UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15D of the Securities Exchange Act of 1934 for the quarterly period ended MARCH 31,September 30, 2023.
☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period FROM _____TO_____.
Commission file number: 0-30695
ARVANA INC.
(Exact name of registrant as specified in its charter)
| Nevada | 87-0618509 |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
299 Main Street, 13th Floor, Salt Lake City, Utah 84111
(Address of principal executive offices) (Zip Code)
(801) 232-7395
(Registrant’s telephone number, including area code)
n/a
(Former name, former address and former fiscal year, if changed since last report)
Securities registered under Section 12(b) of the Act: None.
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 every Interactive Data File 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 such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large, accelerated filer ☐ | Accelerated filer ☐ |
| Non-accelerated filer | Smaller reporting company ☒ |
| Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
The number of shares outstanding of the issuer’s common stock, par value $0.001 (the only class of voting stock) at June 2,November 14, 2023, was .
| 1 |
.
TABLE OF CONTENTS
| PAGE | |
| PART I FINANCIAL INFORMATION | |
| Item 1. Unaudited and Consolidated Financial Statements | 3 |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16 |
| Item 3. Quantitative and Qualitative Disclosure About Market Risk | 20 |
| Item 4. Controls and Procedures | |
| PART II OTHER INFORMATION | |
| Item 1. Legal Proceedings | |
| Item 1A. Risk Factors | |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | |
| Item 3. Defaults Upon Senior Securities | |
| Item 4. Mine Safety Disclosures | |
| Item 5. Other Information | |
| Item 6. Exhibits | |
| Signatures | |
| Index to Exhibits |
| 2 |
ITEM 1. FINANCIAL STATEMENTS
As used herein, the terms “Arvana,” “we,” “our,” and “us” refer to Arvana Inc., its subsidiary, and its predecessor, unless context indicates otherwise. Any distinct references to Down2Fish, refer to Down2Fish Charters, LLC., a wholly owned subsidiary of Arvana. In the opinion of management, the accompanying unaudited condensed financial statements included in this Form 10-Q reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for the periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.
| 3 |
ARVANA INC.
ARVANA INC.
CONSOLIDATED BALANCE SHEETS
| March 31, | December 31, | September 30, | December 31, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| ASSETS | ||||||||||||||||
| Current assets: | ||||||||||||||||
| Cash and cash equivalents | $ | 51,562 | $ | 142,365 | $ | 3,286 | $ | 142,365 | ||||||||
| Accounts receivable | 8,000 | — | ||||||||||||||
| Other current assets | 5,100 | — | 5,100 | — | ||||||||||||
| Total current assets | 56,662 | 142,365 | 16,386 | 142,365 | ||||||||||||
| Non-current assets: | ||||||||||||||||
| Property and equipment, net | 172,856 | — | 166,897 | — | ||||||||||||
| Intangible assets | 26,000 | — | 26,000 | — | ||||||||||||
| Total non-current assets | 198,856 | — | 192,897 | — | ||||||||||||
| Total assets | $ | 255,518 | $ | 142,365 | $ | 209,283 | $ | 142,365 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||
| Current liabilities: | ||||||||||||||||
| Accounts payable and accrued liabilities | $ | 61,615 | $ | 29,770 | $ | 79,222 | $ | 29,770 | ||||||||
| Related party payables (Note 8) | 10,800 | 8,100 | 10,800 | 8,100 | ||||||||||||
| Deferred Revenue | 4,000 | — | ||||||||||||||
| Current portion of notes payable - related party | 65,000 | — | ||||||||||||||
| Current portion of long-term debt | 35,590 | — | 46,114 | — | ||||||||||||
| Total current liabilities | 112,005 | 37,870 | 201,136 | 37,870 | ||||||||||||
| Long-term liabilities: | ||||||||||||||||
| Notes payable - related party, net of current portion | 27,644 | — | ||||||||||||||
| Notes payable, net of current portion | 892,984 | — | 851,940 | — | ||||||||||||
| Total long-term liabilities | 892,984 | — | 879,584 | — | ||||||||||||
| Total liabilities | 1,004,989 | 37,870 | 1,080,720 | 37,870 | ||||||||||||
| Stockholders’ equity (deficit): | ||||||||||||||||
| Common stock, $ par value, shares authorized, issued, and outstanding at March 31, 2023, and December 31, 2022, respectively | 107,847 | 107,847 | ||||||||||||||
| Stockholders' equity (deficit): | ||||||||||||||||
| Common stock, $ par value, shares authorized, issued and outstanding at September 30, 2023 and December 31, 2022 | 107,847 | 107,847 | ||||||||||||||
| Additional paid-in capital | 36,314,786 | 36,240,352 | 36,427,816 | 36,240,352 | ||||||||||||
| Accumulated deficit | (37,168,768 | ) | (36,240,368 | ) | (37,403,764 | ) | (36,240,368 | ) | ||||||||
| Total stockholders' equity (deficit) before treasury stock | (746,135 | ) | 107,831 | (868,101 | ) | 107,831 | ||||||||||
| Less treasury stock – common shares at March 31, 2023 and December 31, 2022, respectively | (3,336 | ) | (3,336 | ) | ||||||||||||
| Total stockholders’ equity (deficit) | (749,471 | ) | 104,495 | |||||||||||||
| Less treasury stock - common shares at September 30, 2023 and December 31, 2022 respectively | (3,336 | ) | (3,336 | ) | ||||||||||||
| Total stockholders' equity (deficit) | (871,437 | ) | 104,496 | |||||||||||||
| Total liabilities and stockholders' equity (deficit) | $ | 255,518 | $ | 142,365 | $ | 209,283 | $ | 142,365 | ||||||||
The accompanying condensed notes are an integral part of these interim unaudited consolidated financial statements.
| 4 |
ARVANA INC.
CONSOLIDATED STATEMENTS OF OPERATION
(unaudited)
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue: | ||||||||||||||||
| Charter income | $ | 10,580 | $ | — | $ | 23,634 | $ | — | ||||||||
| Cost of sales | 20,824 | — | 40,936 | — | ||||||||||||
| Gross profit (loss) | (10,244 | ) | — | (17,302 | ) | — | ||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | 93,061 | 41,989 | 307,459 | 58,845 | ||||||||||||
| Professional fees | 13,828 | 5,182 | 56,872 | 12,743 | ||||||||||||
| Total operating expenses | 127,713 | 47,171 | 405,267 | 71,588 | ||||||||||||
| Loss from operations | (117,133 | ) | (47,171 | ) | (381,633 | ) | (71,588 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Lease income (Note 6) | 12,000 | — | 32,000 | — | ||||||||||||
| Interest income | — | — | 5 | — | ||||||||||||
| Interest expense | (15,594 | ) | — | (42,759 | ) | (587 | ) | |||||||||
| Other income | — | — | — | 15,000 | ||||||||||||
| Loss on asset purchase | — | — | (771,009 | ) | — | |||||||||||
| Total other expense | (3,594 | ) | — | (781,763 | ) | 14,413 | ||||||||||
| Net loss | $ | (120,727 | ) | $ | (47,171 | ) | $ | (1,163,396 | ) | $ | (57,175 | ) | ||||
| Per common share information - basic and diluted | ||||||||||||||||
| Weighted average shares outstanding - diluted | 107,839,299 | 107,839,299 | 107,839,299 | 107,839,299 | ||||||||||||
| Net loss per common share - diluted | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.00 | ) | ||||
| Three months ended | ||||||||
| March 31, | ||||||||
| 2023 | 2022 | |||||||
| Operating Expenses: | ||||||||
| General and administrative | $ | 112,440 | 3,292 | |||||
| Professional fees | 36,463 | 5,344 | ||||||
| Total operating expenses | 148,903 | 8,636 | ||||||
| Loss from operations | (148,903 | ) | (8,636 | ) | ||||
| Other income (expense): | ||||||||
| Lease Income | 8,000 | |||||||
| Depreciation | (5,850 | ) | — | |||||
| Interest income | 4 | — | ||||||
| Interest expense | (10,642 | ) | (194 | ) | ||||
| Loss on asset purchase | (771,009 | ) | — | |||||
| Total other expense | (779,497 | ) | (194 | ) | ||||
| Net loss | $ | (928,400 | ) | $ | (8,830 | ) | ||
| Per common share information – basic and diluted | ||||||||
| Weighted average shares outstanding – basic | 107,839,299 | 102,445,554 | ||||||
| Net loss per common share – basic | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted average shares outstanding – diluted | 107,839,299 | 102,445,554 | ||||||
| Net loss per common share – diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||
The accompanying condensed notes are an integral part of these interim unaudited consolidated financial statements.
| 5 |
ARVANA INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS DeficiT (unaudited)CHANGES IN STOCKHOLDERS’ EQUITY (Deficit) (Unaudited)
Periods ended March 31,FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023, andAND 2022
| Common Shares | Treasury | |||||||||||||||||||||||||||
| Shares | Amount | Additional Paid-in Capital | Accumulated Deficit | Shares | Amount | Total Stockholders’ Equity (Deficit) | ||||||||||||||||||||||
| Balance, June 30, 2022 | 102,445,554 | $ | 102,447 | $ | 35,888,276 | $ | (36,098,976 | ) | (6,255 | ) | $ | (3,336 | ) | $ | (111,589 | ) | ||||||||||||
| Issuance of common stock | 4,800,000 | 4,800 | 315,200 | — | — | — | 320,000 | |||||||||||||||||||||
| Share issuance cost | — | — | (32,000 | ) | — | — | — | (32,000 | ) | |||||||||||||||||||
| Conversion of related party debt to equity | 600 | 39,400 | — | — | — | 40,000 | ||||||||||||||||||||||
| Net loss | — | — | — | (47,171 | ) | — | — | (47,171) | ||||||||||||||||||||
| Balance September 30, 2022 | 107,845,554 | 107,847 | 36,210,876 | (36,146,147) | (6,255 | ) | (3,336 | ) | $ | (169,240 | ) | |||||||||||||||||
| Common Shares | Treasury | |||||||||||||||||||||||||||
| Shares | Amount | Additional Paid-in Capital | Accumulated Deficit | Shares | Amount | Total Stockholders’ Equity (Deficit) | ||||||||||||||||||||||
| Balance, June 30, 2023 | 107,845,554 | 107,847 | 36,377,274 | (37,283,037 | ) | (6,255 | ) | (3,336 | ) | (801,252 | ) | |||||||||||||||||
| Share-based compensation | — | — | 50,542 | — | — | — | 50,542 | |||||||||||||||||||||
| Net loss | — | — | — | (120,727 | ) | — | — | (120,727 | ) | |||||||||||||||||||
| Balance September 30, 2023 | 107,845,554 | $ | 107,847 | $ | 36,427,816 | $ | (37,403,764 | ) | (6,255 | ) | $ | (3,336 | ) | $ | (871,437 | ) | ||||||||||||
| Common Shares | Treasury | |||||||||||||||||||||||||||
| Shares | Amount | Additional Paid-in Capital | Accumulated Deficit | Shares | Amount | Total Stockholders’ Equity | ||||||||||||||||||||||
| Balance, December 31, 2021 | 102,445,554 | $ | 102,447 | $ | 35,888,276 | $ | (36,088,972 | ) | (6,255 | ) | $ | (3,336 | ) | $ | (101,585 | ) | ||||||||||||
| Issuance of common stock | 4,800,000 | 4,800 | 315,200 | — | — | — | 320,000 | |||||||||||||||||||||
| Share issuance cost | — | — | (32,000 | ) | — | — | — | (32,000 | ) | |||||||||||||||||||
| Conversion of related party debt to equity | 600 | 39,400 | — | — | — | 40,000 | ||||||||||||||||||||||
| Net Loss | — | — | — | (57,175 | ) | — | — | (57,175 | ) | |||||||||||||||||||
| Balance September 30, 2022 | 107,845,554 | $ | 107,847 | $ | 36,210,876 | $ | (36,146,147 | ) | (6,255 | ) | $ | (3,336 | ) | $ | (169,240 | ) | ||||||||||||
| Common Shares | Treasury | |||||||||||||||||||||||||||
| Shares | Amount | Additional Paid-in Capital | Accumulated Deficit | Shares | Amount | Total Stockholders’ Equity (Deficit) | ||||||||||||||||||||||
| Balance, December 31, 2022 | 107,845,554 | $ | 107,847 | $ | 36,240,352 | $ | (36,240,368 | ) | (6,255 | ) | $ | (3,336 | ) | $ | 104,496 | |||||||||||||
| Share based compensation | — | — | 187,464 | — | — | — | 187,464 | |||||||||||||||||||||
| Net Loss | — | — | — | (1,163,396 | ) | — | — | (1,163,396 | ) | |||||||||||||||||||
| Balance, September 30, 2023 | 107,845,554 | $ | 107,847 | $ | 36,427,816 | $ | (37,403,764 | ) | (6,255 | ) | $ | (3,336 | ) | $ | (871,437 | ) | ||||||||||||
| Common Shares | Treasury | |||||||||||||||||||||||||||
| Shares | Amount | Additional Paid-in Capital | Accumulated Deficit | Shares | Amount | Total Stockholders’ Deficiency | ||||||||||||||||||||||
| Balance December 31, 2021 | 102,445,554 | $ | 102,447 | $ | 35,888,276 | $ | (36,088,972 | ) | (6,255 | ) | $ | (3,336 | ) | $ | (101,585 | ) | ||||||||||||
| Net loss | — | — | — | (8,830 | ) | — | — | (8,830 | ) | |||||||||||||||||||
| Balance March 31, 2022 | 102,445,554 | 102,447 | 35,888,276 | (36,097,802 | ) | (6,255 | ) | (3,336 | ) | (110,415 | ) | |||||||||||||||||
| Balance December 31, 2022 | 107,845,554 | 107,847 | 36,240,352 | (36,240,368 | ) | (6,255 | ) | (3,336 | ) | 104,495 | ||||||||||||||||||
| Share-based compensation | — | — | 74,474 | — | — | — | 74,434 | |||||||||||||||||||||
| Net loss | — | — | — | (928,400 | ) | — | — | (928,400 | ) | |||||||||||||||||||
| Balance March 31, 2023 | 107,845,554 | $ | 107,847 | $ | 36,314,786 | $ | (36,168,768 | ) | (6,255 | ) | $ | (3,336 | ) | $ | (749,471 | ) | ||||||||||||
The accompanying condensed notes are an integral part of these interim unaudited consolidated financial statements.
| 6 |
ARVANA INC.
STATEMENTS OF CASH FLOWS
Three Months Ended March 31,NINE MONTHS ENDED SEPTEMBER 30, 2023, andAND 2022
(unaudited)(Unaudited)
| 2023 | 2022 | Nine months ended | ||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||
| September 30, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| Cash flows from operating activities | ||||||||||||||||
| Net loss | $ | (928,400 | ) | $ | (8,830 | ) | $ | (1,163,396 | ) | (57,175 | ) | |||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||
| Depreciation expense | 5,850 | — | 17,552 | — | ||||||||||||
| Share-based compensation | 74,434 | — | 187,464 | — | ||||||||||||
| Loss on asset purchase | 771,009 | 771,009 | — | |||||||||||||
| Increase (decrease) in: | ||||||||||||||||
| Accounts payable | 18,792 | 5,764 | ||||||||||||||
| Deferred revenue | 4,000 | — | ||||||||||||||
| Current assets | (8,000 | ) | — | |||||||||||||
| Accounts payable and accrued liabilities | 44,542 | (14,582 | ) | |||||||||||||
| Related party payables | 10,200 | 2,844 | 2,056 | 9,931 | ||||||||||||
| Net cash used in operating activities | (44,115 | ) | (222 | ) | (148,773 | ) | (61,826 | ) | ||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Cash paid for fixed assets | (5,743 | ) | — | |||||||||||||
| Cash paid for asset acquisition | (50,000 | ) | — | (50,000 | ) | — | ||||||||||
| Cash acquired from asset acquisition | 4,089 | — | 4,089 | — | ||||||||||||
| Net cash used in investing activities | (45,911 | ) | — | (51,654 | ) | — | ||||||||||
| Cash flows from financing activities: | ||||||||||||||||
| Proceeds from loans payable | 70,766 | 35,224 | ||||||||||||||
| Issuance of common stock | — | 320,000 | ||||||||||||||
| Issuance cost | — | (32,000 | ) | |||||||||||||
| Payments on loans payable | (777 | ) | — | (9,418 | ) | (50,724 | ) | |||||||||
| Net cash used in financing activities | (777 | ) | — | |||||||||||||
| Net decrease in cash | (90,803 | ) | (222 | ) | ||||||||||||
| Net cash provided by financing activities | 61,348 | 272,500 | ||||||||||||||
| Net increase (decrease) in cash | (139,079 | ) | 210,674 | |||||||||||||
| Cash and cash equivalents, beginning of year | 142,365 | 3,340 | 142,365 | 3,340 | ||||||||||||
| Cash and cash equivalents, end of period | $ | 51,562 | $ | 3,118 | $ | 3,286 | 214,014 | |||||||||
| Supplemental disclosures of cash flow information: | ||||||||||||||||
| Cash paid for interest | $ | 2,856 | $ | — | $ | 22,318 | — | |||||||||
| Non-cash investing and financing activities - | ||||||||||||||||
| Non-cash investing and financing activities | ||||||||||||||||
| Related party payable reduced through issuance of shares | 40,000 | |||||||||||||||
| Note payable issued for asset acquisition (Note 3) | 700,000 | — | 700,000 | — | ||||||||||||
| Liabilities assumed in asset acquisition | $ | 234,904 | — | |||||||||||||
| Liabilities assume in asset acquisition | $ | 234,904 | — | |||||||||||||
The accompanying condensed notes are an integral part of these interim unaudited consolidated financial statements.
| 7 |
ARVANA INC.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31,September 30, 2023
(Unaudited)
Note 1 – Organization and Summary of Significant Accounting Policies
Organization
Arvana Inc. (the “Company”) was incorporated in the State of Nevada on June 16, 1977, as “Turinco, Inc.”, and on July 24, 2006, changed its name to Arvana Inc. to reflect the acquisition of a telecommunications business. We discontinued efforts related to our telecommunications business as of March 31, 2009. The Company acquired Down 2 Fish Charters, LLC on February 3, 2023. Down2Fish was organized under the laws of the State of Florida on April 1, 2019.
Down2Fish Charters LLC operates a Florida based fishing charter business that offers a range of curated maritime adventures that include inshore, offshore, and custom charters for fishing enthusiasts, nature lovers and tourists. The business is operated from a private dock in Palmetto, Florida that services the Tampa Bay area in addition to St Petersburg, Sarasota, Venice, Port Charlotte, and Clearwater. Down2Fish generates its revenue from the sale and provision of fishing charter services.
Basis of Presentation
The Company’s fiscal year end is December 31.31st. The accompanying unaudited consolidated financial statements of the Company for the three-monththree and nine-month periods ended March 31,September 30, 2023, and 2022, have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) for financial information with the instructions to Form 10-Q and Regulation S-X. The consolidated interim financial statements and notes appearing in this report should be read in conjunction with our audited consolidated 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, 2022, as filed with the Securities and Exchange Commission (“Commission”) on April 17, 2023. Results are not necessarily indicative of those which may be achieved in future periods.
Use of Estimates
The preparation of unaudited consolidated 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 unaudited consolidated 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.
Stock split
On February 21, 2023, stockholders approved a forward-split of the Company’s common shares on a 3-1 basis. The forward-split was filed with the Nevada Secretary of State effective March 31, 2023, and the Financial Industry Regulatory Authority (FINRA) rolled the stock forward on April 19, 2023. All changes in the capital structure have been given retroactive effect in these financial statements.
| 8 |
ARVANA INC.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31,September 30, 2023
(Unaudited)
Note 1 – Organization and Summary of Significant Accounting Policies – (continued)
Financial Instruments
The Company uses the following methods and assumptions to estimate the fair value of each class of financial instruments for which it is practicable to estimate such values:
Cash - the carrying amount approximates fair value.
Accounts payable and accrued liabilities, loans payable to stockholders, and amounts due to related parties - the carrying amount approximates fair value due to the short-term nature of the obligations.
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. At March 31,September 30, 2023 and December 31, 2022 respectively, the Company did not have any cash in excess of the insured FDIC 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 account.
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.
| 9 |
ARVANA INC.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31,September 30, 2023
(Unaudited)
Note 1 – Organization and Summary of Significant Accounting Policies (continued)
Stock-based compensation
The Company accounts for all stock-based payments to employees and non-employees under ASC 718 “Stock Compensation,” which requires that the value of the award is established at the date of grant and is expensed over the vesting period of the grant. The method of determining the fair value of share-based payments depends on the type of award. Share-based awards that vest over a certain service period with no market conditions are valued at the closing market price on the grant date. Options grants are valued using the Black-Scholes-Merton model using inputs that are determined on the date of the grant. Once the per-share fair value on the date of grant is established, the aggregate expense of the grant is recognized as earned over the vesting period of the grant. The cost of stock-based payments to non-employees if fully vested and non-forfeitable at the grant date, is measured and recognized at that date.
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. The Company had outstanding stock options as at March 31,September 30, 2023, and none at March 31,June 30, 2022, which have been excluded from the calculation of diluted loss per share because their effects would be anti-dilutive.
Recent Accounting Pronouncements
Recently Issued Accounting Pronouncements Adopted by the Company
In June 2016, the FASB issued ASU 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 is intended to provide financial statement usesusers with more decision-useful information about expected credit losses on financial instruments and other commitments and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for the Company beginning January 1, 2023. The Company adopted ASU 2016-13, effective January 1, 2023, which adoption has not had a material effect on its financial statements.
| 10 |
ARVANA INC.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31,September 30, 2023
(Unaudited)
Note 2 – Going Concern
For the nine month period ended March 31,September 30, 2023, the Company recognized a net loss of $928,4001,163,396 and $120,727 for the three month period ended September 30, 2023 and had an accumulated deficit of $37,168,76837,403,764. The Company had a working capital deficit of $55,343184,750 as of March 31,September 30, 2023. As of March 31,September 30, 2023, the Company’s has negative cash flows from operations, has recognized a net loss over the current three-month period,three and nine-month periods, has incurred significant losses since inception, and has an accumulated deficit. While the Company commenced revenue generating activities in the first quarter of 2023, it will require funding from outside sources to implement its business development strategy. The Company has no firm commitments for additional funding. The aggregation of these factors raises substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date these consolidated financial statements are made available. The accompanying unaudited consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets that might be necessary if the Company is unable to continue as a going concern.
Failure to obtain the ongoing support of stockholders and creditors may indicate that the preparation of these consolidated financial statements on a going concern basis is inappropriate, in which case our assets and liabilities would need to be recognized at their liquidation values. The Company’s consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and liabilities that might arise from this uncertainty.
Note 3 – Asset Acquisition
On February 3, 2023 (Closing Date), the company acquired the assets and assumed the liabilities of Down2Fish Charters, LLC (D2F), a limited liability company organized under the laws of Florida, which operates a charter fishing business. On the Closing Date, the Company paid $50,000 in cash and issued a note for $700,000 for a total consideration of $750,000. The Company’s consolidated statements of operations from the Closing Date through March 31,September 30, 2023, include D2F revenues andindicate a net loss of $8,000 1,163,396and $27,114, respectively..
Assets acquired and liabilities assumed were recorded at their estimated fair values as of the Closing Date under the acquisition method of accounting. The estimated fair values of certain assets and liabilities including long-lived assets require judgment and assumptions. Adjustments may be made to these estimates during the measurement period and those adjustments could be material.
Assets acquired and liabilities assumed are based on their fair values as of the Closing Date, with the excess of cost over fair value of $771,009. For the period ended March 31,September 30, 2023, the Company recorded an impairment loss of $771,009 on the excess amount. Assets acquired are as follows:
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ARVANA INC.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31,September 30, 2023
(Unaudited)
Note 3 – Acquisition (continued)
| Schedule of assets acquired and liabilities assumed | ||||||||
| Assets | ||||||||
| Cash | $ | 4,089 | $ | 4,089 | ||||
| Trade and other receivables | 5,100 | 5,100 | ||||||
| Marine operating equipment | 178,706 | 178,706 | ||||||
| Commercial fishing license | 26,000 | 26,000 | ||||||
| Total assets | 213,895 | 213,895 | ||||||
| Liabilities | ||||||||
| Accounts payable | 4,910 | 4,910 | ||||||
| Deposits | 644 | 644 | ||||||
| Payable to affiliates | 62,634 | 62,634 | ||||||
| Notes payable | 166,716 | 166,716 | ||||||
| Total Liabilities | 234,904 | |||||||
| Total liabilities | 234,904 | |||||||
| Purchase price | 750,000 | 750,000 | ||||||
| Loss on asset acquisition | 771,009 | 771,009 | ||||||
The Company did not incur any acquisition related costs during the period.
Property and equipment acquired consisted primarily of offshore support vessels. The Company recorded property and equipment acquired at an estimated fair value of $178,706. The fair values of the offshore support vessels were estimated by applying a replacement cost approach. These assets will be tested for impairment upon the occurrence of a triggering event. The Company estimates the remaining useful lives for the vessels acquired are seven years, based on an original estimated useful life of 10 years.
The charter fishing license acquired is a perpetual federal fishing license, which grants the Company access to fish in federally regulated waters off the coast of Florida. This asset is not amortized and is tested for impairment at least annually.
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ARVANA INC.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31,September 30, 2023
(Unaudited)
Note 4 – Property and Equipment
Property and equipment consist of the following:
| Schedule of property plant and equipment | ||||||||||||||||
| March 31, 2023 | December 31, 2022 | September 30, 2023 (Unaudited) | December 31, 2022 | |||||||||||||
| Marine Equipment | $ | 173,034 | $ | — | $ | 178,777 | $ | — | ||||||||
| Furniture and fixtures | 5,672 | — | 5,672 | — | ||||||||||||
| Total | 178,706 | — | 184,449 | — | ||||||||||||
| Less – accumulated depreciation | (5,850 | ) | — | (17,552 | ) | — | ||||||||||
| Property and equipment, net | $ | 172,856 | $ | — | $ | 166,897 | $ | — | ||||||||
Depreciation expense was $5,85017,552 and $nilnone for the periodsnine months ended March 31,September 30, 2023, and 2022 and $5,851 and none for the three months ended September 30, 2023, and 2022. Depreciation expense is included in Cost of Sales on the Consolidated Statements of Operations.
All marineMarine equipment is subject to an operating lease agreement atthat ends on December 31, 2025 (Note 6).
Note 5 – Intangible Assets
The Company acquired a perpetual federal fishing license, from the acquisition of assets (see Note 3), which grants the Company access to fish in federally regulated waters ofoff the coast of Florida. This asset is not amortized and is tested for impairment at least annually. As of March 31,September 30, 2023, and 2022, no impairment of this asset hashad occurred.
Note 6 – Leases
The Company leases marine equipment in an operating arrangement. The agreement began on January 1, 2023, and ends December 31, 2025. The agreement provides for minimum monthly lease payments of $4,000 per month for the term of the agreement. At the end of the term, any additional lease payment due will be calculated and paid. The lessee’s right to lease the marine equipment is limited to those times which do not conflict with Company use. There is no option to purchase the watercraft as part of the agreement and the Company expects to recoup full value when the watercraft are sold.
The Company manages risk by requiring the lessee to indemnify the Company in the event of loss to property or persons.
The amount of lease income recognized in other income for the period ending March 31,nine months ended September 30, 2023, is $8,00032,000 .and $12,000 for the three months ended September 30, 2023.
Cash flows from lease payments are expected to be received as follows:
| Schedule of lease payments | Schedule of lease payments | Schedule of lease payments | ||||||||
| Year | Year | Lease amount | Year | Lease amount | ||||||
| 2023 | $ | 44,000 | ||||||||
| Remainder of 2023 | $ | 44,000 | ||||||||
| 2024 | 48,000 | 48,000 | ||||||||
| 2025 | 48,000 | 48,000 | ||||||||
| 13 |
ARVANA INC.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31,September 30, 2023
(Unaudited)
Note 7 – Common Stock
During the year ended December 31, 2022, Company issued shares of its restricted common stock at a price of $ per share for total proceeds of $320,000. The Company incurred share issuance costs in the amount of $in relation to the share issuance.
The Company has authorized shares of common stock. Total issued and outstanding shares were and as of September 30, 2023, and December 31, 2022, respectively.
Stockholders approved a forward stock split of the Company’s common shares on a 3-for-1 basis that was effected on April 19, 2023, to stockholders of record on March 31, 2023. All changes in the capital structure have been given retroactive effect in these financial statements.
During the year ended December 31, 2022, the Company issued 4,800,000 shares at a price of per share for total proceeds of $320,000.
During the year ended December 31, 2022, the Company issued shares at the price of $to settle $40,000 of accounts payable to a company controlled by an officer of the Company.
No common stock was issued during the three and nine months ended March 31,September 30, 2023.
Note 8 - Related Party Transactions and Loans Payable to Stockholders
During the three-monthsnine-months ended March 31,September 30, 2023, and March 31,September 30, 2022, the Company incurred advisory fees to a company controlled by its chief executive officer of $00 and $2,84418,731.
Effective September 1, 2022, theThe Company signedhas an employment agreement with its chief executive officer for $90,000120,000 per year plus incentive stock options until year-end December 31, 2022, thereafter for $120,000 per year over the term. At March 31,September 30, 2023 and December 31, 2022, accrued payroll of $10,000 and $7,500 respectively are included in amounts due to related parties.party payables.
At March 31,September 30, 2023 and December 31, 2022, the Company accrued $800 and $600 respectively to board members for services rendered. This amount is included in amounts due to related parties.party payables.
During the year ended December 31, 2022, $40,000 in accounts payable to a company controlled by the Company’s chief executive officer was settled by the issuance of shares with a fair value of $40,000. There was no gain or loss on the settlement.
During the three-month periodthree and nine-month periods ended March 31,September 30, 2023 and year ended December 31, 2022, the Company recorded stock-based compensation of $, $and $respectively, from the grant of stock options to its chief executive officer and board members.
The Company has non-interest-bearing notes payable to related party totaling $65,000 due at various dates between May 30, 2024, and September 20, 2024.
The Company also has a non-interest bearing note payable to a related party of $27,644 due November 9, 2024.
The Company has an amount due to a related party for running charters for Down2Fish totaling $3,000 as of September 30, 2023.
Note 9 – Stock Options
The Company adopted the 2022 Stock Incentive Plan (“the Plan”) effective September 30, 2022. The Plan provides for awards of stock options and restricted stock to officers, directors, key employees, and consultants. Under the Plan, option prices are set by the Compensation Committee and may not be less than the fair market value of the stock on the grant date.
The Company accounts for stock-based compensation awards in accordance with the provisions of ASC 718, which addresses the accounting for employee stock options which requires that the cost of all employee stock options, as well as other equity-based compensation arrangements, be reflected in the financial statements over the vesting period based on the estimated fair value of the awards.
At December 31, 2022, the Company had options outstanding with vesting periods of -years and exercise prices of approximately $per share. During the nine-month period ended March 31,September 30, 2023, there have been changes in the number of options outstanding. Total share-based expense is $and $for the three-monthsthree and nine-months periods ended March 31,September 30, 2023, and 2022, respectively. The remaining share-based expense of $will be recognized as follows:
| Year | Year | Year | ||||||||
| 2023 | $ | |||||||||
| Remainder 2023 | $ | |||||||||
| 2024 | ||||||||||
| 2025 | ||||||||||
| 2026 | ||||||||||
| 2027 | ||||||||||
| Total | $ | $ | ||||||||
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ARVANA INC.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31,September 30, 2023
(Unaudited)
Note 10 – Notes Payable
Notes payable are as follows at March 31,September 30, 2023 and December 31, 2022:
| Schedule of notes payable | ||||||||||||||||
March 31, 2023 (Unaudited) | December 31, 2022 | September 30, 2023 (Unaudited) | December 31, 2022 | |||||||||||||
| Note payable to a bank, interest at 6.75%, due in monthly installments of principal and interest, matures August 15, 2039, secured by a boat. | $ | 138,096 | $ | — | $ | 136,045 | $ | — | ||||||||
| Note payable to a bank, interest at 7.49%, due in monthly installments of principal and interest, matures March 15, 2037, secured by a boat. | 27,844 | — | 23,509 | — | ||||||||||||
| Note payable to seller, interest at 7.25%, due February 3, 2024, secured by membership interest in Down2Fish LLC | 700,000 | — | ||||||||||||||
| Note payable to third parties, bear no interest, and are due September 30, 2025. | 62,634 | — | ||||||||||||||
| Note payable to seller, interest at 7.25%, due February 3, 2025, secured by membership interest in Down2Fish LLC | 700,000 | — | ||||||||||||||
| Note payable to third parties, bear no interest, with various maturities | 38,500 | — | ||||||||||||||
| Total notes payable | 928,574 | — | 898,054 | — | ||||||||||||
| Less – current portion | (35,590 | ) | — | (46,114 | ) | — | ||||||||||
| Total long-term portion | $ | 892,984 | $ | — | $ | 851,940 | $ | — | ||||||||
Principal maturities of notes payable are as follows:
| Schedule of principal maturities of notes payable | Schedule of principal maturities of notes payable | Schedule of principal maturities of notes payable | ||||||||
| Year | Year | Amount | Year | Amount | ||||||
| 2023. | $ | 35,590 | ||||||||
| Remainder of 2023 | Remainder of 2023 | $ | 0 | |||||||
| 2024 | 10,294 | $ | 46,114 | |||||||
| 2025 | 746,937 | 710,857 | ||||||||
| 2026 | 11,864 | 11,655 | ||||||||
| 2027 | 12,736 | 12,512 | ||||||||
| 2028 | 8,304 | |||||||||
| Thereafter | 111,153 | 108,612 | ||||||||
| $ | 928,574 | $ | 898,054 | |||||||
Note 11 - Subsequent Events
The Company evaluated its March 31,September 30, 2023, consolidated financial statements for subsequent events through the date the consolidated financial statements were issued. The Company is aware of the following subsequent events which would require recognition or disclosure in the consolidated financial statements.
On April 19, 2023, FINRA effected a forward stock splitThe Company received loans from its controlling stockholder in the aggregate amount of 3-1 of the Company’s common stock.$22,135.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
FORWARD LOOKING STATEMENTS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this quarterly report contain forward-looking statements that involve risks and uncertainties. Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,” “plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include but are not limited to those discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition below. The following discussion should be read in conjunction with our financial statements and notes thereto included in this report. Our fiscal year end is December 31. All information presented herein is based on the three and nine months ended March 31,September 30, 2023, and March 31,September 30, 2022.
Arvana
Arvana was incorporated in the State of Nevada on June 16, 1977, as “Turinco, Inc.” to engage in any legal undertaking. On July 24, 2006, Arvana changed its name from Turinco, Inc. to Arvana Inc. on the acquisition of Arvana Networks, Inc., a telecommunications business. We discontinued efforts related to that business as of December 31, 2009. Arvana acquired Down 2 Fish Charters, LLC on February 3, 2023. Down2Fish was organized under the laws of the State of Florida on April 1, 2019.
Down2Fish operates a Florida based fishing charter business that offers a range of curated maritime adventures that include inshore, offshore, and custom charters for fishing enthusiasts, nature lovers and tourists. The business is operated from a private dock in Palmetto, Florida that services the Tampa Bay area in addition to St Petersburg, Sarasota, Venice, Port Charlotte, and Clearwater. Down2Fish generates its revenue from the sale and provision of fishing charter services.
Arvana acquired the assets and assumed the liabilities of Down2Fish on February 3, 2023, from LCF Salons, LLC, in exchange for fifty thousand dollars ($50,000) and a promissory note in the amount of seven hundred thousand dollars ($700,000) payable twenty-four (24) months after the closing date that bears interest of seven and one quarter percent (7¼ %)%) per annum in accordance with the Business Purchase Agreement dated November 16, 2022.annum. Interest on the promissory note is payable in advance on an annual basis.
Stockholders approved a forward stock split of Arvana’s common shares on a 3-for-1 basis that was effected on April 19, 2023, to stockholders of record on March 31, 2023. All changes in the capital structure have been given retroactive effect in these financial statements.this periodic report.
Arvana’s office is located at 299 Main Street, 13th Floor, Salt Lake City, Utah 84111, and our telephone number is (801) 232-7395.
AA Registered Agents, 4869 Nightwood Court, Las Vegas, Nevada 89149, is our registered agent in the State of Nevada.
Arvana is traded on the OTC Markets Group, Inc.’s Pink Sheets Current Information market platform under the symbol “AVNI.”
While Arvana is focused on building on the Down2Fishits fishing charter business model it will continue to seek, evaluate, and determine other business opportunities in the energy and real estate development sectors.development.
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Plan of Operation
OurArvana’s plan of operation is to support the further development of ourits business and to buildby building on Down2Fish’s existing business model. We believe that an expansion ofif Down2Fish increases marketing efforts aroundin the Tampa Bay to offerarea, and offers a wider range of services, such as dolphin tours, will establish the Down2Fish brand,these endeavors would attract more customers which in turn would increase revenues. Expansion into new service offerings, will however, would require capital sufficient to finance the purchase of another vessel, add complimentary boating equipment, and engage additional boating equipment.personnel. We believe that dolphin tours can return net revenue on a consistent basis if we are able to attract sufficient customers to fill each excursion. We are currently licensed and equipped to carry no more than six customers on each fishing charter. A vessel designed primarily for dolphin tours can carry from fifty to one hundred customers. Our primary impediment for equipment procurement and installationto this strategy is cost. We are presentlyWhile Arvana is considering financing options there is no assurance that might becomefunds will be made available to us in the near term but have no assurance that financing options will become available or that if such did become available, that the financing terms would be tenable for our business. Unless or until we can offer excursions that cater to a greater number of customers on each excursion,this purpose. Meanwhile, we will continue to focus on offering more fishing charter excursions in an effort to build revenue and improve our results of operations. Our ability to increase the number of customers is however impeded by the seasonal nature of our business and can be affected by the effects of climate change including an increase in hurricane events.
Results of Operations
During the three-monththree and nine-month period ended March 31,September 30, 2023, Arvana acquired the assets and assumed the liabilities of Down2Fish, approvedeffected a forward-split of its common stock and commenced operations as a fishing charteroperated its business.
Our results of operations for the three-monthsthree and nine-month periods ended March 31,September 30, 2023, as compared to the three-monthsthree and nine-month periods ended March 31,September 30, 2022, were as follows below:
| Three Months Ended March 31 | ||||||||||||
| 2023 | 2022 | Change | ||||||||||
| Operating expenses | (148,903 | ) | (8,636 | ) | (140,267 | ) | ||||||
| Loss from Operations | (148,903 | ) | (8,636 | ) | (140,267 | ) | ||||||
| Lease income | 8,000 | 8,000 | ||||||||||
| Depreciation | (5,850 | ) | — | (5,850 | ) | |||||||
| Interest income | 4 | — | 4 | |||||||||
| Interest expense | (10,642 | ) | (194 | ) | (10,448 | ) | ||||||
| Loss on asset purchase | (771,009 | ) | — | (771,009 | ) | |||||||
| Total Other Income (Expense) | (779,497 | ) | (194 | ) | (779,303 | ) | ||||||
| Net losses | $ | (928,400 | ) | $ | (8,830 | ) | $ | (919,570 | ) | |||
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | $ | 10,580 | $ | — | $ | 23,634 | $ | — | ||||||||
| Operating expenses | (127,713 | ) | (47,171 | ) | (405,267 | ) | 71,588 | |||||||||
| Loss from Operations | (117,133 | ) | (47,171 | ) | (381,633 | ) | (71,588 | ) | ||||||||
| Other Income (Expense) | (3,594 | ) | — | (781,763 | ) | 14,413 | ||||||||||
| Net Losses | $ | (120,727 | ) | $ | (47,171 | ) | $ | (1,163,396 | ) | $ | (57,175 | ) | ||||
Loss from Operations
Revenue
Revenue for the three-monthsthree and nine-month periods ended March 31,September 30, 2023, was $10,580, and 2022 was $nil. Other income$23,634 respectively as compared to revenue of $8,000$0 for the three and nine-month periods ended September 30, 2022. Revenue is comprised of fishing charter services.
Fishing charter services were hampered in the current three-month period since our acquisitionby the onset of hurricane season with Hurricane Idalia, equipment repair and fewer bookings despite the limited extension of the assets and assumptionred-snapper season. We expect revenue to taper off in the final quarter of liabilities of Down2Fish is attributed2023, as the charter fishing season comes to an operating lease agreement for the use of our charter boats in the off-season.
We expect to increase revenues in the near term as our business secures fishing charters for the “red snapper” season that begins in the middle of June.end.
| 17 |
Operating Expenses
Operating expenses for the three-monthsthree-month period ended March 31,September 30, 2023, increased to $148,903$127,713, as compared to $8,636$47,171 for the three-monthsthree-month period ended March 31,September 30, 2022, an increase of 1,624%171%. Operating expenses for the nine-month period ended September 30, 2023, increased to $405,267, as compared to $71,588 for the nine-month period ended September 30, 2022, an increase of 466%. The increase in operating expenses over the three-monththree and nine-month comparative periods ended March 31,September 30, is attributed to charter expenses, and increases in general and administrative expenses, and professional fees associated with the acquisition of Down2Fish, offset by revenues in the three-months ended March 31, 2023.fees.
We expect operating expenses to decreaseremain relatively consistent in the near term as we have realized the professional fees associated with the acquisition of Down2Fish and will be managing fishing charters in the second quarter of this year.term.
Other ExpenseExpense/Income
Other expense for the three-monthsthree-month period ended March 31,September 30, 2023, increased to $779,497was $3,594, as compared to $194other expense of $0 for the three-monthsthree-month period ended March 31, 2022, an increaseSeptember 30, 2022. Other expense for the nine-month period ended September 30, 2023, was $781,763, as compared to other income of 401,703%. The increase in other expense over$14,413 for the three-month comparative periodsnine-month period ended March 31, is attributed to loss on asset purchase, depreciation and interest expense, offset by lease and interest income.
We expect other expense to increase as depreciation and interest expenses will continue to increase inSeptember 30, 2022. Lease income for the near term due to outstanding debt and the aginguse of our charter vessels.boats in the three and nine-month periods ended September 30, 2023, was offset by interest expense, depreciation and the loss realized on the acquisition of the assets and the assumption of liabilities related to Down2Fish.
Other expense is likely to decrease over the next twelve months as losses attributed to the acquisition of Down2Fish are recorded and interest on outstanding loans is offset by fishing boat lease income.
Net Loss
Net loss for the three-monthsthree-month period ended March 31,September 30, 2023, was $928,400$120,727 as compared to a net loss $8,830of $47,171 for the three-months ended March 31,September 30, 2022, an increase of 10,414%156%. Net loss for the nine-month period ended September 30, 2023, was $1,163,396, as compared to a net loss of $57,175, for the nine-month period ended September 30, 2022, an increase of 1,935%. The increase in net loss over the three-monththree and nine-month comparative periods ended March 31,September 30, can be primarily attributed to increases in operating expenses and other expense, offset by revenue.a loss of $771,009 recognized on the acquisition of Down2Fish.
We expect net losslosses to continue in the near term as ongoing debt obligations will continue to negatively affect operating results until such time as sufficient revenue can be realized sufficient to extinguishreduce negative cash flows.flows from operations.
Capital Expenditures
Arvana expended no amounts on capital expenditures for the three-monththree and nine-month periods ended March 31,September 30, 2023, and March 31,September 30, 2022.
Liquidity and Capital Resources
Since inception, we have experienced significant changes in liquidity, capital resources, and stockholders’ deficiency.deficit.
Arvana had current assets of $56,662$16,386 as of March 31,September 30, 2023, that consisted of cash and other assets,a bond, with a working capital deficit of $55,343.$184,750. Total assets as of March 31,September 30, 2023, amounted to $265,108$209,283 that consisted of current assets, property, equipment, and intangible assets associated with Down2Fish.affixed to a commercial fishing license.
| 18 |
Arvana had current and total assets of $142,365 as of December 31, 2022, that consisted of solely of cash with a working capital surplus of $104,495.
NetTotal stockholders' deficit was $749,471$871,437 as of March 31,September 30, 2023, as compared to net stockholder’s deficitequity of $104,495 as of December 31, 2022.
Cash Used inFlows From Operating Activities
Net cash used in operating activities for the three-monthnine-month period ended March 31,September 30, 2023, was $44,115$148,773 as compared to net cash flow used in operating activities of $222$61,826 for the three-monthnine-month period ended March 31,September 30, 2022. Net cash used in operating activities can be attributed to book expense items that do not affect the total amount relative to actual cash used, such as depreciation expense, stock-basedshare-based compensation, and loss on asset purchase. Balance sheet accounts that affect cash but are not income statement related items that are added or deducted to arrive at net cash used in operating activities, include current assets, accounts payable, deferred revenue, and related party payables.
We expect to continue to usehave net cash flow used in operating activities over the next twelve months or until such time as Arvana generates sufficient revenue from operations to offsetsustain the cost of operating activities.
Cash Used inFlows From Investing Activities
Net cash used in investing activities for the three-monthnine-month period ended March 31,September 30, 2023, was $45,911$51,654 as compared to net cash used in investing activities of $nil$0 for the three-monthnine-month period ended March 31,September 30, 2022. Net cash used in investing activities in the three-monthcurrent nine-month period ended March 31, 2023,September 30, is attributed to the purchase of fixed assets for the charter boats, the payment against the purchase of Down2Fish, offset by cash acquired fromas the result of that acquisition.
We expect to usehave net cash used in investing activities in future periods as the implementation of our business plan will cause us to invest in additional capital equipment.
Cash Used inFlows From Financing Activities
Net cash used inprovided by financing activities for the three-monthnine-month period ended March 31,September 30, 2023, was $776$61,348 as compared to net cash used inprovided by financing activities of $nil$272,500 for the three-monthnine-month period ended March 31,September 30, 2022. Net cash used inprovided by financing activities in the three-monthnine-month period ended March 31,September 30, 2023, is attributed to proceeds from loans payable offset by payments on loans payable. Net cash provided by financing activities in the nine-month period ended September 30, 2022, is attributed to the proceeds of loans payable and the issuance of common stock offset by issuances costs and payments against loans payable.
We expect to continue to rely on net cash provided by financing activities in future periods to as our business development strategy does require us to undertake financing measures to grow our business.
Arvana’s assets are insufficient as of March 31,September 30, 2023, to implement its plan of operation to expand the business operations of Down2Fish over the next twelve months. We anticipate conducting another private equity offering to meet our objectives and will look to third parties to secure financing. Management is confident that its efforts to realize additional funding will be successful.
Subsequent to period end, Arvana received additional loans from its controlling stockholder in the aggregate amount of $22,135. Arvana may seek additional loans in the short term to sustain operations.
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Arvana does not intend to pay cash dividends in the foreseeable future.
Arvana had no lines of credit or other bank financing arrangements as of March 31,September 30, 2023.
Arvana had no commitments for future capital expenditures at March 31,September 30, 2023.
Arvana has adopted the Arvana Inc. 2022 Stock Incentive Plan and has an employment agreement with its executive officer.
Arvana plans to purchase an additional vessel to be used in offering dolphin tours in the near term, subject to satisfactory financing being available, though it has no contractual commitment to do so.
Arvana has no current plans to make any changes in the number of employees.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities.”
Critical Accounting Policies
The preparation of financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions affecting the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenues and expenses in the reporting period. We base our estimates and assumptions on current facts, historical experience, and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. We continually review the estimates and underlying assumptions to ensure they are appropriate for the circumstances. Accounting assumptions and estimates are inherently uncertain and actual results may differ materially from our estimates. A summary of our critical accounting policies is provided in Note 1 to the audited financial statements for the years ended December 31, 2022, and 2021, that are included in thisour most recent Form 10-K. We discuss accounting policies that are significant in determining results of operations and the currency of its financial position.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
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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’sArvana’s management, with the participation of the chief executive officer and the acting chief financial officer, of the effectiveness of the Company’sArvana’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 March 31,September 30, 2023. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to management, including its chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.
Based on that evaluation, the Company’sArvana’s management concluded, as of the end of the period covered by this report, that the Company’sArvana’s disclosure controls and procedures were not 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 not accumulated and communicated to management, including its chief executive officer and 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 March 31,September 30, 2023, that materially affected, or are reasonably likely to materially affect, the Company’sArvana’s internal control over financial reporting.
PART II
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors
Not required of smaller reporting companies.
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 to Arvana.
Item 5. Other Information
None.During the three months ended September 30, 2023, no director or officer, as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended, of Arvana has adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
Item 6. Exhibits
Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page 2324 of this Form 10-Q and are incorporated herein by this reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ARVANA INC.
By: | /s/ Ruairidh Campbell | |
| Ruairidh Campbell, Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer | ||
| Date: |
INDEX TO EXHIBITS