Arvana Inc 10-K/A, filed Apr 1, 2020
Arvana Inc (AVNI)
About this 10-K/A
Arvana Inc filed this 10-K/A on April 1, 2020, covering the fiscal year ended December 31, 2019.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019.
☐ 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 (State or other jurisdiction of incorporation or organization) |
87-0618509 (I.R.S.
Employer |
299 S. Main Street, 13th Floor, Salt Lake City, Utah 84111
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (801) 232-7395
Securities registered under Section 12(b) of the Act: None.
Securities registered under Section 12(g) of the Act: common stock (title of class), $0.001 par value.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐ No ☒
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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or 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 ☐ | Smeller reporting company ☒ | |
| Emerging growth company ☐ |
If an emerging growth company, indicate by check number if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant 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 Act).
Yes ☒ No ☐
The aggregate market value of the registrant’s common stock, $0.001 par value (the only class of voting stock), held by non-affiliates (1,019,405 shares) was $122,329 based on the average of the bid and ask price ($0.12) for the common stock on March 27, 2020.
At March 27, 2020, the number of shares outstanding of the registrant’s common stock, $0.001 par value (the only class of voting stock), was 1,034,030.
| 1 |
TABLE OF CONTENTS
| PART I | |||
| Item 1. Business | 3 | ||
| Item 1A. Risk Factors | 6 | ||
| Item 1B. Unresolved Staff Comments | 6 | ||
| Item 2. Properties | 6 | ||
| Item 3. Legal Proceedings | 6 | ||
| Item 4. Mine Safety Disclosures | 6 | ||
| PART II | |||
| Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities | 7 | ||
| Item 6. Selected Financial Data | 8 | ||
| Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations | 8 | ||
| Item 7A. Quantitative and Qualitative Disclosures about Market Risk | 12 | ||
| Item 8. Financial Statements and Supplementary Data | 12 | ||
| Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 13 | ||
| Item 9A. Controls and Procedures | 13 | ||
| Item 9B. Other Information | 14 | ||
| PART III | |||
| Item 10. Directors, Executive Officers, and Corporate Governance | 15 | ||
| Item 11. Executive Compensation | 18 | ||
| Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 19 | ||
| Item 13. Certain Relationships and Related Transactions, and Director Independence | 20 | ||
| Item 14. Principal Accountant Fees and Services | 20 | ||
| PART IV | |||
| Item 15. Exhibits, Financial Statement Schedules | 22 | ||
| Item 16. Form 10-K Summary | 22 | ||
| Signatures | 23 | ||
EXPLANATORY NOTE
The purpose of this amendment on Form 10-K to Arvana Inc.’s Annual Report for the period ended December 31, 2019, filed with the Securities and Exchange Commission on March 30, 2020, is solely to correct a typographical error with the issue date of the report provided by its independent auditor Davidson & Company. Amendment No. 1 speaks as of the original filing date of the Form 10-K, and does not reflect events that may have occurred subsequent to that date, nor does it modify or update in any way disclosure made in the original Form 10-K.
| 2 |
PART I
ITEM 1 BUSINESS
As used herein the terms “Company,” “we,” “our,” and “us” refer to Arvana Inc., its previously held subsidiaries, and its predecessor, unless context indicates otherwise.
FORWARD-LOOKING STATEMENTS
The information in this Annual Report on Form 10-K contains forward-looking statements. These forward-looking statements involve risks and uncertainties, including statements regarding our capital needs, business plans and expectations. Such forward-looking statements involve risks and uncertainties regarding our planned business, availability of funds, government regulations, common share prices, operating costs, capital costs, our ability to deploy our planned business and generate revenues and other factors. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential" or "continue", the negative of such terms or other comparable terminology. These statements are based on certain assumptions and analyses made by our management in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors they believe are appropriate in the circumstances. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined below, and, from time to time, in other reports we file with the Securities and Exchange Commission (the “Commission”). These factors may cause our actual results to differ materially from any forward-looking statement. We disclaim any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
Overview
The Company was incorporated in the State of Nevada on June 16, 1977, as “Turinco, Inc.” to engage in any legal undertaking. On July 24, 2006, the Company’s name was changed from Turinco, Inc. to Arvana Inc. to reflect the acquisition of Arvana Networks, Inc., a telecommunications business. We discontinued efforts related to our telecommunications business as of December 31, 2009. We have since been in the process of seeking other business opportunities.
Our office is located at 299 S. Main Street, 13th Floor, Salt Lake City, Utah 84111, and our telephone number is (801) 232-7395. Our registered agent is JAD Communications LLC., 5209 West Gowan Road, Las Vegas, Nevada 89130.
The Company currently is traded on the OTC Markets Group, Inc.’s Pink Sheets Current Information over the counter market platform under the symbol “AVNI.”
Company
On March 17, 2016, the Company entered into a non-binding Memorandum of Understanding (“MOU”) with CaiE Food Partnership Ltd. (“CaiE”) for the purpose of acquiring CaiE as a wholly-owned subsidiary. CaiE is in the business of manufacturing and distributing fresh Dim Sum food products from a facility based in Sparks, Nevada.
| 3 |
The MOU anticipates that the Company will issue shares of its common stock to acquire CaiE, in addition it will convert existing debt to equity, increase its authorized common shares, elect a new board of directors and change its name to reflect the new business. Due to delays in obtaining CaiE’s business and financial information, the terms of the MOU will change in the event that the parties determine to move forward with the transaction. The delays have caused CaiE to make additional loans to the Company. CaiE has loaned the Company $169,610 as of the filing date of this report.
In the event that the Company does not complete the acquisition of CaiE, its intention is to identify and evaluate alternative business opportunities that might be a good match for the Company. Towards this end, the Company has entered into a consulting agreement with an expert in strategic business alliances, business combinations, mergers and acquisitions to procure an alternative to the CaiE transaction in the event that the parties to the MOU do not reach an agreement.
The Company will not be able to develop any alternative business opportunities presented to it without additional financing. Management continues to pursue financing from CaiE to maintain operations while a determination of the likelihood of concluding a transaction based on the MOU remains uncertain.
Selection of a Business
Should the Company not acquire CaiE, it will not restrict consideration to any particular business or industry segment, and could consider opportunities in finance, brokerage, insurance, transportation, communications, research and development, biotechnology, service, natural resources, manufacturing or high-technology. Management recognizes that the Company’s inadequate financial resources limit the scope and number of business venture candidates that might otherwise be available.
The decision to participate in a specific business opportunity will be made upon management’s analysis of the quality of management and personnel (if any), the prospects for new products or marketing concepts, the merit of technological changes and other factors which are difficult, if not impossible, to analyze through the application of any objective criteria. We also understand that the historical operations of a specific venture may not necessarily be indicative of the potential for future operations due to any changes in management, marketing, operations, products and services, or other changes.
We will not acquire or merge with any company for which audited financial statements cannot be obtained. Further, we understand that any new opportunity would present risks to our shareholders. Risks could include the effectiveness of management, the success of marketing of products or services, and whether the opportunity has realized net income from operations. Many more risks may not be adequately identified prior to the selection of a specific opportunity, and our shareholders must, therefore, depend on the ability of management to identify and evaluate such risks.
Acquisition of Business
We may become a party to a merger, consolidation, reorganization, joint venture, franchise or licensing agreement with another entity or may purchase the stock or assets of an existing business. On the consummation of any given transaction, it is likely that present management and shareholders would no longer control the Company. Further, management may resign and be replaced by new officers and directors without a vote of the Company’s shareholders. Securities issued in any reorganization would be issued in reliance on exemptions from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of any transaction, the Company may agree to register securities either at the time the transaction is consummated, or at a specified time thereafter. The issuance of additional securities and potential sale into our trading market could have a depressive effect on our stock price.
| 4 |
While the actual terms of a transaction to which the Company may be a party cannot be predicted, it may be expected that the parties to the business transaction would find it desirable to avoid the creation of a taxable event and thereby structure an acquisition in a so called “tax-free” reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986, as amended. However, in order to obtain tax-free treatment it may be necessary for the owners of the acquired business or business opportunity to own 80% or more of the voting stock of the surviving entity. In such event, Company shareholders would retain less than 20% of the issued and outstanding shares of the surviving entity. Any merger or acquisition effected by the Company can be expected to have a substantial dilutive effect on the percentage of shares held by the Company’s present shareholders.
Operation of Business after Acquisition
The Company's operation following a merger with or acquisition of a business would be dependent on the nature of the business and the interest acquired. We are unable to determine at this time whether the Company would be in control of the business or whether present management would be in control of the Company following any acquisition. We could expect that any future business would present various challenges that cannot be predicted at the present time.
Competition
Whatever the business opportunity is that we do ultimately acquire or develop, we are almost certain to be involved in intense competition with other business entities, many of which will have a competitive edge over us by virtue of their stronger financial resources and prior business experience.
Employees
The Company’s sole, part time employee, Ruairidh Campbell, serves as our chief executive officer, chief financial officer and as a director. The Company looks to Mr. Campbell for his entrepreneurial skills and talents. Management uses consultants, attorneys and accountants as necessary and does not plan to engage any full-time employees in the near future.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements and Labor Contracts
The Company owns no patents, trademarks, licenses, franchises, concessions, or royalty agreements. We are not subject to any labor contracts.
Governmental and Environmental Regulation
General
The Company cannot at this time anticipate the government regulations, if any, to which the Company may be subject following a merger or acquisition. However, we can be certain that the conduct of any business subjects us to environmental, public health and safety, land use, trade, or other governmental regulations and state or local taxation. In selecting a business in which to acquire an interest, management would endeavor to ascertain the effects of such government regulation on a prospective business opportunity. In certain circumstances, however, such as the acquisition of an interest in a new or start-up business activity, it may not be possible to predict with any degree of accuracy the impact of government regulation.The Company believes that it is currently in compliance in all material respects with all laws, rules, regulations and requirements that affect its business. Further, we believe that compliance with such applicable laws, rules, regulations and requirements does not impose a material impediment on our ability to conduct business.
| 5 |
Reports to Security Holders
The Company’s annual report contains audited financial statements. We are not required to deliver an annual report to security holders and will not automatically deliver a copy of the annual report to our security holders unless a request is made for such delivery. We file all of our required reports and other information with the Commission. The statements and forms filed by us with the Commission have also been filed electronically and are available for viewing or copy on the Commission maintained Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission. The Internet address for this site can be found at http://www.sec.gov.
ITEM 1A. RISK FACTORS
Not required for smaller reporting companies.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not required for smaller reporting companies.
ITEM 2. PROPERTIES
The Company maintains executive office space at 299 S. Main Street, 13th Floor, Salt Lake City, Utah 84111. We pay $69 in rent on a monthly basis for the use of this office. We do not believe that we will need to maintain a larger office at any time in the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
We are not party to any legal proceedings and to our knowledge no such proceedings are threatened or contemplated.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
| 6 |
PART II
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common shares are quoted on the Pink Sheet Current Information under the symbol “AVNI”, a service maintained by the OTC Market Group, Inc. Trading in the common stock in the over-the-counter market has been limited and sporadic and the quotations set forth below are not necessarily indicative of actual market conditions.
Capital Stock
The following is a summary of the material terms of the Company’s capital stock. This summary is subject to and qualified by our articles of incorporation and bylaws.
Common Stock
As of December 31, 2019, there were 60 shareholders of record holding a total of 1,034,030 shares of fully paid and non-assessable common stock of the 5,000,000 shares of common stock, par value $0.001, authorized. The board of directors believes that the number of beneficial owners is substantially greater than the number of record holders because a portion of our outstanding common stock is held in broker “street names” for the benefit of individual investors. The holders of the common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the common stock have no preemptive rights and no right to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to the common stock.
Warrants
As of December 31, 2019, the Company had no outstanding warrants to purchase its common stock.
Stock Options
As of December 31, 2019, the Company had no outstanding stock options to purchase shares of its common stock.
Convertible Securities
As of December 31, 2019, the Company has convertible loans in the principal amount of $107,800.
Securities Authorized for Issuance Under Equity Compensation Plans
The Company had no securities authorized for issuance under any equity compensation plan as of December 31, 2019.
Purchases of Equity Securities made by the Issuer and Affiliated Purchasers
The Company had not repurchased any shares of its common stock during the year ended December 31, 2019.
| 7 |
Recent Sales of Unregistered Securities
None.
Trading Information
The Company’s transfer agent is:
ISSUER DIRECT CORPORATION
500 Perimeter Park Drive Suite D
Morrisville NC 27560
919-481-4000
ITEM 6. SELECTED FINANCIAL DATA
Not required for smaller reporting companies.
ITEM 7. 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 annual 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.
Discussion and Analysis
The Company’s plan of operation over the next twelve months is to acquire CaiE as a wholly-owned subsidiary on those terms to be provided within definitive agreements and thereafter to focus on CaiE’s business model. We will require a minimum of $50,000 in funding over the next 12 months to maintain operations and acquire CaiE. On completing the acquisition of CaiE, the Company will need additional capital to grow CaiE’s business. The amount of funding that may be required for this purpose is not determinable at this time.
Should the Company not complete the anticipated transaction with CaiE then it will seek to identify an alternative business opportunity for which purpose it will require a minimum of $25,000 in funding over the next 12 months. The Company will need additional funding to complete any alternative transaction that might be identified within this time frame. We anticipate that the required prospective funding in the near term will be in the form of convertible debt financing from CaiE. Should the Company not complete the anticipated transaction with CaiE, then requisite funding may come from the sale of our common shares or unsecured shareholder loans. The Company does not have alternative financing arranged and is not certain that it will be able to realize funding from the sale of its equity or that shareholders will continue to provide loans. We will require continued financial support from our shareholders and creditors until the Company is able to generate sufficient cash flow to maintain operations. There is substantial doubt that the Company will be able to maintain operations unless it can complete a financing in order to pursue a merger or acquisition of an operating business in the near term.
| 8 |
Results of Operations
During the year ended December 31, 2019, the Company satisfied continuous public disclosure requirements and continued to finance its operations with loans that originated from CaiE.
Our operations for the years ended December 31, 2019 and 2018 are summarized in the following table.
| 2019 | 2018 | |||||||
| Operating Expenses: | ||||||||
| General and administration | (20,931 | ) | (12,055 | ) | ||||
| Professional fees | (31,494 | ) | (29,819 | ) | ||||
| Loss from Operations | (52,425 | ) | (41,874 | ) | ||||
| Interest expense | (102,543 | ) | (63,948 | ) | ||||
| Foreign exchange gain (loss) | (20,096 | ) | 85,095 | |||||
| Gain on sale of subsidiaries | — | 114,237 | ||||||
| Gain on write-down of liabilities | 287,316 | — | ||||||
| Net Income (Loss) for the Year | $ | 112,252 | $ | 93,510 | ||||
Net Income
Net income for the year ended December 31, 2019 was $112,252, as compared to net income of $93,510 for the year ended December 31, 2018. The net income over the twelve month period ended December 31, 2019, is attributed to the write-down of certain amounts due to related parties, certain amounts included in accounts payable, and accrued liabilities. The write-down is based on the statutory laws pertaining to claims that are no longer collectibe. Net income for the year ended December 31, 2018, is attributed to the sale of foreign subsidiaries, and a gain on foreign exchange due to a decrease in the value of foreign currencies against the US dollar that positively impacted the cost of expenses payable in foreign currencies.
The Company did not generate revenue during either twelve-month period and does not expect revenue over the next twelve months unless it acquires CaiE or develops a revenue producing business opportunity.
Capital Expenditures
The Company expended no amounts on capital expenditures for the year ended December 31, 2019.
Impact of Inflation
The Company believes that inflation has had a negligible effect on operations over the past three years.
Liquidity and Capital Resources
Since inception, the Company has experienced significant changes in liquidity, capital resources, and stockholders’ deficit.
| 9 |
The Company had assets of $2,346 as of December 31, 2019, that consisted solely of cash and a working capital deficit of $2,213,713, as compared to assets of $815 as of December 31, 2018, that consisted solely of cash and a working capital deficit of $2,325,965 as of December 31, 2018. Net stockholders' deficiency in the Company was $2,213,713 at December 31, 2019, as compared to a net stockholders' deficiency in the Company of $2,325,965 at December 31, 2018.
Cash Used in Operating Activities
Net cash used in operating activities for the twelve month period ended December 31, 2019 was $35,279 as compared to net cash used in operating activities of $33,871 for the twelve month period ended December 31, 2018. Net cash used in operating activities in the current period can be attributed primarily to a number of items that are book expense items which do not affect the total amount relative to actual cash used such as unrealized foreign exchange gain, amortization of discount on convertible loan, and other income from the write-down of liabilities. 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 accrued liabilities, and amounts due to related parties.
We expect to continue to use net cash in operating activities over the next twelve months or until such time as the Company can generate sufficient revenue to transition to providing net cash from operations.
Cash Used in Investing Activities
Net cash used in investing activities for the year ended December 31, 2019, was $nil as compared to $44 for the year ended December 31, 2018. The net cash used in investing activities in the prior year can be attributed to the sale of the Company’s foreign subsidiaries.
We do not expect to use net cash in investing activities until such time as a transaction is concluded through merger, acquisition or development of viable business opportunity.
Cash Flows from Financing Activities
Net cash provided by financing activities for the year ended December 31, 2019, were $36,810, as compared to $30,000 for the year ended December 31, 2018. The increase in net cash provided from financing activities over the prior year can be attributed to an increase in loans received from CaiE in the current period.
We expect to continue to use net cash provided by financing activities as necessary to maintain operations.
The Company’s current assets are insufficient to conduct its plan of operation over the next twelve (12) months as it will need at least $50,000 to maintain operations and conclude a transaction wtih CaiE. Since entering into an MOU with CaiE the Company has secured a series of loans from CaiE pending a merger or acquisition transaction. CaiE has loaned the Company $169,610 as of the filing date of this report. Despite the historical CaiE loans, the Company has no future commitments or arrangements in place to fund the completion of the intended merger or acquisition of CaiE. The Company’s shareholders or CaiE remain the most likely sources of funding for this purpose though none have made any commitment for such funding. The Company’s inability to obtain sufficient funding to maintain operations and a merger with or acquisition of CaiE would have a material adverse effect on its ability to sustain operations.
| 10 |
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 December 31, 2019.
The Company had no commitments for future capital expenditures at December 31, 2019.
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 December 31, 2019, 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, 2019 and 2018, included in our Form 10-K, the Company discusses those accounting policies that are considered to be significant in determining the results of operations and its financial position. The Company believes that accounting principles utilized by it conform to accounting principles generally accepted in the United 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 nature, these judgments are subject to an inherent degree of uncertainty. On an on-going basis, the Company evaluates estimates. The Company bases its estimates on historical experience and other facts and circumstances that are believed to be reasonable, and the results form the basis for making judgments about the carrying value of assets and liabilities. The actual results may differ from these estimates under different assumptions or conditions.
Going Concern
As at December 31, 2019, the Company had an accumulated deficit of $23,494,928 and negative cash flows from operating activities. These conditions raise substantial doubt about the Company’s ability to continue as a going concern which will require funding from outside sources in the form debt or equity. Management believes that it will be able to obtain the funding required to enable the Company to continue as a going concern though there can be no assurances that its efforts will prove successful.
| 11 |
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.
Recent Accounting Pronouncements
Please see Note 2 to our financial statements for a discussion of recent accounting pronouncements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for smaller reporting companies.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our audited financial statements for the year ended December 31, 2019, as set forth below, are included with this Annual Report on Form 10-K. Our audited financial statements are prepared on the basis of accounting principles generally accepted in the United States and are expressed in U.S. dollars.
| PAGE | |
| Report of Independent Registered Public Accounting Firm | F-1 |
| Balance Sheets, December 31, 2019 and 2018 | F-2 |
| Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2019 and 2018 | F-3 |
| Statements of Cash Flows for the years ended December 31, 2019 and 2018 | F-4 |
| Statements of Stockholders’ Deficiency for the years ended December 31, 2019 and 2018 | F-5 |
| Notes to Financial Statements | F-6 |
| 12 |
Report of Independent Registered Public Accounting Firm
To the Shareholders and Directors of
Arvana Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Arvana Inc. (the “Company”), as of December 31, 2019 and 2018, and the related statements of operations and comprehensive income (loss), stockholders’ deficiency, and cash flows for the years ended December 31, 2019 and 2018, and the related notes and schedules (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of Arvana Inc. as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the years ended December 31, 2019 and 2018 in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatements of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Company’s auditor since 2005.
“DAVIDSON & COMPANY LLP”
/s/ Davidson & Company LLP
| Vancouver, Canada | Chartered Professional Accountants |
March 27 , 2020
| F-1 |
Arvana
Inc.
Balance Sheets
(Expressed
in US Dollars)
| December 31, | December 31, | |||||||
| 2019 | 2018 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 2,346 | $ | 815 | ||||
| Total assets | $ | 2,346 | $ | 815 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIENCY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 974,013 | $ | 1,012,714 | ||||
| Convertible loans (net of discount of $nil and $45,059, respectively (Note 9) | 107,800 | 62,741 | ||||||
| Loans payable to stockholders (Note 3) | 581,379 | 583,593 | ||||||
| Loans payable to related party (Note 3) | 130,249 | 129,231 | ||||||
| Loans payable (Note 3) | 84,509 | 47,330 | ||||||
| Amounts due to related parties (Note 8) | 338,109 | 491,171 | ||||||
| Total current liabilities | 2,216,059 | 2,326,780 | ||||||
| Stockholders' deficiency | ||||||||
| Common stock, $0.001 par value 5,000,000 authorized,1,034,030 shares issued and outstanding at December 31, 2019 and 2018, respectively | 1,034 | 1,034 | ||||||
| Additional paid-in capital | 21,283,517 | 21,283,517 | ||||||
| Deficit | (23,494,928 | ) | (23,607,180 | ) | ||||
| (2,210,377 | ) | (2,322,629 | ) | |||||
| Less:
Treasury stock – 2,085 common shares at December 31, 2019 and 2018, respectively | (3,336 | ) | (3,336 | ) | ||||
| Total stockholders’ deficiency | (2,213,713 | ) | (2,325,965 | ) | ||||
| $ | 2,346 | $ | 815 | |||||
The accompanying notes are an integral part of these financial statements.
| F-2 |
Arvana
Inc.
Statements of Operations and Comprehensive Income
(Expressed in US Dollars)
For the years ended | ||||||||
| December 31, | ||||||||
| 2019 | 2018 | |||||||
| Operating expenses | ||||||||
| General and administrative | $ | 20,931 | $ | 12,055 | ||||
| Professional fees | 31,494 | 29,819 | ||||||
| Total operating expenses | 52,425 | 41,874 | ||||||
| Loss from operations | (52,425 | ) | (41,874 | ) | ||||
| Interest expense (Notes 3 and 9) | (102,543 | ) | (63,948 | ) | ||||
| Foreign exchange gain (loss) | (20,096 | ) | 85,095 | |||||
| Gain on sale of subsidiaries (Note 10) | — | 114,237 | ||||||
| Other income (Note 11) | 287,316 | — | ||||||
| Net income and comprehensive income | $ | 112,252 | $ | 93,510 | ||||
| Per common share information – basic and diluted: | ||||||||
| Weighted average shares outstanding - basic | 1,034,030 | 1,034,030 | ||||||
| Net income per common share – basic | $ | 0.11 | $ | 0.09 | ||||
| Weighted average shares outstanding - diluted | 1,580,838 | 1,348,164 | ||||||
| Net income per common share – diluted | $ | 0.07 | $ | 0.07 | ||||
The accompanying notes are an integral part of these financial statements.
| F-3 |
Arvana
Inc.
Statements of Cash Flows
(Expressed in US Dollars)
For the years ended | ||||||||
| December 31, | ||||||||
| 2019 | 2018 | |||||||
| Operating activities | ||||||||
| Net income for the year | $ | 112,252 | $ | 93,510 | ||||
| Items not involving cash: | ||||||||
| Interest expense | 57,484 | 51,207 | ||||||
| Foreign exchange (gain) loss | 20,096 | (85,095 | ) | |||||
| Gain on sale of subsidiaries | — | (114,237 | ) | |||||
| Other income (Note 11) | (287,316 | ) | — | |||||
| Amortization of discount on convertible loan | 45,059 | 12,741 | ||||||
| Changes in non-cash working capital: | ||||||||
| Accounts payable and accrued liabilities | 14,974 | (2,368 | ) | |||||
| Amounts due to related parties | 3,172 | 10,371 | ||||||
| Net cash used in operations | (35,279 | ) | (33,871 | ) | ||||
| Investing activities | ||||||||
| Cash disposed on sale of subsidiaries | — | (44 | ) | |||||
| Net cash used in investing activities | — | (44 | ) | |||||
| Financing activities | ||||||||
| Proceeds of loans payable (Note 9) | 36,810 | — | ||||||
| Proceeds of convertible loan (Note 9) | — | 30,000 | ||||||
| Net cash provided by financing activities | 36,810 | 30,000 | ||||||
| Increase (decrease) in cash | 1,531 | (3,915 | ) | |||||
| Cash, beginning of year | 815 | 4,730 | ||||||
| Cash, end of year | $ | 2,346 | $ | 815 | ||||
| Supplementary information: | ||||||||
| Cash paid for interest | $ | — | $ | — | ||||
| Cash paid for income taxes paid | $ | — | $ | — | ||||
| Accounts payable and accrued liabilities written off | $ | 287,316 | $ | — | ||||
| Accounts payable and accrued liabilities settled as consideration for the sale of subsidiaries | $ | — | $ | 23,206 | ||||
| Discount on convertible notes from beneficial conversion feature | $ | — | $ | 57,800 | ||||
The accompanying notes are an integral part of these financial statements.
| F-4 |
Arvana
Inc.
Statements of Stockholders' Deficiency
(Expressed in US Dollars)
| Common Shares | Treasury | |||||||||||||||||||||||||||
| Shares | Amount | Additional Paid-in Capital | Deficit | Shares | Amount | Total Stockholders’ Deficiency | ||||||||||||||||||||||
| Balance, December 31, 2015 | 885,130 | $ | 885 | $ | 21,166,619 | $ | (23,413,245 | ) | (2,085 | ) | $ | (3,336 | ) | $ | (2,249,077 | ) | ||||||||||||
| Debt settlement | 148,900 | 149 | 34,098 | 34,247 | ||||||||||||||||||||||||
| Discount on convertible notes from beneficial conversion feature | 25,000 | 25,000 | ||||||||||||||||||||||||||
Net loss for the year ended December 31, 2016 | (62,531 | ) | (62,531 | ) | ||||||||||||||||||||||||
| Balance, December 31, 2016 | 1,034,030 | $ | 1,034 | $ | 21,225,717 | $ | (23,475,776 | ) | (2,085 | ) | $ | (3,336 | ) | $ | (2,252,361 | ) | ||||||||||||
| Net loss for the year ended December 31, 2017 | (224,914 | ) | (224,914 | ) | ||||||||||||||||||||||||
| Balance, December 31, 2017 | 1,034,030 | $ | 1,034 | $ | 21,225,717 | $ | (23,700,690 | ) | (2,085 | ) | $ | (3,336 | ) | $ | (2,477,275 | ) | ||||||||||||
| Discount on convertible notes from beneficial conversion feature | 57,800 | 57,800 | ||||||||||||||||||||||||||
| Net income for the year ended December 31, 2018 | 93,510 | 93,510 | ||||||||||||||||||||||||||
| Balance, December 31, 2018 | 1,034,030 | $ | 1,034 | $ | 21,283,517 | $ | (23,607,180 | ) | (2,085 | ) | $ | (3,336 | ) | $ | (2,325,965 | ) | ||||||||||||
| Net income for the year ended December 31, 2019 | 112,252 | 112,252 | ||||||||||||||||||||||||||
| Balance,December 31, 2019 | 1,034,030 | $ | 1,034 | $ | 21,283,517 | $ | (23,494,928 | ) | (2,085 | ) | $ | (3,336 | ) | $ | (2,213,713 | ) | ||||||||||||
The accompanying notes are an integral part of these financial statements.
| F-5 |
| Arvana Inc. |
| Notes to Financial Statements |
| For the Years Ended December 31, 2019 and 2018 |
| (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 in combination with a reverse split of one share for every twenty shares outstanding.
On March 17, 2016, the Company entered into a non-binding Memorandum of Understanding (“MOU”) with CaiE Food Partnership Ltd. (“CaiE”) for the purpose of acquiring CaiE as a wholly-owned subsidiary. CaiE is in the business of manufacturing and distributing fresh Dim Sum food products from a facility based in Sparks, Nevada. In the event that the Company does not complete the acquisition of CaiE, its intention will be to identify and evaluate alternative business opportunities that might be a good match for the Company.
The reporting currency and functional currency of the Company is the United States dollar (“US Dollar”) and the accompanying financial statements have been expressed in US Dollars.
These 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 year ended December 31, 2019, the Company recognized net income of $112,252, as a result of a other income (Note 11). At December 31, 2019, the Company had a working capital deficiency of $2,213,713. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
The World Health Organization declared coronavirus COVID-19 a global pandemic in March 2020. COVID-19 is a contagious disease that continues to spread adversely affecting workforces, economies, and financial markets globally, which affects will likely result in an economic downturn. The Company cannot predict the duration or magnitude of the adverse results connected to COVID-19, nor can it preduct the effect, if any, COVID-19 will have on the Company’s business or its ability to raise funds
The Company will require continued financial support from its stockholders 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 objectives. 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.
| F-6 |
| Arvana Inc. |
| Notes to Financial Statements |
| For the Years Ended December 31, 2019 and 2018 |
| (Expressed in U.S. Dollars) |
2. Summary of Significant Accounting Policies
a)
Basis of presentation
The Company is in the process of evaluating CaiE as a business opportunity and has minimal operating expenses. Our fiscal year end is December 31. The accompanying financial statements of Arvana Inc. for the years ended December 31, 2019 and 2018 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-K and Regulation S-K. Results are not necessarily indicative of results which may be achieved in the future.
b)
Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
c)
Foreign currency translation and transactions
Transactions conducted in foreign currencies are recorded using the exchange rate in effect on the transaction date. At the period end, monetary assets and liabilities are translated to the functional currency of each entity using the exchange rate in effect at the period end date. Transaction gains and losses are recorded in foreign exchange gain or loss in the statement of operations and comprehensive loss.
d)
Comprehensive income (loss)
The Company considers comprehensive income (loss) as a change in equity (net assets) of a business entity during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.
e)
Cash equivalents
The Company considers all highly-liquid investments, with terms to maturity of three months or less when acquired, to be cash equivalents. The Company did not have any cash equivalents as at December 31, 2019.
| F-7 |
| Arvana Inc. |
| Notes to Financial Statements |
| For the Years Ended December 31, 2019 and 2018 |
| (Expressed in U.S. Dollars) |
2. Summary of Significant Accounting Policies (continued)
f)
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 loans, loans payable and amounts due to related parties - the carrying amount approximates fair value due to the short-term nature of the obligations.
The estimated fair values of the Company's financial instruments as of December 31, 2019 and December 31, 2018 follows:
December 31, 2019 | December 31, 2018 | |||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
| Cash | $ | 2,346 | $ | 2,346 | $ | 815 | $ | 815 | ||||||||
| Accounts payable and accrued liabilities | 974,013 | 974,013 | 1,012,714 | 1,012,714 | ||||||||||||
| Convertible loans | 107,800 | 107,800 | 62,741 | 62,741 | ||||||||||||
| Loans payable to stockholders | 581,379 | 581,379 | 583,593 | 583,593 | ||||||||||||
| Loans payable to related party | 130,249 | 130,249 | 129,231 | 129,231 | ||||||||||||
| Loans payable | 84,509 | 84,509 | 47,330 | 47,330 | ||||||||||||
| Amounts due to related parties | $ | 338,109 | $ | 338,109 | $ | 491,171 | $ | 491,171 | ||||||||
The following table presents information about the assets that are measured at fair value on a recurring basis as of December 31, 2019, 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:
December 31, 2018 | Quoted
Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
| Assets: | ||||||||||||||||
| Cash | $ | 2,346 | $ | 2,346 | $ | — | $ | — | ||||||||
The fair value of cash is determined through market, observable and corroborated sources.
| F-8 |
| Arvana Inc. |
| Notes to Financial Statements |
| For the Years Ended December 31, 2019 and 2018 |
| (Expressed in U.S. Dollars) |
2. Summary of Significant Accounting Policies (continued)
g)
Concentration of credit risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash. The Company maintains cash in bank accounts that, at times, may exceed federally-insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts.
h)
Income taxes
A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry-forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
i)
Stock-based compensation
The Company accounts for all stock-based payments to employees and non-employees under ASC 718 “Stock Compensation,” using the fair value method. Under the fair value method, stock-based payments are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable. The cost of stock-based payments to non-employees that are fully vested and non-forfeitable at the grant date is measured and recognized at that date.
j) Beneficial conversion feature
From time-to-time, the Company may issue convertible notes that may have conversion prices that create an embedded beneficial conversion feature. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of any attached equity instruments, if any related equity instruments were granted with the debt. The intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method.
k)
Earnings (loss) per share
Basic earnings (loss) per share are computed using the weighted average number of common shares outstanding during the year. Diluted earnings (loss) per share are computed using the weighted average number of common shares and potentially dilutive common stock equivalents, including stock options and warrants. There were no outstanding stock options or warrants as at December 31, 2019 and 2018.
| F-9 |
| Arvana Inc. |
| Notes to Financial Statements |
| For the Years Ended December 31, 2019 and 2018 |
| (Expressed in U.S. Dollars) |
2. Summary of Significant Accounting Policies (continued)
l) Recent accounting pronouncements
New and amended standards adopted by the Company
There were no new and amended standards adopted by the Company during the year which had a material impact on the Company’s audited financial statements except the following:
In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-02, Leases (Topic 842). In July 2018 and December 2018, FASB issued Accounting Standards Update 2018-11, and 2018-20, respectively. These standards require the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. The standards require lessors to classify leases as either sales-type, finance or operating. A sales-type lease occurs if the lessor transfers all the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer of control, the lease is treated as a financing lease. If the lessor does not convey risks and rewards or control, which results in an operating lease. The Company considers that these standards has had no impact on its results of operations, financial condition, cash flows, and financial statement disclosures.
In July 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2017-11, requiring certain changes to the presentation and disclosures of changes to liability or equity classification of financial instruments. The Company considers that the adoption of this standard has had no impact on its results of operations, financial condition, cash flows, and financial statement disclosures.
In June 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2018-07, requiring certain changes to nonemployee share-based payment accounting. The Company is considers that the adoption of this standard has had no impact on its results of operations, financial condition, cash flows, and financial statement disclosures.
New standards and interpretations not yet adopted by the Company
Several new standards and amendments to standards and interpretations are effective for annual periods beginning after the closing date of this report and have not been applied in preparing these audited financial statements:
In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, requiring certain changes to the recognition and measurement as well as disclosure of incurred and expected credit losses. The standard will become effective for the Company beginning January 1, 2020. In November 2018, the FASB issued ASU 2018-19 to clarify certain aspects of the new current expected credit losses impairment model in ASU 2016-13. ASU 2018-19 points out that operating lease receivables are within the scope of ASC 842 rather than ASC 326. The Company is currently assessing the impact that the adoption of this standard will have on its results of operations, financial condition, cash flows, and financial statement disclosures.
| F-10 |
| Arvana Inc. |
| Notes to Financial Statements |
| For the Years Ended December 31, 2019 and 2018 |
| (Expressed in U.S. Dollars) |
2. Summary of Significant Accounting Policies (continued)
l) Recent accounting pronouncements (continued)
New standards and interpretations not yet adopted (continued)
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 amendments in this ASU are the result of a broader disclosure project called FASB Concepts Statement, Conceptual Framework for Financial Reporting — Chapter 8: Notes to Financial Statements. The amendments are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company is currently assessing the impact that the adoption of this standard will have on its results of operations, financial condition, cash flows, and financial statement disclosures.
3. Loans Payable
As of December 31, 2019, the Company had received loans of $581,379 (€225,000; CAD$ 72,300; $273,107) (December 31, 2018 - $583,593: €225,000; CAD$ 72,300; $273,107) from stockholders, loans of $130,249 (CAD$ 27,600; $109,000) (December 31, 2018 – $129,231: CAD$ 27,600; $109,000) from a related party and loans of $84,509 (CAD$ 10,000; $76,810) (December 31, 2018 – $47,330: CAD$ 10,000; $40,000) 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 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 $521,156 and $470,192 is included in accounts payable and accrued liabilities at December 31, 2019 and December 31, 2018, respectively. Interest expense recognized on these loans was $57,484 for the year ended December 31, 2019, compared to $51,207 for the year ended December 31, 2018, respectively.
4. Stock Options
At December 31, 2019 and December 31, 2018, there were no stock options outstanding. No options were granted, exercised or expired during the year ended December 31, 2019 or the year ended December 31, 2018.
5. Common Stock
During the years ended December 31, 2019 and December 31, 2018, the Company issued nil shares and nil shares, respectively.
6. Segmented Information
The Company has no reportable segments.
| F-11 |
| Arvana Inc. |
| Notes to Financial Statements |
| For the Years Ended December 31, 2019 and 2018 |
| (Expressed in U.S. Dollars) |
7. Income Taxes
Income tax benefits attributable to losses from operations in the United States of America was $Nil for the years ended December 31, 2019 and 2018, and differed from the amounts computed by applying the United States of America combined federal and Utah tax rate of 24.91% to pretax losses from operations as a result of the following:
| 2019 | 2018 | |||||||
| Income (loss) for the year before income taxes | $ | 112,252 | $ | 93,510 | ||||
| Computed expected tax expense (benefit) | $ | 27,963 | $ | 23,294 | ||||
| Non-deductible expenses | 5,006 | (21,198 | ) | |||||
| Change in tax rates | (4,088 | ) | — | |||||
| True up of prior-year provision to statutory tax returns | (236,196 | ) | — | |||||
| Change in valuation allowance | 207,315 | — | ||||||
| Income tax expense | $ | — | $ | 2,096 | ||||
8. Related Party Transactions and Amounts Due to Related Parties
At December 31, 2019 and December 31, 2018, the Company had amounts due to related parties of $338,109 and $491,171, respectively. This amount includes $60,000 at December 31, 2019, and $136,100 at December 31, 2018, respectively, payable to current and former directors for services rendered during 2007. During the year ended December 31, 2019, the Company determined that $76,100 of the $136,100 that was payable at December 31, 2018, was no longer considered collectible from the two former directors and written off. The $60,000 payable to a current director at December 31, 2019 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.
The Company incurred consulting fees of $8,894 (2018 - $11,819) paid to a company controlled by our chief executive officer during the year ended December 31, 2019.
Our former chief executive officer and former director entered into a consulting arrangement on a month to month basis that provided for a monthly fee of CAD$5,000. These amounts have been accrued and are currently unpaid. This consulting arrangement ended on May 24, 2013. As of December 31, 2019, our former chief executive officer was owed $278,109 and $262,705 as of December 31, 2018 which are unsecured non-interest bearing amounts due on demand.
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 at December 31, 2019 and December 31, 2018, the Company had amounts due to this former chief financial officer of $nil and $58,870, respectively. During the year ended December 31, 2019, the Company determined that the $58,870 was no longer considered collectible from our former chief financial officer and written off.
Our former chief executive officer and former director entered into a debt assignment agreement effective January 1, 2012, with a corporation with a former director in common and thereby assigned $156,104 (CAD$202,759) of unpaid amounts payable.
| F-12 |
| Arvana Inc. |
| Notes to Financial Statements |
| For the Years Ended December 31, 2019 and 2018 |
| (Expressed in U.S. Dollars) |
8. Related Party Transactions and Amounts Due to Related Parties (continued)
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 $130,249 for unsecured amounts bearing 6% interest due on demand loaned to the Company as of December 31, 2019, compared to $129,231 as of December 31, 2018. Total interest expense of $78,962 (2018 - $70,711) is included in accounts payable and accrued liabilities as at December 31, 2019.
At December 31, 2019 and December 31, 2018, the Company had amounts due to another former officer and a company controlled by that former officer of $nil and $31,153, respectively. During the year ended December 31, 2019, the Company determined that the $31,153 was no longer considered collectible from our former officer and written off.
9. Convertible Loans
On May 18, 2016, the Company issued a convertible promissory note (“Convertible Note”) pursuant to which the Company received $50,000 from CaiE due on November 17, 2017. The $50,000 Convertible Note is convertible into common stock, in whole or in part, at any time and from time to time before maturity at the option of the holder at a fixed price of $0.20 per share. Due to the conversion price being lower than the closing share price on the issuance date, a beneficial conversion feature was recognized as a discount against the convertible note. The Convertible Note accrues interest at a rate equal to 10% per year. During the year ended December 31, 2019 and 2018, $nil and $nil of the discount was amortized as interest expense, respectively. Interest expense recognized on this loan was $5,000 for the year ended December 31, 2019, compared to $5,000 for the year ended December 31, 2018. As at December 31, 2019 and December 31, 2018, the balance of the Convertible Note was $50,000. On November 17, 2017, the Company entered into an amending agreement to extend the maturity date to March 31, 2018; all other terms remained unchanged. On March 31, 2018, the Company entered into an additional amending agreement to further extend the maturity date of the Convertible Note to March 31, 2019. All other terms remained unchanged. On March 31, 2019, the Company entered into an additional amending agreement to further extend the maturity date of the Convertible Note to March 31, 2020. All other terms remained unchanged.
On October 12, 2018, the Company issued an additional convertible note with CaiE pursuant to which the Company received $27,800 during the year ended December 31, 2018 and $30,000 during the year ended December 31, 2019. The $57,800 convertible note was due on October 11, 2019 and is convertible into common stock, in whole or in part, at any time and from time to time before maturity at the option of the holder at a fixed price of $0.20 per share. Effective October 11, 2019, the Company entered into an amending agreement to extend the maturity date to March 31, 2020. All other terms remained unchanged. Due to the conversion price being lower than the closing share price on the issuance date, a beneficial conversion feature was recognized as a discount against the convertible note. The convertible note accrues interest at a rate equal to 10% per year. During the year ended December 31, 2019 and 2018, $45,059 and $12,741 of the discount was amortized as interest expense, respectively. Interest expense recognized on this loan was $5,780 for the year ended December 31, 2019, compared to $1,420 for the year ended December 31, 2018. As at December 31, 2019 and December 31, 2018, the balance of the convertible note was $57,800 and $nil, respectively.
| F-13 |
| Arvana Inc. |
| Notes to Financial Statements |
| For the Years Ended December 31, 2019 and 2018 |
| (Expressed in U.S. Dollars) |
10. Sale of Subsidiaries
On September 24, 2018, the Company entered into a sale and purchase agreement with Nazleal S.A. (“Nazleal”) to dispose of the Company’s subsidiaries, Arvana Networks Inc., Arvana Participaçōes S.A. and Arvana Comunicações do Brasil S. A. (collectively, the “Subsidiaries”). Under the terms of the agreement, Nazleal purchased the Subsidiaries for €20,000 ($23,206) by executing a settlement and release agreement for the same amount pertaining to amounts previously payable by the Company to Nazleal.
Effective September 30, 2018, Nazleal assumed all debts, obligations, and guarantees of the Subsidiaries, which totaled $1,822,152. Of this amount, $1,731,077 was written off (concurrently upon completion of the transaction), as these amounts represented amounts due to the Company from the Subsidiaries (previously eliminated on consolidation). The remaining $91,075 comprised $40,000 in accounts payable (due to arm’s length parties) and $51,075 in amounts due to related parties which were derecognized upon completion of the sale. The net effect of the above transactions resulted in a total gain to the Company of $114,237.
As at December 31, 2019 and 2018, the Subsidiaries had total assets of $44 which consisted solely of cash.
11. Other Income
During the year ended December 31, 2019, the Company recognized other income in the amount of $287,316 corresponding to the write down of $167,691 included in amounts due to related parties and $119,625 included in accounts payable and accrued liabilities, that based on statutory law are deemed to no longer be collectibe by these individuals and vendors.
12. Subsequent Events
The Company evaluated its December 31, 2019, financial statements for subsequent events through the date the financial statements were issued. The Company is aware of the following subsequent events which would require recognition or disclosure in the financial statements:
| (a) | On March 3, 2020, the Company entered into a Debt Settlement Agreement with Olga Volger, an assignee of a debt due to AG Consultants, Inc., to settle in full $14,883 in principal and interest due on loans made to the Company for 148,830 shares of its common stock valued at $0.10 a share. |
| (b) | On March 4, 2020, the Company entered into a Debt Settlement Agreement with Conrad Swanson to settle in full $39,592 in principal and interest due on loans made to the Company for 395,920 shares of its common stock valued at $0.10 a share. |
| (c) | On March 4,2020, the Company entered into a Debt Settlement Agreement with Raymond Wicki to settle $42,629 in principal and interest due on loans made to th Company for 426,290 shares of its common stock valued at $0.10 a share. |
| (d) | On March 17, 2020, the Company received an additional loan from CaiE in the amount of $25,000 with terms and conditions of this loan to be finalized at a latter date. |
.
| F-14 |
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
In connection with the preparation of this annual report, an evaluation was carried out by the Company’s management, with the participation of the chief executive officer and the 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 December 31, 2019. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.
Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were 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 such information was accumulated and communicated to management, including its chief executive officer and chief financial officer, to allow timely decisions regarding required disclosures.
Management's Annual Report on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process, under the supervision of the chief executive officer and the chief financial officer, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with United States generally accepted accounting principles (GAAP). Internal control over financial reporting includes those policies and procedures that:
- Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company’s assets.
- Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the board of directors.
- Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
| 13 |
The Company’s management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013), to determine whether there existed material weaknesses in internal control over financial reporting. A material weakness is a control deficiency, or a combination of deficiencies in internal control over financial reporting that creates a reasonable possibility that a material misstatement in annual or interim financial statements will not be prevented or detected on a timely basis. The assessment identified a material weakness in internal control over financial reporting. Since the assessment of the effectiveness of our internal control over financial reporting did identify a material weakness, management considers its internal control over financial reporting to be ineffective.
The matter involving internal control over financial reporting that our management considers to be a material weakness is:
- Failure to segregate the duties of chief executive officer and chief financial officer, which failure could result in inadequate implementation and review of financial reporting control procedures.
The aforementioned material weaknesses were identified by our Chief Executive Officer and Chief Financial Officer in connection with his review of our financial statements as of December 31, 2019.
Management believes that the material weakness set forth above did not have an effect on our financial results. However, management believes that the failure to segregate the duties of chief executive officer and chief financial officer could result in ineffective oversight of the monitoring of internal controls over financial reporting, which weakness could result in a material misstatement in our financial statements in future periods.
Management’s Remediation Initiatives
In an effort to remediate the identified material weaknesses and enhance our internal controls over financial reporting, the Company plans to take the following measures, as soon as is practicable, subject to the availability of capital and personnel resources:
- Bifurcate the position of chief executive officer and chief financial officer into two separate positions.
This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Commission that permit us to provide only management’s report in this annual report.
Changes in internal control over financial reporting
During the year ended December 31, 2019, there has been no change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.
9B. OTHER INFORMATION
Not applicable.
| 14 |
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Officers and Directors
The following table sets forth the name, age and position of each director and executive officer of the Company:
| Name | Age | Position |
| Sir John Baring | 73 | Chairman of the Board of Directors |
| Ruairidh Campbell | 56 | Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and Director |
| Shawn Teigen | 47 | Director |
Set forth below is a brief description of the background and business experience of each of our executive officers and directors for the past five years:
Sir John Baring served as chief executive officer of the Company between May 26, 2005, and October 17, 2005. Sir John was appointed as a director on May 26, 2005, and as chairman of the board of directors on October 17, 2005, on his resignation as chief executive officer. Sir John also has other significant responsibilities, as detailed in the following paragraph. He will serve until the next annual meeting of the Company’s shareholders and his successor is elected and qualified.
Business Experience:
Sir John Baring brings more than 30 years of banking and investing experience to the board of directors. Since June 2002, Sir John has acted as a managing and founding member of Mercator Management LLC, a leading fund management company.
Officer and Director Responsibilities and Qualifications:
Sir John Baring acts as Chairman of the Company’s board of directors and is a member of our audit committee.
Other Public Company Directorships in the Last Five Years:
Sir John Baring has not been a director of any other public companies over the past five years.
The Company has concluded that Sir John Baring should continue to serve as Chairman of the Company’s board of directors due to the breadth of his business experience.
Ruairidh Campbell was appointed Chief Executive Officer and director on May 24, 2013, and as Chief Financial Officer on June 25, 2013. Mr. Campbell estimates that he spends approximately 10 percent of his time, approximately 5 hours per week, on the Company’s business. He also has other significant responsibilities, as detailed in the following paragraph. He will serve until the next annual meeting of the Company’s shareholders and his successor is elected and qualified.
| 15 |
Business Experience:
Mr. Campbell brings to his position management skills acquired from a legal and business background encompassing over 25 years of consultancy experience. He is a member of the California State Bar, holds a Bachelor of Arts from the University of Texas at Austin and a Juris Doctorate from the University of Utah College of Law. He started his legal career as an attorney for Baker & McKenzie in Cairo, Egypt transitioning to consultancy work in 2001 on the formation of Orsa & Company. Orsa is dedicated to assisting companies navigate the business environment. Services range from regulatory compliance to managerial duties that include working with government regulators, business organizations, auditors, accountants, attorneys and quasi-public governing bodies responsible for everything from public health to public quotation.
Officer and Director Responsibilities and Qualifications:
Mr. Campbell is responsible for the overall management of the Company and is involved in its day-to-day operations, finance and administration. Mr. Campbell is also a member of our audit committee.
Other Public Company Directorships in the Last Five Years:
Mr. Campbell presently serves as the chief executive officer, chief financial officer, principal accounting officer and a director for Allied Resources, Inc., a public company involved in oil and gas exploration and production, responsibilities he has held since June 1998 to present.
The Company has concluded that Mr. Campbell should continue to serve as a director due his knowledge of business, regulatory requirements and management experience.
Shawn Teigen was appointed as a director on June 25, 2013. He also has significant responsibilities with other companies, as detailed in the following paragraph. He will serve until an annual meeting of the Company’s shareholders and his successor is elected and qualified.
Business Experience:
Mr. Teigen 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.
Officer and Director Responsibilities and Qualifications:
Mr. Teigen is responsible for oversight and overall business strategy as a director of the Company. He also serves as a member of our audit committee.
Other Public Company Directorships in the Last Five Years:
Mr. Teigen has not been a director of any other public companies over the past five years.
The Company has concluded that Mr. Teigen should continue to serve as a director due to his valuable and complimentary experience in the management of public-sector and non-profit organizations.
| 16 |
Audit Committee and Audit Committee Financial Expert
Our board of directors has established an audit committee that is comprised of Sir John Baring, Ruairidh Campbell and Shawn Teigen.
Our board of directors has determined that Ruairidh Campbell qualifies as an “audit committee financial expert”, as defined by the rules of the Commission, though it has further determined that he should not be considered “independent” as that term is defined by NASDAQ Marketplace Rule 5605(a)(2). The NASDAQ independence definition includes a series of objective tests, such as that the director is not an employee of the company and has not engaged in various types of business dealings with the company.
The audit committee recommends independent accountants to audit its financial statements, discusses the scope and results of the audit with the independent accountants, considers the adequacy of the internal accounting controls, considers the audit procedures of the Company and reviews the non-audit services to be performed by the independent accountants.
The functions of our audit committee are effectively served by our Board of Directors.
Code of Ethics
We have adopted a Code of Ethics that applies to all the Company’s directors, officers and employees.
A copy of our Code of Ethics was incorporated by reference in our previously filed on Form 10-KSB for the year ended December 31, 2006 as an exhibit.
Significant Employees
We do not have any other significant employees, other than our directors and executive officers named above.
Term of Office
The Company’s directors are appointed for a one (1) year term to hold office until the next annual shareholders meeting or until removed from office in accordance with the Company’s bylaws. The Company’s executive officers are appointed by the board of directors and hold office until removed.
Involvement in Certain Legal Proceedings
During the past ten years there are no events that occurred related to an involvement in legal proceedings that are material to an evaluation of the ability or integrity of the Company directors, or persons nominated to become directors or executive officers.
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially own more than ten percent of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. Based on our review of the copies of such forms received by us, we believe that during the fiscal year ended December 31, 2019, all such applicable filing requirements were met.
| 17 |
ITEM 11. EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The objective of the Company’s compensation program is to provide an incentive to our chief executive officer and chief financial officer for services rendered. The compensation program for our sole executive officer is comprised of a consulting fee paid to a related party based on services rendered in connection with maintaining our disclosure obligations with the Commission. We utilize this form of compensation as it is adequate to retain and motivate our executive officer at this stage of our development. Nonetheless, when we develop or acquire an existing business opportunity our intention in respect to executive compensation would be to compensate Company executives in accordance with compensatory packages typical of other development stage companies. We do not expect to rely on any specific formula to determine compensation. Future compensation arrangements for Company executives will most likely include salaries, stock awards and stock options.
Executive compensation paid to a company controlled by our current chief executive officer and chief financial officer for the periods ended December 31, 2019, and December 31, 2018, were $8,984 and $11,819 respectively.
During the year ended December 31, 2019, the Company incurred director’s fees of $1,600 (2018 - $1,600).
Table
The following table provides summary information for 2019 and 2018 concerning cash and non-cash compensation paid or accrued by the Company to or on behalf of (i) the chief executive officer and the chief financial officer and (ii) any other employee to receive compensation in excess of $100,000.
| Summary Compensation Table | ||||||||||||||||||||||||||||||||||
| Name and Principal Position | Year | Salary ($)
| Bonus ($)
| Stock Awards ($)
| Option Awards ($) | Non-Equity Incentive Plan Compensation ($)
| Change in Pension Value and Nonqualified Deferred Compensation ($) | All Other Compensation ($)
| Total ($)
| |||||||||||||||||||||||||
| Ruairidh Campbell CEO, CFO, PAO, and Director | 2019 2018 | — | — | — | — | — | — | 8,894 11,819 | 8,894 11,819 | |||||||||||||||||||||||||
Outstanding Equity Awards as of December 31, 2019
There were no outstanding equity awards as of December 31, 2019 for our named executive officer.
No share purchase options were granted to our named executive officer during our fiscal year ended December 31, 2019.
Long-Term Incentive Plans
We do not have any long-term incentive plans, pension plans, or similar compensatory plans for our directors or executive officers.
| 18 |
Change of Control Agreements
We are not party to any change of control agreements with any of our directors or executive officers.
Compensation of Directors
The following table summarizes the compensation of our Company directors for the year ended December 31, 2019:
| Name | Fees
Earned or Paid in Cash ($) | Stock
Awards ($) | Option
Awards ($) |
Non-
Equity | Non-qualified
Deferred Compensation Earnings ($) | All
Other Compensation ($) | Total ($) | |||||||||||||||||||||
| Sir John Baring | 800 | — | — | — | — | — | 800 | |||||||||||||||||||||
| Shawn Teigen | 800 | — | — | — | — | — | 800 | |||||||||||||||||||||
| Ruairidh Campbell | — | — | — | — | — | — | — | |||||||||||||||||||||
Employment Agreements
There are no employment agreements with the named executive officer.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially (1) as of March 27, 2020, by: (i) each of our directors, (ii) each of our executive officers, (iii) our executive officers and directors as a group, and (iv) each beneficial shareholder known to us to own more than 5% of our outstanding common stock. Unless otherwise indicated, the shareholders listed possess sole voting and investment power with respect to the shares shown.
| Title of Class | Name
and Address of Beneficial Owner | Number
of Common Shares | Percentage
of Common Shares(1) | |||||||
| Directors and Officers | ||||||||||
| Common Stock | Ruairidh
Campbell, CEO, CFO, PAO and Director 299 S. Main Street, 13th Floor, Salt Lake City, Utah 84111 | — | — | |||||||
| Common Stock | Shawn
Teigen, Director 299 S. Main Street, 13th Floor, Salt Lake City, Utah 84111 | — | — | |||||||
| Common Stock | Sir
John Baring, Director 299 S. Main Street, 13th Floor, Salt Lake City, Utah 84111 | 14,625 | 1.4 | % | ||||||
| Common Stock | All
Directors and Executive Officers as a Group (3 persons) | 14,625 | 1.4 | % | ||||||
| Common Stock | Valor
Invest 60 Rue du Rhone, Fifth Floor Geneva 3, Switzerland CH1211 | 63,090 | 6.1 | % | ||||||
| Total | 77,715 | 7.5 | % | |||||||
(1) Under Commission Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on December 31, 2019. The percentage calculations are based on the aggregate of 1,034,030 shares issued and outstanding as at December 31, 2019.
| 19 |
Change of Control
The acquisition of CaiE as a wholly-owned subsidiary would result in a change in control of the Company. We are not aware of any other arrangement that might result in a change in control in the future.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Certain Relationships and Related Transactions
None of our directors or executive officers, nor any proposed nominee for election as a director, nor any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to all of our outstanding shares, nor any members of the immediate family (including spouse, parents, children, siblings, and in−laws) of any of the foregoing persons has any material interest, direct or indirect, in any transaction since the beginning of our last fiscal year or in any presently proposed transaction which, in either case, has or will materially affect us.
Director Independence
Our common stock trades in the OTC Markets Pink Sheets. As such, we are not currently subject to corporate governance standards of listed companies, which require, among other things, that the majority of the board of directors be independent.
Since we are not currently subject to corporate governance standards relating to the independence of our directors, we choose to define an “independent” director in accordance with NASDAQ Marketplace Rule 5605(a)(2)). The NASDAQ independence definition includes a series of objective tests, such as that the director is not an employee of the company and has not engaged in various types of business dealings with the company. The Company has two independent directors under the above definition.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth information regarding the amount billed to us by our independent auditor, Davidson & Company, LLP, for our fiscal years ended December 31, 2019 and 2018:
| Years ended December 31 | ||||||||
| 2019 | 2018 | |||||||
| Audit Fees: | 13,500 | $ | 12,750 | |||||
| Audit Related Fees: | 7,500 | 5,610 | ||||||
| Tax Fees: | — | — | ||||||
| All Other Fees: | — | — | ||||||
| Total: | 21,000 | $ | 18,360 | |||||
Audit Fees
Audit Fees are the aggregate fees billed by our independent auditor for the audit of our annual financial statements and attestation services that are provided in connection with statutory and regulatory filings or engagements.
| 20 |
Audit-Related Fees
Audit-Related Fees are fees charged by our independent auditor for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under "Audit Fees." This category comprises fees billed for independent accountant review of our interim financial statements and management discussion and analysis, as well as advisory services associated with our financial reporting.
Policy on Pre-Approval by Audit Committee of Services Performed by Independent Auditors
Our Audit Committee pre-approves all audit services to be provided to us by our independent auditors. Our Audit Committee’s policy regarding the pre-approval of non-audit services to be provided to us by our independent auditors is that all such services shall be pre-approved by the Audit Committee. Non-audit services that are prohibited to be provided by our independent auditors may not be pre-approved. In addition, prior to the granting of any pre-approval, our Audit Committee must be satisfied that the performance of the services in question will not compromise the independence of the auditors.
| 21 |
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements
The following documents are filed under “Item 8. Financial Statements and Supplementary Data,” pages F-1 through F-14, and are included as part of this Form 10-K/A:
Financial Statements of the Company for the years ended December 31, 2019 and 2018:
Report of Independent Registered Public Accounting Firm
Balance Sheets
Statements of Operations and Comprehensive Income (Loss)
Statements of Stockholders’ Deficiency
Statements of Cash Flows
Notes to Financial Statements
(b) Exhibits
The exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page 24 of this Form 10-K/A, and are incorporated herein by this reference.
(c) Financial Statement Schedules
We are not filing any financial statement schedules as part of this Form 10-K/A because such schedules are either not applicable or the required information is included in the financial statements or notes thereto.
ITEM 16 FORM 10-K SUMMARY
None.
| 22 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, Principal Accounting Officer and Director | ||
| Date: | March 31, 2020 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By: | /s/ Sir John Baring | |
| Sir John Baring | ||
| Director | ||
| Date: | March 31, 2020 | |
By: |
/s/ Ruairidh Campbell |
|
| Ruairidh Campbell | ||
| Director | ||
| Date: | March 31, 2020 |
|
By: |
/s/ Shawn Teigen |
|
| Shawn Teigen | ||
| Director | ||
| Date: | March 31, 2020 |
| 23 |
EXHIBIT INDEX
Regulation S-K Number |
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) |
| 14.1 | Code of Ethics (4) |
| 31 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act (5) |
| 32 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(d) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(5) |
| 101.INS | XBRL Instance Document(6) |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase(6) |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase(6) |
| 101.DEF | XBRL Taxonomy Extension Label Linkbase(6) |
| 101.CAL | XBRL Taxonomy Extension Label Linkbase(6) |
| 101.SCH | XB RL Taxonomy Extension Label Linkbase(6) |
(1) |
Previously filed with the SEC as an exhibit to the Company’s registration statement on Form 10-SB filed with the SEC on May 24, 2000.
|
| (2) | Previously filed with the SEC as an exhibit to the Company’s Form 8-K filed with the SEC on October 12, 2010.
|
| (3) | Previously filed with the SEC as an exhibit to the Company’s registration statement on Form 10-SB filed with the SEC on May 24, 2000. |
| (4) | Previously filed with the SEC as an exhibit to the Company’s Annual Report on Form 10-KSB filed with the SEC on March 316, 2007. |
| (5) | Filed as an exhibit to this Annual Report on Form 10-K. |
| (6) | 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. |
| 24 |
Exhibit 31
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Ruairidh Campbell certify that:
1. I have reviewed this report on Form 10-K/A of Arvana Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
| a) | All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. |
| Date: March 31, 2020 | |
| /s/ Ruairidh Campbell | |
| Ruairidh Campbell | |
| Chief Executive Officer and Chief Financial Officer |
Exhibit 32
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the report on Form 10-K/A of Arvana Inc. for the annual period ended December 31, 2019, as filed with the Securities and Exchange Commission on the date hereof, I, Ruairidh Campbell, do hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
| (1) | This report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in this report fairly represents, in all material respects, the financial condition of the registrant at the end of the period covered by this report and results of operations of the registrant for the period covered by this report. |
| Date: March 31, 2020 | |
| /s/ Ruairidh Campbell | |
| Ruairidh Campbell | |
| Chief Executive Officer and Chief Financial Officer |
This certification accompanies this report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the registrant for the purposes of §18 of the Securities Exchange Act of 1934, as amended. This certification shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of this report), irrespective of any general incorporation language contained in such filing.
A signed original of this written statement required by §906 has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request.