UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
þ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
quarterly period ended June 30, 2016.
oTransition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
transition period from
to
.
Commission file number: 0-30695
ARVANA INC.
(Exact name of registrant as specified in its charter)
Nevada
87-0618509
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
299 S. Main Street, 13th Floor, Salt Lake City, Utah 84111
(Address of principal executive offices) (Zip Code)
(801) 232-7395
Registrant’s telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate
Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of
Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files). Yes ¨ No þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-
accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes þ No o
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the
latest practicable date. The number of shares outstanding of the registrant’s common stock, $0.001 par
value (the only class of voting stock), at August 15, 2016, was 885,130.
1
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
3
Item 2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations
14
Item 3. Quantitative and Qualitative Disclosure About Market Risk
19
Item 4. Controls and Procedures
19
PART II OTHER INFORMATION
Item 1. Legal Proceedings
20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
20
Item 3. Defaults Upon Senior Securities
20
Item 4. Mine Safety Disclosures
20
Item 5. Other Information
20
Item 6. Exhibits
20
21
2
ITEM 1.
FINANCIAL STATEMENTS
As used herein, the terms “Company,” “we,” “our,” “us,” “it,” and “its” refer to Arvana Inc., a Nevada
corporation and its wholly owned subsidiaries, unless otherwise indicated. In the opinion of management,
the accompanying unaudited condensed consolidated financial statements included in this Form 10-Q
reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of
the results of operations for the periods presented. The results of operations for the periods presented are
not necessarily indicative of the results to be expected for the full year.
3
Arvana Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(Expressed in US Dollars)
June 30,
December 31,
2016
2015
ASSETS
Current assets:
Cash
$
24,706
$
53
Total assets
$
24,706
$
53
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities
Accounts payable and accrued liabilities
$ 1,064,421
$
1,018,963
Convertible loan (Note 7)
50,000
-
Loans payable to stockholders (Note 3)
627,347
619,671
Loans payable to related party (Note 3)
30,368
28,941
Loans payable (Note 3)
147,742
147,225
Amounts due to related parties (Note 3)
450,297
434,330
Total current liabilities
2,370,175
2,249,130
Stockholders' deficiency
Common stock, $0.001 par value 5,000,000 authorized,
885,130 shares issued and outstanding at
June 30, 2016 and December 31, 2015, respectively (Note 4)
885
885
Additional paid-in capital
21,166,619
21,166,619
Deficit
(23,509,637)
(23,413,245)
(2,342,133)
(2,245,741)
Less: Treasury stock – 2,085 common shares at
June 30, 2016 and December 31, 2015, respectively
(3,336)
(3,336)
Total stockholders’ deficiency
(2,345,469)
(2,249,077)
$
24,706
$
53
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Arvana Inc.
Condensed Consolidated Statements of Operations
For the Three and Six Months Ended June 30, 2016 and 2015
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2016
2015
2016
2015
Operating expenses
General and administrative
$
5,965 $
5,230
$
8,534 $
11,132
Professional fees
7,102
1,730
8,877
3,230
Total operating expenses
13,067
6,960
17,411
14,362
Loss from operations
(13,067)
(6,960)
(17,411)
(14,362)
Interest expense
(12,082)
(12,165)
(24,277)
(24,067)
Foreign exchange gain (loss)
12,199
(31,661)
(54,704)
97,035
Net income (loss) and
comprehensive income (loss)
$
(12,950) $
(50,786)
$
(96,392) $
58,606
Per common share information – basic
and diluted:
Weighted average shares outstanding
885,130
885,130
885,130
885,130
Net income (loss) per
common share – basic and
diluted
$
(0.01) $
(0.06)
$
(0.11) $
0.07
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Arvana Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Expressed in US Dollars)
Six Months Ended
June 30,
2016
2015
Cash flows from operating activities
Net income (loss)
$
(96,392)
$
58,606
Item not involving cash:
Unrealized foreign exchange
54,361
(97,195)
Changes in non-cash working capital:
Accounts payable and accrued liabilities
15,773
29,945
Amounts due to related parties
911
933
Net cash used in operations
(25,347)
(7,711)
Cash flows from investing activities
Net cash used in investing activities
-
-
Cash flows from financing activities
Proceeds of loans payable stockholders
-
10,000
Loans corresponding to MOU (Note 7)
50,000
-
Net cash provided by financing activities
50,000
10,000
Increase in cash
24,653
2,289
Cash , beginning of period
53
1,876
Cash, end of period
$
24,706
$
4,165
Supplementary information
Cash paid for interest
$
-
$
-
Cash paid for income taxes
$
-
$
-
There were no non-cash investing or financing transactions for the six month periods ended June 30, 2016
and 2015.
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
Arvana Inc.
Notes to Condensed Consolidated Financial Statements
June 30, 2016
(Unaudited)
(Expressed in U.S. Dollars)
1. Nature of Business and Ability to Continue as a Going Concern
Arvana Inc. (“our”, “we”,”us” and the “Company”) was incorporated under the laws of the State of
Nevada as Turinco, Inc. on September 16, 1977. On July 24, 2006, the shareholders approved a change of
the Company’s name from Turinco, Inc. to Arvana Inc.
These condensed consolidated financial statements for the six month period ended June 30, 2016, include
the accounts of the Company and its subsidiary Arvana Networks Inc. (including its wholly-owned
subsidiaries, Arvana Participaçōes S.A. and Arvana Comunicações do Brasil S. A. The Company has
ceased all operations in its subsidiary companies, and has written-off or disposed of all assets in the
subsidiary companies, consequently they are now all considered to be inactive subsidiaries.
Our reporting currency and functional currency is the United States dollar (“US Dollar”) and the
accompanying condensed consolidated financial statements have been expressed in US Dollars.
These condensed consolidated financial statements have been prepared on a going concern basis, which
assumes the realization of assets and settlement of liabilities in the normal course of business. For the six
month period ended June 30, 2016, the Company recognized a net loss of $96,392 as a result of general
administrative expenses and foreign exchange losses. At June 30, 2016, the Company had a working
capital deficiency of $2,345,469. These conditions raise substantial doubt about the Company’s ability to
continue as a going concern.
Accordingly, the Company will require continued financial support from its shareholders and creditors
until it is able to generate sufficient cash flow from operations on a sustained basis. There is substantial
doubt that the Company will be successful at achieving these results. Failure to obtain the ongoing
support of its shareholders and creditors may make the going concern basis of accounting inappropriate,
in which case the Company’s assets and liabilities would need to be recognized at their liquidation values.
These financial statements do not include any adjustments relating to the recoverability and classification
of recorded asset amounts and classification of liabilities that might arise from this uncertainty.
7
Arvana Inc.
Notes to Condensed Consolidated Financial Statements
June 30, 2016
(Unaudited)
(Expressed in U.S. Dollars)
2. Summary of Significant Accounting Policies
Basis of presentation
The Company is in the process of transacting a business opportunity and has minimal operating levels.
The Company’s fiscal year end is December 31. The accompanying condensed interim consolidated
financial statements of Arvana Inc. for the six months ended June 30, 2016 and 2015, have been prepared
in accordance with accounting principles generally accepted in the United States (“US GAAP”) for
financial information with the instructions to Form 10-Q and Regulation S-X. Results are not necessarily
indicative of results which may be achieved in the future. Although they are unaudited, in the opinion of
management, they include all adjustments, consisting only of normal recurring items, necessary for a fair
presentation. Results are not necessarily indicative of results which may be achieved in the future. The
condensed consolidated interim financial statements and notes appearing in this report should be read in
conjunction with our consolidated audited financial statements and related notes thereto, together with
Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in
our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as filed with the
Securities and Exchange Commission (“SEC”) on April 14, 2016.
Use of Estimates
The preparation of consolidated financial statements in conformity with US GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates. These
estimates include the recognition of deferred tax assets based on the change in unrecognized deductible
temporary tax differences.
Financial instruments
The Company uses the following methods and assumptions to estimate the fair value of each class of
financial instruments for which it is practicable to estimate such values:
Cash - the carrying amount approximates fair value because the amounts consist of cash held at a bank.
Accounts payable and accrued liabilities and loans payable - the carrying amount approximates fair value
due to the short-term nature of the obligations.
8
Arvana Inc.
Notes to Condensed Consolidated Financial Statements
June 30, 2016
(Unaudited)
(Expressed in U.S. Dollars)
2. Summary of Significant Accounting Policies (continued)
Financial instruments (continued)
The estimated fair values of the Company's financial instruments as of June 30, 2016 and December 31,
2015 follows:
June 30,
December 31,
2016
2015
Carrying
Fair
Carrying
Fair
Amount
Value
Amount
Value
Cash
$24,706
$24,706
$53
$53
Accounts payable and accrued liabilities
1,064,421
1,064,421
1,018,963
1,018,963
Convertible loan
50,000
50,000
-
-
Loans payable to stockholders
627,347
627,347
619,671
619,671
Loans payable to related party
30,368
30,368
28,941
28,941
Loans payable
147,742
197,742
147,225
147,225
Amounts due to related parties
450,297
450,297
434,330
434,330
The following table presents information about the assets that are measured at fair value on a recurring
basis as of June 30, 2016, and indicates the fair value hierarchy of the valuation techniques the Company
utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted
prices (unadjusted) in active markets for identical assets. Fair values determined by Level 2 inputs utilize
data points that are observable such as quoted prices, interest rates and yield curves. Fair values
determined by Level 3 inputs are unobservable data points for the asset or liability, and included
situations where there is little, if any, market activity for the asset:
Quoted
Significant
Prices
Other
Significant
in Active
Observable
Unobservable
June 30,
Markets
Inputs
Inputs
2016
(Level 1)
(Level 2)
(Level 3)
Assets:
Cash
$
24,706
$
24,706
$
—
$
—
The fair value of cash is determined through market, observable and corroborated sources.
9
Arvana Inc.
Notes to Condensed Consolidated Financial Statements
June 30, 2016
(Unaudited)
(Expressed in U.S. Dollars)
2. Summary of Significant Accounting Policies (continued)
Recent accounting pronouncements
In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards
Update 2016-02, Leases (Topic 842). The standard requires 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 standard
requires lessors to classify leases as either sales-type, finance or operating. A sales-type lease occurs if the
lessor transfers all of 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, an operating lease results. The standard will
become effective for the Company beginning January 1, 2019. The Company is currently assessing the
impact adoption of this standard will have on its consolidated results of operations, financial condition,
cash flows, and financial statement disclosures.
In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates
(ASU) 2014-15 requiring an entity’s management to evaluate whether there are conditions or events,
considered in aggregate, that raise substantial doubt about entity’s ability to continue as a going concern
within one year after the date that the financial statements are issued (or within one year after the date that
the financial statements are available to be issued when applicable). The amendments to (ASU) 2014-15
are effective for the annual period ending after December 15, 2016, and for annual periods and interim
periods thereafter. Early application is permitted. The Company is in the process of evaluating the
prospective impact that (ASU) 2014-15 will have on its balance sheet.
10
Arvana Inc.
Notes to Condensed Consolidated Financial Statements
June 30, 2016
(Unaudited)
(Expressed in U.S. Dollars)
3. Amounts Due to Related Parties and Loans Payable to Stockholders
From February, 2007, until June 30, 2016, the Company received a number of loans from stockholders,
related parties and unrelated third parties. As of June 30, 2016, the Company had received loans of
$627,347 (Euro 225,000; CAD$ 72,300; $323,107) (December 31, 2015 - $619,671: Euro 225,000;
CAD$ 72,300; $323,107) from stockholders, loans of $30,368 (CAD$ 27,600; $9,000) (December 31,
2015 – $28,941: CAD$ 27,600; $9,000) from a related party and loans of $197,742 (CAD$ 10,000;
$140,000) (December 31, 2015 – $147,225: CAD$10,000; $140,000) 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 consolidated financial statements are expressed in
US Dollars. Repayment of the loans is due on closing of any future financing arrangement by the
Company. The balance of accrued interest of $358,792 and $330,536 is included in accounts payable and
accrued expenses at June 30, 2016, and December 31, 2015, respectively. Interest expense recognized on
these loans was $12,082 and $24,277 for the three and six months ended June 30, 2016, respectively,
compared to $12,165 and $24,067 for the three and six months ended June 30, 2015, respectively. The
Company also received a convertible loan of $50,000 from CaiE Food Partnership Ltd. as per Note 7
below.
At June 30, 2016, and December 31, 2015, the Company had amounts due to related parties of $450,297
and $434,330, respectively. This amount includes $136,100 at June 30, 2016, and December 31, 2015,
payable to two former directors and a current director for services rendered during 2007. This amount is
to be paid part in cash and part in stock at a future date with the number of common shares determined by
the fair value of the shares on the settlement date. The amounts owing bear no interest, are unsecured, and
have no fixed terms of repayment.
4. Common stock
We have a stock option plan in place under which we are authorized to grant options to executive officers
and directors, employees and consultants enabling them to acquire up to 10% of our issued and
outstanding common stock. Under the plan, the exercise price of each option equals the market price of
our stock as calculated on the date of grant. The options can be granted for a maximum term of 10 years.
Vesting terms are determined at the time of grant.
At June 30, 2016 and December 31, 2015, there were no stock options outstanding. No options were
granted, exercised or expired during the period ended June 30, 2016 or the year ended December 31,
2015.
5. Segmented Information
The Company has no reportable segments.
11
Arvana Inc.
Notes to Condensed Consolidated Financial Statements
June 30, 2016
(Unaudited)
(Expressed in U.S. Dollars)
6. Related Party Transactions
Other than amounts payable to related parties as disclosed below and in Note 3, the Company also
incurred consulting fees of $5,588 (2015 - $4,756) paid to a company controlled by our chief executive
officer during the six months ended June 30, 2016.
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 June 30, 2016, our former
chief executive officer was owed $64,808 (CAD$83,710) for services rendered as an officer, compared to
$60,480 (CAD$83,710) as at December 31, 2015. The amounts owing for past services have been
included in the total payable of $171,267 as of June 30, 2016 and $159,979 as of December 31, 2015
detailed below.
Our former chief financial officer and former director had entered into a consulting agreement on a month
to month basis that provides for a monthly fee of $2,000. These amounts have been accrued and are
currently unpaid. This consulting arrangement ended on June 14, 2013. As of June 30, 2016 and
December 31, 2015 our former chief financial officer was owed $58,870 for services rendered as an
officer.
Our former chief executive officer and former director entered into a debt assignment agreement effective
January 1, 2012, with a corporation with a former director in common and thereby assigned $156,976
(CAD$202,759) of unpaid amounts payable.
Our former chief executive officer and former director entered into a debt assignment agreement effective
January 1, 2012, with an unrelated third party and thereby assigned $53,357 of unpaid amounts payable
and $100,000 of unpaid loans.
Our former chief executive officer and former director is owed $171,267 for unsecured non-interest
bearing amounts due on demand loaned to the Company as of June 30, 2016, compared to $159,979 as of
December 31, 2015.
Our former chief executive officer and former director is owed $30,368 for unsecured amounts bearing
6% interest due on demand loaned to the Company as of June 30, 2016, compared to $28,941 as of
December 31, 2015.
Our other former officers are owed a total of $84,060 for their prior services rendered as officers as at
June 30, 2016, compared to $79,381 as of December 31, 2015.
A director of the Company is owed $60,000 as of June 30, 2016 and December 31, 2015, for services
rendered as a director during 2007. Two former directors of the Company are owed $76,100 as of June
30, 2016 and December 31, 2015 for services rendered as directors during 2007.
12
Arvana Inc.
Notes to Condensed Consolidated Financial Statements
June 30, 2016
(Unaudited)
(Expressed in U.S. Dollars)
7. Memorandum of Understanding
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. The MOU anticipates that the Company will issue, subject to shareholder approval, a fully diluted 67% interest in its common stock in exchange for CaiE. The MOU also provides that the Company enter into Debt Settlement Agreements with certain of its existing creditors, whereby the Company will issue shares of its common stock in order to settle certain historical debt. It is anticipated that the shares will be issued at a deemed value of $0.50 per share pursuant to the Debt Settlement Agreements.
The MOU further provides that CaiE lend the Company $50,000 on a convertible basis prior to the consummation of the transaction. The terms and conditions of the conversion of this loan have not been agreed though the intention of each party is that the conversion be effected at the same price as that of Debt Settlement Agreements discussed above. CaiE has loaned the Company $50,000 as of the filing date of this report, which has been accounted for as a liability as at June 30, 2016, but will be reassessed for a beneficial conversion feature once the terms of the loan have been finalized.
8. Subsequent Events
The Company evaluated its June 30, 2016, financial statements for subsequent events through the date
the financial statements were issued. The Company is not aware of any subsequent events which would
require recognition or disclosure in the financial statements.
13
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other
parts of this quarterly report contain forward-looking statements that involve risks and uncertainties.
Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,”
“plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future
performance and our actual results may differ significantly from the results discussed in the forward-
looking statements. Factors that might cause such differences include but are not limited to those
discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future
Results and Financial Condition below. The following discussion should be read in conjunction with our
financial statements and notes thereto included in this report. Our fiscal year end is December 31. All
information presented herein is based on the three and six months ended June 30, 2016 and June 30, 2015.
Overview
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. The MOU anticipates that the Company will issue, subject to shareholder
approval, a fully diluted sixty-seven percent (67%) interest in its common stock in exchange for CaiE.
The MOU further provides that CaiE lend the Company fifty thousand dollars ($50,000) on a convertible
basis prior to the consummation of the transaction. The anticipated transaction will require the Company
to convert existing debt into shares of its common stock, increase the number of authorized common
shares, elect a new Board of Directors and change its name to reflect the new business. CaiE had loaned
the Company $50,000 as of the filing date of this report and the Company is working with CaiE to
finalize a definitive transaction.
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. We will not
be able to develop any identified business opportunities without additional financing. Our board of
directors and management are actively pursuing financing in order to maintain operations but are not
currently evaluating potential businesses pending the anticipated transaction with CaiE.
Our Plan of Operation
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 based on the MOU 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
may 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 most likely need additional funding to complete any alternative
transaction that might be identified within this time frame.
14
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 any alternative financing arranged and cannot be certain that it will be able to
realize funding from the sale of equity or that shareholders will continue to provide loans. Accordingly,
we will require continued financial support from our shareholders and creditors until the Company is able
to generate sufficient cash flow to maintain operations on a sustained basis. There is substantial doubt that
the Company will be successful in maintaining operations unless it completes the acquisition of CaiE.
Results of Operations
During the six months ended June 30, 2016, the Company (i) entered into a non-binding MOU with CaiE;
and (ii) satisfied continuous public disclosure requirements.
Our operations for the three and six months ended June 30, 2016 and 2015 are summarized below.
Three months
Three months
Six months
Six months
Ended
Ended
Ended
Ended
June 30, 2016
June 30, 2015
June 30, 2016
June 30, 2015
Expenses:
General and administration
($5,965)
($5,230)
($8,534)
($11,132)
Professional fees
(7,102)
(1,730)
(8,877)
(3,230)
Interest
(12,082)
(12,165)
(24,277)
(24,067)
Foreign exchange gain (loss)
12,199
(31,661)
(54,704)
97,035
Net income (loss) and
comprehensive income (loss) for
the period
($12,950)
($50,786)
($96,392)
$58,606
Net Income (Losses)
Net loss for the three months ended June 30, 2016 was $12,950 as compared to net loss of $50,786 for the
three months ended June 30, 2015. The recognition of a decrease in net losses over the three month
periods ended June 30, 2016, and June 30, 2015, can be attributed to a foreign exchange gain as compared
to a foreign exchange loss in the comparable three month period, relative consistency in general and
administrative expenses, and interest expense over the comparable three month periods, offset by an
increase in professional fees in the current three month period.
Net loss for the six months ended June 30, 2016 was $96,392 as compared to net income of $58,606 for
the six months ended June 30, 2015. The transition to net losses over the six month period ended June 30,
2016, can be primarily attributed to the loss on foreign exchange in the current six month period as
compared to a foreign exchange gain in the comparable six month period. The loss on foreign exchange in
the current six month period is due to an increase in the value of foreign currencies against the US dollar,
which increase has negatively impacted the cost of those expenses that are payable in foreign currencies.
We did not generate revenue during this period and expect to continue to incur losses over the next twelve
months at a rate comparable to the prior annual period presented here or until such time as we are able to
conclude the acquisition or development of a new business opportunity that produces net income.
15
Capital Expenditures
The Company expended no amounts on capital expenditures for the six month period ended June 30,
2016.
Income Tax Expense (Benefit)
The Company has a prospective income tax benefit resulting from a net operating loss carry-forward and
start up costs that will offset any future operating profit.
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’ deficiency.
The Company had current and total assets of $24,706 as of June 30, 2016, consisting solely of cash and a
working capital deficit of $2,345,469, as compared to current and total assets of $53, consisting solely of
cash and a working capital deficit of $2,249,077 as of December 31, 2015. Net stockholders' deficiency in
the Company was $2,345,469 at June 30, 2016, as compared to a net stockholder’s deficiency in the
Company of $2,249,077 at December 31, 2015.
Cash Used in Operating Activities
Net cash flow used in operating activities for the six month period ended June 30, 2016 was $25,347 as
compared to $7,711 for the six month period ended June 30, 2015, which differences reflect the
comparative changes in unrealized foreign exchange and changes in working capital in the current period.
Net cash flow used in operating activities in the prior period can also be primarily attributed to general
and administrative expenses, and changes in working capital. General and administrative expenses
include but are not limited to, personnel costs, accounting fees and consulting expenses while changes in
working capital include accounts payable and amounts due to related parties.
We expect to continue to use net cash flow in operating activities over the next twelve months or until
such time as the Company can generate revenue to offset expenses in order to transition to providing net
cash flow from operations.
Cash Used in Investing Activities
We do expect to use net cash flow in investing activities in connection with the prospective acquisition of
CaiE. However, until such time as such transaction is concluded, we do not expect to use net cash flows
in investing activities.
Cash Flows from Financing Activities
Cash flow provided by financing activities for the three months ended June 30, 2016, increased to
$50,000 as compared to $10,000 for the six months ended June 30, 2016. The increase in cash flow
provided from financing activities over the comparative six month periods can be attributed to a
convertible loan received from CaiE.
16
We expect to continue to use cash flow provided by financing activities to procure sufficient funds to
maintain operations, acquire CaiE and alternatively, in the event that our shareholders do not approve the
acquisition of CaiE, to seek out suitable business opportunities.
The Company’s current assets are insufficient to conduct its plan of operation over the next twelve (12)
months as we will need at least $50,000 to maintain operations. The Company has secured a non-binding
commitment from CaiE in the form of a convertible loan of $50,000 to maintain operations and undertake
the acquisition detailed in the MOU. The Company has no alternative commitments or arrangements with
respect to, or immediate sources of funding. The Company’s shareholders remain the most likely source
of new funding in the form of loans or equity placements though none have made any commitment for
future investment and the Company has no agreement formal or otherwise. The Company’s inability to
obtain sufficient funding to maintain operations will have a material adverse affect on its ability to fulfill
its plan of operation.
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 June 30, 2016.
The Company had no commitments for future capital expenditures that were material at June 30, 2016.
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 June 30, 2016, 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 consolidated financial statements for the years ended December 31, 2015 and
2014, included in our Form 10-K, the Company discusses those accounting policies that are considered to
be significant in determining the results of operations and its financial position. The Company believes
that the accounting principles utilized by it conform to accounting principles generally accepted in the
United States.
17
The preparation of consolidated financial statements requires Company management to make significant
estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. By
their nature, these judgments are subject to an inherent degree of uncertainty. On an on-going basis, the
Company evaluates estimates. The Company bases its estimates on historical experience and other facts
and circumstances that are believed to be reasonable, and the results form the basis for making judgments
about the carrying value of assets and liabilities. The actual results may differ from these estimates under
different assumptions or conditions.
Going Concern
Management of the Company has expressed an opinion as to the Company’s ability to continue as a going
concern as a result of an accumulated deficit of $23,509,637 since inception and negative cash flows
from operating activities as of June 30, 2016. The Company’s ability to continue as a going concern is
subject to the ability of the Company to obtain funding from outside sources. Management’s plan to
address the Company’s ability to continue as a going concern includes obtaining funding from the private
placement of equity or through debt financing. Management believes that it will be able to obtain funding
to allow the Company to remain a going concern through the methods discussed above, though there can
be no assurances that such methods will prove successful.
Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition
The statements contained in the section titled Management’s Discussion and Analysis of Financial
Condition and Results of Operations and elsewhere in this current report, with the exception of historical
facts, are forward-looking statements. Forward-looking statements reflect our current expectations and
beliefs regarding our future results of operations, performance, and achievements. These statements are
subject to risks and uncertainties and are based upon assumptions and beliefs that may or may not
materialize. These statements include, but are not limited to, statements concerning:
§ our anticipated financial performance and business plan;
§ the sufficiency of existing capital resources;
§ our ability to raise capital to fund cash requirements for future operations;
§ uncertainties related to the Company’s future business prospects;
§ the volatility of the stock market and;
§ general economic conditions.
We wish to caution readers that our operating results are subject to various risks and uncertainties that
could cause our actual results to differ materially from those discussed or anticipated. We also wish to
advise readers not to place any undue reliance on the forward-looking statements contained in this report,
which reflect our beliefs and expectations only as of the date of this report. We assume no obligation to
update or revise these forward-looking statements to reflect new events or circumstances or any changes
in our beliefs or expectations, other than as required by law.
Stock-Based Compensation
We have adopted Accounting Standards Codification Topic (“ASC”) 718, Share-Based Payment, which
addresses the accounting for stock-based payment transactions in which an enterprise receives employee
services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair
value of the enterprise’s equity instruments or that may be settled by the issuance of such equity
instruments.
18
We account for equity instruments issued in exchange for the receipt of goods or services from other than
employees in accordance with ASC 505. Costs are measured at the estimated fair market value of the
consideration received or the estimated fair value of the equity instruments issued, whichever is more
reliably measurable. The value of equity instruments issued for consideration other than employee
services is determined on the earliest of a performance commitment or completion of performance by the
provider of goods or services.
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
Item 4.
Controls and Procedures
Disclosure Controls and Procedures
In connection with the preparation of this quarterly report, an evaluation was carried out by the
Company’s management, with the participation of the chief executive officer and the acting chief
financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)) as of June
30, 2016. 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 ineffective 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 not accumulated and
communicated to management, including the chief executive officer and the chief financial officer, to
allow timely decisions regarding required disclosures.
Changes in Internal Control over Financial Reporting
There have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of
the Exchange Act) during the quarter ended June 30, 2016, that materially affected, or are reasonably
likely to materially affect, the Company’s internal control over financial reporting.
19
PART II
Item 1.
Legal Proceedings.
None.
Item 1A.
Risk Factors
Not required.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3.
Defaults Upon Senior Securities
None.
Item 4.
Mine Safety Disclosures
Not applicable.
Item 5.
Other Information
None.
Item 6.
Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page
22 of this Form 10-Q, and are incorporated herein by this reference.
20
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.
ARVANA INC.
/s/ Ruairidh Campbell
By: _______________________________
Ruairidh Campbell, Chief Executive Officer,
Chief Financial Officer and Principal
Accounting Officer
Date: August 15, 2016
21
INDEX TO EXHIBITS
Regulation
S-K
Exhibit
Number
2.1
Agreement and Plan of Reorganization between the Company, Arvana Networks, Inc. and
the Shareholders of Arvana Networks, Inc. dated August 18, 2005(1)
3.1
Articles of Incorporation(2)
3.2
Bylaws, as amended(2)
3.3
Amendment to Articles of Incorporation (3)
10.1
2006 Stock Option Plan, dated June 5, 2006(4)
14.1
Code of Ethics (5)
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-
14(a) of the Exchange Act (6)
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 (6)
101.INS
XBRL Instance Document(7)
101.PRE
XBRL Taxonomy Extension Presentation Linkbase(7)
101.LAB
XBRL Taxonomy Extension Label Linkbase(7)
101.DEF
XBRL Taxonomy Extension Label Linkbase(7)
101.CAL
XBRL Taxonomy Extension Label Linkbase(7)
101.SCH
XB RL Taxonomy Extension Label Linkbase(7)
(1) Previously filed with the SEC as an exhibit to the Company’s Current Report on Form 8-K filed
with the SEC on August 19, 2005.
(2) 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.
(3) Previously filed with the SEC as an exhibit to the Company’s registration statement on Form 8-K
filed with the SEC on October 12, 2010.
(4) Previously filed with the SEC as an exhibit to the Company’s Quarterly Report on Form 8-K filed
with the SEC on June 7, 2006.
(5) Previously filed with the SEC as an exhibit to the Company’s Annual Report on Form 10-KSB filed
with the SEC on April 16, 2007.
(6) Filed as an exhibit to this Annual Report on Form 10-K.
(7) 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.
22
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 quarterly report on Form 10-Q 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 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 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 consolidated 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.
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 control 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 control over financial reporting.
Date: August 15, 2016
/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-Q of Arvana Inc. for the quarterly period ended June 30, 2016
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)
The 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 the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.
/s/ Ruairidh Campbell
Ruairidh Campbell
Chief Executive Officer and Chief Financial Officer
August 15, 2016
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.
Document and Entity Information - USD ($) |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2016 |
Aug. 15, 2016 |
Jun. 30, 2015 |
|
| Document and Entity Information: | |||
| Entity Registrant Name | ARVANA INC | ||
| Document Type | 10-Q | ||
| Document Period End Date | Jun. 30, 2016 | ||
| Trading Symbol | avni | ||
| Amendment Flag | false | ||
| Entity Central Index Key | 0001113313 | ||
| Current Fiscal Year End Date | --12-31 | ||
| Entity Common Stock, Shares Outstanding | 885,130 | ||
| Entity Public Float | $ 0 | ||
| Entity Filer Category | Smaller Reporting Company | ||
| Entity Current Reporting Status | Yes | ||
| Entity Voluntary Filers | No | ||
| Entity Well-known Seasoned Issuer | No | ||
| Document Fiscal Year Focus | 2016 | ||
| Document Fiscal Period Focus | Q2 |
Arvana Inc Consolidated Balance Sheets June 30, 2016 and December 31, 2015 [Parenthetical] - $ / shares |
Jun. 30, 2016 |
Dec. 31, 2015 |
|---|---|---|
| Condensed Consolidated Balance Sheets Parenthetical | ||
| Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 5,000,000 | 5,000,000 |
| Common stock, shares issued | 885,130 | 885,130 |
| Common stock, shares outstanding | 885,130 | 885,130 |
| Treasury stock, shares | (3,336) | (3,336) |
ARVANA INC CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015 - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
| Operating expenses | ||||
| General and administrative | $ 5,965 | $ 5,230 | $ 8,534 | $ 11,132 |
| Fees and Commissions | 7,102 | 1,730 | 8,877 | 3,230 |
| Total operating expenses | 13,067 | 6,960 | 17,411 | 14,362 |
| Loss from operations | (13,067) | (6,960) | (17,411) | (14,362) |
| Interest expense | (12,082) | (12,165) | (24,277) | (24,067) |
| Foreign exchange gain | 12,199 | (31,661) | (54,704) | 97,035 |
| Net Income (Loss) Attributable to Parent | $ (12,950) | $ (50,786) | $ (96,392) | $ 58,606 |
| Per common share information - basic and diluted: | ||||
| Weighted average shares outstanding (in shares) | 885,130 | 885,130 | 885,130 | 885,130 |
| Net loss per common share - basic and diluted (in dollars per share) | $ 0.01 | $ 0.06 | $ 0.11 | $ 0.07 |
ARVANA INC CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2016 AND 2015 - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
| Cash flows from operating activities | ||||
| Net loss | $ (12,950) | $ (50,786) | $ (96,392) | $ 58,606 |
| Items not involving cash: | ||||
| Unrealized foreign exchange | 54,361 | (97,195) | ||
| Changes in non-cash working capital: | ||||
| Accounts payable and accrued liabilities | 15,773 | 29,945 | ||
| Amounts due to related parties | 911 | 933 | ||
| Net cash used in operations | (25,347) | (7,711) | ||
| Cash flows from financing activities | ||||
| Proceeds of loans payable stockholders | 10,000 | |||
| Proceeds of loans payable related parties | 50,000 | |||
| Net cash provided by financing activities | 50,000 | 10,000 | ||
| Increase (decrease) in cash | 24,653 | 2,289 | ||
| Cash and Cash Equivalents, at Carrying Value | 53 | 1,876 | ||
| Cash and Cash Equivalents, at Carrying Value | $ 24,706 | $ 4,165 | $ 24,706 | $ 4,165 |
Note 2: Summary of Significant Accounting Policies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Note 2: Summary of Significant Accounting Policies |
2. Summary of Significant Accounting Policies
Basis of presentation The Company is in the process of transacting a business opportunity and has minimal operating levels. The Company’s fiscal year end is December 31. The accompanying condensed interim consolidated financial statements of Arvana Inc. for the six months ended June 30, 2016 and 2015, have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) for financial information with the instructions to Form 10-Q and Regulation S-X. Results are not necessarily indicative of results which may be achieved in the future. Although they are unaudited, in the opinion of management, they include all adjustments, consisting only of normal recurring items, necessary for a fair presentation. Results are not necessarily indicative of results which may be achieved in the future. The condensed consolidated interim financial statements and notes appearing in this report should be read in conjunction with our consolidated audited financial statements and related notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as filed with the Securities and Exchange Commission (“SEC”) on April 14, 2016.
Use of Estimates The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates include the recognition of deferred tax assets based on the change in unrecognized deductible temporary tax differences.
Financial instruments The Company uses the following methods and assumptions to estimate the fair value of each class of financial instruments for which it is practicable to estimate such values:
Cash - the carrying amount approximates fair value because the amounts consist of cash held at a bank.
Accounts payable and accrued liabilities and loans payable - the carrying amount approximates fair value due to the short-term nature of the obligations.
2. Summary of Significant Accounting Policies (continued)
Financial instruments (continued) The estimated fair values of the Company's financial instruments as of June 30, 2016 and December 31, 2015 follows:
The following table presents information about the assets that are measured at fair value on a recurring basis as of June 30, 2016, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and included situations where there is little, if any, market activity for the asset:
The fair value of cash is determined through market, observable and corroborated sources.
2. Summary of Significant Accounting Policies (continued)
Recent accounting pronouncements
In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-02, Leases (Topic 842). The standard requires 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 standard requires lessors to classify leases as either sales-type, finance or operating. A sales-type lease occurs if the lessor transfers all of 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, an operating lease results. The standard will become effective for the Company beginning January 1, 2019. The Company is currently assessing the impact adoption of this standard will have on its consolidated results of operations, financial condition, cash flows, and financial statement disclosures.
In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates (ASU) 2014-15 requiring an entity’s management to evaluate whether there are conditions or events, considered in aggregate, that raise substantial doubt about entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). The amendments to (ASU) 2014-15 are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is in the process of evaluating the prospective impact that (ASU) 2014-15 will have on its balance sheet. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 3: Amounts Due To Related Parties and Loans Payable To Stockholders |
6 Months Ended |
|---|---|
Jun. 30, 2016 | |
| Notes | |
| Note 3: Amounts Due To Related Parties and Loans Payable To Stockholders |
3. Amounts Due to Related Parties and Loans Payable to Stockholders
From February, 2007, until June 30, 2016, the Company received a number of loans from stockholders, related parties and unrelated third parties. As of June 30, 2016, the Company had received loans of $627,347 (Euro 225,000; CAD$ 72,300; $323,107) (December 31, 2015 - $619,671: Euro 225,000; CAD$ 72,300; $323,107) from stockholders, loans of $30,368 (CAD$ 27,600; $9,000) (December 31, 2015 – $28,941: CAD$ 27,600; $9,000) from a related party and loans of $197,742 (CAD$ 10,000; $140,000) (December 31, 2015 – $147,225: CAD$10,000; $140,000) 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 consolidated financial statements are expressed in US Dollars. Repayment of the loans is due on closing of any future financing arrangement by the Company. The balance of accrued interest of $358,792 and $330,536 is included in accounts payable and accrued expenses at June 30, 2016, and December 31, 2015, respectively. Interest expense recognized on these loans was $12,082 and $24,277 for the three and six months ended June 30, 2016, respectively, compared to $12,165 and $24,067 for the three and six months ended June 30, 2015, respectively. The Company also received a convertible loan of $50,000 from CaiE Food Partnership Ltd. as per Note 7 below.
At June 30, 2016, and December 31, 2015, the Company had amounts due to related parties of $450,297 and $434,330, respectively. This amount includes $136,100 at June 30, 2016, and December 31, 2015, payable to two former directors and a current director for services rendered during 2007. This amount is to be paid part in cash and part in stock at a future date with the number of common shares determined by the fair value of the shares on the settlement date. The amounts owing bear no interest, are unsecured, and have no fixed terms of repayment. |
Note 4: Common Stock |
6 Months Ended |
|---|---|
Jun. 30, 2016 | |
| Notes | |
| Note 4: Common Stock |
4. Common stock
We have a stock option plan in place under which we are authorized to grant options to executive officers and directors, employees and consultants enabling them to acquire up to 10% of our issued and outstanding common stock. Under the plan, the exercise price of each option equals the market price of our stock as calculated on the date of grant. The options can be granted for a maximum term of 10 years. Vesting terms are determined at the time of grant.
At June 30, 2016 and December 31, 2015, there were no stock options outstanding. No options were granted, exercised or expired during the period ended June 30, 2016 or the year ended December 31, 2015. |
Note 6: Related Party Transactions |
6 Months Ended |
|---|---|
Jun. 30, 2016 | |
| Notes | |
| Note 6: Related Party Transactions |
6. Related Party Transactions
Other than amounts payable to related parties as disclosed below and in Note 3, the Company also incurred consulting fees of $5,588 (2015 - $4,756) paid to a company controlled by our chief executive officer during the six months ended June 30, 2016.
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 June 30, 2016, our former chief executive officer was owed $64,808 (CAD$83,710) for services rendered as an officer, compared to $60,480 (CAD$83,710) as at December 31, 2015. The amounts owing for past services have been included in the total payable of $171,267 as of June 30, 2016 and $159,979 as of December 31, 2015 detailed below.
Our former chief financial officer and former director had entered into a consulting agreement on a month to month basis that provides for a monthly fee of $2,000. These amounts have been accrued and are currently unpaid. This consulting arrangement ended on June 14, 2013. As of June 30, 2016 and December 31, 2015 our former chief financial officer was owed $58,870 for services rendered as an officer.
Our former chief executive officer and former director entered into a debt assignment agreement effective January 1, 2012, with a corporation with a former director in common and thereby assigned $156,976 (CAD$202,759) of unpaid amounts payable.
Our former chief executive officer and former director entered into a debt assignment agreement effective January 1, 2012, with an unrelated third party and thereby assigned $53,357 of unpaid amounts payable and $100,000 of unpaid loans.
Our former chief executive officer and former director is owed $171,267 for unsecured non-interest bearing amounts due on demand loaned to the Company as of June 30, 2016, compared to $159,979 as of December 31, 2015.
Our former chief executive officer and former director is owed $30,368 for unsecured amounts bearing 6% interest due on demand loaned to the Company as of June 30, 2016, compared to $28,941 as of December 31, 2015.
Our other former officers are owed a total of $84,060 for their prior services rendered as officers as at June 30, 2016, compared to $79,381 as of December 31, 2015.
A director of the Company is owed $60,000 as of June 30, 2016 and December 31, 2015, for services rendered as a director during 2007. Two former directors of the Company are owed $76,100 as of June 30, 2016 and December 31, 2015 for services rendered as directors during 2007. |
Note 8: Subsequent Events |
6 Months Ended |
|---|---|
Jun. 30, 2016 | |
| Notes | |
| Note 8: Subsequent Events |
8. Subsequent Events
The Company evaluated its June 30, 2016, financial statements for subsequent events through the date the financial statements were issued. The Company is not aware of any subsequent events which would require recognition or disclosure in the financial statements. |
Note 2: Summary of Significant Accounting Policies: Use of Estimates, Policy (Policies) |
6 Months Ended |
|---|---|
Jun. 30, 2016 | |
| Policies | |
| Use of Estimates, Policy |
Use of Estimates The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates include the recognition of deferred tax assets based on the change in unrecognized deductible temporary tax differences. |
Note 2: Summary of Significant Accounting Policies: G) Financial Instruments (Policies) |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Policies | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| G) Financial Instruments |
Financial instruments The Company uses the following methods and assumptions to estimate the fair value of each class of financial instruments for which it is practicable to estimate such values:
Cash - the carrying amount approximates fair value because the amounts consist of cash held at a bank.
Accounts payable and accrued liabilities and loans payable - the carrying amount approximates fair value due to the short-term nature of the obligations.
2. Summary of Significant Accounting Policies (continued)
Financial instruments (continued) The estimated fair values of the Company's financial instruments as of June 30, 2016 and December 31, 2015 follows:
The following table presents information about the assets that are measured at fair value on a recurring basis as of June 30, 2016, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and included situations where there is little, if any, market activity for the asset:
The fair value of cash is determined through market, observable and corroborated sources. |
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