ARVANA INC - Quarter Report: 2020 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15D of the Securities Exchange Act of 1934 for the quarterly period ended SEPTEMBER 30, 2020.

☐ 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)

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

(Address of principal executive offices) (Zip Code)

(801) 232-7395

(Registrant’s telephone number, including area code)

n/a

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒  No ☐

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

Yes ☐  No ☒

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

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

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

Yes ☒  No ☐

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. The number of shares outstanding of the issuer’s common stock, $0.001 par value (the only class of voting stock), at November 19, 2020, was 2,005,070.

TABLE OF CONTENTS

ITEM 1. FINANCIAL STATEMENTS

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

Arvana Inc.

Condensed Interim Balance Sheets

(Unaudited) 

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

Arvana Inc.

Condensed Interim Statements of Operations and COmprehensive Loss

(Unaudited) 

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

Arvana Inc.

Condensed Interim Statements of Cash Flows

(Unaudited) 

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

Arvana Inc,

Statements of Stockholders’ Deficiency

(Unaudited)

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

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, our shareholders approved a name change to Arvana Inc. The reporting currency and functional currency of the Company is the United States dollar (“US Dollar”) and the accompanying financial statements have been expressed in US Dollars.

On March 17, 2016, the Company entered into a non-binding Memorandum of Understanding (“MOU”) with CaiE Food Partnership Ltd. (“CaiE”) for the purpose of acquiring it 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 required CaiE to provide audited financial statements and a business plan as conditions precedent to entering into a binding agreement. CaiE has not satisfied the conditions necessary for us to move forward. On November 11, 2020, the Company notified CaiE that it was no longer interested in acquiring its business. Our present intention is to identify and evaluate business opportunities that are ready to create value for Company’s shareholders.

These condensed interim financial statements have been prepared on a going concern basis, which assumes the realization of assets and the settlement of liabilities in the normal course of business.

For the nine-month period ended September 30, 2020, the Company recognized a net loss of $109,440 as a result of general administrative expenses, professional fees and interest expenses. The Company had a working capital deficiency of $2,226,049 as of September 30, 2020. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The World Health Organization declared coronavirus COVID-19 a global pandemic in March 2020. COVID-19 is a contagious disease that continues to spread adversely affecting workforces, economies, and financial markets globally, which affects will likely result in an economic downturn. The Company cannot predict the duration or magnitude of the adverse results connected to COVID-19, nor can it predict the effect, if any, COVID-19 will have on the Company’s search to identify a business opportunity or its ability to attract sufficient capital to sustain operations.

Our present intention is to identify and evaluate business opportunities that could create value for Company shareholders. During this search the Company will require continued financial support from shareholders and creditors until it is able to generate cash flow from operations. While we are confident that a business opportunity will be identified, the insufficiency of our financial resources casts substantial doubt on whether we will be able to fulfill this objective.

Failure to obtain the ongoing support of shareholders and creditors may indicate that the preparation of these financial statements on a going concern basis is 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 liabilities that might arise from this uncertainty.

2. Summary of Significant Accounting Policies

a) Basis of presentation

The Company’s fiscal year end is December 31. The accompanying condensed interim financial statements of the Company for the three and nine months ended September 30, 2020 and 2019, have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) for financial information with the instructions to Form 10-Q and Regulation S-X. The condensed interim financial statements and notes appearing in this report should be read in conjunction with our audited financial statements and related notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission (“SEC”) on April 1, 2020. Results are not necessarily indicative of those which may be achieved in future periods.

b) Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates include the recognition of deferred tax assets based on the change in unrecognized deductible temporary tax differences.

c) Financial instruments

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

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

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

The estimated fair values of the Company's financial instruments as of September 30, 2020 and December 31, 2019 are as follows:

2. Summary of Significant Accounting Policies (continued)

c) Financial instruments (continued)

The following table presents information about the assets that are measured at fair value on a recurring basis as of September 30, 2020, 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:

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

d) Recent accounting pronouncements

New and amended standards adopted by the Company

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

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, requiring certain changes to the recognition and measurement as well as disclosure of incurred and expected credit losses. In November 2018, the FASB issued ASU 2018-19 to clarify certain aspects of the new current expected credit losses impairment model in ASU 2016-13. ASU 2018-19 points out that operating lease receivables are within the scope of ASC 842 rather than ASC 326. The standard became effective for the Company beginning January 1, 2020. The adoption of this standard did not have a material impact on the Company’s results of operations, financial condition, cash flows, and financial statement disclosures.

In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2018-13, which changes the fair value measurement disclosure requirements of ASC 820. The standard became effective for the Company beginning January 1, 2020. The amendments in this ASU are the result of a broader disclosure project called FASB Concepts Statement, Conceptual Framework for Financial Reporting — Chapter 8: Notes to Financial Statements. The adoption of this standard did not have a material impact on the Company’s results of operations, financial condition, cash flows, and financial statement disclosures.

3. Loans Payable

As of September 30, 2020, the Company had received loans of $565,988 (€225,000; CAD$ 72,300; $248,107) (December 31, 2019 - $581,379: €225,000; CAD$ 72,300; $273,107) from stockholders; loans of $129,692 (CAD$ 27,600; $109,000) (December 31, 2019 – $130,249: CAD$ 27,600; $109,000) from a related party and loans of $79,307 (CAD$ 10,000; $71,810) (December 31, 2019 – $84,509: CAD$ 10,000; $76,810) from unrelated third parties. All of the loans bear interest at 6% per annum. The loans were made in 3 different currencies, Euros, Canadian Dollars and US Dollars. All amounts reflected on these financial statements are expressed in US Dollars. Repayment of the loans is due on closing of any future financing arrangement by the Company. The balance of accrued interest of $530,992 and $521,156 is included in accounts payable and accrued expenses at September 30, 2020 and December 31, 2019, respectively. Interest expense recognized on these loans was $10,623 for the three months ended September 30, 2020, compared to $11,256 for the three months ended September 30, 2019, respectively. Interest expense recognized on these loans was $31,356 for the nine months ended September 30, 2020, compared to $35,314 for the nine months ended September 30, 2019, respectively.

On March 30, 2020, loans of $60,000 and corresponding interest of $37,104 were settled by the issuance of 971,040 common shares pursuant to three debt settlement agreements dated March 3, 2020, March 4, 2020 and March 4, 2020.

Between March 17, 2016, and August 17, 2020, CaiE provided an aggregate of $174,610 in loans to the Company, of which $107,800 is documented in two convertible promissory notes for $50,000 and $57,800 dated May 18, 2016, and October 12, 2018, respectively (Note 8). The amounts that remain undocumented will likely be treated in a manner similar to those contracted for the convertible promissory notes.

4. Stock Options

At September 30, 2020, and December 31, 2019, there were no stock options outstanding. No options were granted, exercised or expired during the period ended September 30, 2020 and during the year ended December 31, 2019.

5. Common stock

During the nine months ended September 30, 2020, the Company issued 971,040 shares of its common stock valued at $0.10 a share to settle $60,000 in loans and $37,104 in interest (Note 3). During the year ended December 31, 2019, the Company had issued nil shares.

6. Segmented Information

The Company has no reportable segments.

7. Related Party Transactions and Amounts Due to Related Parties

At September 30, 2020, and December 31, 2019, the Company had amounts due to related parties of $343,032 and $338,109, respectively. This amount includes $60,000 at September 30, 2020, and December 31, 2019, payable to a current director for services rendered during 2007. The amounts owing bear no interest, are unsecured with no fixed terms of repayment, and are due on demand.

The Company incurred consulting fees of $11,888 (2019 - $7,144) paid to a company controlled by our chief executive officer during the nine months ended September 30, 2020. As at September 30, 2020, the Company owed our chief executive officer $3,275.

A former chief executive officer and director entered into a consulting arrangement that provided for a monthly fee of CAD $5,000, which amounts were accrued through the termination date on May 24, 2013. As of September 30, 2020, and December 31, 2019, our former chief executive officer was owed $279,757 and $278,109, respectively. The amounts owing bear no interest, are unsecured with no fixed terms of repayment, and are due on demand.

A former chief executive officer and director assigned unpaid amounts due as of September 30, 2020, and December 31, 2019, of $152,008 and $156,104 respectively, to a related corporation, as provided in a debt assignment agreement dated effective January 1, 2012.

A former chief executive officer and director is owed $129,692 (includes accrued interest of $84,526) and $130,249 (includes interest of $78,962) as of September 30, 2020 and December 31, 2019, respectively for unpaid amounts bearing 6% interest, on unsecured amounts with no fixed terms of repayment, that are due on demand.

8. Convertible Loans

On May 18, 2016, the Company issued a convertible promissory note to CaiE that accrues 10% per annum, in exchange for $50,000, initially due on November 17, 2017. The note is convertible into the Company’s common stock, in whole or in part, at any time prior to maturity at the option of the holder at $0.20 per share. Due to the conversion price being lower than the closing share price on the issuance date, a beneficial conversion feature was recognized as a discount against the debt. The maturity date of the note was extended by amendment, to March 31, 2021, while all other terms of the note remain unchanged. During the three and nine months ended September 30, 2020 and 2019, no discount was amortized as interest expense. Interest expense recognized on this loan was $1,250 for the three months ended September 30, 2020, compared to $1,250 for the three months ended September 30, 2019. Interest expense recognized on this loan was $3,750 for the nine months ended September 30, 2020, compared to $3,750 for the nine months ended September 30, 2019. As at September 30, 2020, and December 31, 2019, the balance of the note was $50,000.

8. Convertible Loans (continued)

On October 12, 2018, the Company issued a convertible note to CaiE that accrues 10% per annum, in exchange for a series of loans that totaled $57,800 initially due on October 11, 2019. The note is convertible into the Company’s common stock, in whole or in part, at any time prior to maturity at the option of the holder at $0.20 per share. Due to the conversion price being lower than the closing share price on the issuance date, a beneficial conversion feature was recognized as a discount against the debt. The maturity date of the note was extended by amendment, to March 31, 2021, while all other terms of the note remain unchanged. During the three months ended September 30, 2020 and 2019, $nil and $14,450 of the discount was amortized as interest expense and during the nine months ended September 30, 2020 and 2019, $nil and $43,350 of the discount was amortized as interest expense. Interest expense recognized on this loan was $1,445 for the three months ended September 30, 2020, compared to $nil for the three months ended September 30, 2019. Interest expense recognized on this loan was $4,335 for the nine months ended September 30, 2020, compared to $4,335 for the nine months ended September 30, 2019. As at September 30, 2020 and December 31, 2019, the balance of the note was $57,800.

9. Subsequent Events

On November 11, 2020, the Company provided written notification to CaiE that it no longer intended to move forward as anticipated in the MOU, to acquire it as an operating subsidiary.

On November 10, 2020, the Company entered into a settlement agreement and release with a shareholder and authorized the issuance of 1,112,910 shares of its restricted common stock to extinguish $111,291 in liabilities effective September 30, 2020.

On November 10, 2020, the Company entered into a settlement agreement and release with a shareholder and authorized the issuance of 1,132,690 shares of its restricted common stock to extinguished $113,269 in liabilities effective September 30, 2020.

On November 10, 2020, the Company authorized the issuance of 360,000 shares of its restricted common stock to a shareholder for services rendered pursuant to the terms and conditions of a consulting agreement that expired on September 30, 2020.

On November 10, 2020, and November 19, 2020, the Company received a loan in the aggregate amount of $10,000 from a shareholder that bears no interest, and is unsecured with no fixed terms of repayment.

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

FORWARD LOOKING STATEMENTS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this quarterly report contain forward-looking statements that involve risks and uncertainties. Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,” “plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include but are not limited to those discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition below. The following discussion should be read in conjunction with our financial statements and notes thereto included in this report. Our fiscal year end is December 31. All information presented herein is based on the three and nine months ended September 30, 2020 and September 30, 2019.

Overview

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

Our office is located at 299 S. Main Street, 13th Floor, Salt Lake City, Utah 84111, and our telephone number is (801) 232-7395. Our registered agent is AA Registered Agents, 4869 Nightwood Court, Las Vegas, Nevada 89149.

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

Company

On March 17, 2016, we entered into a non-binding Memorandum of Understanding (“MOU”) with CaiE Food Partnership Ltd. (“CaiE”) for the purpose of acquiring it 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. While CaiE loaned the Company $174,610 over more than four years, it was unable to deliver audited financial statements. The constant delay to moving forward has negatively affected our business prospects and has placed an untenable burden on our shareholders. On November 11, 2020, the Company notified CaiE in writing that it was no longer interested in acquiring its business.

Our present intention is to identify and evaluate other business opportunities. We will not be able to develop any business opportunity without additional financing. Management will look to its shareholders and creditors for sufficient support to sustain operations. Assurance as to whether our shareholders and creditors will respond sufficiently to funding requests is uncertain.

Plan of Operation

Our plan of operation is to identify a business opportunity for which purpose it will require a minimum of $25,000 in funding over the next 12 months to sustain operations through that process. Should a business opportunity be identified, we will need additional funding to complete any definitive transaction. We anticipate that funding in this instance will be in the form of unsecured debt or equity financing from stockholders, creditors and third parties. Despite our confidence that funding will be available for a suitable business opportunity, we have no such financing arranged. Therefore, we will require financial support from our stockholders and creditors.

Results of Operations

During the three and nine months ended September 30, 2020, the Company satisfied periodic public disclosure requirements and maintained limited operations from debt financing provided by CaiE.

Operations for the three and nine months ended September 30, 2020 and 2019, are summarized in the following table.

Net Losses

Net loss for the three months ended September 30, 2020, was $67,591 as compared to a net loss of $3,234 for the three months ended September 30, 2019. The increase in net loss over the comparative three-month periods can be attributed to the increase in general administrative expenses, professional fees and the transition to foreign exchange loss from the prior gain, offset by a decrease in interest expense over the comparable three month periods. The increase in professional fees and general administrative expenses is attributed to costs related to the elimination and settlement of existing debt for shares, while the decrease in interest expense is due to newly adopted accounting standards that no longer require book accretion interest on convertible loans, and the foreign exchange transition to loss in response to the volatility of foreign currencies against the US dollar, which loss impacts the cost of expenses payable in foreign currencies.

Net loss for the nine months ended September 30, 2020, was $109,440 as compared to net loss of $98,903 for the nine months ended September 30, 2019. The increase in net loss over the comparative nine-month periods can be attributed to an increase in general administrative expenses, professional fees, and the transition to foreign exchange loss from the prior gain, offset by a decrease in interest expenses. The increase in professional fees and general administrative expenses is attributed to costs related to the elimination and settlement of existing debt for shares, while the decrease in interest expense is due to newly adopted accounting standards that no longer require book accretion interest on convertible loans, and the foreign exchange transition to loss in response to the volatility of foreign currencies against the US dollar, which loss impacts the cost of expenses payable in foreign currencies.

We did not generate revenue during this period and expect to continue to incur losses over the next twelve months until such time as we are able to secure a business opportunity that generates income.

Capital Expenditures

The Company expended no amounts on capital expenditures for the nine-month period ended September 30, 2020.

Liquidity and Capital Resources

Since inception, we have experienced significant changes in liquidity, capital resources, and stockholders’ deficiency.

The Company had assets of $911 as of September 30, 2020, and a working capital deficit of $2,226,049, as compared to assets of $2,346, and a working capital deficit of $2,213,713 as of December 31, 2019. Net stockholders' deficit in the Company was $2,226,049 at September 30, 2020, as compared to a net stockholder’s deficit of $2,213,713 at December 31, 2019.

Cash Used in Operating Activities

Net cash flow used in operating activities for the nine-month period ended September 30, 2020, was $31,435 as compared to net cash flow used in operating activities of $30,861 for the nine-month period ended September 30, 2019. Changes in net cash used in operating activities in the current nine-month period over the prior nine-month period can be attributed to a number of book expense items that do not affect the total amount relative to actual cash used, such as unrealized foreign exchange, interest expense and the amortization of a discount on convertible debt. Balance sheet accounts that actually affect cash, but are not income statement related that are added or deducted to arrive at net cash used in operating activities, include accounts payable, accrued liabilities, 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 sufficient revenue to offset the cost of operating activities.

Cash Used in Investing Activities

Net cash used in investing activities for the nine-month periods ended September 30, 2020, and September 30, 2019, was $nil.

We do not expect to use net cash in investing activities until we are able to conclude a definitive agreement on a suitable business opportunity.

Cash Flows from Financing Activities

Cash flow provided by financing activities for the nine-months ended September 30, 2020, was $30,000 as compared to $36,810 for the nine-months ended September 30, 2019. Cash flows provided from financing activities over the comparative nine-month periods was provided by CaiE as convertible loans.

We expect to continue to use net cash provided by financing activities to maintain operations.

The Company’s current assets are insufficient to conduct its plan of operation over the next twelve (12) months as it will need at least $25,000 to sustain operations while seeking to identify a suitable business opportunity. While the Company will look to its shareholders and creditors to provide debt or equity financing to secure those amounts necessary, it has no definitive commitments or arrangements for continued financial support. The Company’s inability to secure funding will have a material adverse effect on its ability to sustain operations.

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

The Company had no lines of credit or other bank financing arrangements as of September 30, 2020.

The Company had no commitments for future capital expenditures that were material at September 30, 2020.

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 September 30, 2020, 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 will continue to rely on debt or equity financing from our shareholders and creditors to maintain operations though we cannot provide any assurance that sufficient financing will be forthcoming.

Critical Accounting Policies

In Note 2 to the audited financial statements for the years ended December 31, 2019 and 2018, 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 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, we evaluate estimates. We base our estimates on historical experience and other facts and circumstances that are believed to be reasonable. The result of our estimates form the basis for making judgments about the carrying value of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.

Going Concern

Management has expressed its opinion that the Company will continue as a going concern despite its accumulated deficit of $23,604,368 and negative cash flows from operating activities as of September 30, 2020. The ability to continue as a going concern requires that the Company procure funding from outside sources. Management’s plan to address the Company’s ability to continue as a going concern includes securing capital from the private placement of equity or debt financing, converting existing debt into equity, and otherwise settling outstanding or extinguishing amounts due to its creditors. Management believes that its reliance on the financing options detailed above will prove sufficient as it seeks to identify and transact an income producing business opportunity, though it provide no assurances that such reliance will prove successful.

Whether the Company will continue as a going concern is further challenged by additional urgency in light of the COVID-19 pandemic that continues to adversely affect workforces, economies, and financial markets around the world that will likely result in an economic downturn. Mangement cannot predict the duration or magnitude of the virus, nor can it predict which adverse effects, if any, will impact the Company’s plan of operation or its ability to remain in business.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required for smaller reporting companies.

Item 4.  Controls and Procedures

Disclosure Controls and Procedures

In connection with the preparation of this quarterly report, an evaluation was carried out by the Company’s management, with the participation of the chief executive officer and the acting chief financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)) as of September 30, 2020. 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 its chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.

Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s rules and forms, and that such information was accumulated and communicated to management, including its 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 period ended September 30, 2020, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II

Item 1.  Legal Proceedings.

None.

Item 1A.  Risk Factors

Not required.

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

On November 10, 2020, our board of directors approved the issuance of 2,605,600 restricted shares of its common stock par value $0.001 to Altaf Nazerali, and two related companies to extinguish debt in the amount of $224,560 due on loans or payables, including accrued interest, and in payment for services rendered in the amount of $36,000, pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities and Exchange Act of 1933, as amended.

When the shares of restricted common stock are issued, the Company will have increased its issued and outstanding shares from 2,005,070 to 4,610,670.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5.  Other Information

Change of Control

The shares of restricted common stock approved by the board of directors on November 10, 2020, for issuance to Altaf Nazerali, and related companies constitutes a change in control of the registrant. Prior to the control change, the Company was controlled by its stockholders rather than any singular stockholder or group of stockholders, and there are no arrangements or understandings in place between the board of directors and Mr. Nazerali with respect to the election of directors or other materal matters. Each share of our common stock entitles the holder to one vote. Mr. Nazarali directly or indirectly exercises control over 2,628,190 Company shares or 57% of our the voting shares on any matter that is brought before our stockholders.

COVID-19

The World Health Organization declared coronavirus COVID-19 a global pandemic in March 2020. COVID-19 is a contagious disease that continues to spread adversely affecting workforces, economies, and financial markets globally, which effects will likely result in an economic downturn. We cannot predict the duration or magnitude of the adverse results connected to COVID-19, nor can we predict the effect, if any, COVID-19 will have on our ability to sustain our business.

Item 6.  Exhibits

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. 

SIGNATURES

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

INDEX TO EXHIBITS