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 SEPTEMBERJUNE 30, 20212022.
☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to .FROM _____TO_____.
Commission file number: 0-30695
ARVANA INC.
(Exact name of registrant as specified in its charter)
Nevada incorporation or organization) | 87-0618509 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer |
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.
Large accelerated filer ☐ | Accelerated filer ☐ | |
Non-accelerated filer ☐ | Smaller reporting company ☒ | |
Emerging growth company ☐ |
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, 2021,August 22, 2022, was .
1 |
TABLE OF CONTENTS
PART I | FINANCIAL INFORMATION | |
Item 1. | Financial Statements | 3 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
Item 3. | Quantitative and Qualitative Disclosure About Market Risk | |
Item 4. | Controls and Procedures | 18 |
PART II | OTHER INFORMATION | |
Item 1. | Legal Proceedings | 19 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
Item 3. | Defaults Upon Senior Securities | |
Item 4. | Mine Safety Disclosures | |
Item 5. | Other Information | |
Item 6. | Exhibits | |
Signatures |
2 |
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.
3 |
Arvana Inc.ARVANA INC.
Condensed Interim Balance Sheets
(Unaudited) BALANCE SHEETS
June 30, 2022, and December 31, 2021
September 30 | December 31 | |||||||
2021 | 2020 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash | $ | 19 | $ | 4,994 | ||||
Total assets | $ | 19 | $ | 4,994 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIENCY | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities (Note 5) | $ | 39,176 | $ | 867,710 | ||||
Convertible loan (Note 8) | 0 | 107,800 | ||||||
Loans payable to stockholders (Note 3) | 0 | 522,552 | ||||||
Loans payable to related party (Note 3) | 200 | 130,677 | ||||||
Loans payable (Note 3) | 0 | 74,664 | ||||||
Amounts due to related parties (Note 7) | 35,298 | 352,651 | ||||||
Total current liabilities | 74,674 | 2,056,054 | ||||||
Stockholders' deficiency | ||||||||
Common stock, $par value authorized, and shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively | 34,149 | 4,611 | ||||||
Additional paid-in capital | 35,956,574 | 21,290,189 | ||||||
Deficit | (36,062,042 | ) | (23,972,524 | ) | ||||
Total Stockholders' deficiency before treasury stock | (71,319 | ) | (2,047,724 | ) | ||||
Less: Treasury stock – common shares at September 30, 2021 and December 31, 2020, respectively | (3,336 | ) | (3,336 | ) | ||||
Total stockholders’ deficiency | (74,655 | ) | (2,051,060 | ) | ||||
Total liabilities and stockholders’ deficit | $ | 19 | $ | 4,994 |
The accompanying notes are an integral part of these condensed interim financial statements.
Arvana Inc.
Condensed Interim Statements of Operations and Comprehensive Loss
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Operating expenses | ||||||||||||||||
General and administrative | 4,740 | 12,224 | 11,854 | 35,382 | ||||||||||||
Professional fees | 42,798 | 5,149 | 64,005 | 23,105 | ||||||||||||
Total operating expenses | $ | 47,538 | $ | 17,373 | $ | 75,859 | $ | 58,487 | ||||||||
Loss from operations | (47,538 | ) | (17,373 | ) | (75,859 | ) | (58,487 | ) | ||||||||
Interest expense | 0 | (13,318 | ) | (19,122 | ) | (39,441 | ) | |||||||||
Foreign exchange gain (loss) | 250 | (36,900 | ) | 6,709 | (11,512 | ) | ||||||||||
Other income (Note 9) | 0 | 0 | 458,833 | 0 | ||||||||||||
Loss on debt settlements (Note 5) | (12,460,079 | ) | 0 | (12,460,079 | ) | 0 | ||||||||||
Net loss and comprehensive loss | $ | (12,507,367 | ) | $ | (67,591 | ) | $ | (12,089,518 | ) | $ | (109,440 | ) | ||||
Per common share information - basic and diluted: | ||||||||||||||||
Weighted average shares outstanding | 27,085,120 | 2,005,070 | 12,103,727 | 1,700,291 | ||||||||||||
Net loss per common shares – basic and diluted | $ | (0.46 | ) | $ | (0.03 | ) | $ | (1.00 | ) | $ | (0.06 | ) |
The accompanying notes are an integral part of these condensed interim financial statements.
Arvana Inc.
Condensed Interim Statements of Cash Flows
(Unaudited)
Nine Months Ended | ||||||||
September 30, | ||||||||
2021 | 2020 | |||||||
Cash flows from operating activities | ||||||||
Net loss for the period | $ | (12,089,518 | ) | $ | (109,440 | ) | ||
Items not involving cash: | ||||||||
Other income | (458,833 | ) | 0 | |||||
Loss on debt settlements | 12,460,079 | 0 | ||||||
Interest expense | 19,122 | 39,441 | ||||||
Foreign exchange | (12,050 | ) | 11,512 | |||||
Changes in non-cash working capital: | ||||||||
Accounts payable and accrued liabilities | 24,960 | 18,904 | ||||||
Amounts due to related parties | 34,940 | 8,148 | ||||||
Net cash used in operations | (21,300 | ) | (31,435 | ) | ||||
Cash flows from investing activities | ||||||||
Net cash used in investing activities | 0 | 0 | ||||||
Cash flows from financing activities | ||||||||
Proceeds of loans payable | 16,325 | 30,000 | ||||||
Net cash provided by financing activities | 16,325 | 30,000 | ||||||
Change in cash | (4,975 | ) | (1,435 | ) | ||||
Cash, beginning of period | 4,994 | 2,346 | ||||||
Cash, end of period | $ | 19 | $ | 911 | ||||
Supplementary information | ||||||||
Cash paid for interest | $ | 0 | $ | 0 | ||||
Cash paid for income taxes | $ | 0 | $ | 0 |
The accompanying notes are an integral part of these condensed interim financial statements.
Arvana Inc.
Supplemental Disclosure of Cash Flow Information
(Unaudited)
Nine Months Ended | ||||||||
September 30, | ||||||||
2021 | 2020 | |||||||
Debt forgiveness included in amounts due to related parties, accounts payable and accrued liabilities (Note 9) | $ | 458,833 | $ | 0 | ||||
Shares issued for debt settlement (Note 5) | $ | 14,065,923 | $ | 97,104 |
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 13,195 | $ | 3,340 | ||||
Total current assets | 13,195 | 3,340 | ||||||
Total assets | $ | 13,195 | $ | 3,340 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 26,561 | $ | 54,931 | ||||
Accrued liabilities | 2,500 | 0 | ||||||
Loans payable stockholders | 36,416 | 15,500 | ||||||
Related party payables | 59,307 | 34,494 | ||||||
Total current liabilities | 124,784 | 104,925 | ||||||
Total liabilities | 124,784 | 104,925 | ||||||
Stockholders' deficit: | ||||||||
Common stock, $ par value, shares authorized, issued and outstanding atJune 30, 2022, and December 31, 2021, respectively | 34,149 | 34,149 | ||||||
Additional paid-in capital | 35,956,574 | 35,956,574 | ||||||
Accumulated deficit | (36,098,976 | ) | (36,088,972 | ) | ||||
Total stockholders' deficiency before treasury stock | (108,253 | ) | (98,249 | ) | ||||
Less treasury stock - common shares at June 30, 2022 and December 31, 2021, respectively | (3,336 | ) | (3,336 | ) | ||||
Total stockholder deficiency | (111,589 | ) | (101,585 | ) | ||||
Total liabilities and stockholders' deficit | $ | 13,195 | $ | 3,340 |
The accompanying notes are an integral part of these condensed interim financial statements.
Arvana Inc.
ARVANA INC.
Statements of Stockholders' DeficiencySTATEMENTS OF OPERATIONS
(Unaudited)Three and Six Months Ended June 30, 2022 and 2021
Common Shares | Treasury | |||||||||||||||||||||||||||
Shares | Amount | Additional Paid-in Capital | Deficit | Shares | Amount | Total Stockholders’ Deficiency | ||||||||||||||||||||||
Balance, December 31, 2019 | 1,034,030 | 1,034 | 21,283,517 | (23,494,928 | ) | (2,085 | ) | (3,336 | ) | (2,213,713 | ) | |||||||||||||||||
Debt settlement | 971,040 | 971 | 96,133 | 97,104 | ||||||||||||||||||||||||
Net income for the period ended March 31, 2020 | — | 22,456 | — | 22,456 | ||||||||||||||||||||||||
Balance, March 31, 2020 | 2,005,070 | 2,005 | 21,379,650 | (23,472,472 | ) | (2,085 | ) | (3,336 | ) | (2,094,153 | ) | |||||||||||||||||
Net income for the period ended June 30, 2020 | — | — | (64,305 | ) | — | (64,305 | ) | |||||||||||||||||||||
Balance, June 30, 2020 | 2,005,070 | 2,005 | 21,379,650 | (23,536,777 | ) | (2,085 | ) | (3,336 | ) | (2,158,458 | ) | |||||||||||||||||
Net income for the period ended September 30, 2020 | — | — | (67,591 | ) | — | (67,591 | ) | |||||||||||||||||||||
Balance, September 30, 2020 | 2,005,070 | 2,005 | 21,379,650 | (23,604,368 | ) | (2,085 | ) | (3,336 | ) | (2,226,049 | ) | |||||||||||||||||
Debt settlement | 2,605,600 | 2,606 | 540,539 | 543,145 | ||||||||||||||||||||||||
Net income for the period ended December 31, 2020 | — | (368,156 | ) | — | (368,156 | ) | ||||||||||||||||||||||
Balance, December 31, 2020 | 4,610,670 | 4,611 | 21,920,189 | (23,972,524 | ) | (2,085 | ) | (3,336 | ) | (2,051,060 | ) | |||||||||||||||||
Net income for the period ended March 31, 2021 | — | — | (2,259 | ) | — | (2,259 | ) | |||||||||||||||||||||
Balance, March 31, 2021 | 4,610,670 | 4,611 | 21,920,189 | (23,974,783 | ) | (2,085 | ) | (3,336 | ) | (2,053,319 | ) | |||||||||||||||||
Net income for the period ended June 30, 2021 | — | — | 420,108 | — | 420,108 | |||||||||||||||||||||||
Balance, June 30, 2021 | 4,610,670 | 4,611 | 21,920,189 | (23,554,675 | ) | (2,085 | ) | (3,336 | ) | (1,633,211 | ) | |||||||||||||||||
Debt settlement | 29,537,848 | 29,538 | 14,036,385 | 14,065,923 | ||||||||||||||||||||||||
Net income for the period ended September 30, 2021 | — | (12,507,367 | ) | — | (12,507,367 | ) | ||||||||||||||||||||||
Balance, September 30, 2021 | 34,148,518 | $ | 34,149 | $ | 35,956,574 | $ | (36,062,042 | ) | (2,085 | ) | $ | (3,336 | ) | $ | (74,655 | ) |
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Operating Expenses: | ||||||||||||||||
General and administrative expenses | $ | 10,720 | $ | 3,754 | $ | 16,856 | $ | 7,114 | ||||||||
Professional Fees | 5,061 | 13,894 | 7,561 | 21,207 | ||||||||||||
Loss from operations | (15,781 | ) | (17,648 | ) | (24,417 | ) | (28,321 | ) | ||||||||
Other income (expense): | ||||||||||||||||
Interest expense | (393 | ) | (6,823 | ) | (587 | ) | (19,122 | ) | ||||||||
Foreign exchange gain (loss) | 0 | (14,254 | ) | 0 | 6,459 | |||||||||||
Other income | 15,000 | 458,833 | 15,000 | 458,833 | ||||||||||||
Total other income expenses | 14,607 | 437,756 | 14,413 | 446,170 | ||||||||||||
Income (loss) before income taxes | (1,174 | ) | 420,108 | (10,004 | ) | 417,849 | ||||||||||
Provision for income taxes | 0 | 0 | 0 | 0 | ||||||||||||
Net income | $ | (1,174 | ) | $ | 420,108 | $ | (10,004 | ) | $ | 417,849 | ||||||
Loss per common share - basic and diluted | (0.00 | ) | $ | 0.09 | (0.00 | ) | $ | 0.09 | ||||||||
Weighted average common shares outstanding – basic and diluted | 34,148,518 | 4,610,670 | 34,148,518 | 4,610,670 |
The accompanying notes are an integral part of these condensed interim financial statements.
5 |
ARVANA INC.
STATEMENTS OF STOCKHOLDERS EQUITY
Six month periods ended June 30, 2022, and 2021
Additional | Total | |||||||||||||||||||||||||||
Common Shares | Paid-in | Treasury | Stockholders’ | |||||||||||||||||||||||||
Shares | Amount | Capital | Deficit | Shares | Amount | Deficiency | ||||||||||||||||||||||
Balance January 1, 2021 | 4,610,670 | $ | 4,611 | $ | 21,920,189 | $ | (23,972,524 | ) | (2,085 | ) | $ | (3,336 | ) | $ | (2,051,060 | ) | ||||||||||||
Net loss for the period ended March 31, 2021 | — | — | — | (2,259 | ) | — | — | (2,259 | ) | |||||||||||||||||||
Balance March 31, 2021 | 4,610670 | 4,611 | 21,920,189 | (23,974,783 | ) | (2,085 | ) | (3,336 | ) | (2,053,319 | ) | |||||||||||||||||
Net income for the period ended June 30, 2021 | — | — | — | 420,108 | — | — | 420,108 | |||||||||||||||||||||
Balance June 30, 2021 | 4,610,670 | $ | 4,611 | $ | 21,920,189 | $ | (23,554,675 | ) | (2,085 | ) | $ | (3,336 | ) | $ | (1,633,211 | ) |
The accompanying notes are an integral part of these condensed interim financial statements.
6 |
ARVANA INC.
STATEMENTS OF STOCKHOLDERS EQUITY
Six month periods ended June 30, 2022, and 2021
Additional | Total | |||||||||||||||||||||||||||
Common Shares | Paid in | Treasury | Stockholders’ | |||||||||||||||||||||||||
Shares | Amount | Capital | Deficit | Shares | Amount | Deficit | ||||||||||||||||||||||
Balance January 1, 2022 | 34,148,518 | $ | 34,149 | $ | 35,956,574 | $ | (36,088,972 | ) | (2,085 | ) | $ | (3,336 | ) | $ | (101,585 | ) | ||||||||||||
Net loss for the period ended March 31, 2022 | — | — | — | (8,830 | ) | — | — | (8,830 | ) | |||||||||||||||||||
Balance March 31, 2022 | 34,148,518 | 34,149 | 35,956,574 | (36,097,802 | ) | (2,085 | ) | (3,336 | ) | 110,415 | ||||||||||||||||||
Net loss for the period ended June 30, 2022 | — | — | — | (1,174 | ) | — | — | (1,174 | ) | |||||||||||||||||||
Balance, June 30, 2022 | 34,148,518 | $ | 34,149 | $ | 35,956,574 | $ | (36,098,976 | ) | (2,085 | ) | $ | (3,336 | ) | $ | (111,589 | ) |
The accompanying notes are an integral part of these condensed interim financial statements.
7 |
ARVANA INC.
STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2022 and 2021
Six Months Ended June 30, | ||||||||
2022 | 2021 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | (10,004 | ) | $ | 417,849 | |||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
Interest expense | 0 | (19,122 | ) | |||||
Unrealized foreign exchange | 0 | 4,074 | ||||||
Other income | 0 | (458,833 | ) | |||||
Changes in non-cash working capital: | ||||||||
Accounts payable | (28,370 | ) | 42,028 | |||||
Accrued liabilities | 2,500 | |||||||
Related party payables | 24,813 | 8,487 | ||||||
Net cash used in operating activities | (11,061 | ) | (5,517 | ) | ||||
Cash flows from investing activities: | ||||||||
Net cash used in investing activities | 0 | 0 | ||||||
Cash flows from financing activities: | ||||||||
Proceeds from loans payable stockholders | 20,916 | 16,125 | ||||||
Net cash provided by financing activities | 20,916 | 16,125 | ||||||
Net increase in cash | 9,855 | 10,608 | ||||||
Cash, beginning of period | 3,340 | 4,994 | ||||||
Cash, end of period | $ | 13,195 | $ | 15,602 |
The accompanying notes are an integral part of these condensed interim financial statements.
8 |
Arvana Inc.ARVANA INC.
Notes to Condensed Interim Financial StatementsCONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
SeptemberJune 30, 20212022
(Unaudited)
1. NatureNote 1 – Organization and Summary of Business and Ability to Continue as a Going ConcernSignificant Accounting Policies
Organization
The Company was incorporated in the State of Nevada on June 16, 1977, as “Turinco, Inc.”, and on July 24, 2006, changed its name to Arvana Inc. to reflect the acquisition of a telecommunications business. We discontinued efforts related to our telecommunications business as of December 31, 2009. The Company is presently focused on evaluating business opportunities for merger or acquisition sufficient to support operations and increase stockholder value.
We entered intoOn March 17, 2016, the Company signed a non-binding memorandum of understanding on March 17, 2016, with the intent of acquiringto acquire a fresh food manufacturer and distributor. On November 11, 2020, we notified the acquisitionintended target that the Company was no longer interested in pursuing the acquisition of its business givendue to the delays attendant to the prospective transaction.
On May 21, 2021, the Company entered intosigned a non-binding term sheet with the intention ofintent on acquiring a multi-media platform and prospectively other businesses.platform. The term sheet required that the owner of the acquisition target first secure voting control of the Company as a pre-condition to his facilitating a transaction. The owner effectively secured voting control on June 30, 2021. On October 26, 2021, the Company entered intosigned a recission agreement and mutual release with the owner of the intended acquisition, due to beingas the parties were unable to agree on the structure of the prospective transaction.
The Company’s present intention is to identify, evaluate and secure a business opportunity to create value for its stockholders.
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, 2021, the Company recognized a net loss and realized a working capital deficiency, which deficiency raises substantial doubt about its ability to continue as a going concern. The Company will continue to require financial support from stockholders and creditors until able to generate its own cash flow from operations.
Failure to obtain the ongoing support of stockholders 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. The Company’s 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.
Arvana Inc.
Notes to Condensed Interim Financial Statements
September 30, 2021
(Unaudited)
2. Summary of Significant Accounting Policies
a) Basis of presentationPresentation
The Company is in the process of evaluating business opportunities and has minimal operating expenses. OurThe Company’s fiscal year end is December 31. The accompanying condensed interim financial statements of Arvana Inc. for the three and ninesix months ended SeptemberJune 30, 20212022, and 2020,2021, 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, 2020,2021, as filed with the Securities and Exchange Commission (“Commission”) on April 9, 2021.21, 2022. Results are not necessarily indicative of those which may be achieved in future periods.
b) 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 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.
9 |
c) Financial instrumentsARVANA INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2022
Note 1 – Organization and Summary of Significant Accounting Policies – (continued)
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 to stockholders, 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 SeptemberJune 30, 20212022, and December 31, 20202021, are as follows:
Estimated fair values | ||||||||||||||||
Carrying Amount | June 30, 2022 Fair Value | Carrying Amount | December 31, 2022 Fair Value | |||||||||||||
Cash | $ | 13,195 | $ | 13,195 | $ | 3,340 | $ | 3,340 | ||||||||
Accounts payable | 26,561 | 26,561 | 54,931 | 54,931 | ||||||||||||
Accrued liabilities | 2,500 | 2,500 | 0 | 0 | ||||||||||||
Loans payable to stockholders | 36,416 | 36,416 | 15,500 | 15,500 | ||||||||||||
Related party payables | 59,307 | 59,307 | 34,494 | 34,494 |
Estimated fair values | ||||||||||||||
September 30, 2021 | December 31, 2020 | |||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||
Cash | $ | 19 | $ | 19 | $4,994 | $ | 4,994 | |||||||
Accounts payable and accrued liabilities | 39,176 | 39,176 | 867,710 | 867,710 | ||||||||||
Convertible loan | 0 | 0 | 107,800 | 107,800 | ||||||||||
Loans payable to stockholders Loans payable to related party | 0 | 0 | 522,522 | 522,522 | ||||||||||
Loans payable to related party | 0 | 0 | 130,677 | 130,677 | ||||||||||
Loans payable | 0 | 0 | 74,664 | 74,664 | ||||||||||
Amounts due to related parties | 35,498 | 35,498 | 352,651 | 352,651 |
Arvana Inc.
Notes to Condensed Interim Financial Statements
September 30, 2021
(Unaudited)
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 SeptemberJune 30, 2021,2022, 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:
Fair Value, Assets Measured on Recurring Basis | |||||||||||||||||
September 30, 2021 | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||
Assets: | |||||||||||||||||
Cash | $ | 19 | $ | 19 | $ | 0 | $ | 0 |
Fair Value, Assets Measured on Recurring Basis | |||||||||||||||
Quoted Prices | Significant Other | Significant | |||||||||||||
In Active | Observable | Unobservable | |||||||||||||
Markets | Inputs | Inputs | |||||||||||||
June 30, 2022 | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Cash | $ | 13,195 | $13,195 | $ | 0 | 0 |
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 –there were no new standards adopted by the Company in this reporting period.
10 |
ARVANA INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2022
TheNote 1 – Organization and Summary of Significant Accounting Policies - (continued)
Additional Footnotes Included By Reference
Except as indicated in the following newNotes, there have been no other material changes in the information disclosed in the notes to the financial statements included in the Company’s Form 10-K for the year ended December 31, 2021, filed with the Securities and amended standards were adoptedExchange Commission. Therefore, those footnotes are included herein by reference.
Note 2 – Going Concern
For the six-month period ended June 30, 2022, the Company forrecognized a net loss of $10,004 as a result of general administrative expenses, professional fees and interest expenses. The Company had a working capital deficiency of $111,589 as of June 30, 2022. These conditions raise substantial doubt about the first time in this reporting period.Company’s ability to continue as a going concern.
The Company’s present intention is to identify, evaluate and secure a business opportunity to create value for its stockholders. During this search the Company will require continued financial support from stockholders and creditors until it is able to generate net cash flow from operations. While the Company is confident that a business opportunity will be identified, the insufficiency of its financial resources casts substantial doubt on whether it will be able to fulfill this objective.
In June 2016,Failure to obtain the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurementongoing support of Credit Lossesstockholders and creditors may indicate that the preparation of these financial statements on Financial Instruments, requiring certain changesa going concern basis is inappropriate, in which case the Company’s assets and liabilities would need to be recognized at their liquidation values. The Company’s financial statements do not include any adjustments relating to the recognitionrecoverability and measurement as well as disclosureclassification of incurredrecorded asset amounts and expected credit losses. In November 2018,liabilities that might arise from this uncertainty.
Note 3 – Stock Options
At June 30, 2022, and December 31, 2021, there were FASB issued ASU 2018-19 to clarify certain aspects ofperiod ended June 30, 2022, and during the new current expected credit losses impairment model in ASU 2016-13. ASU 2018-19 points out that operating lease receivables are withinyear ended December 31, 2021. stock options outstanding. options were granted, exercised, or expired during the
Note 4 – Common Stock
During the scope of ASC 842 rather than ASC 326. The standard became effective forsix months ended June 30, 2022, the Company beginning January 1, 2020. The adoptionissued no shares. During the year ended December 31, 2021, the Company issued shares of this standard did not haveits restricted common stock with 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$14,065,923 to settle $662,251 in this ASU are the result of a broader disclosure project called FASB Concepts Statement, Conceptual Framework for Financial Reporting — Chapter 8: Notesaccounts payable and accrued liabilities, $107,800 in convertible loans, $480,960 in loans payable 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,stockholders, $130,947 in loans payable to related party, $74,762 in loans payable, and financial statement disclosures.$149,124
in amounts due to related parties.
11 |
Arvana Inc.ARVANA INC.
Notes to Condensed Interim Financial StatementsCONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
SeptemberJune 30, 20212022
(Unaudited)
3. Loans Payable
As of September 30, 2021, theNote 5 - Segmented Information
The Company had loans outstanding of $nil has no reportable segments.
0 (December 31, 2020 - $522,552: €225,000; CAD$ 60,000; $199,600) from stockholders; loans of $200 (December 31, 2020Note 6 – $130,677Loans Payable Stockholders: CAD$ 27,600; $109,000) from a related party and loans of $nil
0 (December 31, 2020 – $: CAD$ 10,000; $66,810) from unrelated third parties. The majorityLoans payable stockholders consists of the historical loans bore interest at following:
Schedule of loans payable stockholders | ||||||||
June 30, 2022 | December 31, 2021 | |||||||
Convertible Promissory Notes Payable – unsecured amounts due to a shareholder that bear interest at 5% and mature on September 30, 2022, and are convertible at $0.10 per common share. These amounts include accrued and Unpaid interest. | $ | 36,416 | $ | 15,500 |
6% per annum while $92,935 of the loans were non-interest bearing. The historical loans were made in 3 different currencies, Euros, Canadian Dollars and US Dollars. The balance of accrued interest of $nil 0 and $515,263 is included in accounts payable and accrued expenses at September 30, 2021 and December 31, 2020, respectively. Interest expense recognized on these loansthis loan was $nil $0587 for the threesix months ended SeptemberJune 30, 2021, compared to $10,623 for the three months ended September 30, 2020, respectively. Interest expense recognized on these loans was $16,427 for the nine months ended September 30, 2021, compared to $31,356 for the nine months ended September 30, 2020, respectively.
On March 30, 2020, loans of $ and corresponding accrued interest of $ were settled by the issuance of common shares pursuant to three debt settlement agreements dated March 3, 2020, March 4, 2020 and March 4, 2020, respectively.
2022.
During the periodyear ended September 30,December 31, 2021, the Company extinguished $ in loans payable to stockholders and corresponding accrued interest of $ .
On July 23, 2021, loans payable to stockholders of $480,960, and $74,762, respectively, loans payable to a related party of $130,947, accrued interest of $361,283 on loans payable to stockholders, and accrued interest of $89,124 on loans payable to a related party were settled by the issuance of common shares pursuant to three debt settlement agreements dated April 1, 2021, and five debt settlement agreements dated June 30, 2021.
On July 23, 2021, accounts payable and accrued liabilities of $262,056 were settled by the issuance of common shares pursuant to two debt settlement agreements dated June 30, 2021.
Note 7 - Related Party Transactions and Loans Payable to Stockholders
4. A company controlled by the chief executive officer was owed $Stock Options44,307 at June 30, 2022, and $34,494 at December 31, 2021. The amount due bears no interest, is unsecured, and has no fixed terms for repayment. The Company incurred advisory fees from a company controlled by the chief executive officer in the amount of $11,863 and $15,163 for the six months ended June 30, 2022 and 2021 respectively.
A company owned by the Company’s controlling stockholder had advanced $At September 30, 2021, and December 31, 2020, there were stock options outstanding. options were granted, exercised or expired during the period ended September 30, 2021 and during the year ended December 31, 2020.
5. Common stock
During the nine months ended September 30, 2021,to the Company issued shares of its restricted common stock with a fair value of $14,065,923 to settle $662,251 in accounts payableat June 30, 2022. The amount due bears no interest, is unsecured, and accrued liabilities, $107,800 in convertible loans, $480,960 in loans payable to stockholders, $130,947 in loans payable to related party, $74,762 in loans payable, and $149,124 in amounts due to related parties (Notes 3, 7, 8, 10).
During the nine months ended September 30, 2020, the Company issued shares of its common stock valued at $ a share to settle $ in loans and $ in interest (Note 3). During the year ended December 31, 2020, the Company issued 0 common shares.
has no fixed terms for repayment.
12 |
ARVANA INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2022
Arvana Inc.
Notes to Condensed Interim Financial Statements
September 30, 2021
(Unaudited)
6. Segmented Information
The Company has no reportable segments.
7. Note 7 - Related Party Transactions and Amounts DueLoans Payable to Related PartiesStockholders – (continued)
Related party payables consist of:
Schedule of related party payables | ||||||||
June 30, 2022 | December 31, 2021 | |||||||
Amounts owed to a company owned by the Company’s controlling stockholder | $ | 15,000 | $ | 0 | ||||
Amounts owed to a company owned by one of the Company’s directors for advisory fees | 44,307 | 34,494 | ||||||
59,307 | 34,494 |
At September 30, 2021, and December 31, 2020, the Company had amounts due to related parties of $35,298 and $352,651, respectively.
A company controlled by ourformer chief executive officer was owed $35,298 at September 30, 2021, and $3,487 at December 31, 2020. Thedirector assigned to a related corporation an unpaid amount due bears no interest, is unsecured, and hs no fixed terms for repayment. The Company incurred consulting fees of $55,461161,234 (2020 -(CAD $11,888202,759) to that company during the nine months ended September 30, 2021.
A former director was owed $nil 0 at September 30, 2021, and $60,000 at Decemberas of March 31, 2020, for services rendered during 2007, that was settled on July 23, 2021 by the issuance of common shares with a fair value of $714,300 resulting in a loss on debt settlement of $654,300, pursuant to2022, as per a debt settlementassignment agreement dated effective June 30, 2021.
A former director and related entities were owed $nil 0 at September 30, 2021, and $579,088 at December 31, 2020 for loans, services rendered, accrued interest, and accounts payable and accrued liabilities.
January 1, 2012.
During the periodyear ended September 30,December 31, 2021, $220,071 ($130,947 in loans payable to related party and $89,124 in accrued interest on loans) was settled on July 23, 2021, by the issuance of shares with a fair value of $207,857207,421 resulting in a gain on debt settlement of $12,21312,650, pursuant to a debt settlement agreement dated April 1, 2021
2021.
During the periodyear ended September 30,December 31, 2021, amounts due to the thea former director and related entities of $369,888 (2020 - $Nil $0) Nil) were forgiven pursuant to two debt forgiveness agreements dated June 30, 2021, that forgave $206,302 (Note 9) and $163,586 (Note 9) respectively that was recorded as other income.
Note 8 - Subsequent Events
The Company evaluated its June 30, 2022, financial statements for subsequent events through the date the financial statements were issued. The Company is not aware of any subsequent events which would require recognition or disclosure in the financial statements.
13 |
Arvana Inc.
Notes to Condensed Interim Financial Statements
September 30, 2021
(Unaudited)
8. Convertible Loans
On May 18, 2016, the Company issued a convertible promissory note to CaiE that accrued 10% per annum, in exchange for $50,000, initially due on November 17, 2017. The note was 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. Since the conversion price was 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 remained unchanged. The Company and CaiE agreed to a debt settlement agreement to extinguish these loans and accrued interest by the issuance of common shares. During the three and nine months ended September 30, 2021 and 2020, 0 discount was amortized as interest expense. Interest expense recognized on this loan was $nil 0 for the three months ended September 30, 2021, compared to $1,250 for the three months ended September 30, 2020. Interest expense recognized on this loan was $1,250 for the nine months ended September 30, 2021, compared to $3,750 for the nine months ended September 30, 2020. As at September 30, 2021, and December 31, 2020, the balance of the note was $nil 0 and $50,000, respectively.
On October 12, 2018, the Company issued a convertible note to CaiE that accrued 10% per annum, in exchange for a series of loans that totaled $57,800 initially due on October 11, 2019. The note was 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. Since the conversion price was 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 remained unchanged. The Company and CaiE agreed to a debt settlement agreement to extinguish these loans and accrued interest by the issuance of common shares. During the three months ended September 30, 2021 and 2020, $nil 0 and $14,450 of the discount was amortized as interest expense and during the nine months ended September 30, 2021 and 2020, $nil 0 and $43,350 of the discount was amortized as interest expense. Interest expense recognized on this loan was $nil 0 for the three months ended September 30, 2021, compared to $1,445 for the three months ended September 30, 2020. Interest expense recognized on this loan was $1,445 for the nine months ended September 30, 2021, compared to $4,335 for the nine months ended September 30, 2020. As at September 30, 2021 and December 31, 2020, the balance of the note was $nil 0 and $57,800, respectively.
On July 23, 2021, CaiE settled a total of $ corresponding to convertible loans of $, and accrued interest on convertible loans of $38,912 by the issuance of common shares pursuant to a debt settlement agreement dated April 1, 2021.
9. Other Income
During the period ended September 30, 2021, the Company recognized other income in the amount of $458,833 corresponding to: (1) debt forgiveness of $206,302 included in amounts due to related parties (Note 7); (2) debt forgiveness of $163,586 included in accounts payable and accrued liabilities (Note 7); and (3) extinguishment of $88,945 (Note 3) in loans and accrued interest expense.
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 ninesix months ended SeptemberJune 30, 20212022, and SeptemberJune 30, 2020.
2021.
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 changed its name from Turinco, Inc. to Arvana Inc. on closing the acquisition of Arvana Networks, Inc., a telecommunications business. We discontinued efforts related to that business as of December 31, 2009. Our present activities are focused on evaluating business opportunities that are sufficient to support operations and increase stockholder value.
Our office is located at 299 S. Main Street, 13th Floor, Salt Lake City, Utah 84111, and our telephone number is (801) 232-7395. AA Registered Agents, 4869 Nightwood Court, Las Vegas, Nevada 89149, is our registered agent in the State of Nevada.
The Company is registered with the Commission and traded on the OTC Markets Group, Inc.’s Pink Sheets Current Information over the counter market platform under the symbol “AVNI.”
The Company is a shell company as that term is defined in Rule 12b-2 of the Exchange Act.
Company
On May 10, 2022, certain of our affiliated and unaffiliated stockholders sold 31,102,882 shares of the Company’s common stock in a private transaction that transferred 91.08% of our outstanding common stock on a fully diluted basis, that resulted in a change in control of the Company. Shortly thereafter, we announced a non-brokered private placement to finance a business development strategy focused on the acquisition and redevelopment of undervalued commercial properties that could be repurposed to realize latent value. The intention being to purchase vacant shopping malls, big box stores and otherwise underused commercial real estate at a fraction of replacement cost to be remediated for specific targeted industries that offer goods or services not otherwise available online. We recently expanded our intended business development strategy to include a plan to form a brokerage division to facilitate international transactions in the delivery of oil and gas products to match sellers with buyers in the energy sector. The brokerage division would be tasked with securing crude oil from sellers in the Middle East through purchase orders and letters of credit from buyers in the Asia Pacific region to facilitate the procurement, payment and delivery of energy. We would expect to earn fees on completed transactions.
14 |
While we are in the process of conducting the private placement and evaluating specific opportunities in the sectors of interest described above, though the Company is yet to enter into any definitive agreements attendant to its stated business development strategy.
The Company entered into a non-binding term sheet on May 21, 2021, with Mr. Alkiviades David and our controlling stockholder withintended to facilitate the intentionacquisition of acquiring a multi-media platform and prospectively other businesses owned or controlled by Mr. David. The term sheet required that our controlling stockholder grant voting control over the Company to Mr. David as a pre-condition to his facilitating a transaction. On June 30, 2021, Mr. David effectively secured voting control over the Company.related businesses. Due to a disgreementdisagreement over the structure of the intended transaction, the Company entered intoparties thereto signed a recission agreement and mutual release with Mr. David on October 26, 2021. The agreement to abandon the intentions of the term sheet included Mr. David’s revocation of the proxies granted to him, which action returned control of the Company to our controlling stockholder, and led to the resignation of two of our directors.
On March 17, 2016, wethe Company entered into a non-binding memorandum of understanding with CaiE Food Partnership Ltd. (“CaiE”) for the purpose of acquiring it asintention to acquire a wholly-owned subsidiary. CaiE is in the business offresh foods manufacturing and distributing fresh Dim Sum food products from a facility based in Sparks, Nevada. While CaiEdistribution business. The target loaned the Company $174,610 over nearly five years to sustain operations, itbut was unable to deliver the information necessary to complete the transaction. OnWe notified the target on November 11, 2020, CaiE was notified that the Company would no longer pursue the intended acquisition of its business. EffectiveAmounts due to the target were extinguished effective April 1, 2021, the Company entered into a debt settlement agreement pursuant to which all amounts due to CaiE were extinguished2020, in exchange for shares of the Company’s restrictedour common stock.
Plan of Operation
Our present activities are focused on realizing the Company’s business development strategy to build stockholder value.
Results of Operations
During the three and six-months ended June 30, 2022, the Company underwent a change in control, initiated a private placement, and determined a business development strategy focused on acquiring assets and building businesses.
Operations for the three and six-months ended June 30, 2022, and 2021, are summarized in the following table.
Three months ended June 30, 2022 | Three months ended June 30, 2021 | Six months ended June 30, 2022 | Six months ended June 30, 2021 | |||||||||||||
Operating Expenses | ||||||||||||||||
General and administrative | $ | 10,720 | $ | 3,754 | $ | 16,856 | $ | 7,114 | ||||||||
Professional fees | 5,061 | 13,894 | 7,561 | 21,207 | ||||||||||||
Loss from Operations | (15,781 | ) | (17,648 | ) | (24,417 | ) | (28,321 | ) | ||||||||
Interest | (393 | ) | (6,823 | ) | (587 | ) | (19,122 | ) | ||||||||
Foreign exchange gain | — | (14,254 | ) | — | 6,459 | |||||||||||
Other income | 15,000 | 458,833 | 15,000 | 458,833 | ||||||||||||
Net loss for the period | $ | (1,174 | ) | $ | 420,108 | $ | (10,004 | ) | $ | 417,849 |
15 |
Plan of Operation
Our present activities are focused on evaluating business opportunities that are sufficient to support operations and increase stockholder value. While this process remains in the discovery phase, the Company will continue to look to its stockholders and creditors for sufficient financial support to sustain operations though we have no assurance that our stockholders or creditors will respond positively to the Company’s efforts.
Results of Operations
During the three and nine months ended September 30, 2021, the Company satisfied periodic public disclosure requirements, continued its search for a suitable business enterprise that might enhance stockholder value and executed a non-binding term sheet with Mr. David.
Operations for the three and nine months ended September 30, 2021 and 2020, are summarized in the following table.
Three months Ended September 30, 2021 | Three months Ended September 30, 2020 | Nine months Ended September 30, 2021 | Nine months 2020 | |||||||||||||
Operating Expenses | ||||||||||||||||
General and administrative | $ | (4,740 | ) | $ | (12,224 | ) | $ | (11,854 | ) | $ | (35,382 | ) | ||||
Professional fees | (42,798 | ) | (5,149 | ) | (64,005 | ) | (23,105 | ) | ||||||||
Loss from Operations | (47,538 | ) | (17,373 | ) | (75,859 | ) | (58,487 | ) | ||||||||
Interest expense | — | (13,318 | ) | (19,122 | ) | (39,441 | ) | |||||||||
Foreign exchange gain (loss) | 249 | (36,900 | ) | 6,708 | (11,512 | ) | ||||||||||
Other income | — | — | 458,833 | — | ||||||||||||
Loss on debt settlements | (12,460,079 | ) | — | (12,460,079 | ) | — | ||||||||||
Net loss for the period | $ | (12,507,367 | ) | $ | (67,591 | ) | $ | (12,089,518 | ) | $ | (109,440 | ) |
Net LossesLoss/Income
Net loss for the three-month periodthree months ended SeptemberJune 30, 2021,2022, was $12,507,367$1,174 as compared to a net lossincome of $67,591$420,108 for the three-month prior periodthree months ended SeptemberJune 30, 2020. The increase in net loss over the comparative three-month periods can be attributed to loss on debt settlements, and professional fees, offset by a decrease in general administrative expenses, the elimination of interest expense and a foreign exchange gain over the prior comparable three-month period. The loss on debt settlements is due to the settlement values for stock issued that were less than the market value of the stock on the settlement dates, while the increase in professional fees is the result of amounts accrued in the preparation of coincident settlement documentation and in the conduct of requisite due diligence in relation to a prospective acquisition. The elimination of interest expense is the result of the debt settlements, and the transition from foreign exchange loss to foreign exchange gain is due to a decrease in the value of foreign currencies against the US dollar that impacts the cost of expenses paid in foreign currencies.
2021. Net loss for the nine-month periodsix months ended SeptemberJune 30, 2021,2022, was $12,089,518$10,004 as compared to net lossincome of $109,440$417,849 for the nine-month periodsix months ended SeptemberJune 30, 2020. The increase in net loss over the comparative nine-month periods can be attributed to loss on debt settlements, professional2021. While general and administrative fees and interest expense,increases were offset by other income, a decrease in general administrative expenses, and a foreign exchange gain over the comparable prior nine-month period. The loss on debt settlements is due to the settlement values for stock issued that were less than the market value of the stock on the settlement dates, the increasedecreases in professional fees isin the three and six-month comparative periods, the transition from net income to net loss can be primarily attributed to the decreases in other income in the current periods. Other income in the three and six-month periods ended June 30, 2022, was the result of amounts accrueda non-interest bearing loan due on demand from our controlling stock holder, while other income in the preparation of coincident settlement documentationthree and in the conduct of requisite due diligence in relation to a prospective acquisition, while the interest expense reflects the expense of debt obligations prior to settlement. Other income issix-month periods ended June 30, 2021, was the result of debt forgiveness agreements, and the transition from foreign exchange loss to foreign exchange gain is due to a decrease in the valueextinguishment of foreign currencies against the US dollar that impacts the cost of expenses paid in foreign currencies.debt.
The CompanyWe did not generate revenue during either of these periodsthis period and expectsexpect to continue to incur losses over the next twelve months until such time as itour business development strategy is able to secure a business that generates income.
implemented.
Capital Expenditures
The Company expended no amounts on capital expenditures for the nine-month periodthree and six-month periods ended SeptemberJune 30, 2021.
2022.
Liquidity and Capital Resources
Since inception, we have experienced significant changes in liquidity, capital resources, and stockholders’ deficiency.
The Company had assets of $19$13,195 in cash as of SeptemberJune 30, 2021, with2022, and a working capital deficit of $74,655,$111,589 as compared to assets of $4,994$3,340 in cash as of December 31, 2020, with2021, and a working capital deficit of $2,051,060. Stockholders'$101,585. Net stockholders' deficit in the Company was $74,655 at September$111,589 as of June 30, 2021,2022, as compared to a net stockholder’s deficit of $2,051,060 at$101,585 as of December 31, 2020.
2021.
Cash Used in Operating Activities
CashNet cash flow used in operating activities for the nine-monthsix-month period ended SeptemberJune 30, 20212022, was $21,100$11,061 as compared to net cash flow used in operating activities of $31,435$5,517 for the nine-monthsix-month period ended SeptemberJune 30, 2020. Changes in2021. Net cash used in operating activities in the current 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 other income, loss on debt settlements and interest expense. Balance sheet accounts that actually affect cash but are not income statement related items that are added or deducted to arrive at net cash used in operating activities, include accounts payable and amounts due to related parties.
We expect to continue to use net cash flow in operating activities over the next twelve months or until such time as the Company can generategenerates sufficient revenueincome to offset the cost of operating activities.
Cash Used in Investing Activities
CashNet cash used in investing activities overfor the nine-monthsix-month periods ended SeptemberJune 30, 2022, and June 30, 2021, and September 30, 2020, was $nil.
We do not expect to use net cash in investing activities until we are able to conclude a definitive agreement with a viablesuch time as our business opportunity.
development strategy is implemented.
Cash Flows from Financing Activities
Cash flowNet cash provided by financing activities for the nine-monthssix-month period ended SeptemberJune 30, 2021,2022, was $16,325$20,916 as compared to $30,000net cash provided by financing activities of $16,125 for the nine-monthssix-month period ended SeptemberJune 30, 2020. Cash flows2021. Net cash provided fromby financing activities over the comparative nine-monthin both six-month periods are considered loansconsisted of proceeds from CaiE.
a credit agreement with one of our stockholders.
We expect to continue to userely on net cash provided by financing activities in future periods to maintain operations.
support operations and implement our business development strategy.
The Company’s current assets arewere insufficient as of June 30, 2022, to conduct its plan of operation over the next twelve (12) months asoperation. Management estimates that it will need at least $50,000 to maintainsustain operations and concludeanother $200,000 to implement its business development strategy. We are currently conducting a definitive transaction. Until such time, we have no definitive commitmentsprivate equity offering in an effort to meet our objectives, and will continue to look to stockholders or arrangements for continued financial support. Despitethird-parties to secure necessary financing. Management is confident that its efforts to realize sufficient funding will be successful and looks forward to first steps in building the Company’s predicament, existing stockholders remain the most likely prospective sources of funding. The Company’s inability to secure funding would have a material adverse effect on its ability to sustain operations.
business.
The Company does not intend to pay cash dividends in the foreseeable future.
The Company hashad no lines of credit or other bank financing arrangements.
arrangements as of June 30, 2022.
The Company hashad no commitments for future material capital expenditures.
expenditures as of June 30, 2022.
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 SeptemberJune 30, 2021,2022, 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
The Company will continue to rely on debt or equity financing to maintain operations and secure a suitable business transaction though it 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, 20202021, and 2019,2020, included in the Company’sour Form 10-K, for the respective periods,Company discusses those accounting policies that are considered to be significant in determining the results of operations and the currency of its financial position. The Company believes that the accounting principles utilized by it conform to Accounting Principles Generally Acceptedaccounting principles generally accepted in the United States (GAAP).
States.
The preparation of financial statements requires Company management to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. By their very. 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 based on historical experience and other facts and circumstances that are believed to be reasonable. Thereasonable, and the results of each evaluation form the basis upon which management makesfor making judgments about the carrying value of assets and liabilities. The actual results may differ from these estimates recorded here under different assumptions or conditions.
Going Concern
Management has expressed an opinion as to the Company’s ability to continue as a going concern givendespite an accumulated deficit of $36,062,042 $36,098,976 since inception and negative cash flows from operating activities as of SeptemberJune 30, 2021. Our2022. The Company’s ability to continue as a going concern requires that weit procure funding from outside sources. Management’s plan to address the Company’s ability to continue as a going concern includes obtaining funding from the private placement of equity or debt financing, converting existing debt to equity, and otherwise settling outstanding amounts due in agreement withbuilding value through its creditors.business development strategy. Management believes that itthe Company will remain a going concern through the methods discussed above pending closure with an income generating business opportunityimplementing its plan, though thereit can beprovide no assurances that continuation as a going concernsuch plan will prove successful.
17 |
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 SeptemberJune 30, 2021.2022. 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 periodquarter ended SeptemberJune 30, 2021,2022, 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
None.
None, other than as previously reported on Form 8-K.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Board of Directors
Effective November 15, 2021, the Company’s board of directors (“Board”) appointed Sir John Baring to serve on the Board until the next annual meeting of its stockholders for the election of directors. Sir John Baring has previously served as chief executive officer (May 26, 2005 - October 17, 2005), director (May 26, 2005 – June 30, 2021) and chairman of the Board (October 17, 2005 – June 30, 2021). He brings more than 30 years of banking and investing experience to the Board. Since June 2002, Sir John has acted as a managing member of Mercator Management LLC, a leading fund management company.
The Company has determined that Sir John Baring will serve as head of its audit committee and has not entered into, nor does it expect to enter into, any transaction with Sir John Baring in which he had or will have a direct or indirect material interest, except a debt settlement agreement dated effective June 30, 2021.
Sir John is neither a party to, nor a participant in, any material plan, contract or arrangement whose appointment to the Board could act as a triggering event, modification, grant, or award under any existing plan, contract or arrangement.
Effective November 18, 2021, the Board appointed Shawn Teigen to serve as a director until the next annual meeting of its stockholders for the election of directors. Teigen has previously served as a Company director (June 25, 2013 – June 30, 2021). He has been providing consulting services to early-stage businesses for the past 15 years. He currently serves as the Vice President and Research Director of Utah Foundation, a non-profit, non-partisan, public policy research organization. Mr. Teigen has also taught a policy research desgin course for the past five years as a faculty member in the University of Utah's Master of Public Policy program. He spent two years in Kazakhstan as a U.S. Peace Corps volunteer. Mr. Teigen holds a Master of Public Policy and a BS in Management from the University of Utah. He also serves on the board of directors of certain public-sector and non-profit organizations.
The Company has determined that Mr. Teigen will serve as a member of its audit committee and has not entered into, nor does it expect to enter into, any transaction with Mr. Teigen in which he had or will have a direct or indirect material interest.
Mr. Teigen is neither a party to, nor a participant in, any material plan, contract or arrangement whose appointment to the Board could act as a triggering event, modification, grant, or award under any existing plan, contract or arrangement.
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 despite the introduction of effective vacines, affecting workforces, economies, and financial markets, which contagion may result in an economic downturn. None can predict the duration or magnitude of the adverse results connected to COVID-19, nor can anyone predict the effect, if any, COVID-19 will have on the Company’s ability to sustain operations.
Item 6. Exhibits
Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page 2321 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.
ARVANA INC.
ARVANA INC. | |
| By: /s/ Ruairidh Campbell |
Ruairidh Campbell, Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer | |
INDEX TO EXHIBITS
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