,131 at
December 31, 2011.
Cash Used in Operating Activities
Cash flow used in operating activities was $122,248 for the period from January 1, 2010, to December 31,
2012. Cash flow used in operating activities for the twelve month period ended December 31, 2012 was
$38,720 as compared to $49,755 for the twelve month period ended December 31, 2011. The change in
cash flows used in operating activities over the current period can be attributed to the increase in net loss
in the current twelve month period due primarily to increases in administrative expenses. Our cumulative
cash flow used in operating activities was used on accounting, administration, consulting, legal expenses
and filing fees. We expect to continue to use cash flow in operating activities over the next twelve months
or until such time as the Company can generate sufficient revenue to transition away from net losses from
operations.
Cash Used in Investing Activities
Cash flow used in investing activities was $0 for the period from January 1, 2010, to December 31, 2012.
We do expect to use cash flow in investing activities in connection with the development or acquisition of
a suitable business opportunity. Until such time as such unidentified opportunity is concluded, we do not
expect to use cash flows in investing activities.
12
Cash Flows from Financing Activities
Cash flow provided from financing activities was $122,968 for the period from January 1, 2010, to
December 31, 2012. Cash flow provided by financing activities for the twelve months ended December
31, 2012 decreased to $38,240 as compared to $49,415 for the twelve months ended December 31, 2011.
The decrease in cash flow provided from financing activities over the comparative twelve month periods
can be attributed to the decreased procurement of unsecured shareholder loans bearing interest at 6% per
annum. We expect to continue to use cash flow provided by financing activities to raise additional funds
to maintain operations and seek out suitable business opportunities.
The Company’s current assets are insufficient to conduct its plan of operation over the next twelve (12)
months. We will have to seek at least $50,000 in debt or equity financing over the next twelve months to
maintain operations. The Company has no current commitments or arrangements with respect to, or
immediate sources of this funding. Further, no assurances can be given that funding is available. The
Company’s shareholders are the most likely source of new funding in the form of loans or equity
placements though none have made any commitment for future investment and the Company has no
agreement formal or otherwise. The Company’s inability to obtain sufficient funding to maintain
operations will have a material adverse affect on its ability to fulfill its current plan of operation to search
for suitable business opportunities.
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 December 31, 2012.
The Company had no commitments for future capital expenditures that were material at December 31,
2012.
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.
Off-Balance Sheet Arrangements
As of December 31, 2012, 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 our plan of operations.
13
Critical Accounting Policies
In Note 2 to the audited financial statements for the years ended December 31, 2012 and 2011, 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
The Company’s auditors have expressed an opinion as to the Company’s ability to continue as a going
concern as a result of an accumulated deficit of $23,468,995 and negative cash flows from operating
activities as of December 31, 2012. The Company’s ability to continue as a going concern is subject to
the ability of the Company to realize a profit and /or obtain funding from outside sources. Management’s
plan to address the Company’s ability to continue as a going concern includes: (i) obtaining funding from
the private placement of debt or equity; and (ii) realizing revenues from its prospective development or
acquisition of a suitable business opportunity. 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 additional capital to fund cash requirements for future operations;
uncertainties related to the Company’s future business prospects;
our ability to generate revenues from future operations;
the volatility of the stock market and;
general economic conditions.
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.
14
Stock-Based Compensation
We have adopted Accounting Standards Codification Topic (“ASC”) 718, Share-Based Payment, which
addresses the accounting for stock-based payment transactions in which an enterprise receives employee
services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair
value of the enterprise’s equity instruments or that may be settled by the issuance of such equity
instruments.
We account for equity instruments issued in exchange for the receipt of goods or services from other than
employees in accordance with ASC 505. Costs are measured at the estimated fair market value of the
consideration received or the estimated fair value of the equity instruments issued, whichever is more
reliably measurable. The value of equity instruments issued for consideration other than employee
services is determined on the earliest of a performance commitment or completion of performance by the
provider of goods or services.
Recent Accounting Pronouncements
Please see Note 2 to our financial statements for a discussion of recent accounting pronouncements.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Not required for smaller reporting companies
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our audited financial statements for the year ended December 31, 2012, as set forth below, are included
with this Annual Report on Form 10-K. Our audited financial statements are prepared on the basis of
accounting principles generally accepted in the United States and are expressed in U.S. dollars.
PAGE
Auditors’ Report
F-1
Consolidated Balance Sheets, December 31, 2012 and 2011
F-2
Consolidated Statements of Operations for the years ended December 31, 2012 and 2011 and cumulative
F-3
amounts from the beginning of the development stage on January 1, 2010 to December 31, 2012
Consolidated Statements of Cash Flows for the years ended December 31, 2012 and 2011 and cumulative
F-4
amounts from the beginning of the development stage on January 1, 2010 to December 31, 2012
Consolidated Statements of Changes in Stockholders’ Equity for the period from the beginning of the
F-5
development stage on January 1, 2010 to December 31, 2012
Notes to Consolidated Financial Statements
F-6
15
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of
Arvana Inc. and subsidiaries
We have audited the accompanying consolidated balance sheets of Arvana Inc. as of December 31, 2012 and
2011 and the related consolidated statements of operations and comprehensive loss, stockholders' deficiency
and cash flows for the years ended December 31, 2012 and 2011 and for the cumulative amounts from the
beginning on the development stage on January 1, 2010 to December 31, 2012. The Company’s management
is responsible for these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audits included consideration of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no
such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position of the Company as of December 31, 2012 and 2011, and the results of its operations and its
cash flows for years then ended and for the period from the beginning of the development stage on January 1,
2010 to December 31, 2012 in conformity with accounting principles generally accepted in the United States
of America.
The accompanying financial statements have been prepared assuming that the Company will continue
as a going concern. As discussed in Note 1 to the financial statements, the Company generated
negative cash flows from operating activities during the past year. The Company has an accumulated
deficit of $23,468,995 as at December 31, 2012. This raises substantial doubt about the Company’s
ability to continue as a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ DAVIDSON & COMPANY”
“DAVIDSON & COMPANY LLP”
Vancouver, Canada
Chartered Accountants
April 1, 2013
1
Arvana Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Balance Sheets
(Expressed in US Dollars)
December 31,
December 31,
2012
2011
ASSETS
Current assets:
Cash
$
1,254
$
1,734
Total assets
$
1,254
$
1,734
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities
Accounts payable and accrued liabilities
$
1,017,344
$
695,550
Loans payable stockholders (Note 3)
631,631
604,930
Loans payable related party (Note 3)
36,741
118,833
Loans payable (Note 3)
145,051
44,833
Amounts due to related parties (Note 3)
475,314
516,719
Total current liabilities
2,306,081
1,980,865
Stockholders' deficiency
Common stock, $0.001 par value 5,000,000 authorized,
885,130 shares issued and outstanding at
December 31, 2012 and 2011, respectively (Note 4)
885
885
Additional paid-in capital
21,166,619
21,166,619
Deficit
(22,705,422)
(22,705,422)
Deficit accumulated during the development stage
(763,573)
(437,877)
(2,301,491)
(1,975,795)
Less: Treasury stock – 2,085 common shares at
December 31, 2012 and 2011, respectively
(3,336)
(3,336)
Total stockholders’ deficiency
(2,304,827)
(1,979,131)
$
1,254
$
1,734
The accompanying notes are an integral part of these consolidated financial statements.
F-2
Arvana Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Operations and Comprehensive Loss
(Expressed in US Dollars)
Cumulative amounts
from the beginning
of the development
For the year ended
stage on
December 31,
January 1, 2010 to
2012
2011
December 31, 2012
Operating expenses
General and administrative
$
257,539
$
300,764
$ 661,691
Depreciation
-
-
103
Total operating expenses
257,539
300,764
661,794
Loss from operations
(257,539)
(300,764)
(661,794)
Interest expense
(47,986)
(45,951)
(136,688)
Foreign exchange gain (loss)
(20,171)
35,266
34,909
Net loss and comprehensive loss for the
year
$
(325,696)
$
(311,449)
$ (763,573)
Per common share information – basic and
diluted:
Weighted average shares outstanding
885,130
1,004,514
Net loss per common share – basic and
diluted
$
(0.37)
$
(0.31)
The accompanying notes are an integral part of these consolidated financial statements.
F-3
Arvana Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Expressed in US Dollars)
Cumulative amounts
from the beginning of
For the year ended
the development stage on
December 31,
January 1, 2010 to
2012
2011
December 31, 2012
Cash flows from operating activities
Net loss for the period
$
(325,696)
$
(311,449)
$ (763,573)
Items not involving cash:
Depreciation and amortization
-
-
103
Unrealized foreign exchange
18,345
(27,424)
(32,467)
Changes in non-cash working capital:
Accounts payable and accrued liabilities
303,700
52,205
410,022
Amounts due to related parties
(35,069)
236,913
263,667
Net cash used in operations
(38,720)
(49,755)
(122,248)
Cash flows from financing activities
Proceeds of loans payable stockholders
20,551
14,749
41,613
Proceeds of loans payable related parties
17,689
14,833
36,522
Proceeds of loans payable
-
19,833
44,833
Net cash provided by financing activities
38,240
49,415
122,968
Increase (decrease) in cash
(480)
(340)
720
Cash , beginning of period
1,734
2,074
534
Cash, end of period
$
1,254
$
1,734
$
1,254
Supplementary information
Cash paid for interest
$
-
$
-
Cash paid for income taxes paid
$
-
$
-
There were no non-cash investing and financing transactions for the years ended December 31, 2012 and 2011 or from the
beginning of the development stage on January 1, 2010 to December 31, 2012.
The accompanying notes are an integral part of these consolidated financial statements.
F-4
Arvana Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Statement of Stockholders' Deficiency
For the year ended December 31, 2012
(Expressed in US Dollars)
Deficit Accumulated
Additional
During
Common Shares
Paid-
Development
Treasury
Total Stockholders’
Shares
Amount
in Capital
Deficit
Stage
Shares
Amount
(Deficiency)
Balance
December
31, 2010
1,060,130
$
1,060
$ 21,446,444
$ (22,705,422)
$
(126,428)
(177,085)
$ (283,336)
$
(1,667,682)
Cancellation
of treasury
stock
(175,000)
(175)
(279,825)
175,000
280,000
Net loss for
the year
ended
December
31, 2011
(311,449)
(311,449)
Balance
December
31, 2011
885,130
885
21,166,619
(22,705,422)
(437,877)
(2,085)
(3,336)
(1,979,131)
Net loss for
the year
ended
December
31, 2012
(325,696)
(325,696)
Balance
December
31, 2012
885,130
$
885
$ 21,166,619
$ (22,705,422)
$
(763,573)
(2,085)
$
(3,336)
$
(2,304,827)
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Arvana Inc. and Subsidiaries
(A Development Stage Company)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2012 and 2011
(Expressed in U.S. Dollars)
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, with authorized common stock of 2,500 shares with a par
value of $0.25. On October 16, 1998, the authorized capital stock was increased to 100,000,000 common
shares with a par value of $0.001 and a forward common stock split of eight shares for each outstanding
share. In 2005, we completed another forward common stock split of nine shares for each outstanding
share. On July 24, 2006, the shareholders approved a change of the Company’s name from Turinco, Inc.
to Arvana Inc. On September 30, 2010, the authorized capital stock was decreased to 5,000,000 common
shares with a par value of $0.001 and effected a reverse split of one share for every twenty shares
outstanding.
These consolidated financial statements for the year ended December 31, 2012 include the accounts of the
Company and its subsidiary Arvana Networks Inc. (including its wholly-owned subsidiaries, Arvana
Participaçōes S.A. (“Arvana Par”) and Arvana Comunicações do Brasil S. A. (“Arvana Com”)). The
Company has ceased all operations in its subsidiary companies, and has written-off or disposed of all
assets in the subsidiary companies, consequently they are now all considered to be inactive subsidiaries.
As a result of this inactivity, the Company entered into a new development stage as of January 1, 2010.
Our reporting currency and functional currency is the United States dollar (“US Dollar”) and the
accompanying consolidated financial statements have been expressed in US Dollars.
These consolidated financial statements have been prepared on a going concern basis, which assumes the
realization of assets and settlement of liabilities in the normal course of business. For the year ended
December 31, 2012, the Company incurred a loss from operations of $325,696. At December 31, 2012,
the Company had a working capital deficiency of $2,304,827. These conditions raise substantial doubt
about the Company’s ability to continue as a going concern.
Accordingly, 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.
F-6
Arvana Inc. and Subsidiaries
(A Development Stage Company)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2012 and 2011
(Expressed in U.S. Dollars)
2. Summary of Significant Accounting Policies
a) Basis of presentation
The Company is in the process of evaluating business opportunities and is a development stage company.
The Company’s fiscal year end is December 31. The accompanying consolidated financial statements of
Arvana Inc. for the years ended December 31, 2012 and 2011, and for the cumulative amounts from the
beginning of the development stage on January 1, 2010, through December 31, 2012, 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-K and Regulation S-K. Results are not necessarily
indicative of results which may be achieved in the future.
b) Basis of consolidation
Included in the financial statements are the accounts of the Company, its wholly-owned inactive
subsidiaries Arvana Networks, Arvana Par, and Arvana Com. All inter-company transactions and
balances have been eliminated.
c) Estimates
The preparation of consolidated 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.
d) Foreign currency translation and transactions
When translating the Brazilian subsidiary operations to the Company’s reporting currency non monetary
assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange
rate in effect on the transaction date. Revenue and expenses are translated at the average rates of exchange
prevailing during the periods.
Transactions conducted in foreign currencies are recorded using the exchange rate in effect on the
transaction date. At the period end, monetary assets and liabilities are translated to the functional currency
of each entity using the exchange rate in effect at the period end date. Transaction gains and losses are
recorded in foreign exchange gain or loss in the statement of operations and comprehensive loss.
e) Comprehensive income
The Company considers comprehensive income (loss) as a change in equity (net assets) of a business
entity during a period from transactions and other events and circumstances from non-owner sources. It
includes all changes in equity during a period except those resulting from investments by owners and
distributions to owners.
f) Cash equivalents
The Company considers all highly liquid investments, with terms to maturity of three months or less
when acquired, to be cash equivalents.
F-7
Arvana Inc. and Subsidiaries
(A Development Stage Company)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2012 and 2011
(Expressed in U.S. Dollars)
2. Summary of Significant Accounting Policies (continued)
g) Financial instruments
Financial instruments of the Company are comprised of cash, accounts payable and accrued liabilities,
amounts due to related parties, loans payable – stockholders, loans payable – related parties, and loans
payable. The estimated fair values of financial instruments were considered by management to be not
materially different from their carrying values due to their short term to maturity or capacity for prompt
liquidation.
The Company measures the fair value of financial assets and liabilities based on US GAAP guidance
which defines fair value, establishes a framework for measuring fair value and expands disclosures about
fair value measurements.
The Company classifies financial assets and liabilities as held-for-trading, available-for-sale, held-to-
maturity, loans and receivables or other financial liabilities depending on their nature. Financial assets and
financial liabilities are recognized at fair value on their initial recognition, except for those arising from
certain related party transactions which are accounted for at the transferor’s carrying amount or exchange
amount.
Financial assets and liabilities classified as held-for-trading are measured at fair value, with gains and
losses recognized in net income. Financial assets classified as held-to-maturity, loans and receivables and
financial liabilities other than those classified as held-for-trading are measured at amortized cost, using
the effective interest rate method of amortization. Financial assets classified as available-for-sale are
measured at fair value, with unrealized gains and losses being recognized as other comprehensive income
until realized, or if an unrealized loss is considered other than temporary, the unrealized loss is recorded
in income.
The following indicates the fair value hierarchy of the valuation techniques the Company utilizes to
determine the fair value of financial assets that are measured at fair value on a recurring basis.
Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities;
Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or
indirectly; and
Level 3 – Inputs that are not based on observable market data.
Financial instruments, including accounts payable and accrued liabilities, amounts due to related parties,
loans payable – stockholders, loans payable-related parties, and loans payable are classified as other
financial liabilities and carried at cost, which management believes approximates fair value due to the
short term nature of these instruments. Cash is classified as held-for-trading, with unrealized gains and
losses being recognized in income, is based on level one quoted prices in active markets for identical
assets and liabilities.
F-8
Arvana Inc. and Subsidiaries
(A Development Stage Company)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2012 and 2011
(Expressed in U.S. Dollars)
2. Summary of Significant Accounting Policies (continued)
h) Concentration of credit risk
Financial instruments that potentially subject the Company to concentrations of credit risk consists of
cash. The Company maintains cash in bank accounts that, at times, may exceed federally insured limits.
The Company has not experienced any losses in such accounts and believes it is not exposed to any
significant risks on its cash in bank accounts.
i) Income taxes
A deferred tax asset or liability is recorded for all temporary differences between financial and tax
reporting and net operating loss carry-forwards. Deferred tax expense (benefit) results from the net
change during the year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets
and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
j) Stock-based compensation
The Company accounts for all stock-based payments to employees and non-employees under ASC 718
“Stock Compensation,” using the fair value based method. Under the fair value method, stock-based
payments are measured at the fair value of the consideration received, or the fair value of the equity
instruments issued, or liabilities incurred, whichever is more reliably measurable. The cost of stock-based
payments to non-employees that are fully vested and non-forfeitable at the grant date is measured and
recognized at that date.
k) Loss per share
Basic loss per share is computed using the weighted average number of common shares outstanding
during the year. Diluted loss per share is computed using the weighted average number of common shares
and potentially dilutive common stock equivalents, including stock options and warrants. For the periods
presented, this calculation proved to be anti-dilutive.
l) Reclassifications
Certain of the comparative figures for the prior years have been reclassified to conform with the
presentation adopted in the current year.
F-9
Arvana Inc. and Subsidiaries
(A Development Stage Company)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2012 and 2011
(Expressed in U.S. Dollars)
2. Summary of Significant Accounting Policies (continued)
m) Recent accounting pronouncements
We have reviewed all recently issued, but not yet effective, accounting pronouncements and do not
believe the future adoption of any such pronouncements may be expected to cause a material impact on
our financial condition or the results of our operations.
3. Amounts Due to Related Parties and Loans Payable to Stockholders
From February, 2007 until December 31, 2012 the Company received a number of loans from
stockholders, related parties and unrelated third parties. As of December 31, 2012 the Company had
received loans of $631,631 (Euro 225,000; CAD 72,300; $262,300) (December 31, 2011 - $604,930:
Euro 225,000; CAD 62,300; $251,800) from stockholders, loans of $36,741 (CAD 27,600; $9,000)
(December 31, 2011 – $118,833: CAD 10,000; $109,000) from a related party and loans of $145,051
(CAD 10,000; $ 135,000) (December 31, 2011 – $ 44,833: CAD 10,000; $35,000) 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 consolidated 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 $215,518 and $156,015 is included in
accounts payable and accrued expenses at December 31, 2012 and December 31, 2011, respectively.
Interest expense recognized on these loans was $47,986 for the year ended December 31, 2012, compared
to $45,951 for the year ended December 31, 2011.
At December 31, 2012 and December 31, 2011 the Company had amounts due to related parties of
$475,314 and $516,719, respectively. This amount includes $136,100 at December 31, 2012 and
December 31, 2011, 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.
F-10
Arvana Inc. and Subsidiaries
(A Development Stage Company)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2012 and 2011
(Expressed in U.S. Dollars)
4. Common stock
We have a stock option plan in place under which we are authorized to grant options to executive officers
and directors, employees and consultants enabling them to acquire up to 10% of our issued and
outstanding common stock. Under the plan, the exercise price of each option equals the market price of
our stock as calculated on the date of grant. The options can be granted for a maximum term of 10 years.
Vesting terms are determined at the time of grant.
At December 31, 2012 and December 31, 2011, there were no stock options outstanding. No options
were granted, exercised or expired during the year ended December 31, 2012 or the year ended December
31, 2011.
On September 30, 2010, the Company completed a common stock reverse split of one share for each
twenty shares outstanding. These consolidated financial statements have been prepared showing after
reverse stock split shares with a par value of $0.001.
On September 6, 2011, the Company cancelled 175,000 shares of its treasury stock of which cancellation
removed $175 from common stock and $279,825 from additional paid-in capital.
5. Segmented Information
The Company has no reportable segments.
6. Deferred Income Taxes
Income tax benefits attributable to losses from United States of America operations was $Nil for the years
ended December 31, 2012 and 2011, and differed from the amounts computed by applying the United
States of America federal income tax rate of 34 percent to pretax losses from operations as a result of the
following:
2012
2011
Loss for the year before income taxes
$
(325,696 ) $
(311,449)
Computed "expected" tax benefit
$
(110,829 ) $
(105,893)
Deductible expenses
6,858
(11,990)
Change in valuation allowance
103,971
117,883
Income tax expense
$
- $
-
F-11
Arvana Inc. and Subsidiaries
(A Development Stage Company)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2012 and 2011
(Expressed in U.S. Dollars)
6. Deferred Income Taxes (continued)
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and
deferred tax liabilities at December 31, 2012 and 2011are presented below:
2012
2011
Deferred tax assets:
Net operating loss carry forwards - US
$
716,938 $
612,967
Valuation allowance
(716,938)
(612,967)
Net deferred tax asset
$
- $
-
The valuation allowance for deferred tax assets as of December 31, 2012 and 2011 was $716,938 and
$612,967, respectively. In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income
during the periods in which those temporary differences become deductible.
Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in assessing the realizability of deferred tax assets. In order to fully realize the
deferred tax asset attributable to net operating loss carryforwards, the Company will need to generate
future taxable income of approximately $2,100,000 prior to the expiration of the net operating loss carry-
forwards.
7. Related Party Transactions
Other than amounts payable to related parties as disclosed below and in Note 3, the Company did not
have any other related party transactions for the periods ended December 31, 2012 and 2011.
Our chief executive officer and director has entered into a consulting arrangement on a month to month
basis that provides for a monthly fee of CAD 5,000. These amounts have been accrued and are currently
unpaid. As of December 31, 2012 our chief executive officer was owed $60,306 (CAD 60,000) for
services rendered as an officer.
Our chief financial officer and director has 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. As
of December 31, 2012 our chief financial officer was owed $48,000 for services rendered as an officer.
Our chief executive officer and director entered into a debt assignment agreement effective January 1,
2012 with a corporation with a director in common and thereby assigned $199,373 (CAD 202,759) of
unpaid amounts payable.
Our chief executive officer and 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.
F-12
Arvana Inc. and Subsidiaries
(A Development Stage Company)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2012 and 2011
(Expressed in U.S. Dollars)
7. Related Party Transactions (continued)
Our chief executive officer and director is owed $186,257 for unsecured non-interest bearing amounts due
on demand loaned to the Company as of December 31, 2012.
Our chief executive officer and a director is owed $36,741 for unsecured amounts bearing 6% interest due
on demand loaned to the Company as of December 31, 2012.
Our former officers are owed a total of $104,957 for their prior services rendered as officers.
A director of the Company is owed $60,000 as of December 31, 2012 for services rendered as a director
during 2007. Two former directors of the Company are owed $76,100 as of December 31, 2012 for
services rendered as directors during 2007.
8. Subsequent Events
The Company evaluated its December 31, 2012 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 the financial statements.
F-13
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2012 (the “Evaluation Date”). This
evaluation was carried out under the supervision and with the participation of our Chief Executive Officer
and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures were not effective as of the Evaluation Date
as a result of the material weaknesses in internal control over financial reporting discussed below.
Disclosure controls and procedures are those controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed or submitted under the Exchange Act are
recorded, processed, summarized and reported within the time periods specified in the SEC's rules and
forms. Disclosure controls and procedures include, without limitation, controls and procedures designed
to ensure that information required to be disclosed in our reports filed under the Exchange Act is
accumulated and communicated to management, including our Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure.
Management's Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the
Company.
Internal control over financial reporting includes those policies and procedures that: (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles,
and that our receipts and expenditures are being made only in accordance with authorizations of its
management and directors; and (3) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of our assets that could have a material effect on the
financial statements.
Management recognizes that there are inherent limitations in the effectiveness of any system of internal
control, and accordingly, even effective internal control can provide only reasonable assurance with
respect to financial statement preparation and may not prevent or detect material misstatements. In
addition, effective internal control at a point in time may become ineffective in future periods because of
changes in conditions or due to deterioration in the degree of compliance with our established policies and
procedures.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in
there being a more than remote likelihood that a material misstatement of the annual or interim financial
statements will not be prevented or detected.
16
The Company’s management conducted an assessment of the effectiveness of our internal control over
financial reporting as of December 31, 2012, based on criteria established in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, which
assessment identified material weaknesses in internal control over financial reporting. A material
weakness is a control deficiency, or a combination of deficiencies in internal control over financial
reporting that creates a reasonable possibility that a material misstatement in annual or interim financial
statements will not be prevented or detected on a timely basis. Since the assessment of the effectiveness
of our internal control over financial reporting did identify material weaknesses, management considers
its internal control over financial reporting to be ineffective.
The matters involving internal control over financial reporting that our management considered to be
material weaknesses were:
lack of segregation of duties as we have an inadequate number of personnel to properly
implement control procedures.
The aforementioned material weaknesses were identified by our chief executive officer and chief
financial officer in connection with the review of our financial statements as of December 31, 2012.
Management believes that the material weaknesses set forth above did not have an effect on our financial
results. However, management believes that the lack of a functioning audit committee, the inadequate
accounting personnel results in ineffective oversight in the monitoring of required internal controls over
financial reporting, which weaknesses could result in a material misstatement in our financial statements
in future periods.
Management’s Remediation Initiatives
In an effort to remediate the identified material weaknesses and enhance our internal controls over
financial reporting, the Company plans to initiate, the following measures:
appoint an independent director or qualified person to the audit committee when such person is
made available to the Company in order to enable the Audit Committee to provide proper
oversight in the monitoring of required internal controls over financial reporting such as
reviewing estimates and assumptions made by management.
engage additional accounting personnel to ensure that the Company is able to properly implement
internal control procedures at such time as funds become available for this purpose.
This annual report does not include an attestation report of our independent registered public accounting
firm regarding internal control over financial reporting. We were not required to have, nor have we,
engaged our independent registered public accounting firm to perform an audit of internal control over
financial reporting pursuant to the rules of the Commission that permit us to provide only management’s
report in this annual report.
17
Changes in internal control over financial reporting
During the period ended December 31, 2012, there has been no change in internal control over financial
reporting that has materially affected, or is reasonably likely to materially affect our internal control over
financial reporting.
9B.
OTHER INFORMATION
Not applicable.
18
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Officers and Directors
The following table sets forth the name, age and position of each director and executive officer of the
Company:
Name
Age
Position
Sir John Baring (1)
66
Chairman of the Board of Directors
Zahir Dhanani (1)
57
Chief Executive Officer and Director
Arnold Tinter
68
Chief Financial Officer and Director
Robert Naso (1)
53
Director
(1)
Member of our Audit Commitee
Set forth below is a brief description of the background and business experience of each of our executive
officers and directors for the past five years:
Sir John Baring was appointed Chief Executive Officer and director to the board of directors (“the
Board”) on May 26, 2005. Following the appointment of Mr. Jervis as Chief Executive Officer on
October 17, 2005, Sir John was appointed Chairman of the board.
Business Experience:
Sir John brings more than 30 years of banking and investing experience to the board. Since June 2002, Sir
John has acted as a managing and founding member of Mercator Management LLC, a leading fund
management company. We have concluded that Sir John should serve as a director because of his
business experience.
Officer and Director Responsibilities and Qualifications:
Sir John is responsible for the overall management of the Company. Sir John is also a member of our
Audit Committee.
Other Public Company Directorships in the Last Five Years:
Sir John has not been a director of any other public companies over the past five years.
We have concluded that Sir John should serve as a director because of his business experience.
Zahir Dhanani was appointed director on August 17, 2009 and Chief Executive Officer on July 27,
2010. He estimates that he spends approximately 15 percent of his time, approximately 6 hours per week,
on the Company’s business. He also has significant responsibilities with other companies, as detailed in
the following paragraph. He will serve until an annual meeting of the Company’s shareholders and his
successor is elected and qualified.
19
Business Experience:
Mr. Dhanani is currently the President and CEO of Bread Garden Franchising Inc. He has been with
Bread Garden since April 2004. Over the past 11 years Mr. Dhanani has also acted as a self-employed
consultant providing financial consulting and advisory services to publicly traded companies listed on
Canadian Stock Exchanges.
Officer and Director Responsibilities and Qualifications:
Mr Dhanani is responsible for the overall management of the Company and is involved in many of its
day-to-day operations, finance and administration. Mr. Dhanani is also a member of our Audit
Committee.
Other Public Company Directorships in the Last Five Years:
Over the past five years Mr. Dhanani has been a director of the following public companies:
Terraco Gold Corp., a mineral exploration company from January 2011 to present; Jinhua Capital
Corporation, a capital pool company from March 2012 to the present; Wangton Capital Corp., a
capital pool company from March 2012 to the present; Arian Resources Corp., a mineral exploration
company from November 2012 to the present.
We have concluded that Mr. Dahani should serve as a director as a result of his background and
experience in business administration and corporate strategy.
Arnold Tinter was appointed director and Chief Financial Officer on July 27, 2010. He estimates that he
spends approximately 15 percent of his time, approximately 6 hours per week, on the Company’s
business. He also has significant responsibilities with other companies, as detailed in the following
paragraph. He will serve until an annual meeting of the Company’s shareholders and his successor is
elected and qualified.
Business Experience:
Mr. Tinter founded Corporate Finance Group, Inc., a consulting firm located in Denver, Colorado, in
1992, and is its President. Corporate Finance Group, Inc. is involved in financial consulting in the areas of
strategic planning, mergers and acquisitions and capital formation. He has provided CFO services to
Spicy Pickle Franchising, Inc., a publically held company, from 2006 to October 2010, where his
responsibilities included oversight of all accounting functions including SEC reporting, strategic planning
and capital formation. Mr. Tinter has also provided CFO services to a number of public companies. From
April 2010 to the present he provides CFO services to Agrisolar Solutions, Inc., from January 17, 2012 to
the present, to Barfresh Food Group, Inc., and from January 3, 2012 to the present to T.O Entertainment.
From May 2001 to May 2003, he served as Chief Financial Officer of Bayview Technology Group, LLC,
a privately held company that manufactured and distributed energy-efficient products. From May 2003 to
October 2004, he served as that company’s Chief Executive Officer. Prior to 1990 Mr. Tinter was Chief
Executive Officer of Source Venture Capital, a holding company with investments in the gaming,
printing, retail industries.
20
Officer and Director Responsibilities and Qualifications:
Mr. Tinter is responsible for many of the Company’s day-to-day operations, finance and administration.
His responsibilities include oversight of all accounting functions including SEC reporting, strategic
planning and capital formation.
Mr. Tinter received a B.S. degree in Accounting in 1967 from C.W. Post College, Long Island University,
and is licensed as a Certified Public Accountant in Colorado and New York. We have concluded that Mr.
Tinter should serve as a director as a result of his background and experience in financial consulting.
Other Public Company Directorships in the Last Five Years:
Over the past five years Mr. Tinter has been a director of one other public company: Barfresh Food Group
Inc, a food manufacturing and distribution company from January 2012 to present.
We have concluded that Mr. Tinter should serve as a director as a result of his background and experience
in business administration and corporate strategy.
Robert Naso was appointed director on August 17, 2009. He also has significant responsibilities with
other companies, as detailed in the following paragraph. He will serve until an annual meeting of the
Company’s shareholders and his successor is elected and qualified.
Business Experience:
Mr. Naso is currently a consultant with Salamat International Investments Corporation and was the
General Manager of Bread Garden Franchising Inc., from April 2005 to December 2010. Prior to joining
Bread Garden he was employed in the construction, hospitality and security industries in a variety of
management positions. We have concluded that Mr. Naso should serve as a director because of his
business experience.
Officer and Director Responsibilities and Qualifications:
Mr. Naso is responsible for the overall management of the Company. Mr. Naso is also a member of our
Audit Committee.
Mr. Naso graduated from the University of British Columbia with an MBA.
Other Public Company Directorships in the Last Five Years:
Over the past five years Mr. Naso has been a director of the following public companies: Arian
Resources Corp., a mineral exploration company from December 2012 to the present.
We have concluded that Mr. Naso should serve as a director because of his business experience.
21
Audit Committee and Audit Committee Financial Expert
Our board of directors has established an Audit Committee that is comprised of Sir John Baring, Zahir
Dhanani and Robert Naso.
Our board of directors has determined that Zahir Dhanani qualifies as an “audit committee financial
expert”, as defined by the rules of the SEC though it has further determined that he should not be
considered “independent” as that term is defined in Rule 121 of the American Stock Exchange
(“AMEX”) listing standards.
The audit committee recommends independent accountants to audit its financial statements, discusses the
scope and results of the audit with the independent accountants, considers the adequacy of the internal
accounting controls, considers the audit procedures of the Company and reviews the non-audit services to
be performed by the independent accountants.
Code of Ethics
We have adopted a Code of Ethics that applies to all the Company’s directors, officers and employees. A
copy of our Code of Ethics was incorporated by reference in our previously filed on Form 10-KSB for
fiscal 2006 as an exhibit.
Significant Employees
We do not have any other significant employees, other than our directors and executive officers named
above.
Term of Office
The Company’s directors are appointed for a one (1) year term to hold office until the next annual
shareholders meeting or until removed from office in accordance with the Company’s bylaws. The
Company’s executive officers are appointed by the board of directors and hold office until removed by
the board.
Involvement in Certain Legal Proceedings
During the past ten years there are no events that occurred related to an involvement in legal proceedings
that are material to an evaluation of the ability or integrity of the Company directors, or persons
nominated to become directors or executive officers.
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who
beneficially own more than ten percent of our equity securities, to file reports of ownership and changes
in ownership with the Securities and Exchange Commission. Officers, directors and greater than ten
percent shareholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms
they file. Based on our review of the copies of such forms received by us, we believe that during the fiscal
year ended December 31, 2012 all such filing requirements applicable to our officers and directors were
complied with, except that Messrs. Dhanani, Tinter and Naso should have filed Forms 3 when they
became officers and directors of the Company.
22
ITEM 11.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The objective of the Company’s compensation program is to provide incentive to our chief executive
officer and chief financial officer for services rendered. The compensation program is comprised solely of
a consulting fee. We utilize this form of compensation because we feel that this compensatory element is
adequate to retain and motivate our executive officer. The amounts we have deemed appropriate to
compensate our executive officer were determined in accordance with compensatory packages for other
development stage companies though we have no specific formula to determine compensation. While we
have deemed that our current compensatory program is appropriately suited for accomplishing our current
objectives, in the future we may expand our compensation program to include additional benefits as the
Company realizes those objectives.
Executive compensation for our chief executive officer for the periods ended December 31, 2012, and
December 31, 2011 were $60,110 and $60,704 respectively. Executive compensation for our chief
financial officer for the periods ended December 31, 2012 and December 31, 2011 were $24,000 and
$24,000 respectively.
Executive compensation is expected to expand in future periods to include salaries, stock awards and
stock options in the event the Company is successful in the development of a suitable business
opportunity.
Table
The following table provides summary information for 2012 and 2011 concerning cash and non-cash
compensation paid or accrued by the Company to or on behalf of (i) the chief executive officer and the
chief financial officer and (ii) any other employee to receive compensation in excess of $100,000.
Summary Compensation Table
Name and
Year Salary Bonus
Stock
Option
Non-Equity
Change in Pension
All Other
Total
Principal
Awards
Incentive Plan
Value and
Compensation
Position
($)
($)
Awards
Compensation
Nonqualified
($)
($)
Deferred
($)
($)
($)
Compensation($)
Zahir
2012 60,110
-
-
-
-
-
-
60,110
Dhanani
CEO, and
2011 60,704
-
-
-
-
-
-
60,704
Director
(1)
Arnold
2012 24,000
-
-
-
-
-
-
24,000
Tinter
CFO,
2011 24,000
-
-
-
-
-
-
24,000
PAO, and
Director
(2)
(1)
Mr. Dhanani was appointed director on August 17, 2009 and chief executive officer on July 27, 2010.
(2)
Mr. Tinter was appointed as our chief financial officer and director on July 27, 2010.
23
Outstanding Equity Awards as of December 31, 2012
There were no outstanding equity awards as of December 31, 2012 for any of our named executive
officers.
No share purchase options were granted to or exercised by our named executive officers during our fiscal
year ended December 31, 2012.
Long-Term Incentive Plans
We do not have any long-term incentive plans, pension plans, or similar compensatory plans for our
directors or executive officers.
Change of Control Agreements
We are not party to any change of control agreements with any of our directors or executive officers.
Compensation of Directors
The following table summarizes the compensation of our company’s directors for the year ended
December 31, 2012:
Fees
Non-qualified
Earned or
Non- Equity
Deferred
Paid in
Stock
Option
Incentive Plan Compensation
All Other
Cash
Awards Awards Compensation
Earnings
Compensation
Total
Name(1)
($)
($)
($)
($)
($)
($)
($)
Sir John Baring
-
-
-
-
-
-
-
Robert Naso
-
-
-
-
-
-
-
(1)
Zahir Dhanani and Arnold Tinter are not included in this table as they are reported as officers of
the Company and did not receive additional compensation for service as directors.
Employment Agreements
There are no employment agreements with any of the named executive officers.
24
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information concerning the number of shares of our common stock
owned beneficially (1) as at April 1, 2013 by: (i) each of our directors, (ii) each of our executive officers,
(iii) our executive officers and directors as a group, and (iv) each beneficial shareholder known to us to
own more than 5% of our outstanding common stock. Unless otherwise indicated, the shareholders listed
possess sole voting and investment power with respect to the shares shown.
Name and Address
Number of Common
Percentage of
Title of Class
of Beneficial Owner
Shares
Common Shares(1)
Directors and
Officers
Common Stock
Zahir Dhanani, CEO and director
90 Madison Street, Suite 701,
-
-
Denver, CO 80206
Common Stock
Arnold Tinter, CFO and director
90 Madison Street, Suite 701,
-
-
Denver, CO 80206
Common Stock
Robert Naso, director
90 Madison Street, Suite 701,
-
-
Denver, CO 80206
Common Stock
Sir John Baring, director
90 Madison Street, Suite 701,
14,625
1.6%
Denver, CO 80206
Common Stock
All Directors and Executive
14,625
1.6%
Officers as a Group (3 persons)
5% Shareholders
Common Stock
-
-
-
(1)
Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any
contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the
power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct
the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for
example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be
beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an
option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of
any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such
person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of
any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with
respect to the number of shares of common stock actually outstanding on April 1, 2013. The percentage calculations are
based on the aggregate of 885,130 shares issued and outstanding as at April 1, 2013.
25
Change of Control
We are not aware of any arrangement that might result in a change in control in the future.
Equity Compensation Plan Information as at December 31, 2012
Number of securities
Number of securities
remaining available
to be issued upon
for future issuance
Plan Category
exercise of outstanding
Exercise price
under equity
options.
compensation plans
Equity compensation
plan approved by
-0-
N/A
88,513
security holders
Equity compensation plans not
approved by security holders
N/A
N/A
N/A
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE
Certain Relationships and Related Transactions
None of our directors or executive officers, nor any proposed nominee for election as a director, nor any
person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights
attached to all of our outstanding shares, nor any members of the immediate family (including spouse,
parents, children, siblings, and in−laws) of any of the foregoing persons has any material interest, direct
or indirect, in any transaction since the beginning of our last fiscal year or in any presently proposed
transaction which, in either case, has or will materially affect us except the following consulting
agreement, for the rendition of consulting services:
Zahir Dhanani, our chief executive officer and director has entered into a consulting arrangement
on a month to month basis that provides for a monthly fee of $5,000.
Arnold Tinter, our chief financial officer and director has entered into a consulting agreement on
a month to month basis that provides for a monthly fee of $2,000.
Sir John Baring, a director of the Company is due $60,000 as of December 31, 2012 for services
rendered as a director during 2007.
Zahir Dhanani, our chief executive officer and director is owed $186,257 for unsecured non-
interest bearing amounts due on demand loaned to the Company as of December 31, 2012.
Zahir Dhanani, our chief executive officer and a director is owed $36,741 for unsecured amounts
bearing 6% interest due on demand loaned to the Company as of December 31, 2012.
Arnold Tinter, our chief financial officer was owed $48,000 for services rendered as an officer as
of December 31, 2012.
Director Independence
Our common stock trades in the OTCQB. As such, we are not currently subject to corporate
governance standards of listed companies, which require, among other things, that the majority
of the board of directors be independent.
26
Since we are not currently subject to corporate governance standards relating to the
independence of our directors, we choose to define an “independent” director in accordance with
the NASDAQ Capital Market’s requirements for independent directors (NASDAQ Marketplace
Rule 5605(a)(2)). The NASDAQ independence definition includes a series of objective tests,
such as that the director is not an employee of the company and has not engaged in various types
of business dealings with the company.
We do not have any independent directors under the above definition. We do not list that
definition on our Internet website.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth information regarding the amount billed to us by our independent auditor,
Davidson & Company, LLP, for our fiscal years ended December 31, 2012 and 2011:
Years ended December 31
2012
2011
Audit Fees:
$15,000
$15,000
Audit Related Fees:
$ 8,305
$ 8,250
Tax Fees:
$
-
$
-
All Other Fees:
$
-
$
-
Total:
$23,305
$23,250
Audit Fees
Audit Fees are the aggregate fees billed by our independent auditor for the audit of our consolidated
annual financial statements, reviews of interim financial statements and attestation services that are
provided in connection with statutory and regulatory filings or engagements.
Audit-Related Fees
Audit-Related Fees are fees charged by our independent auditor for assurance and related services that are
reasonably related to the performance of the audit or review of our financial statements and are not
reported under "Audit Fees." This category comprises fees billed for independent accountant review of
our interim financial statements and management discussion and analysis, as well as advisory services
associated with our financial reporting.
Policy on Pre-Approval by Audit Committee of Services Performed by Independent Auditors
Our Audit Committee pre-approves all audit services to be provided to us by our independent auditors.
Our Audit Committee’s policy regarding the pre-approval of non-audit services to be provided to us by
our independent auditors is that all such services shall be pre-approved by the Audit Committee. Non-
audit services that are prohibited to be provided by our independent auditors may not be pre-approved. In
addition, prior to the granting of any pre-approval, our Audit Committee must be satisfied that the
performance of the services in question will not compromise the independence of the auditors.
27
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements
The following documents are filed under “Item 8. Financial Statements and Supplementary Data,” pages
F-1 through F-16, and are included as part of this Form 10-K:
Consolidated financial Statements of the Company for the years ended December 31, 2012 and 2011:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Loss
Consolidated Statement of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(b) Exhibits
The exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on
page 29 of this Form 10-K, and are incorporated herein by this reference.
(c) Financial Statement Schedules
We are not filing any financial statement schedules as part of this Form 10-K because such schedules are
either not applicable or the required information is included in the financial statements or notes thereto.
The following exhibits are included with this Annual Report on Form 10-K:
28
Pursuant to the requirements of Section 13 or 15(d) 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.
By: /s/ Zahir Dhanani
Zahir Dhanani, Chief Executive Officer and
Director
Date: April 1, 2013
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: /s/ Zahir Dhanani
Zahir Dhanani, Chief Executive Officer and
Director
Date: April 1, 2013
By: /s/ Arnold Tinter
Arnold Tinter, Chief Financial Officer,
Principal Accounting Officer and Director
Date: April 1, 2013
By: /s/ Sir John Baring
Sir John Baring
Director
Date: April 1, 2013
By: /s/ Robert Naso
Robert Naso
Director
Date: April 1, 2013
29
EXHIBIT INDEX
Regulation
S-K
Exhibit
Number
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)
10.1
2006 Stock Option Plan, dated June 5, 2006(4)
14.1
Code of Ethics (5)
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act (6)
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act (6)
Certification of Chief Executive 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 (6)
Certification of 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 (6)
101.INS
XBRL Instance Document(7)
101.PRE
XBRL Taxonomy Extension Presentation Linkbase(7)
101.LAB
XBRL Taxonomy Extension Label Linkbase(7)
101.DEF
XBRL Taxonomy Extension Label Linkbase(7)
101.CAL
XBRL Taxonomy Extension Label Linkbase(7)
101.SCH
XB RL Taxonomy Extension Label Linkbase(7)
(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 an exhibit 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 Quarterly Report on Form 8-K filed
with the SEC on June 7, 2006.
(5) 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.
(6) Filed as an exhibit to this Annual Report on Form 10-K.
(7) 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.
30