The Kavilco – Audited Financial Statements 2023 have been published.

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December 31 2023 Audited Financial Statements

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1 FINANCIAL STATEMENTS DECEMBER 31, 2023
2 Contents
Report of Independent Registered Public Accounting Firm – Opinion (Fortune CPA,
Inc.; Orange, CA, USA; PCAOB 6901)….…………..……………………………………3
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES ……………………………………………….4
SCHEDULE OF INVESTMENTS ……………………………………………………. 5 through 8
STATEMENT OF OPERATIONS ……………………………………………………………………9
STATEMENT OF CHANGES IN NET ASSETS……………………………………………..10
FINANCIAL HIGHLIGHTS ………………………………………………………………………….11
NOTES TO FINANCIAL STATEMENTS …………………………………….. 12 through 18
Report of Independent Registered Public Accounting Firm – Internal Controls
(Fortune CPA, Inc.; Orange, CA, USA; PCAOB 6901)………………………………………19
333 City Blvd W 3rd Floor Orange, CA 92868 1
Phone (714)-820-3316 Fax (714)-333-4992
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Shareholders and the Board of Directors
Kavilco Incorporated
Kasaan, Alaska
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of Kavilco Incorporated (the Fund),
including the schedule of investments, as of December 31, 2023, the related statement of operations for the
year then ended, the statements of changes in net assets and the related notes (collectively referred to as the
financial statements) and the financial highlights for the year ended December 31, 2023. In our opinion, the
financial statements and financial highlights present fairly, in all material respects, the financial position of the
Fund as of December 31, 2023, the results of its operations for the year then ended, the changes in net assets,
and the financial highlights for the year ended December 31, 2023, in conformity with accounting principles
generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Company’s management. Our
responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on
our audits. We are a public accounting firm registered with the 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 Fund 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 Fund’s internal control over financial reporting. Accordingly, we express
no such opinion.
Our audits included performing procedures to assess the risks of material misstatement 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 procedures included confirmation of securities owned as of December 31, 2023, by
correspondence with the custodian. 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 and financial highlights. We believe that our audits provide a reasonable basis for our opinion.
/s/ Fortune CPA, Inc
We have served as the Company’s auditor since 2022.
February 27, 2024
3 See Notes To Financial Statements
4 KAVILCO INCORPORATED STATEMENT OF ASSETS AND LIABILITIES
December 31, 2023
See Notes To Financial Statements
5 KAVILCO INCORPORATED SCHEDULE OF INVESTMENTS
December 31, 2023
See Notes To Financial Statements
6 SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
Principal Amount
or Shares Fair Value
See Notes To Financial Statements
7 KAVILCO INCORPORATED
SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
Principal Amount
or Shares Fair Value
See Notes To Financial Statements
8 SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
See Notes To Financial Statements
9 KAVILCO INCORPORATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2023
See Notes To Financial Statements
10 KAVILCO INCORPORATED STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 2023 and 2022
See Notes To Financial Statements
11 KAVILCO INCORPORATED FINANCIAL HIGHLIGHTS
For the Years Ended December 31, 2023 TO 2019
12 NOTES TO FINANCIAL STATEMENTS
Note 1. Organization
Kavilco Incorporated (“the Fund”) is a village corporation within the Sealaska region organized on
November 13, 1973, pursuant to the Alaska Native Claims Settlement Act (“ANCSA”) of 1971.
Under ANCSA, the Native claims to land in Alaska were settled in exchange for part of the state’s
land and compensation. Settlement benefits were given to Natives of Alaska villages in the form
of ownership shares in village corporations that were organized pursuant to ANCSA. The Fund
was organized for the purpose of securing and administering the land and benefits for the
Natives of the Kasaan village in Alaska. Contributed capital includes receipts from the U.S.
government and the state of Alaska under provisions of ANCSA.
On November 1, 1989, the Fund began to operate as a self-managed, closed end management
investment company, as defined by the Investment Company Act of 1940 (“the Act”). The Fund is
subject to various restrictions imposed by the Act and the Internal Revenue Code, including
restrictions on borrowing, dividend, distribution policies, operations, and reporting requirements.
The Fund’s investment decisions focus primarily on large-cap dividend equity investments and
fixed income investments, are made by management under the direction of the Board of
Directors.
Note 2. Significant Accounting Policies
As an investment company, the Fund follows the accounting and reporting guidance of the
Financial Accounting Standards Board Accounting Standard Codification Topic 946 “Financial
Services – Investment Companies.” The financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America (“GAAP”), which
require management to make certain estimates and assumptions at the date of the financial
statements that affect certain reported amounts and disclosures. Actual results could differ from
those estimates. Subsequent events, if any, through the date that the financial statements were
issued have been evaluated in the preparation of the financial statements. The following
summarizes the significant accounting policies of the Fund:
Cash and Cash Equivalents
Cash and cash equivalents include cash on deposit with banks. The Fund considers all highly
liquid instruments with a maturity of three months or less to be cash equivalents. The Fund has
cash balances in excess of federally insured limits.
Valuation of Investments
All investments are recorded at estimated fair value, as described in Note 3.
Investment Transactions and Income
Investment transactions are recorded on a trade date basis. Realized gains and losses from
securities transactions are computed using the last in, first out (“LIFO”) method. Interest income is
recorded on an accrual basis as adjusted for the amortization of discounts and premiums using
the effective interest method. Premiums and discounts, including original issue discounts, are
amortized for both tax and financial reporting purposes. Dividend income is recorded as of the
ex-dividend date. Unrealized gains and losses are included in the Statement of Operations.
Federal Income Taxes
The Fund files income tax returns in the U.S. federal jurisdiction and Alaska State.
The Fund’s policy is to continue to comply with the requirements of the Internal Revenue Code
that are applicable to regulated investment companies and to distribute at least 90% of its net
investment taxable income to its shareholders. Generally, no federal income tax provision is
required for the Fund.
The Fund records a liability, if any, for unrecognized tax benefits resulting from uncertain income
tax positions taken or expected to be taken in an income tax return. No liability has been
recorded for uncertain tax positions or related interest or penalties as of December 31, 2023.
Dividends and Distributions to Shareholders
Dividends and distributions to shareholders are recorded on the payable date. Dividends are
generally declared and paid twice a year. Capital gain distributions are generally declared and
paid annually. The timing and characterization of certain income and capital gains distributions
are determined in accordance with federal tax regulations and may differ from those determined
in accordance with accounting principles generally accepted in the United States.
Directors’ Compensation and Expenses
Each member of the Board of Directors receives compensation for each board meeting attended
during the year, in addition to a per diem allowance. Directors are also reimbursed for such
expenses as accommodation, airfare, and car rental related to Board meetings. In addition to
meeting related expenses, the Fund pays for the medical insurance and out of pocket expenses of
certain directors.
Note 3. Fair Value Measurements
Fair value is defined as an exit price, representing the amount that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market participants. As such,
fair value is a market-based measurement determined based on assumptions that market
participants would use in pricing an asset or liability. There are three levels that prioritize the
inputs used in measuring fair value as follows:
• Level 1: Observable market inputs such as quoted prices (unadjusted) in active markets for
identical assets or liabilities;
• Level 2: Observable market inputs, other than quoted prices in active markets, that are
observable either directly or indirectly; and
• Level 3: Unobservable inputs where there is little or no market data, which require the
reporting entity to develop its own assumptions.
An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of any input
that is significant to the fair value measurement. The following is a description of the valuation
methodologies used for assets measured at fair value, including a general description of the asset.
Money Market Funds
Fair value of money market funds is determined using quoted market prices and are categorized
in Level 1 of the fair value hierarchy.
U.S Treasury Bills
Investments in U.S. Treasury bills are reported at cost, net of unamortized premiums or discounts.
Premiums or discounts are amortized into interest income over the term of the investment using
the effective interest rate method. The Fund’s intent is to hold investments to maturity.
Consequently, a provision is not made for unrealized gains or losses on these securities. U.S.
Treasury Bill are categorized in Level 1 of the fair value hierarchy.
Equity Securities (Common Stock)
Securities traded on a national securities exchange (or reported on the NASDAQ national market)
are stated at the last reported sales price on the day of valuation. To the extent these securities
are actively traded, and valuation adjustments are not applied, they are categorized in Level 1 of
the fair value hierarchy.
Real Estate
Real estate represents entitlement to the surface estate of real property, for which no readily
available market quotation exists. Fair value of real estate is determined by management based
on a Certified Forester’s opinion as to the current value and status of the land, along with other
factors. Other relevant factors include the lack of commercially viable timber due to previous
harvest, amount of capital expenditures required for the future growth of timber, location of the
property, recent sales of similar real property in the region and market demand and supply for
this type of real property during the valuation process. Real estate is included in Level 3 of the fair
value hierarchy.
The following table presents information about the Fund’s investments in securities and real
estate measured at fair value as of December 31, 2023:
For the year ended December 31, 2023, there were no realized gain (loss), cost or purchases,
proceeds from sales, or transfers in or out of Level 3 at the end of the reporting period.
Note 4. Real Estate
At December 31, 2023, the Fund owns fee title to the surface estate of 22,946 acres of real estate
located in southeast Alaska.
As of December 31, 2023, there is no commercially viable timber on the real estate and the Fund
has no outstanding timber agreements. The last harvest and sale of timber from this land was in
2001.
The financial statements include real estate valued at $7,200,000 in 2023, the value of which was
determined by an independent appraisal. The value at December 31, 2023 represents an increase
of $510,000 from the value at December 31, 2022 of $6,690,000. The board approved the fair
value estimate of the real estate.
Note 5. Trading Risk
In the normal course of business, the Fund enters into financial transactions involving instruments
where there is risk of potential loss due to changes in the market (market risk) or failure of the
other party to the transaction to perform (credit risk).
Market risk is the potential change in value caused by fluctuations in market prices of an
underlying financial instrument. Subsequent market fluctuations may require selling investments
at prices that differ from the values reflected on the statement of assets and liabilities. Market risk
is directly impacted by the volatility and liquidity in the markets in which financial instruments are
traded. The Fund’s exposure to market risk may be increased in that a significant portion of its
assets may be invested in a relatively small number of investment positions at any one time.
Accordingly, appreciation or depreciation in value of investment positions may have a more
significant effect on the value of the Fund’s portfolio than would be the case in a more diversified
or hedged portfolio.
Credit risk is the possibility that a loss may occur due to the failure of the counterparty to perform
according to the terms of a contract. The Fund’s exposure to credit risk associated with
counterparty nonperformance includes cash deposits that may exceed applicable insurance limits.
The Fund seeks to control such credit risk by maintaining deposits with only high-quality financial
institutions and trading exchange traded financial instruments, which generally do not give rise to
significant counterparty exposure due to the requirements of the individual exchanges.
Catastrophe – Force Majeure Risk
The occurrence of catastrophic events (such as hurricanes, earthquakes, pandemics, such as
COVID-19, acts of terrorism and other catastrophes) could adversely affect the values recorded in
the Fund’s financial statements.
Note 6. Investment Transactions
Purchases of investment securities (common stock) aggregated $149,898 for the year ended
December 31, 2023, and sales of investment securities (common stock) aggregated $17,937,996
for the year ended December 31, 2023.
The U.S. federal income tax basis of the Fund’s investments is the same as for financial reporting
purposes. The gross unrealized appreciation and gross unrealized depreciation for U.S. federal
income tax purposes is $4,633,806 and $2,740,370, respectively, as of December 31, 2023.
Note 7. Premises and Equipment
The following is a summary of premises and equipment at December 31, 2023:
All assets are recorded at cost less accumulated depreciation. Depreciation is computed on the
straight-line method over the estimated useful lives of the related assets, which range from 3 to
15 years. As of December 31, 2023, all assets were fully depreciated.
Note 8. Lease Obligation
The Fund leases office space under a non-cancelable operating lease agreement, which
terminates September 30, 2028. Pursuant to the lease agreement, the Fund paid a lease deposit
of $3,528 which will be credited to the last month’s rent. The discount rate for the office lease is
1.76% and cash paid for rent in 2023 was $41,353. The right of use asset amounting to $203,360
at December 31, 2023, is included in prepaid expenses and other assets. The lease liability at
December 31, 2023 is $207,200, of which the current portion is $39,209 and the non-current
portion is $167,991. Future minimum lease commitments under this non-cancelable operating
lease are as follows:
Rent expense for the year ended December 31, 2023, was $44,415.
Note 9. Net Assets
Upon organization of the Fund, 100 shares of common stock (Class A) were issued to each
qualified shareholder enrolled in the Fund pursuant to ANCSA. The Fund utilized a roll
comprising 120 Alaska Natives eligible to receive stock certificates as certified by the U.S.
Secretary of the Interior. Under the provisions of ANCSA, stock dividends paid or other stock
grants are restricted, and the stock may not be sold, pledged, assigned, or otherwise alienated,
except in certain circumstances by court decree or death, unless approved by a majority of the
shareholders. The stock carries voting rights only if the holder hereof is an eligible Alaska Native.
Nonvoting common stock (Class B) is issued to non-Native persons who inherit stock or are gifted
stock.
The Fund’s capital structure is as follows:
• Common stock:
– Class A, no par value – Authorized, 1,000,000 shares; issued and outstanding, 10,020.53
shares
– Class B, no par value – Authorized, 500,000 shares; issued and outstanding, 1,979.47
shares
Note 10. Dividends and Distributions to Shareholders
On March 10, 2023, a distribution of $13.00 per share was declared. The dividend was paid on
March 22, 2023, to shareholders of record on March 10, 2023.
On November 16, 2023, a distribution of $62.00 per share was declared. The dividend was paid on
November 29, 2023, to shareholders of record on November 16, 2023.
The tax character of dividends and distributions paid during 2023 and 2022 were as follows:
As of December 31, 2023, and 2022, the components of distributable earnings on a tax basis were
as follows:
Note 11. Schedule of Investments
Investments are categorized by type, country, and industry. The industry category represents
management’s belief as to the most meaningful presentation of the classification of the principal
business of the investees. The percentage of net assets is computed by dividing the fair value of
each category by net assets.
Note 12. Pension Plan
Employees of the Fund are covered by a defined contribution pension plan. The Fund contributes
20% of each participant’s compensation to the plan. The Fund’s contributions during the year
ended December 31, 2023, totaled $53,186.
Note 13. Other Income and Expense
The Fund earned income of $259,920 and $123,720 for the years ended December 31, 2023, and
2022, respectfully, as a result of ANCSA Section 7(i), which requires regional corporations to
distribute 70% of any net revenues derived from timber resources and the subsurface estate to
other regional corporations, which then redistribute under Section 7(j) 50% of such amounts to
the village corporations and at large shareholders.
Other income also includes $16,920 of lease and rental income for each of the years ended
December 31, 2023 and 2022, respectively.
333 City Blvd W 3rd Floor Orange, CA 92868
Phone (714)-820-3316 Fax (714)-333-4992
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Shareholders and the Board of Directors
Kavilco Incorporated
Kasaan, Alaska
In planning and performing our audit of the financial statements of Kavilco Incorporated (the Fund)
as of and for the year ended December 31, 2023, in accordance with the standards of the Public
Company Accounting Oversight Board (United States) (PCAOB), we considered the Fund’s internal
control over financial reporting, including controls over safeguarding securities, as a basis for
designing our auditing procedures for the purpose of expressing our opinion on the financial
statements and to comply with the requirements of Form N-CEN, but not for the purpose of
expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting.
Accordingly, we express no such opinion. The management of the Fund is responsible for establishing
and maintaining effective internal control over financial reporting. In fulfilling this responsibility,
estimates and judgments by management are required to assess the expected benefits and related costs
of controls. A company’s internal control over financial reporting is a process designed 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 (GAAP).
A company’s internal control over financial reporting includes those policies and procedures tha t (1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with
GAAP, and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use or disposition of a
company’s assets that could have a material effect on the financial statements.
Because of 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.
A deficiency in internal control over financial reporting exists when the design or operation of a control
does not allow management or employees, in the normal course of performing their assigned
functions, to prevent or detect misstatements on a timely basis. A material weakness is a deficiency, or
combination of deficiencies, in internal control over financial reporting, such that there is a reasonable
possibility that a material misstatement of the Fund’s annual or interim financial statements will not
be prevented or detected on a timely basis.
Our consideration of the Fund’s internal control over financial reporting was for the limited purpose
described in the first paragraph and would not necessarily disclose all deficiencies in internal control
that might be material weaknesses under standards established by the PCAOB. However, we noted
no deficiencies in the Fund’s internal control over financial reporting and its operation, including
controls over safeguarding securities, that we consider to be a material weakness as defined above as
of December 31, 2023.
This report is intended solely for the information and use of management and the Board of Directors
of Kavilco Incorporated and the Securities and Exchange Commission and is not intended to be and
should not be used by anyone other than these specified parties.
/s/ Fortune CPA, Inc
February 27, 2024

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