Attached files
| file | filename |
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| EXCEL - IDEA: XBRL DOCUMENT - ARVANA INC | Financial_Report.xls |
| EX-31 - CERTIFICATION - ARVANA INC | exhibit31.htm |
| EX-32 - CERTIFICATION - ARVANA INC | exhibit32.htm |
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 September 30, 2014.
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.)
700 Lavaca Street, Suite 1400, Austin, Texas 78701
(Address of principal executive offices) (Zip Code)
(512) 462-3327
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 November 13, 2014, was 885,130.
1
TABLE OF CONTENTS
PART 1- FINANCIAL INFORMATION
Financial Statements:
3
Management's Discussion and Analysis of Financial Condition and Results of Operations
13
Quantitative and Qualitative Disclosures about Market Risk
18
Controls and Procedures
18
PART II-OTHER INFORMATION
Legal Proceedings
19
Unregistered Sales of Equity Securities and Use of Proceeds
19
Defaults Upon Senior Securities
19
Mine Safety Disclosures
19
Other Information
19
Exhibits
19
20
2
ITEM 1.
FINANCIAL STATEMENTS
As used herein, the terms “Company,” “we,” “our,” “us,” “it,” and “its” refer to Arvana, Inc., a Nevada
corporation 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)
September 30,
December 31,
2014
2013
ASSETS
Current assets:
Cash
$
702
$
321
Total assets
$
702
$
321
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities
Accounts payable and accrued liabilities
$
1,045,578
$
1,056,941
Loans payable to stockholders (Note 3)
661,794
666,511
Loans payable to a related party (Note 3)
33,644
34,950
Loans payable (Note 3)
143,929
144,402
Amounts due to related parties (Note 3)
481,430
493,534
Total current liabilities
2,366,375
2,396,338
Stockholders' deficiency
Common stock, $0.001 par value 5,000,000 authorized,
885,130 shares issued and outstanding at
September 30, 2014 and December 31, 2013 (Note 4)
885
885
Additional paid-in capital
21,166,619
21,166,619
Deficit
(23,529,841)
(23,560,185)
(2,362,337)
(2,392,681)
Less: Treasury stock – 2,085 common shares at
September 30, 2014 and December 31, 2013
(3,336)
(3,336)
Total stockholders’ deficiency
(2,365,673)
(2,396,017)
$
702
$
321
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Arvana Inc.
Condensed Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2014 and 2013
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2014
2013
2014
2013
Operating expenses
General and administrative
$
9,010 $
8,666 $
25,831 $
53,570
Total operating expenses
9,010
8,666
25,831
53,570
Loss from operations
(9,010)
(8,666)
(25,831)
(53,570)
Interest expense
(12,536)
(12,623)
(38,004)
(36,790)
Foreign exchange gain (loss)
86,944
(38,946)
94,179
12,444
Net income (loss) and
Comprehensive income (loss)
$
65,398 $
(60,235) $
30,344 $
(77,916)
Per share information - basic and diluted:
Weighted average shares outstanding
885,130
885,130
885,130
885,130
Net income (loss) per share
$
0.07 $
(0.07) $
0.03 $
(0.09)
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)
Nine Months Ended
September 30,
2014
2013
Cash flows from (used in) operating activities
Net income (loss)
$
30,344
$
(77,916)
Item not involving cash:
Unrealized foreign exchange
(90,671)
(12,548)
Changes in non-cash working capital:
Accounts payable and accrued liabilities
34,594
29,975
Amounts due to related parties
1,514
35,494
Net cash used in operations
(24,219)
(24,995)
Cash flows from investing activities
Net cash used in investing activities
-
-
Cash flows from financing activities
Proceeds of loans payable to stockholders
24,600
24,082
Net cash provided by financing activities
24,600
24,082
Increase (decrease) in cash
381
(913)
Cash , beginning of period
321
1,254
Cash, end of period
$
702
$
341
There were no non-cash investing and financing transactions for the nine month periods ended September
30, 2014 and 2013.
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
Arvana Inc.
Notes to Condensed Consolidated Financial Statements
September 30, 2014
(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, with authorized common stock of 2,500 shares with a par
value of $0.25. On October 16, 1998, the authorized capital stock was increased to 100,000,000 common
shares with a par value of $0.001 and a forward common stock split of eight shares for each outstanding
share. In 2005, we completed another forward common stock split of nine shares for each outstanding
share. On July 24, 2006, the shareholders approved a change of the Company’s name from Turinco, Inc.
to Arvana Inc. On September 30, 2010, the authorized capital stock was decreased to 5,000,000 common
shares with a par value of $0.001 and effected a reverse split of one share for every twenty shares
outstanding.
These condensed consolidated financial statements for the nine month period ended September 30, 2014
include the accounts of the Company and its subsidiary Arvana Networks Inc. (including its wholly-
owned subsidiaries, Arvana Participaçōes S.A. (“Arvana Par”) and Arvana Comunicações do Brasil S. A.
(“Arvana Com”)). The Company has ceased all operations in its subsidiary companies, and has written-
off or disposed of all assets in the subsidiary companies, consequently they are now all considered to be
inactive subsidiaries.
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 nine
month period ended September 30, 2014, the Company incurred net income from operations of $30,344.
At September 30, 2014, the Company had a working capital deficiency of $2,365,673. 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
September 30, 2014
(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 and nine months ended September 30, 2014 and 2013,
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, 2013, as filed with
the Securities and Exchange Commission (the “SEC”) on March 31, 2014.
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
September 30, 2014
(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 September 30, 2014 and December
31, 2013 follows:
September 30,
December 31,
2014
2013
Carrying
Fair
Carrying
Fair
Amount
Value
Amount
Value
Cash
$702
$702
$321
$321
Accounts payable and accrued liabilities
1,045,578
1,045,578
1,056,941
1,056,941
Loans payable to stockholders
661,794
661,794
666,511
666,511
Loans payable to related party
33,644
33,644
34,950
34,950
Loans payable
143,929
143,929
144,402
144,402
Amounts due to related parties
481,430
481,430
493,534
493,534
The following table presents information about the assets that are measured at fair value on a recurring
basis as of September 30, 2014, 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
September 30,
Markets
Inputs
Inputs
2014
(Level 1)
(Level 2)
(Level 3)
Assets:
Cash
$
702
$
702
$
-
$
-
The fair value of cash is determined through market, observable and corroborated sources.
9
Arvana Inc.
Notes to Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
(Expressed in U.S. Dollars)
2. Summary of Significant Accounting Policies (continued)
Recent accounting pronouncements
In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(ASU) No. 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial
Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810,
Consolidation”. This ASU does the following, among other things: a) eliminates the requirement to
present inception-to-date information on the statements of income, cash flows, and shareholders' equity,
b) eliminates the need to label the financial statements as those of a development stage entity, c)
eliminates the need to disclose a description of the development stage activities in which the entity is
engaged, and d) amends FASB ASC 275, “Risks and Uncertainties”, to clarify that information on risks
and uncertainties for entities that have not commenced planned principal operations is required. The
amendments in ASU No. 2014-10 related to the elimination of Topic 915 disclosures and the additional
disclosure for Topic 275 are effective for public companies for annual and interim reporting periods
beginning after December 15, 2014. Early adoption is permitted. The Company has evaluated this ASU
and early adopted beginning with the period ended June 30, 2014.
In May 2014, the FASB released ASU 2014-9 - Accounting Standards Update 2014-9, Topic 606:
Revenue from Contracts with Customers that outlines a single comprehensive model for entities to use in
accounting for revenue arising from contracts with customers and supersedes most current revenue
recognition guidance, including industry-specific guidance. The guidance is based on the principle that an
entity should recognize revenue to depict the transfer of goods or services to customers in an amount that
reflects the consideration to which the entity expects to be entitled in exchange for those goods or
services. The guidance also requires additional disclosure about the nature, amount, timing and
uncertainty of revenue and cash flows arising from customer contracts, including significant judgments
and changes in judgments and assets recognized from costs incurred to fulfill a contract. Entities have the
option of using either a full retrospective or a modified retrospective approach for the adoption of the new
standard. This guidance becomes effective for annual reporting periods beginning after December 15,
2016 and early adoption is not permitted. The Company is currently assessing the impact that this
standard will have on its financial statements.
10
Arvana Inc.
Notes to Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
(Expressed in U.S. Dollars)
3. Amounts Due to Related Parties and Loans Payable to Stockholders
From February, 2007, until September 30, 2014, the Company received a number of loans from
stockholders, related parties and unrelated third parties. As of September 30, 2014, the Company had
received loans of $661,794 (Euro 225,000; CAD 72,300; $313,107) (December 31, 2013 - $666,511:
Euro 225,000; CAD 72,300; $288,507) from stockholders, loans of $33,644 (CAD 27,600; $9,000)
(December 31, 2013 – $34,950: CAD 27,600; $9,000) from a related party and loans of $143,929 (CAD
10,000; $ 135,000) (December 31, 2013 – $ 144,402: CAD 10,000; $135,000) 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 condensed 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 $294,000 and $268,271 is
included in accounts payable and accrued liabilities at September 30, 2014, and December 31, 2013,
respectively. Interest expense recognized on these loans was $12,536 and $38,004 for the three and nine
months ended September 30, 2014, respectively, compared to $12,623 and $36,790 for the three and nine
months ended September 30, 2013, respectively.
At September 30, 2014, and December 31, 2013, the Company had amounts due to related parties of
$481,430 and $493,534, respectively. This amount includes $136,100 at September 30, 2014, and
December 31, 2013, 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 September 30, 2014 and December 31, 2013, there were no warrants outstanding.
At September 30, 2014 and December 31, 2013, there were no stock options outstanding. No options
were granted, exercised or expired during the nine months ended September 30, 2014 or the year ended
December 31, 2013.
5. Segmented Information
The Company has no reportable segments.
11
Arvana Inc.
Notes to Condensed Consolidated Financial Statements
September 30, 2014
(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 $5,638 paid to a company controlled by our chief executive officer during the
period ended September 30, 2014 compared to consulting fees of $3,651 incurred during the period ended
September 30, 2013.
Our former chief executive officer and former director had 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 September 30, 2014
our former chief executive officer was owed $74,745 (CAD 83,710) for services rendered as an officer,
compared to $78,704 (CAD 83,710) as at December 31, 2013.
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 September 30, 2014 and
December 31, 2013 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 $190,026
(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 $191,658 for unsecured non-interest
bearing amounts due on demand loaned to the Company as of September 30, 2014, compared to $199,481
as of December 31, 2013.
Our former chief executive officer and former director is owed $33,644 for unsecured amounts bearing
6% interest due on demand loaned to the Company as of September 30, 2014, compared to $34,950 as of
December 31, 2013.
Our other former officers are owed a total of $94,802 for their prior services rendered as officers as at
September 30, 2014, compared to $99,083 as of December 31, 2013.
A director of the Company is owed $60,000 as of September 30, 2014 and December 31, 2013 for
services rendered as a director during 2007. Two former directors of the Company are owed $76,100 as of
September 30, 2014 and December 31, 2013 for services rendered as directors during 2007.
7. Subsequent Events
The Company evaluated its September 30, 2014, 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.
12
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other
parts of this quarterly report contain forward-looking statements that involve risks and uncertainties.
Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,”
“plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future
performance and our actual results may differ significantly from the results discussed in the forward-
looking statements. Factors that might cause such differences include but are not limited to those
discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future
Results and Financial Condition below. The following discussion should be read in conjunction with our
financial statements and notes thereto included in this report. Our fiscal year end is December 31. All
information presented herein is based on the three and nine months ended September 30, 2014 and
September 30, 2013.
Overview
The Company is currently in the process of evaluating business opportunities and has minimal operating
levels. We can provide no assurance 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 Operation
The Company’s plan of operation over the next twelve months is to identify and acquire a suitable
business opportunity. However, we will not be able to pursue any new business opportunities that we
might identify without additional financing to provide for ongoing operations. Management is actively
seeking new financing to this end while we evaluate potential businesses.
We anticipate that in order to maintain operations while we evaluate new businesses the Company will
need debt or equity funding of at least $50,000 over the next twelve months. Should we be successful in
identifying a new business opportunity the Company will require additional funding to evaluate and
prospectively acquire any given opportunity. The amount of such additional funding will depend on the
business and is not determinable at this time.
Other than shareholder loans, we do not believe that debt financing will be an attractive means of funding
our business development as we do not have tangible assets to secure debt financing. Rather, we
anticipate that future funding will be in the form of shareholder loans and equity financing from the sale
of our common stock. However, we do not currently have any financing arrangements in place and cannot
provide prospective investors with any assurance that we will be able to procure sufficient funding to fund
our plan of operation. Accordingly, we will require continued financial support from our shareholders and
creditors until we are able to generate sufficient net cash flow from active operations on a sustained basis.
Results of Operations
During the nine months ended September 30, 2014, the Company (i) sought out prospective business
opportunities; and (ii) satisfied continuous public disclosure requirements.
13
Our operations for the three and nine months ended September 30, 2014 and 2013 are summarized below.
Three months
Three months
Nine months
Nine months
Ended
Ended
Ended
Ended
September 30,
September 30,
September 30, September 30,
2014
2013
2014
2013
Expenses:
General and administration
$9,010
$8,666
$25,831
$53,570
Interest
12,536
12,623
38,004
36,790
Foreign exchange (gain) loss
(86,944)
38,946
(94,179)
(12,444)
Net (income) loss and
comprehensive
(income) loss for the period
($65,398)
$60,235
($30,344)
$77,916
Net Income/Loss
Net income for the three months ended September 30, 2014 was $65,398 as compared to net loss of
$60,235 for the three months ended September 30, 2013. The transition to net income over the
comparative three months period can be attributed to the gain on unrealized foreign exchange in the
current three month period and the decrease in interest expense, offset by the increase in general and
administrative expenses. The gain on unrealized foreign exchange is due to volatility in the value of
foreign currencies against the US dollar, which volatility impacts the cost of those expenses that are
payable in foreign currencies.
Net income for the nine months ended September 30, 2014 was $30,344 as compared to a net loss of
$77,916 for the nine months ended September 30, 2013. The transition to net income over the
comparative nine month periods can be attributed to the increase in the gain on unrealized foreign
exchange in the current nine month period and the decrease in interest expense, offset by the decline in
general and administrative expenses in the current nine month period. The gain on unrealized foreign
exchange is due to volatility in the value of foreign currencies against the US dollar, which volatility
impacts the cost of those expenses 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 three and nine months 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 nine month period ended September
30, 2014.
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.
14
Liquidity and Capital Resources
Since inception, the Company has experienced significant changes in liquidity, capital resources, and
stockholders’ deficit.
The Company had current and total assets of $702 as of September 30, 2014, consisting solely of cash
and a working capital deficit of $2,365,673, as compared to current and total assets of $321, consisting
solely of cash and a working capital deficit of $2,396,017 as of December 31, 2013. Net stockholders'
deficit in the Company was $2,365,673 at September 30, 2014, as compared to a net stockholder’s deficit
in the Company of $2,396,017 at December 31, 2013.
Cash Used in Operating Activities
Cash flow used in operating activities for the nine month period ended September 30, 2014 was $24,219
as compared to $24,995 for the nine month period ended September 30, 2013, which differences reflect
the comparative decrease in general and administrative expenses, increases in gain on unrealized foreign
exchange and changes in working capital in the current nine month period. General and administrative
expenses include but are not limited to, personnel costs, accounting fees, consulting expenses, and
professional fees, accounts payable and accrued expenses. Net cash used in operating activities in the
prior nine month period can also be primarily attributed to general and administrative expenses and
changes in other assets, accounts payable and accrued expenses.
We expect to continue to use cash flow in operating activities over the next twelve months or until such
time as the Company can generate sufficient revenue to transition net income from operations.
Cash Used in Investing Activities
We do expect to use cash flow in investing activities in connection with the development or acquisition of
a suitable business opportunity. Until such time as such unidentified opportunity is concluded, we do not
expect to use cash flows in investing activities.
Cash Flows from Financing Activities
Cash flow provided by financing activities for the nine months ended September 30, 2014, increased to
$24,600 as compared to $24,082 for the nine months ended September 30, 2013. The increase in cash
flow provided from financing activities over the comparative nine month periods can be attributed to the
increase in unsecured loan amounts procured from shareholders.
We expect to continue to use cash flow provided by financing activities to procure sufficient funds to
maintain operations in order 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. We will have to seek at least $50,000 in debt or equity financing over the next twelve months to
maintain operations. The Company has no current commitments or arrangements with respect to, or
immediate sources of this funding. Further, no assurances can be given that funding is available. The
Company’s shareholders are the most likely source of new funding in the form of loans or equity
placements though none have made any commitment for future investment and the Company has no
agreement formal or otherwise. The Company’s inability to obtain sufficient funding to maintain
operations will have a material adverse affect on its ability to fulfill its current plan of operation to search
for suitable business opportunities.
15
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, 2014.
The Company had no commitments for future capital expenditures that were material at September 30,
2014.
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, 2014, 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 financial statements for the years ended December 31, 2013 and 2012, 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.
16
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 $23,529,841 since inception and negative cash flows
from operating activities as of September 30, 2014. The Company’s ability to continue as a going
concern is subject to the ability of the Company to realize a profit and /or obtain funding from outside
sources. Management’s plan to address the Company’s ability to continue as a going concern includes:
(i) obtaining funding from the private placement of debt or equity; and (ii) realizing revenues from its
prospective development or acquisition of a suitable business opportunity. Management believes that it
will be able to obtain funding to allow the Company to remain a going concern through the methods
discussed above, though there can be no assurances that such methods will prove successful.
Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition
The statements contained in the section titled Management’s Discussion and Analysis of Financial
Condition and Results of Operations and elsewhere in this current report, with the exception of historical
facts, are forward-looking statements. Forward-looking statements reflect our current expectations and
beliefs regarding our future results of operations, performance, and achievements. These statements are
subject to risks and uncertainties and are based upon assumptions and beliefs that may or may not
materialize. These statements include, but are not limited to, statements concerning:
§ our anticipated financial performance and business plan;
§ the sufficiency of existing capital resources;
§ our ability to raise 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.
17
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Not required.
Item 4.
Controls and Procedures
Disclosure Controls and Procedures
In connection with the preparation of this report on Form 10-Q, an evaluation was carried out by the
Company’s management, with the participation of the chief executive officer and 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”)). 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 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.
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, 2014, that materially affected, or are
reasonably likely to materially affect, the Company’s internal control over financial reporting.
18
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
21 of this Form 10-Q, and are incorporated herein by this reference.
19
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: November 13, 2014
20
INDEX TO EXHIBITS
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)
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule
13a-14(a) of the Exchange Act(5)
Certification of Chief Executive Officer and 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)
101. INS
XBRL Instance Document†
101. PRE
XBRL Taxonomy Extension Presentation Linkbase†
101. LAB
XBRL Taxonomy Extension Label Linkbase†
101. DEF
XBRL Taxonomy Extension Label Linkbase†
101. CAL
XBRL Taxonomy Extension Label Linkbase†
101. SCH
XBRL Taxonomy Extension Schema†
(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.
†
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.
21