UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
Commission
file number:
(Exact name of registrant as specified in its charter)
| (State
or other jurisdiction of incorporation or organization) |
(I.R.S.
Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(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.
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).
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 ☐ |
| 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
☐
The number of shares outstanding of the issuer’s common stock, par value $0.001 (the only class of voting stock) at May 9, 2024, was .
| 1 |
.
TABLE OF CONTENTS
| PAGE | |
| PART I FINANCIAL INFORMATION | |
| Item 1. Financial Statements | 3 |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 15 |
| Item 3. Quantitative and Qualitative Disclosure About Market Risk | 21 |
| Item 4. Controls and Procedures | 21 |
| PART II OTHER INFORMATION | |
| Item 1. Legal Proceedings | 22 |
| Item 1A. Risk Factors | 22 |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 22 |
| Item 3. Defaults Upon Senior Securities | 22 |
| Item 4. Mine Safety Disclosures | 22 |
| Item 5. Other Information | 22 |
| Item 6. Exhibits | 22 |
| Signatures | 23 |
| Index to Exhibits | 24 |
| 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 Down 2 Fish Charters, LLC., a wholly owned subsidiary of Arvana. 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.
CONSOLIDATED BALANCE SHEETS
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Related party payables (Note 8) | ||||||||
| Current portion of notes payable - related party | ||||||||
| Current portion of notes payable | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Notes payable, net of current portion | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders' (deficit): | ||||||||
| Common stock, $par value, shares authorized, issued and outstanding at March 31, 2024 and December 31, 2023 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' (deficit) before treasury stock | ( | ) | ( | ) | ||||
| Less treasury stock - common shares at March 31, 2024 and December 31, 2023 respectively | ( | ) | ( | ) | ||||
| Total stockholders' (deficit) | ( | ) | ( | ) | ||||
| Total liabilities and stockholders' (deficit) | $ | $ | ||||||
The accompanying condensed notes are an integral part of these interim unaudited consolidated financial statements.
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ARVANA INC.
CONSOLIDATED STATEMENTS OF OPERATION
(unaudited)
| Three months ended | ||||||||
| March 31, | ||||||||
| 2024 | 2023 | |||||||
| Operating expenses: | ||||||||
| General and administrative | $ | $ | ||||||
| Professional fees | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Lease income | ||||||||
| Depreciation | ( | ) | ( | ) | ||||
| Interest income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Loss on asset purchase | ( | ) | ||||||
| Total other expense | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Per common share information – basic and diluted | ||||||||
| Weighted average shares outstanding – basic | ||||||||
| Net loss per common share – basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average shares outstanding – diluted | ||||||||
The accompanying condensed notes are an integral part of these interim unaudited consolidated financial statements.
| 5 |
ARVANA INC.
STATEMENTS OF STOCKHOLDERS DeficiT (unaudited)
Periods ended March 31, 2024 and 2023
| ’ | |||||||||||||||||||||||||||||
| Common Shares | Treasury | ||||||||||||||||||||||||||||
| Shares | Amount | Additional Paid-in Capital | Accumulated Deficit | Shares | Amount | Total Stockholders’ Equity (Deficiency) | |||||||||||||||||||||||
| Balance December 31, 2022 | $ | $ | $ | ( | ) | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
| Share based compensation | — | — | |||||||||||||||||||||||||||
| Net loss | — | ( | ) | — | ( | ) | |||||||||||||||||||||||
| Balance March 31, 2023 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Balance December 31, 2023 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Share based compensation | — | — | |||||||||||||||||||||||||||
| Net loss | — | ( | ) | — | ( | ) | |||||||||||||||||||||||
| Balance March 31, 2024 | $ | $ | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||
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, 2024, and 2023
(unaudited)
| Three months ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expense | ||||||||
| Share-based compensation | ||||||||
| Loss on asset purchase | ||||||||
| Increase (decrease) in: | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Deferred revenue | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Cash paid for asset acquisition | ( | ) | ||||||
| Cash acquired from asset acquisition | ||||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds of loans payable | ( | ) | ||||||
| Payments on loans payable | ( | ) | ||||||
| Related party payables | ( | ) | ||||||
| Proceeds from related party note payable | ||||||||
| Payments of related party note payable | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash and cash equivalents, beginning of year | ||||||||
| Cash and cash equivalents, end of year | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Note payable issued for asset acquisition (Note 3) | $ | $ | ||||||
| Liabilities assumed in asset acquisition | $ | $ | ||||||
The accompanying condensed notes are an integral part of these interim unaudited consolidated financial statements.
| 7 |
ARVANA INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2024
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 December 31, 2009. The Company acquired Down 2 Fish Charters, LLC on February 3, 2023 (D2F). D2F was organized under the laws of the State of Florida on April 1, 2019.
D2F 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. D2F generates its revenue from the sale and provision of fishing charter services.
Basis of Presentation
The Company’s fiscal year end is December 31. The accompanying consolidated financial statements of the Company for the three-month periods ended March 31, 2024, and 2023, 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-K. 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, 2023, as filed with the Securities and Exchange Commission (“Commission”) on April 5, 2024. Results are not necessarily indicative of those which may be achieved in future periods.
Use of Estimates
The preparation of unaudited 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 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.
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ARVANA INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2024
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, 2024 and December 31, 2023 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 FINANCIAL STATEMENTS
March 31, 2024
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 at March 31, 2024, and at March 31, 2023, 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 users 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 FINANCIAL STATEMENTS
March 31, 2024
Note 2 – Going Concern
For the period ended March 31,
2024, and March 31, 2023, the Company recognized a net loss of $
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 Down 2 Fish 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
$
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 $
| Schedule of assets acquired and liabilities assumed | ||||
| Assets | ||||
| Cash | $ | |||
| Trade and other receivables | ||||
| Marine operating equipment | ||||
| Commercial fishing license | ||||
| Total assets | ||||
| Liabilities | ||||
| Accounts payable | ||||
| Deposits | ||||
| Payable to affiliates | ||||
| Notes payable | ||||
| Total Liabilities | ||||
| Purchase price | ||||
| Loss on asset acquisition | ||||
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 $
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.
| 11 |
ARVANA INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2024
Note 4 – Property and Equipment
Property and equipment consist of the following:
| Schedule of property plant and equipment | ||||||||
March 31, 2024 (Unaudited) | December 31, 2023 | |||||||
| Marine Equipment | $ | $ | ||||||
| Furniture and fixtures | ||||||||
| Total | ||||||||
| Less – accumulated depreciation | ||||||||
| Property and equipment, net | $ | $ | ||||||
Depreciation expense was $
Marine equipment is subject to an operating lease agreement that 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 off the coast of Florida. This asset is not amortized and is tested for impairment at least annually.
As of March 31, 2024, and 2023,
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 $
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 three-months ended March 31, 2024, was $
Cash flows from lease payments are expected to be received as follows:
| Schedule of lease payments | |||||
| Year | Lease amount | ||||
| Remainder of 2024 | $ | ||||
| 2025 | |||||
| Total | $ | ||||
| 12 |
ARVANA INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2024
Note 7 – Common Stock
The Company has authorized shares of common stock. Total issued and outstanding shares were and as of March 31, 2024, and December 31, 2023, respectively.
No common stock was issued during the three months ended March 31, 2024.
No common stock was issued during the three months ended March 31, 2023.
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.
Note 8 - Related Party Transactions and Loans Payable to Stockholders
Effective
September 1, 2022, the Company signed an employment agreement with its chief executive officer for $
At March 31, 2024 and December 31, 2023, the Company accrued
$
At March 31, 2024, and December 31, 2023, the Company owed $
During the three-month period ended March 31, 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.
During the three-month period ended March 31, 2024, the Company
satisfied non-interest-bearing notes payable to related parties that totaled $
During the three-month
period ended March 31, 2024, the Company issued a non-interest-bearing note payable to a related party that totaled $
During the three-month period ended March 31, 2024, the Company
issued an interest-bearing note payable to a related party totaling $
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 three-month period ended March 31, 2024, there have been changes in the number of options outstanding. Total share-based expense is $and $for the three-month periods ended March 31, 2024 and 2023, respectively. The remaining share-based expense of $will be recognized as follows:
| Year | |||||
| Remainder of 2024 | |||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| Total | $ | ||||
| 13 |
ARVANA INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2024
Note 10 – Notes Payable
Notes payable are as follows at March 31, 2024 and December 31, 2023:
| Schedule of notes payable | ||||||||
March 31, 2024 | December 31, 2023 | |||||||
| Note
payable to a bank, interest at | $ | $ | ||||||
| Note
payable to a bank, interest at | ||||||||
| Note
payable to seller, interest at | ||||||||
| Note
payable to third parties, bear | ||||||||
| Total notes payable | ||||||||
| Less – current portion | ( | ) | ( | ) | ||||
| Total long-term portion | $ | $ | ||||||
Principal maturities of notes payable are as follows:
| Schedule of principal maturities of notes payable | |||||
| Year | Amount | ||||
| Remainder of 2024 | $ | ||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| Thereafter | |||||
| $ | |||||
Note 11 - Subsequent Events
The Company evaluated its March 31, 2024, financial statements for subsequent events through the date the financial statements were available to be issued.
On April 4, 2024, the Company, and the holder of the note payable to seller in connection with the purchase of the D2F paid the annual interest payment due to seller.
On April 25, 2024, the Company issued a note payable to a related
party in the amount of $
| 14 |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
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 Down 2 Fish Charters, LLC., a wholly owned subsidiary of Arvana.
FORWARD LOOKING STATEMENTS
The information in this Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties, including our capital needs, business plans and expectations. Forward-looking statements also involve risks and uncertainties regarding our business, capital, government regulations, stock price, operating costs, capital costs, and other factors. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. You can identify forward-looking statements by terminology such as "may", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential" or "continue", the negative of such terms, or other comparable terminology. Forward-looking statements are based on assumptions and analyses made by management considering their experience and perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. Actual events or results may differ materially. We disclaim any obligation to publicly update forward-looking statements or disclose any difference between actual results and those reflected in these statements. Given these uncertainties, readers are cautioned not to place undue reliance on forward-looking statements.
Our fiscal year end is December 31. All information presented herein is based on the three months ended March 31, 2024, and March 31, 2023.
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. Interest on the promissory note is payable on an annual basis.
Stockholders approved a forward stock split of our 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 this periodic report.
| 15 |
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 operates its fishing charter business it has continued to seek business opportunities in real estate development. On December 12, 2023, Arvana announced a non-binding memorandum of understanding to acquire a Nevada based company intent on expanding its specialty use concept to acquire and repurpose vacant shopping malls, outlet locations and big box stores to attract new tenants from targeted industries that offer goods or services that are not available online. The parties are yet to enter into a definitive agreement.
Plan of Operation
Arvana’s plan of operation is to support the development of its business, and to build on its existing business model. We believe that an expansion of marketing efforts around Tampa Bay, to offer a wider range of services, such as dolphin tours, will help establish the Down2Fish brand, attract more customers and increase revenues. Expansion into new service offerings will however require capital sufficient to finance the purchase of another vessel and additional boating equipment. We believe that dolphin tours can return net revenue on a consistent basis if we are able to attract sufficient customers to 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 installation is cost. We are presently considering financing options that might become available to us in the near term but have no assurance that financing will become available or that if such did become available, that the 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, we will continue to focus on offering more fishing charter excursions to build revenue and improve our results of operations.
Results of Operations
During the three-month period ended March 31, 2024, Arvana raised capital to sustain operations, maintained its charter fishing business and evaluated other business opportunities.
| 16 |
Our results of operations for the three-month period ended March 31, 2024, as compared to the three-month periods ended March 31, 2023, were as follows below:
| Three Months Ended March 31, | ||||||||||||
| 2024 | 2023 | Change | ||||||||||
| Revenue | $ | — | $ | — | $ | — | ||||||
| Operating expenses | (118,328 | ) | (148,903 | ) | 30,575 | |||||||
| Loss from operations | (118,328 | ) | (148,903 | ) | 30,575 | |||||||
| Other expenses | ||||||||||||
| Lease income | 12,000 | 8,000 | 4,000 | |||||||||
| Depreciation | (6,711 | ) | (5,850 | ) | (861 | ) | ||||||
| Interest income | 18 | 4 | 14 | |||||||||
| Interest expense | (16,416 | ) | (10,642 | ) | (5,774 | ) | ||||||
| Loss on asset purchase | — | (771,009 | ) | 771,009 | ||||||||
| Loss from other expenses | (11,109 | ) | (779,497 | ) | 773,630 | |||||||
| Net Loss | $ | (129,437 | ) | $ | (928,400 | ) | $ | (798,963 | ) | |||
Revenue
Charter revenue from operations for the three-month periods ended March 31, 2024, and March 31, 2023, was $0. Revenue results for the current quarter ended March 31, 2024, were stifled by warranty repairs to both of our fishing charter vessels and a seasonal wane in the popularity of fishing charters, while revenue results from the comparable prior three-month period ended March 31, 2023, were disrupted by the acquisition of Down2Fish in February of that period.
We expect charter revenue in the second quarter of 2024, as the charter fishing season ramps up and our vessels are returned to active service.
Operating Expenses
Operating expenses for the three-month period ended March 31, 2024, decreased to $118,328, as compared to $148,903 for the three-month period ended March 31, 2023, a decrease of 21%. The fall in operating expenses over the three-month period ended March 31, 2024, is attributed to a decrease in general and administrative expenses as one result of the lack of fishing charters in the period and professional fees that were higher in the prior three-month period ended March 31, 2023, due to the expense of acquiring Down2Fish.
We expect operating expenses to increase in future periods as we return to offering fishing charters and move forward to develop our business plan.
Other Expense
Other expense for the three-month period ended March 31, 2024, was $11,109 as compared to other expense of $779,497 for the three-month period ended March 31, 2023. The decrease in other expense in the three-month period ended March 31, 2024, can be primarily attributed to the loss recognized in connection with the acquisition of Down2Fish in the prior three-month period ended March 31, 2023. Other items that contributed to the decrease in other expense over the comparative three-month periods include an increase in lease income and interest income offset by an increase in depreciation and interest expense in the three-month period ended March 31, 2024.
We expect to continue to recognize other expense as debt instruments tied to acquisition of Down2Fish continue to accrue interest, and depreciation of our vessels will continue into the future.
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Net Loss
Net loss for the three-month period ended March 31, 2024, was $129,437 as compared to a net loss of $928,400 for the three-month period ended March 31, 2023, a decrease of 86%. The decrease in net loss in the current three-month period, over the prior comparable three-month period can be primarily attributed to the loss recognized in connection the acquisition of Down2Fish in the prior three-month period ended March 31, 2023, and the lack of revenue from fishing charters in the current three-month period ended March 31, 2024.
We expect to continue to realize net losses from operations over the next twelve months as management works to increase the number of fishing charters to implement its business model.
Capital Expenditures
Arvana expended no amounts on capital expenditures for the three-month periods ended March 31, 2024, and March 31, 2023.
Liquidity and Capital Resources
Since inception, we have experienced significant changes in liquidity, capital resources, and stockholders’ deficit.
We had current assets of $139,138 as of March 31, 2024, that consisted of cash, and a bond as compared to current assets of $27,171 as of December 31, 2023, that too consisted of cash and a bond. Total assets were $321,804 as of March 31, 2024, that consisted of current assets, property, equipment, and intangible assets, as compared to total assets, of $216,549 as of December 31, 2023, that too consisted of current assets, property, equipment, and intangible assets.
We had current liabilities of $1,223,770 as of March 31, 2024, that consisted of accounts payable, related party payables, and the current portion of long-term debt as compared to current liabilities of $338,487 as of December 31, 2023, that too consisted of accounts payable, related party payables, and the current portion of long-term debt. Total liabilities were $1,353,511 as of March 31, 2024, that consisted of current liabilities and notes payable net of current portion as compared to total liabilities of $1,178,675 as of December 31, 2023, that too consisted of current liabilities and notes payable net of current portion. The increase in current liabilities in the three-month period ended March 31, 2024, is attributed to the transition of long-term debt due in connection with the acquisition of Down2Fish to current liabilities from the twelve-month period ended December 31, 2023, in which it was classified as a long-term liability.
We had a working capital deficit of $1,084,632 as of March 31, 2024, as compared to a working capital deficit of $311,316 as of December 31, 2023.
Total stockholders' deficit was $1,031,707 at March 31, 2024, as compared to a total stockholders' deficit of $962,126 at December 31, 2023.
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The following table shows a summary of our cash flows for the periods presented:
| Three Months Ended March 31, | ||||||||||||
| 2024 | 2023 | Change | ||||||||||
| Net cash provided by (used in) | ||||||||||||
| Operating activities | ||||||||||||
| Net loss | $ | (129,437 | ) | $ | (928,400 | ) | $ | 798,963 | ||||
| Depreciation expense | 6,712 | 5,850 | 862 | |||||||||
| Share-based compensation | 59,856 | 74,434 | (14,578 | ) | ||||||||
| Loss on asset purchase | — | 771,009 | (771,009 | ) | ||||||||
| Accounts payable and accrued liabilities | 7,895 | 18,792 | (44,897 | ) | ||||||||
| Deferred revenue | — | 4,000 | — | |||||||||
| Net cash used in operating activities | $ | (54,974 | ) | $ | (54,315 | ) | $ | (659 | ) | |||
| Investing activities | ||||||||||||
| Cash paid for asset acquisition | $ | — | $ | (50,000 | ) | $ | 50,000 | |||||
| Cash acquired from asset acquisition | — | 4,089 | (4,089 | ) | ||||||||
| Net cash provided by financing activities | — | (45,911 | ) | 45,911 | ||||||||
| Financing activities | ||||||||||||
| Proceeds from loans payable | $ | 3,000 | $ | (777 | ) | $ | 3,777 | |||||
| Payments on loans payable | (8,659 | ) | — | (8,659 | ) | |||||||
| Related party payables | (15,400 | ) | 10,200 | 4,400 | ||||||||
| Proceeds from related party notes payable | 320,000 | — | 320,000 | |||||||||
| Payment of related notes payable | (132,000 | ) | — | (132,000 | ) | |||||||
| Net cash provided by financing activities | $ | 166,941 | $ | 9,423 | $ | 157,518 | ||||||
| Increase (decrease) in cash | $ | 111,967 | $ | (90,603 | ) | $ | 202,770 | |||||
Cash Flows From Operating Activities
Net cash used in operating activities for the three-month period ended March 31, 2024, was $54,974 as compared to net cash used in operating activities of $54,315 for the three-month period ended March 31, 2023. 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, share-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 accounts payable, and accrued liabilities.
We expect to continue to use net cash flow in operating activities over the next twelve months as our net loss is projected to increase until such time as Arvana generates sufficient revenue from operations to sustain the cost of operating activities.
Cash Flows From Financing Activities
Net cash provided by financing activities for the three-month period ended March 31, 2024, was $166,941 as compared to net cash provided in financing activities of $9,423 for the three-month period ended March 31, 2023. Net cash used in financing activities in the three-month period ended March 31, 2024, is attributed to proceeds from loans payable, and related party notes payable, offset by payments on loans payable, related party payables, and related party loans payable. Net cash used in financing activities in the three-month period ended March 31, 2023, is attributed to related party payables offset by loans payable.
We expect to realize net cash provided by financing activities over the next twelve months through private equity placements, public offerings, or private debt from unrelated parties.
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Cash Flows From Investing Activities
Net cash used in investing activities for the three-month period ended March 31, 2024, was $0 as compared to net cash used in investing activities of $45,911 for the three-month period ended March 31, 2023. Net cash used in investing activities in the prior three-month period ended March 31, 2023, can be attributed to asset acquisition offset by amounts acquired from asset acquisition.
We expect to use net cash in investing activities in the near term as investment will be required to expand our fishing charter business.
Arvana’s assets are insufficient as of March 31, 2024, to implement its plan of operation to expand its business operations. We anticipate conducting another private equity offering to meet our objectives and may seek additional loans in the short term to sustain operations. Management is confident that its efforts to realize additional funding will be successful.
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, 2024.
Arvana had no commitments for future capital expenditures at March 31, 2024.
Arvana has adopted the Arvana Inc. 2022 Stock Incentive Plan and has an employment agreement with its executive officer.
Arvana has no current plans for the purchase or sale of any plant or equipment.
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, 2023, and 2022, that are included in our most recent Form 10-K. We discuss accounting policies that are significant in determining results of operations and its financial position.
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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 Arvana’s management, with the participation of the chief executive officer and the acting chief financial officer, of the effectiveness of Arvana’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, 2024. 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, Arvana’s management concluded, as of the end of the period covered by this report, that Arvana’s disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s rules and forms, and such information was accumulated and communicated to management, including its chief executive officer and chief financial officer, to allow timely decisions regarding required disclosures.
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, 2024, that materially affected, or are reasonably likely to materially affect, Arvana’s internal control over financial reporting.
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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.
Item 5. Other Information
During the three months ended March 31, 2024, 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 25 of this Form 10-Q and are incorporated herein by this reference.
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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: | May 9, 2024 |
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INDEX TO EXHIBITS
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