ARVANA INC - Quarter Report: 2016 March (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
þ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
quarterly period ended March 31, 2016.
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.)
299 S. Main Street, 13th Floor, Salt Lake City, Utah 84111
(Address of principal executive offices) (Zip Code)
(801) 232-7395
Registrant’s telephone number, including area code
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 ¨
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 during the preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files). Yes ¨ No þ
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.
Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes þ No
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the
latest practicable date. The number of shares outstanding of the registrant’s common stock, $0.001 par
value (the only class of voting stock), at May 20, 2016, was 885,130.
1
TABLE OF CONTENTS
PART I
Financial Statements
3
Management's Discussion and Analysis of Financial Condition and Results of Operations 14
Quantitative and Qualitative Disclosures about Market Risk
18
Controls and Procedures
19
PART II
Legal Proceedings
20
Unregistered Sales of Equity Securities and Use of Proceeds
20
Management's Discussion and Analysis of Financial Condition and Results of Operations 20
Mine Safety Disclosures
20
Other Information
20
Exhibit
20
21
2
ITEM 1.
FINANCIAL STATEMENTS
As used herein, the terms “Company,” “we,” “our,” “us,” “it,” and “its” refer to Arvana, Inc., a Nevada
corporation and its wholly owned subsidiaries, unless otherwise indicated. In the opinion of management,
the accompanying unaudited condensed consolidated financial statements included in this Form 10-Q
reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of
the results of operations for the periods presented. The results of operations for the periods presented are
not necessarily indicative of the results to be expected for the full year.
3
Arvana Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(Expressed in US Dollars)
March 31,
December 31,
2016
2015
ASSETS
Current assets:
Cash
$
20,030
$
53
Total assets
$
20,030
$
53
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities
Accounts payable and accrued liabilities
$ 1,070,905
$
1,018,963
Loans payable to stockholders (Note 3)
635,076
619,671
Loans payable to related party (Note 3)
30,252
28,941
Loans payable (Note 3, 6)
167,700
147,225
Amounts due to related parties (Note 3)
448,616
434,330
Total current liabilities
2,352,549
2,249,130
Stockholders' deficiency
Common stock, $0.001 par value 5,000,000 authorized,
885,130 shares issued and outstanding at
March 31, 2016 and December 31, 2015, respectively (Note 4)
885
885
Additional paid-in capital
21,166,619
21,166,619
Deficit
(23,496,687)
(23,413,245)
(2,329,183)
(2,245,741)
Less: Treasury stock – 2,085 common shares at
March 31, 2016 and December 31, 2015, respectively
(3,336)
(3,336)
Total stockholders’ deficiency
(2,332,519)
(2,249,077)
$
20,030
$
53
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Arvana Inc.
Condensed Consolidated Statements of Operations
For the Three Months Ended March 31, 2016 and 2015
(Unaudited)
Three Months Ended
March 31,
2016
2015
Operating expenses
General and administrative
$
2,569 $
5,902
Professional fees
1,775
1,500
Total operating expenses
4,344
7,402
Loss from operations
(4,344)
(7,402)
Interest expense
(12,195)
(11,902)
Foreign exchange gain (loss)
(66,903)
128,696
Net income (loss) and comprehensive
income (loss)
$
(83,442) $
109,392
Per common share information – basic and
diluted:
Weighted average shares outstanding
885,130
885,130
Net income (loss) per common share –
basic and diluted
$
(0.09) $
0.12
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Arvana Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Expressed in US Dollars)
Three Months Ended
March 31,
2016
2015
Cash flows from operating activities
Net income (loss)
$
(83,442)
$
109,392
Items not involving cash:
Unrealized foreign exchange
65,972
(125,443)
Changes in non-cash working capital:
Accounts payable and accrued liabilities
16,993
13,779
Amounts due to related parties
454
462
Net cash used in operations
(23)
(1,810)
Cash flows from investing activities
Net cash used in investing activities
-
-
Cash flows from financing activities
Proceeds of loans payable stockholders
-
10,000
Loans corresponding to MOU (Note 7)
20,000
-
Net cash provided by financing activities
20,000
10,000
Increase in cash
19,977
8,190
Cash , beginning of period
53
1,876
Cash, end of period
$
20,030
$
10,066
Supplementary information
Cash paid for interest
$
-
$
-
Cash paid for income taxes paid
$
-
$
-
There were no non-cash investing or financing transactions for the three month periods ended March 31,
2016 and 2015.
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
Arvana Inc.
Notes to Condensed Consolidated Financial Statements
March 31, 2016
(Unaudited)
(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.On July 24, 2006, the shareholders approved a change of
the Company’s name from Turinco, Inc. to Arvana Inc. These condensed consolidated financial
statements for the three month period ended March 31, 2016, include the accounts of the Company and its
subsidiary Arvana Networks Inc. (including its wholly-owned subsidiaries, Arvana Participaçōes S.A.
and Arvana Comunicações do Brasil S. A.) 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.
Our reporting currency and functional currency is the United States dollar (“US Dollar”) and the
accompanying condensed consolidated financial statements have been expressed in US Dollars.
These condensed 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
three month period ended March 31, 2016, the Company recognized a net loss of $83,442 as a result of
general administrative expenses and foreign exchange losses. At March 31, 2016, the Company had a
working capital deficiency of $2,332,519. 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.
7
Arvana Inc.
Notes to Condensed Consolidated Financial Statements
March 31, 2016
(Unaudited)
(Expressed in U.S. Dollars)
2. Summary of Significant Accounting Policies
Basis of presentation
The Company is in the process of evaluating business opportunities and has minimal operating levels.
The Company’s fiscal year end is December 31. The accompanying condensed interim consolidated
financial statements of Arvana, Inc. for the three months ended March 31, 2016 and 2015, have been
prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”)
for financial information with the instructions to Form 10-Q and Regulation S-X. Results are not
necessarily indicative of results which may be achieved in the future. Although they are unaudited, in the
opinion of management, they include all adjustments, consisting only of normal recurring items,
necessary for a fair presentation. Results are not necessarily indicative of results which may be achieved
in the future. The condensed consolidated interim financial statements and notes appearing in this report
should be read in conjunction with our consolidated audited financial statements and related notes thereto,
together with Management’s Discussion and Analysis of Financial Condition and Results of Operations,
contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as filed with
the Securities and Exchange Commission (the “SEC”) on April 14, 2016.
Use of 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.
Financial instruments
The Company uses the following methods and assumptions to estimate the fair value of each class of
financial instruments for which it is practicable to estimate such values:
Cash - the carrying amount approximates fair value because the amounts consist of cash held at a bank.
Accounts payable and accrued liabilities and loans payable - the carrying amount approximates fair value
due to the short-term nature of the obligations.
8
Arvana Inc.
Notes to Condensed Consolidated Financial Statements
March 31, 2016
(Unaudited)
(Expressed in U.S. Dollars)
2. Summary of Significant Accounting Policies (continued)
Financial instruments (continued)
The estimated fair values of the Company's financial instruments as of March 31, 2016 and December 31,
2015 follows:
March 31,
December 31,
2016
2015
Carrying
Fair
Carrying
Fair
Amount
Value
Amount
Value
Cash
$20,030
$20,030
$53
$53
Accounts payable and accrued liabilities
1,070,905
1,070,905
1,018,963
1,018,963
Loans payable to stockholders
635,076
635,076
619,671
619,671
Loans payable to related party
30,252
30,252
28,941
28,941
Loans payable
167,700
167,700
147,225
147,225
Amounts due to related parties
448,616
448,616
434,330
434,330
The following table presents information about the assets that are measured at fair value on a recurring
basis as of March 31, 2016, and indicates the fair value hierarchy of the valuation techniques the
Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize
quoted prices (unadjusted) in active markets for identical assets. Fair values determined by Level 2 inputs
utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values
determined by Level 3 inputs are unobservable data points for the asset or liability, and included
situations where there is little, if any, market activity for the asset:
Quoted
Significant
Prices
Other
Significant
in Active
Observable
Unobservable
March 31,
Markets
Inputs
Inputs
2016
(Level 1)
(Level 2)
(Level 3)
Assets:
Cash
$
20,030
$
20,030
$
—
$
—
The fair value of cash is determined through market, observable and corroborated sources.
9
Arvana Inc.
Notes to Condensed Consolidated Financial Statements
March 31, 2016
(Unaudited)
(Expressed in U.S. Dollars)
2. Summary of Significant Accounting Policies (continued)
Recent accounting pronouncements
In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards
Update 2016-02, Leases (Topic 842). The standard requires the recognition of lease assets and lease
liabilities by lessees for those leases classified as operating leases. Leases will be classified as either
finance or operating, with classification affecting the pattern of expense recognition. The standard
requires lessors to classify leases as either sales-type, finance or operating. A sales-type lease occurs if the
lessor transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee. If
risks and rewards are conveyed without the transfer of control, the lease is treated as a financing lease. If
the lessor does not convey risks and rewards or control, an operating lease results. The standard will
become effective for the Company beginning January 1, 2019. The Company is currently assessing the
impact adoption of this standard will have on its consolidated financial statements.
In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates
(ASU) 2014-15 requiring an entity’s management to evaluate whether there are conditions or events,
considered in aggregate, that raise substantial doubt about entity’s ability to continue as a going concern
within one year after the date that the financial statements are issued (or within one year after the date that
the financial statements are available to be issued when applicable). The amendments to (ASU) 2014-15
are effective for the annual period ending after December 15, 2016, and for annual periods and interim
periods thereafter. Early application is permitted. The Company is in the process of evaluating the
prospective impact that (ASU) 2014-15 will have on its consolidated financial statements.
10
Arvana Inc.
Notes to Condensed Consolidated Financial Statements
March 31, 2016
(Unaudited)
(Expressed in U.S. Dollars)
3. Amounts Due to Related Parties and Loans Payable to Stockholders
From February, 2007, until March 31, 2016, the Company received a number of loans from stockholders,
related parties and unrelated third parties. As of March 31, 2016, the Company had received loans of
$635,076 (Euro 225,000; CAD$ 72,300; $323,107) (December 31, 2015 - $619,671: Euro 225,000;
CAD$ 72,300; $323,107) from stockholders, loans of $30,252 (CAD$ 27,600; $9,000) (December 31,
2015 – $28,941: CAD$ 27,600; $9,000) from a related party and loans of $167,700 (CAD$ 10,000; $
160,000) (December 31, 2015 – $ 147,225: CAD$ 10,000; $140,000) 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 $350,771 and $330,536 is included in accounts payable and
accrued expenses at March 31, 2016, and December 31, 2015, respectively. Interest expense recognized
on these loans was $12,195 for the three months ended March 31, 2016, compared to $11,902 for the
three months ended March 31, 2015. The Company also received a loan of $20,000 from CaiE Food
Partnership Ltd. as per Note 7 below.
At March 31, 2016, and December 31, 2015, the Company had amounts due to related parties of $448,616
and $434,330, respectively. This amount includes $136,100 at March 31, 2016, and December 31, 2015,
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.
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 March 31, 2016 and December 31, 2015, there were no stock options outstanding. No options were
granted, exercised or expired during the period ended March 31, 2016 or the year ended December 31,
2015.
5. Segmented Information
The Company has no reportable segments.
11
Arvana Inc.
Notes to Condensed Consolidated Financial Statements
March 31, 2016
(Unaudited)
(Expressed in U.S. Dollars)
6. Related Party Transactions
Other than amounts payable to related parties as disclosed below and in Note 3, the Company also
incurred consulting fees of $275 (2015 - $3,256) paid to a company controlled by our chief executive
officer during the three months ended March 31, 2016.
Our former chief executive officer and former director entered into a consulting arrangement on a month
to month basis that provided for a monthly fee of CAD 5,000. These amounts have been accrued and are
currently unpaid. This consulting arrangement ended on May 24, 2013. As of March 31, 2016, our former
chief executive officer was owed $64,457 (CAD 83,710) for services rendered as an officer, compared to
$60,480 (CAD 83,710) as at December 31, 2015. The amounts owing for past services have been
included in the total payable of $169,966 as of March 31, 2016 and $159,979 as of December 31, 2015
detailed below.
Our former chief financial officer and former director had entered into a consulting agreement on a month
to month basis that provides for a monthly fee of $2,000. These amounts have been accrued and are
currently unpaid. This consulting arrangement ended on June 14, 2013. As of March 31, 2016 and
December 31, 2015 our former chief financial officer was owed $58,870 for services rendered as an
officer.
Our former chief executive officer and former director entered into a debt assignment agreement effective
January 1, 2012, with a corporation with a former director in common and thereby assigned $156,124
(CAD 202,759) of unpaid amounts payable.
Our former chief executive officer and former director entered into a debt assignment agreement effective
January 1, 2012, with an unrelated third party and thereby assigned $53,357 of unpaid amounts payable
and $100,000 of unpaid loans.
Our former chief executive officer and former director is owed $169,966 for unsecured non-interest
bearing amounts due on demand loaned to the Company as of March 31, 2016, compared to $159,979 as
of December 31, 2015.
Our former chief executive officer and former director is owed $30,252 for unsecured amounts bearing
6% interest due on demand loaned to the Company as of March 31, 2016, compared to $28,941 as of
December 31, 2015.
Our other former officers are owed a total of $83,680 for their prior services rendered as officers as at
March 31, 2016, compared to $79,381 as of December 31, 2015.
A director of the Company is owed $60,000 as of March 31, 2016 and December 31, 2015, for services
rendered as a director during 2007. Two former directors of the Company are owed $76,100 as of March
31, 2016 and December 31, 2015 for services rendered as directors during 2007.
12
Arvana Inc.
Notes to Condensed Consolidated Financial Statements
March 31, 2016
(Unaudited)
(Expressed in U.S. Dollars)
7. Memorandum of Understanding
On March 17, 2016, the Company entered into a non-binding Memorandum of Understanding (“MOU”)
with CaiE Food Partnership Ltd. (“CaiE”) for the purpose of acquiring CaiE as a wholly owned
subsidiary. The MOU anticipates that the Company will issue, subject to shareholder approval, a fully
diluted 67% interest in its common stock in exchange for the securities of CaiE. The MOU further
provides that CaiE lend the Company $50,000 on a convertible basis prior to the consummation of the
transaction. CaiE has loaned the Company $50,000 as of the filing date of this report, on terms yet to be
determined.
8. Subsequent Events
The Company evaluated its March 31, 2016, 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.
13
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other
parts of this quarterly report contain forward-looking statements that involve risks and uncertainties.
Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,”
“plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future
performance and our actual results may differ significantly from the results discussed in the forward-
looking statements. Factors that might cause such differences include but are not limited to those
discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future
Results and Financial Condition below. The following discussion should be read in conjunction with our
financial statements and notes thereto included in this report. Our fiscal year end is December 31. All
information presented herein is based on the three months ended March 31, 2016 and March 31, 2015.
Overview
On March 17, 2016, the Company entered into a non-binding Memorandum of Understanding (“MOU”)
with CaiE Food Partnership Ltd. (“CaiE”) for the purpose of acquiring CaiE as a wholly owned
subsidiary. CaiE is in the business of manufacturing and distributing fresh Dim Sum food products from a
facility based in Sparks Nevada. The MOU anticipates that the Company will issue, subject to shareholder
approval, a fully diluted sixty-seven percent (67%) interest in its common stock in exchange for the
securities of CaiE. The MOU further provides that CaiE lend the Company fifty thousand dollars
($50,000) on a convertible basis prior to the consummation of the transaction. The anticipated transaction
will require the Company to convert existing debt into shares of its common stock, increase the number of
authorized common shares, elect a new Board of Directors and change its name to reflect the new
business. CaiE had loaned the Company $50,000 as of the filing date of this report, under terms not yet
determined.
In the event that the Company does not complete the acquisition of CaiE, its intention will be to identify
and evaluate alternative business opportunities that might be a good match for the Company. We will not
be able to develop any identified business opportunities without additional financing. Our board of
directors and management are actively pursuing financing in order to maintain operations but are not
currently evaluating potential businesses pending the anticipated transaction with CaiE.
Our Plan of Operation
The Company’s plan of operation over the next twelve months is to acquire CaiE as a wholly owned
subsidiary on those terms to be provided within definitive agreements based on the MOU and thereafter to
focus on CaiE’s business model. We will require a minimum of $50,000 in funding over the next 12
months to maintain operations and acquire CaiE. On completing the acquisition of CaiE the Company
may need additional capital to grow CaiE’s business. The amount of funding that may be required for this
purpose is not determinable at this time.
Should the Company not complete the anticipated transaction with CaiE then it will seek to identify an
alternative business opportunity for which purpose it will require a minimum of $25,000 in funding over
the next 12 months. The Company will most likely need additional funding to complete any alternative
transaction that might be identified within this time frame.
14
We anticipate that the required prospective funding in the near term will be in the form of convertible
debt financing from CaiE. Should the Company not complete the anticipated transaction with CaiE, then
requisite funding may come from the sale of our common shares or unsecured shareholder loans. The
Company does not have any alternative financing arranged and cannot be certain that it will be able to
realize funding from the sale of equity or that shareholders will continue to provide loans. Accordingly,
we will require continued financial support from our shareholders and creditors until the Company is able
to generate sufficient cash flow to maintain operations on a sustained basis. There is substantial doubt that
the Company will be successful in maintaining operations unless it completes the acquisition of CaiE.
Results of Operations
During the three months ended March 31, 2016, the Company (i) entered into a non-binding MOU with
CaiE; and (ii) satisfied continuous public disclosure requirements.
Our operations for the three months ended March 31, 2016 and 2015 are summarized below.
Three months
Three months
Ended
Ended
March 31, 2016 March 31, 2015
Expenses:
General and administration
($2,569)
($5,902)
Professional fees
(1,775)
(1,500)
Interest
(12,195)
(11,902)
Foreign exchange gain (loss)
(66,903)
128,696
Net income (loss) and
comprehensive income (loss) for
the period
($83,442)
$109,392
Net Income (loss)
Net loss for the three months ended March 31, 2016 was $83,442 as compared to net income of $109,392
for the three months ended March 31, 2015. The transition to net losses over the three month periods
ended March 31, 2016, can be primarily attributed to the loss on unrealized foreign exchange. The loss on
unrealized foreign exchange is due to an increase in the value of foreign currencies against the US dollar,
which increase has negatively impacted the cost of those liabilities that are payable in foreign currencies.
We did not generate revenue during this period and expect to continue to incur losses over the next twelve
months at a rate comparable to the prior annual period presented here or until such time as we are able to
conclude the acquisition or development of a new business opportunity that produces net income.
Capital Expenditures
The Company expended no amounts on capital expenditures for the three month period ended March 31,
2016.
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.
15
Impact of Inflation
The Company believes that inflation has had a negligible effect on operations over the past three years.
Liquidity and Capital Resources
Since inception, the Company has experienced significant changes in liquidity, capital resources, and
stockholders’ deficiency.
The Company had current and total assets of $20,030 as of March 31, 2016, consisting solely of cash and
a working capital deficit of $2,332,519, as compared to current and total assets of $53, consisting solely
of cash and a working capital deficit of $2,249,077 as of December 31, 2015. Net stockholders' deficiency
in the Company was $2,332,519 at March 31, 2016, as compared to a net stockholder’s deficiency in the
Company of $2,249,077 at December 31, 2015.
Cash Used in Operating Activities
Net cash flow used in operating activities for the three month period ended March 31, 2016 was $23 as
compared to $1,810 for the three month period ended March 31, 2015, which differences reflect the
comparative changes in unrealized foreign exchange and changes in working capital in the current period.
Net cash flow used in operating activities in the prior period can also be primarily attributed to general
and administrative expenses, and changes in working capital. General and administrative expenses
include but are not limited to, personnel costs, accounting fees and consulting expenses while changes in
working capital include accounts payable and amounts due to related parties.
We expect to continue to use net cash flow in operating activities over the next twelve months or until
such time as the Company can generate revenue to offset expenses in order to transition to providing net
cash flow from operations.
Cash Used in Investing Activities
We do expect to use net cash flow in investing activities in connection with the development or
acquisition of a suitable business opportunity. However, until such time as such anopportunity is
concluded, we do not expect to use net cash flows in investing activities.
Cash Flows from Financing Activities
Cash flow provided by financing activities for the three months ended March 31, 2016, increased to
$20,000 as compared to $10,000 for the three months ended March 31, 2015. The increase in cash flow
provided from financing activities over the comparative three month periods can be attributed to the loan
received from CaiE.
We expect to continue to use cash flow provided by financing activities to procure sufficient funds to
maintain operations, acquire CaiE and alternatively to seek out suitable business opportunities.
The Company’s current assets are insufficient to conduct its plan of operation over the next twelve (12)
months as we will need at least $50,000 to maintain operations. The Company has secured a non-binding
commitment from CaiE to loan it $50,000 to maintain operations and undertake the acquisition detailed in
the MOU. The Company’s shareholders remain 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 plan of operation.
16
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 March 31, 2016.
The Company had no commitments for future capital expenditures that were material at March 31, 2016.
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 March 31, 2016, 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.
Critical Accounting Policies
In Note 2 to the audited consolidated financial statements for the years ended December 31, 2015 and
2014, 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 consolidated 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 $23,496,687 since inception and negative cash flows
from operating activities as of March 31, 2016. The Company’s ability to continue as a going concern is
subject to the ability of the Company to obtain funding from outside sources. Management’s plan to
address the Company’s ability to continue as a going concern includes obtaining funding from the private
placement of equity or through debt financing. Management believes that it will be able to obtain funding
to allow the Company to remain a going concern through the methods discussed above, though there can
be no assurances that such methods will prove successful.
17
Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition
The statements contained in the section titled Management’s Discussion and Analysis of Financial
Condition and Results of Operations and elsewhere in this current report, with the exception of historical
facts, are forward-looking statements. Forward-looking statements reflect our current expectations and
beliefs regarding our future results of operations, performance, and achievements. These statements are
subject to risks and uncertainties and are based upon assumptions and beliefs that may or may not
materialize. These statements include, but are not limited to, statements concerning:
§ our anticipated financial performance and business plan;
§ the sufficiency of existing capital resources;
§ our ability to raise capital to fund cash requirements for future operations;
§ uncertainties related to the Company’s future business prospects;
§ 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.
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.
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
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Item 4.
Controls and Procedures
Disclosure Controls and Procedures
In connection with the preparation of this quarterly report, an evaluation was carried out by the
Company’s management, with the participation of the chief executive officer and the acting chief
financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)) as of March
31, 2016. Disclosure controls and procedures are designed to ensure that information required to be
disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and
reported within the time periods specified in the Commission’s rules and forms, and that such information
is accumulated and communicated to management, including the chief executive officer and the chief
financial officer, to allow timely decisions regarding required disclosures.
Based on that evaluation, the Company’s management concluded, as of the end of the period covered by
this report, that the Company’s disclosure controls and procedures were ineffective in recording,
processing, summarizing, and reporting information required to be disclosed, within the time periods
specified in the Commission’s rules and forms, and such information was not accumulated and
communicated to management, including the chief executive officer and the chief financial officer, to
allow timely decisions regarding required disclosures.
Changes in Internal Control over Financial Reporting
There have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of
the Exchange Act) during the quarter ended March 31, 2016, that materially affected, or are reasonably
likely to materially affect, the Company’s internal control over financial reporting.
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PART II
Item 1.
Legal Proceedings.
None.
Item 1A.
Risk Factors
Not required.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3.
Defaults Upon Senior Securities
None.
Item 4.
Mine Safety Disclosures
Not applicable.
Item 5.
Other Information
None.
Item 6.
Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page
22 of this Form 10-Q, and are incorporated herein by this reference.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.
ARVANA INC.
By: /s/ Ruairidh Campbell
Ruairidh Campbell, Chief Executive Officer,
Chief Financial Officer and Principal
Accounting Officer
Date: May 20, 2016
21
INDEX TO EXHIBITS
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 and Chief Financial Officer pursuant to Rule 13a-
14(a) of the Exchange Act (6)
32
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-
14(d) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 (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.
22