Attached files
| file | filename |
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| EX-32.1 - EXH 32-1 CERTIFICATION - ARVANA INC | exh32-1_certification.htm |
| EX-31.2 - EXH 31-2 CERTIFICATION - ARVANA INC | exh31-2_certification.htm |
| EX-32.2 - EXH 32-2 CERTIFICATION - ARVANA INC | exh32-2_certification.htm |
| EX-31.1 - EXH 31-1 CERTIFICATION - ARVANA INC | exh31-1_certification.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2011
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to _______________
000-30695
(Commission file number)
ARVANA INC.
(Exact name of registrant as specified in its charter)
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NEVADA
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87-0618509
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State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization
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Identification No.)
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90 Madison Street, Suite 701, Denver, CO 80206
(Address of principal executive offices) (Zip Code)
303 329-3008
(Registrant’s telephone number, including area code)
Suite 145, 925 West Georgia Street, Vancouver, BC V6C 3L2
(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 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 ¨ (Not required)
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 ¨ (Do not check if a smaller reporting company) 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 issuer’s classes of common stock, as of the latest practicable date: As of May 7, 2011 there were 1,060,130 shares of common stock outstanding.
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PART I
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FINANCIAL INFORMATION
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3
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Item 1.
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Financial Statements
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3
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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9
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Item 3.
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Quantitative and Qualitative Disclosure About Market Risk
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12
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Item 4.
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Controls and Procedures
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12
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PART II
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OTHER INFORMATION
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15
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Item 1.
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Legal Proceedings
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15
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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15
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Item 3.
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Defaults Upon Senior Securities
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15
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Item 4.
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(Removed and Reserved)
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15
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Item 5.
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Other Information
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15
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Item 6.
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Exhibits
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15
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Signatures
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17
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2
Item 1. Financial Statements
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Arvana Inc.
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(A Development Stage Company)
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Condensed Consolidated Balance Sheets
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March 31,
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December 31,
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2011
(Unaudited)
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2010
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ASSETS
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Current assets:
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Cash
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$ | 12,047 | $ | 2,074 | ||||
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Total assets
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$ | 12,047 | $ | 2,074 | ||||
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LIABILITIES AND STOCKHOLDERS' DEFICIENCY
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Current liabilities
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Accounts payable and accrued liabilities
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$ | 708,103 | $ | 657,603 | ||||
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Loans payable stockholders (Note 3)
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633,680 | 604,653 | ||||||
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Loans payable related party (Note 3)
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100,000 | 100,000 | ||||||
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Loans payable (Note 3)
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25,000 | 25,000 | ||||||
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Amounts due to related parties (Note 3)
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319,861 | 282,500 | ||||||
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Total current liabilities
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1,786,644 | 1,669,756 | ||||||
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Stockholders' deficiency
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Common stock, $.001 par value 5,000,000 shares authorized
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1,060,130 shares issued and outstanding at
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March 31, 2011 and at December 31, 2010 (Note 4)
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1,060 | 1,060 | ||||||
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Additional paid-in capital
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21,446,444 | 21,446,444 | ||||||
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Deficit
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(22,705,422 | ) | (22,705,422 | ) | ||||
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Deficit accumulated during the development stage
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(233,343 | ) | (126,428 | ) | ||||
| (1,491,261 | ) | (1,384,346 | ) | |||||
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Less: Treasury stock - 177,085 common shares at
March 31, 2011 and at December 31, 2010
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(283,336 | ) | (283,336 | ) | ||||
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Total stockholders’ deficit
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(1,774,597 | ) | (1,667,682 | ) | ||||
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Total liabilities and deficit
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$ | 12,047 | $ | 2,074 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
3
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Arvana Inc.
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(A Development Stage Company)
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Condensed Consolidated Statement of Operations
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For the Three Months Ended March 31, 2011 and 2010
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(Unaudited)
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Cumulative
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Amounts from the
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Beginning of the
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Three Months Ended
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Development Stage on
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March 31,
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January 1, 2010 to
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2011
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2010
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March 31, 2011
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Operating expenses
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General and administrative
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$ | 53,793 | $ | 24,869 | $ | 157,181 | ||||||
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Depreciation
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- | 75 | 103 | |||||||||
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Total operating expenses
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53,793 | 24,944 | 157,284 | |||||||||
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Loss from operations
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(53,793 | ) | (24,944 | ) | (157,284 | ) | ||||||
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Interest expense
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(11,233 | ) | (10,479 | ) | (53,984 | ) | ||||||
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Net loss
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(65,026 | ) | (35,423 | ) | (211,268 | ) | ||||||
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Other comprehensive income loss:
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Foreign exchange gain (loss)
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(41,889 | ) | 24,522 | (22,075 | ) | |||||||
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Comprehensive loss
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$ | (106,915 | ) | $ | (10,901 | ) | $ | (233,343 | ) | |||
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Per share information - basic and fully diluted:
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Weighted average shares outstanding
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1,060,130 | 1,060,130 | 1,060,130 | |||||||||
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Net loss per share
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$ | (0.10 | ) | $ | (0.01 | ) | $ | (0.22 | ) | |||
The accompanying notes are an integral part of these consolidated financial statements.
4
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Arvana Inc.
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(A Development Stage Company)
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Condensed Consolidated Statements of Cash Flows
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(Unaudited)
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| Cumulative | ||||||||||||
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For the three months ended
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development stage on | |||||||||||
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March 31,
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January 1, 2010 to | |||||||||||
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2011
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2010
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March 31, 2011 | ||||||||||
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Cash flows from operating activities
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Net loss for the period
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$ | (106,915 | ) | $ | (10,901 | ) | $ | (233,343 | ) | |||
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Adjustments to reconcile net loss to net cash used in operating activities:
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Depreciation and amortization
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- | 75 | 103 | |||||||||
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Unrealized foreign exchange
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41,268 | (24,962 | ) | 17,880 | ||||||||
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Changes in operating assets and liabilities:
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Accounts payable and accrued liabilities
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31,428 | 18,779 | 75,790 | |||||||||
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Amounts due to related parties
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34,192 | 14,766 | 105,770 | |||||||||
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Net cash used in operations
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$ | (27 | ) | $ | (2,243 | ) | $ | (33,800 | ) | |||
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Cash flows from financing activities
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Proceeds of loans payable
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10,000 | 14,764 | 45,313 | |||||||||
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Net cash provided by financing activities
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10,000 | 14,764 | 45,313 | |||||||||
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Increase in cash
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9,973 | 12,521 | 11,513 | |||||||||
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Cash, beginning of period
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2,074 | 534 | 534 | |||||||||
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Cash, end of period
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$ | 12,047 | $ | 13,055 | $ | 12,047 | ||||||
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Supplementary information
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Cash paid for interest
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$ | - | $ | - | ||||||||
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Cash paid for income taxes
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$ | - | $ | - | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
5
Arvana Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Nature of Business and Ability to Continue as a Going Concern
Arvana Inc. (“our”, “we”, ”us” and the “Company”) was incorporated under the laws of the State of Nevada as Turinco, Inc. on September 16, 1977, 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 shares with a par value of $0.001. 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.
In 1998, we completed a common stock split of eight shares for each outstanding share. In 2005, we completed another common stock split of nine shares for each outstanding share. On September 30, 2010, we completed a common stock reverse split of one share for each twenty shares outstanding. These consolidated financial statements have been prepared showing the after stock reverse split shares with a par value of $0.001.
These consolidated financial statements for the three month period ended March 31, 2011 include the accounts of the Company and our subsidiary Arvana Networks (including its wholly-owned subsidiaries Arvana Par and Arvana Comunicações do Brasil S. A. (“Arvana Com”). we have ceased all operations in our 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, we entered into a new development stage as of January 1, 2010.
Our reporting 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 three month period ended March 31, 2011, we incurred a loss from operations of $106,915. At March 31, 2011, we had a working capital deficiency of $1,774,597. These conditions raise substantial doubt about our ability to continue as a going concern.
Accordingly, we will require continued financial support from our shareholders and creditors until we are able to generate sufficient cash flow from operations on a sustained basis. There is substantial doubt that we will be successful at achieving these results. Failure to obtain the ongoing support of our shareholders and creditors may make the going concern basis of accounting inappropriate, in which case our assets and liabilities would need to be recognized at their liquidation values. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might arise from this uncertainty.
2. Summary of Significant Accounting Policies
Basis of presentation
We are in the process of evaluating business opportunities and have entered a new development stage as of January 1, 2010 and present our financial statements in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the “Codification” or “ASC”) Topic 915. Our fiscal year end is December 31. The accompanying consolidated interim financial statements of Arvana Inc. for the three month periods ended March 31, 2011 and 2010, and for the cumulative amounts from the beginning of the development stage on January 1, 2010, through March 31, 2011, 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. 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 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,
6
Arvana Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in the our Annual Report on Form 10-K for the fiscal year ended December 31, 2010, as filed with the Securities and Exchange Commission (the “SEC”) on April 6, 2011.
Use of 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, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting periods. Actual results could differ from those estimates.
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 March 31, 2011, we received a number of loans from shareholders and loans from an unrelated third party. As of March 31, 2011, we had received loans of $633,680 (December 31, 2010 - $604,653) from shareholders, loans of $100,000 (December 31, 2010 - $100,000) from a related party and loans of $25,000 (December 31, 2010 - $25,000) from an unrelated third party. 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 amount reflected on these financial statement are expressed in US Dollars. Repayment of the loans is due on closing of any future financing arrangement by us. The balance of accrued interest of $138,434 and $123,104 is included in accounts payable and accrued expenses at March 31, 2011 and December 31, 2010, respectively. Interest expense recognized on these loans was $11,233 for the three months ended March 31, 2011, compared to $10,479 for the three months ended March 31, 2010.
At March 31, 2011 and December 31, 2010, we had amounts due to related parties of $319,861 and $282,500, respectively. These amounts include $136,100 at March 31, 2011 and December 31, 2010, payable to three directors 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 account 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.
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.
At March 31, 2011 and December 31, 2010, there were no stock options outstanding. No options were granted, exercised or expired during the three months ended March 31, 2011.
7
Arvana Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
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.
5. Segmented Information
The Company has no reportable segments.
6. Subsequent Events
Subsequent to March 31, 2011, the Company received a related party loan totaling $10,000. This loan is unsecured, payable on demand and bears interest at the rate of 6% per annum.
8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
In this Quarterly Report:
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(i)
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references to “we”, “us”, “our”, or the “Company” refer to Arvana Inc. and our wholly-owned subsidiaries, namely:
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•
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Arvana Networks Inc. which wholly owns Arvana Participações (“Arvana Par”), a company which wholly owns Arvana Comunicações do Brazil S.A. (“Arvana Com”); and
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(ii)
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all dollar amounts are expressed in United States dollars, unless otherwise indicated.
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You should read the following discussion and analysis of our financial condition, results of operations and plan of operations together with the interim consolidated financial statements and notes to the interim consolidated financial statements included in this Quarterly Report, as well as our most recent annual report Form 10-K for the year ended December 31, 2010 and current reports on Form 8-K.
Forward-Looking Statements
The information in this Quarterly Report on Form 10-Q 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 our 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
We are currently in the process of evaluating business opportunities and have entered a new development stage as of January 1, 2010. There can be no guarantee that we will be successful in identifying suitable business opportunities, or if we are able to identify suitable business opportunities, that we will be able to find an adequate source of financing to acquire any business or business assets, and commence operations, or that those operations, if commenced, will be successful in generating profits.
Our Plan of Operations
Our present plan of operations for the next twelve months is to identify and evaluate industries and business opportunities in order to find a suitable business to enter into.
We will not be able to pursue any new business opportunities without additional financing. Our board of directors and management are actively pursuing obtaining financing in order to maintain operations while we evaluate potential businesses.
9
In order to maintain operations while we evaluate new businesses we anticipate that we will need additional funding of approximately $100,000 during 2011. We had cash in the amount of $12,047 and a working capital deficit of $1,774,597 as at March 31, 2011. If we are successful in identifying a new business opportunity we will require funding in order to pursue that opportunity. The amount of funding required will depend on the opportunity and is not determinable at this time.
Other than small advances from shareholders, we believe that debt financing will not be an alternative for funding additional phases of our business development as we do not have tangible assets to secure any debt financing. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock. However, we do not have any financing arranged and we cannot provide investors with any assurance that we will be able to obtain sufficient funding from the sale of our common stock to fund our plan of operations. The board is currently considering all avenues available to obtain financing.
Accordingly, we will require continued financial support from our shareholders and creditors until we are able to generate sufficient cash flow from operations on a sustained basis. There is substantial doubt that we will be successful at achieving these results.
Critical Accounting Policies
Critical accounting policies are those that management believes are both most important to the portrayal of the Company’s financial condition and results of operations and that require difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that involve uncertainty.
We believe that the “critical” accounting policies that we use in the preparation of our financial statements are as follows:
a) 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.
b) Foreign currency translation and transactions
Our functional currency is the United States dollar.
Long-term assets and liabilities denominated in a foreign currency are translated into US 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.
c) Stock-based compensation
We account for all stock-based payments to employees and non-employees under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the “Codification”or “ASC”) Topic 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
10
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.
Our financial statements for the quarter ended March 31, 2011 include the accounts of:
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·
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Arvana Networks;
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·
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Arvana Par; and
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·
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Arvana Com;
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Results of Operations
Our operations for the three months ended March 31, 2011 and 2010 are summarized below.
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Three months
ended
March 31, 2011
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Three months
ended
March 31, 2010
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Expenses:
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General and administration
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$ | 53,793 | $ | 24,869 | ||||
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Depreciation
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- | 75 | ||||||
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Interest
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11,233 | 10,479 | ||||||
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Foreign exchange (gain) loss
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41,889 | (24,522 | ) | |||||
| 106,915 | 10,901 | |||||||
General and Administrative Expenses
General and administrative expenses are comprised of costs associated with management compensation, office overhead including rent, legal fees, and consulting services. The changes in our administrative expenses for the three months ended March 31, 2011 compared to March 31, 2010 are due to increased activities related to investigating new business opportunities.
Comprehensive Income (Loss) for the Period
We had a comprehensive loss for the three months ended March 31, 2011 of $106,915 compared with a comprehensive loss of $10,901 for the three months ended March 31, 2010. Our comprehensive income and loss fluctuate significantly due to unrealized foreign exchange gains and losses incurred due to the level of our liabilities payable in foreign currencies. Future quarterly expenses are expected to be comparable to the current quarter until such time as a new business is entered into, net losses if any due to any new business cannot be estimated at this time.
Liquidity and Capital Resources
As at March 31, 2011, we had cash of $12,047 and a working capital deficit of $1,774,597. This compares to cash of $2,074 and working capital deficit of $1,667,682 as at December 31, 2010.
11
Cash Used in Operating Activities
We used cash in operations in the amount of $27 during the three months ended March 31, 2011, as compared to $2,243 during the three months ended March 31, 2010. Cash used in operations during the three months ended March 31, 2011 was attributable primarily to payments for administration expenses.
Cash Used in Investing Activities
We did not use cash in investing activities during the three months ended March 31, 2011 or the three months ended March 31, 2010.
Cash Flows from Financing Activities
We obtained $10,000 from unsecured loans bearing 6% interest per annum during the three months ended March 31, 2011. During the three months ended March 31, 2010, we obtained $14,764 from unsecured loans bearing 6% interest per annum.
Going Concern
For the three months ended March 31, 2011, we had a comprehensive loss of $106,915. At March 31, 2011, we had a working capital deficiency of $1,774,597. These conditions raise substantial doubt about our ability to continue as a going concern. We have not attained profitable operations and are dependent upon obtaining financing to pursue our plan of operations. Our auditors stated in their report on our December 31, 2010 audited financial statements that they have substantial doubt we will be able to continue as a going concern.
Future Financings
We anticipate continuing to rely on 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.
Off-Balance Sheet Arrangements
We have no 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.
Not required for smaller reporting companies.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
Evaluation of 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 March 31, 2011 (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
12
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.
Notwithstanding the assessment that our internal control over financial reporting was not effective and that there were material weaknesses as identified in this report, we believe that our financial statements contained in our Quarterly Report on Form 10-Q for the period ended March 31, 2011 fairly present our financial condition, results of operations and cash flows in all material respects.
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.
Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting, as of the Evaluation Date, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its evaluation under this framework, management concluded that our internal control over financial reporting was not effective as of the Evaluation Date.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of Evaluation Date and identified the following material weaknesses:
Inadequate Segregation of Duties: We have an inadequate number of personnel to properly implement control procedures.
Management is committed to improving its internal controls and will (1) continue to use third party specialists to address shortfalls in staffing and to assist the Company with accounting and finance responsibilities, (2) increase the
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frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel.
Management, including our Chief Executive Officer and Chief Financial Officer, has discussed the material weakness noted above with our independent registered public accounting firm. Due to the nature of this material weakness, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected.
Changes in internal control over financial reporting
As of the Evaluation Date, there were no changes in our internal control over financial reporting that occurred during the period ended March 31, 2011 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the effectiveness of controls and procedures
Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that the our controls and procedures will prevent all potential errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
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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. (Removed and Reserved)
Item 5. Other Information
None.
The following exhibits are included with this Quarterly Report on Form 10-Q:
|
Exhibit
Number
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Description of Exhibit
|
|
2.1
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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)
|
|
31.1
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act(5)
|
|
31.2
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act(5)
|
|
32.1
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(5)
|
|
32.2
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(5)
|
|
(1)
|
Incorporated by reference to the exhibits to the Company’s Current Report on Form 8-K filed with the SEC on August 19, 2005.
|
|
(2)
|
Incorporated by reference to the exhibits to the Company’s registration statement on Form 10-SB filed with
|
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| the SEC on May 24, 2000. | |
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(3)
|
Incorporated by reference to the exhibits to the Company’s Current Report on Form 8-K filed with the SEC on October 12, 2010.
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(4)
|
Incorporated by reference to the exhibits to the Company’s Current Report on Form 8-K filed with the SEC on June 7, 2006.
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(5)
|
Filed as an exhibit to this Quarterly Report on Form 10-Q.
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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.
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By:
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/s/ Zahir Dhanani
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|
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Zahir Dhanani, Chief Executive Officer
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||
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Date:
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May 15, 2011
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By:
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/s/ Arnold Tinter
|
|
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Arnold Tinter, Chief Financial Officer
|
||
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Date:
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May 15, 2011
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EXHIBIT INDEX
|
Exhibit
Number
|
Description of Exhibit
|
|
2.1
|
Agreement and Plan of Reorganization between the Company, Arvana Networks, Inc. and the Shareholders of Arvana Networks, Inc. dated August 18, 2005(1)
|
|
3.1
|
Articles of Incorporation(2)
|
|
3.2
|
Bylaws, as amended(2)
|
|
3.3
|
Amendment to Articles of Incorporation(3)
|
|
10.1
|
2006 Stock Option Plan, dated June 5, 2006(4)
|
|
31.1
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act(5)
|
|
31.2
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act(5)
|
|
32.1
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(5)
|
|
32.2
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(5)
|
|
(1)
|
Incorporated by reference to the exhibits to the Company’s Current Report on Form 8-K filed with the SEC on August 19, 2005.
|
|
(2)
|
Incorporated by reference to the exhibits to the Company’s registration statement on Form 10-SB filed with the SEC on May 24, 2000.
|
|
(3)
|
Incorporated by reference to the exhibits to the Company’s Current Report on Form 8-K filed with the SEC on October 12, 2010.
|
|
(4)
|
Incorporated by reference to the exhibits to the Company’s Current Report on Form 8-K filed with the SEC on June 7, 2006.
|
|
(5)
|
Filed as an exhibit to this Quarterly Report on Form 10-Q.
|
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