UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15D OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY
PERIOD ENDED |
| 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:
(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. Yes ☐
This Amendment No. 1 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 is being filed to restate the Company’s previously issued condensed consolidated financial statements. The restatement corrects errors related to capitalization of website development costs, accrual of professional fees, and stock-based compensation. As a result, previously reported financial results for the three and nine months ended September 30, 2024, and related prior periods have been revised. Investors should no longer rely on the previous financial statements and related disclosures contained in the Original Form 10-Q. 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).
Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See 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 pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the 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) on July 11, 2025 was .
1
| ARVANA INC. |
| TABLE OF CONTENTS |
| PAGE | |||
| PART I | FINANCIAL INFORMATION | ||
| Item 1. | Condensed Consolidated Financial Statements (Unaudited and Restated) | 3 | |
| Condensed Consolidated Balance Sheets | 4 | ||
| Condensed Consolidated Statements of Operations | 5 | ||
| Condensed Consolidated Statements of Stockholders’ Deficit | 6 | ||
| Condensed Consolidated Statements of Cash Flows | 7 | ||
| Notes to Condensed Consolidated Financial Statements | 8 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Operations (Unaudited and Restated) | 24 | |
| Item 3. | Quantitative and Qualitative Disclosure About Market Risk | 29 | |
| Item 4. | Controls and Procedures | 29 | |
| PART II | OTHER INFORMATION | 31 | |
| Item 1. | Legal Proceedings | 31 | |
| Item 1A. | Risk Factors | 31 | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 31 | |
| Item 3. | Defaults Upon Senior Securities | 31 | |
| Item 4. | Mine Safety Disclosures | 31 | |
| Item 5. | Other Information | 31 | |
| Item 6. | Exhibits | 32 | |
| Signatures | 33 | ||
| Index to Exhibits | 34 | ||
2
PART I
| ITEM 1. | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
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 or D2F refer to Down 2 Fish 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.
Non-Reliance on Previously Issued Financial Statements
The Company previously filed a Form 10-Q containing financial statements that were not audited by the Company’s independent auditor. The Company concluded these financial statements, as restated, materially impact the previously issued financial statements relating to the three and nine months ended September 30, 2024.
The following unaudited condensed consolidated financial statements have been restated to correct errors identified in the Company’s previously filed Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2024:
| • | Condensed Consolidated Balance Sheets as of September 30, 2024 (Unaudited and Restated) and December 31, 2023 (Audited) |
| • | Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 (Unaudited and Restated) |
| • | Condensed Consolidated Statements of Stockholders’ Deficit for the Three and Nine Months Ended September 30, 2024 and 2023 (Unaudited and Restated) |
| • | Condensed Consolidated Statements of Cash Flows for the Three and Nine Months Ended September 30, 2024 and 2023 (Unaudited and Restated) |
| • | Notes to Condensed Consolidated Financial Statements for the Three and Nine Months Ended September 30, 2024 and 2023 (Unaudited and Restated), including Note 12 – Restatements |
3
| ARVANA INC. |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| AS OF SEPTEMBER 30, 2024 AND DECEMBER 31, 2023 |
| (Unaudited) |
| (Restated) |
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| ASSETS | (Restated) | (Audited) | ||||||
| Current Assets: | ||||||||
| Cash and Cash Equivalents | $ | $ | ||||||
| Other Current Assets | ||||||||
| Total Current Assets | ||||||||
| Non-Current Assets: | ||||||||
| Property and Equipment, Net | ||||||||
| Intangible Assets, Net | ||||||||
| Total Non-Current Assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts Payable | $ | $ | ||||||
| Deferred Revenue | ||||||||
| Other Current Liabilities | ||||||||
| Related-Party Payables (Note 8) | ||||||||
| Current Portion of Notes Payable (Note 7) | ||||||||
| Current Portion of Related-Party Notes Payable | ||||||||
| Total Current Liabilities | ||||||||
| Long-Term Liabilities: | ||||||||
| Notes Payable, Net of Current Portion | ||||||||
| Related-Party Notes Payable, Net of Current Portion | ||||||||
| Total Long-Term Liabilities | ||||||||
| Total Liabilities | ||||||||
| Stockholders' Deficit: | ||||||||
| Common stock, $ par value, shares authorized, issued and outstanding at September 30, 2024, and issued and outstanding at December 31, 2023, respectively | ||||||||
| Additional Paid-in Capital | ||||||||
| Accumulated Deficit | ( | ) | ( | ) | ||||
| Total Stockholders' Deficit Before Treasury Stock | ( | ) | ( | ) | ||||
| Less: Treasury Stock ( shares and shares at cost) | ( | ) | ||||||
| Total Stockholders' Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders' Deficit | $ | $ | ||||||
| The accompanying notes are an integral part of these interim unaudited consolidated financial statements |
4
| ARVANA INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
| FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 |
| (Unaudited) |
| (Restated) |
| Three Months Ended | ||||||||||||||||
| September 30, | ||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (Restated) | (Restated) | |||||||||||||||
| Revenue: | ||||||||||||||||
| Charter Revenue | $ | $ | $ | $ | ||||||||||||
| Lease Revenue | ||||||||||||||||
| Total Revenue | ||||||||||||||||
| Cost of Services | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| Operating Expenses: | ||||||||||||||||
| Amortization Expense | ||||||||||||||||
| Depreciation Expense | ||||||||||||||||
| General and Administrative | ( | ) | ||||||||||||||
| Professional Fees | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Operating Loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income and Expenses: | ||||||||||||||||
| Interest Income | ||||||||||||||||
| Interest Expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on Asset Purchase | ( | ) | ||||||||||||||
| Total Other Income and Expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net Loss Per Share: | ||||||||||||||||
| Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted Average Shares Outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
| The accompanying notes are an integral part of these interim unaudited consolidated financial statements |
5
| ARVANA INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT |
| FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 |
| (Unaudited) |
| (Restated) |
| Additional | Total | |||||||||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Treasury Stock | Stockholders' | ||||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Shares | Amount | Deficit | ||||||||||||||||||||||
| Three Months Ended September 30, 2023 | ||||||||||||||||||||||||||||
| Balance June 30, 2023 | $ | $ | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Stock-Based Compensation | — | — | ||||||||||||||||||||||||||
| Net Loss | — | ( | ) | — | ( | ) | ||||||||||||||||||||||
| Balance September 30, 2023 | $ | $ | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Three Months Ended September 30, 2024 (Restated) | ||||||||||||||||||||||||||||
| Balance June 30, 2024 | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||
| Stock-Based Compensation | — | ( | ) | — | ( | ) | ||||||||||||||||||||||
| Net Loss | — | ( | ) | — | ( | ) | ||||||||||||||||||||||
| Balance September 30, 2024 | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||
| Nine Months Ended September 30, 2023 | ||||||||||||||||||||||||||||
| Balance December 31, 2022 | $ | $ | $ | ( | ) | ( | ) | $ | ( | ) | $ | |||||||||||||||||
| Stock-Based Compensation | — | — | ||||||||||||||||||||||||||
| Net Loss | — | ( | ) | — | ( | ) | ||||||||||||||||||||||
| Balance September 30, 2023 | $ | $ | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Nine Months Ended September 30, 2024 (Restated) | ||||||||||||||||||||||||||||
| Balance December 31, 2023 | $ | $ | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Restatement Adjustment | — | ( | ) | — | ||||||||||||||||||||||||
| Reissued Treasury Shares | — | ( | ) | |||||||||||||||||||||||||
| Stock-Based Compensation | — | — | ||||||||||||||||||||||||||
| Net Loss | — | ( | ) | — | ( | ) | ||||||||||||||||||||||
| Balance September 30, 2024 | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||
| The accompanying notes are an integral part of these interim unaudited consolidated financial statements |
6
| ARVANA INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 |
| (Unaudited) |
| (Restated) |
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2024 | 2023 | |||||||
| (Restated) | ||||||||
| Cash Flows from Operating Activities: | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to | ||||||||
| net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation | ||||||||
| Loss on asset purchase | ||||||||
| Change in other current assets | ( | ) | ||||||
| Change in accounts payable | ( | ) | ||||||
| Change in deferred revenue | ||||||||
| Change in other current liabilities | ||||||||
| Change in related-party payables | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Cash paid for fixed assets | ( | ) | ||||||
| Cash paid for intangible assets | ( | ) | ||||||
| Cash paid for asset acquisition | ( | ) | ||||||
| Cash acquired from asset acquisition | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from issuance of common stock | ||||||||
| Proceeds from issuance of notes payable | ||||||||
| Proceeds from related-party notes payable | ||||||||
| Repayments of notes payable | ( | ) | ( | ) | ||||
| Repayments of related-party notes payable | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net decrease in cash | ( | ) | ( | ) | ||||
| Cash and cash equivalents, beginning of year | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Non-Cash Investing and Financing Activities: | ||||||||
| Note payable issued for asset acquisition (Note 3) | $ | $ | ||||||
| Liabilities assumed in asset acquisition (Note 3) | $ | $ | ||||||
| The accompanying notes are an integral part of these interim unaudited consolidated financial statements |
7
Arvana Inc.
Notes to Condensed Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2024 and 2023
(Unaudited and Restated)
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. On July 24, 2006, the Company changed its name to Arvana Inc. to reflect the acquisition of a telecommunications business. The Company discontinued its telecommunications operations as of December 31, 2009.
On February 3, 2023, the Company acquired Down 2 Fish Charters, LLC, which was organized in the State of Florida on April 1, 2019. Down2Fish operates a Florida based fishing charter business offering a range of curated maritime adventures including 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 as well as the lease of Down2Fish’s marine equipment.
Basis of Presentation
The Company’s fiscal year ends on December 31. The accompanying unaudited consolidated financial statements for the three and nine months ended September 30, 2024 and 2023 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. These interim consolidated financial statements and notes should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the Securities and Exchange Commission (“SEC”) on April 5, 2024. The results of operations for interim periods are not necessarily indicative of results that may be achieved for the full fiscal year or any other future periods.
The results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results of operations for the full year. These financial statements and related footnotes should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission.
The accompanying condensed financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at September 30, 2024 and for the related periods are presented.
Use of Estimates
The preparation of unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, the 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 and measurement of deferred tax assets and the evaluation of unrecognized deductible temporary tax differences.
Financial Instruments
The Company’s financial instruments consist primarily of cash, a government-issued bond, accounts payable, notes payable to related parties, other amounts due to related parties, and notes payable to financial institutions. The carrying amounts of cash, the government-issued bond, accounts payable, and other amounts due to related parties approximate their fair values due to their short-term maturities.
Notes payable to related parties and financial institutions consist of both short-term and long-term borrowings. The fair value of these notes payable approximates their carrying amounts because the interest rates approximate current market rates or because these instruments are carried at amounts reflecting current borrowing terms.
8
Note 1 – Organization and Summary of Significant Accounting Policies – (continued)
Concentration of Credit Risk
The Company maintains cash deposits at financial institutions in accounts that may at times exceed federally insured limits. At September 30, 2024 and December 31, 2023, the Company did not have any cash balances in excess of insured FDIC limits. The Company has not experienced any losses on such accounts, and believes it is not exposed to any significant credit risks.
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 judgment 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 measured using enacted tax rates in effect during the periods in which those temporary differences are expected to reverse.
Stock Split
On February 21, 2023, the Company’s stockholders approved a 3-for-1 forward stock split of the common shares. The stock split was filed with the Nevada Secretary of State effective March 31, 2023, and was reflected in the market through the Financial Industry Regulatory Authority (FINRA) on April 19, 2023. All references in these financial statements to common stock, share counts, and per-share amounts have been retroactively adjusted to reflect the stock split.
Stock-Based Compensation
The Company accounts for all share-based payments to employees and non-employees under ASC 718, Compensation—Stock Compensation, which requires that the value of the award be established at the date of grant and then 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. Stock-based compensation expense is included in general and administrative expenses on the statement of operations.
For share-based awards which are fully vested and non-forfeitable at the grant date, the cost is measured and recognized at that date.
For share-based awards vesting over a certain service period with no market conditions, the cost is valued using the Black-Scholes option pricing model based on inputs determined for the grant date. Once the per-share fair value on the grant date is established, the award is expensed over a weighted-average service period for the entire award using the straight-line method (also referred to as the single-award method).
In accordance with the provisions of ASC 718, the Company has elected to account for forfeitures of options when such forfeitures occur rather than estimating forfeitures at the grant date. Therefore, the Company records stock-based compensation expense assuming all option holders will complete the requisite service period for the options to fully vest, and then an adjustment is recorded in the period during which forfeitures occur. Compensation cost is not reversed for stock options that have vested prior to forfeiture.
9
Note 1 – Organization and Summary of Significant Accounting Policies – (continued)
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 September 30, 2024 and at September 30, 2023, which have been excluded from the calculation of diluted loss per share because their effects would be anti-dilutive due to net losses in both periods.
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. The Company adopted ASU 2016-13 effective January 1, 2023, which adoption has not had a material effect on its financial statements.
Reclassifications
To conform with the current year presentation on the statement of operations, the Company made the following reclassifications for the three and nine months ended September 30, 2023:
| • | Lease
Revenue: $ |
| • | Cost
of Services: $ |
These reclassifications had no impact on net loss, total assets, or total liabilities for the period presented.
Note 2 – Going Concern
The
Company incurred a net loss of $
10
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,
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 $
| Assets: | ||||||
| Cash and Cash Equivalents | $ | |||||
| Trade and Other Receivables | ||||||
| Marine Operating Equipment | ||||||
| Commercial Fishing License | ||||||
| Total Assets | ||||||
| Liabilities: | ||||||
| Accounts Payable | ||||||
| Customer Deposits | ||||||
| Notes Payable | ||||||
| Related-Party Notes Payable | ||||||
| Total Liabilities | ||||||
| Loss on Asset Acquisition: | ||||||
| Purchase Price | ||||||
| Excess of Liabilities Assumed Over Assets Acquired | ||||||
| Net 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 $
11
Note 4 – Property and Equipment
Property and equipment consist of the following:
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Marine Equipment | $ | $ | ||||||
| Furniture and Fixtures | ||||||||
| Total Property and Equipment | ||||||||
| Less: Accumulated Depreciation | ( | ) | ( | ) | ||||
| Property and Equipment, Net | $ | $ | ||||||
Depreciation
expense was $
Marine equipment is subject to an operating lease agreement ending on December 31, 2025. See Note 6 for more information.
Note 5 – Intangible Assets
The Company acquired a perpetual federal fishing license as part of the acquisition of Down2Fish’s assets (see Note 3 for more information), 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 September 30, 2024 and 2023, the Company determined no impairment of this asset had occurred.
The
Company maintains a website and capitalizes website development costs under ASC 350-50, Website Development Costs. In December
2023, the Company capitalized $
Note 6 – Leases (Company as Lessor)
The
Company leases marine equipment to a related party in an operating lease arrangement. The lease commenced on January 1, 2023 and ends
December 31, 2025. The agreement provides for fixed minimum monthly lease payments of $
12
Note 6 – Leases (Company as Lessor) – (continued)
Lease
income was $
| Year | Amount | ||||
| Remainder of 2024 | $ | ||||
| 2025 | |||||
| Total | $ | ||||
Note 7 – Notes Payable
Notes payable are as follows:
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Note payable to a bank, interest at | $ | $ | ||||||
| Note payable to a bank, interest at | ||||||||
| Note payable to seller (a related party), interest at | ||||||||
| Note payable to majority shareholder, interest at %, matures , unsecured. | ||||||||
| Note payable to majority shareholder, bearing interest, matures , unsecured. | ||||||||
| Note payable to majority shareholder, bearing interest, with various maturities, unsecured. | ||||||||
| Note payable to a related party, bearing | ||||||||
| Note payable to a related party, bearing | ||||||||
| Note payable to a related party, bearing | ||||||||
| Total Notes Payable | ||||||||
| Less: Current Portion of Notes Payable | ( | ) | ( | ) | ||||
| Less: Current Portion of Related-Party Notes Payable | ( | ) | ( | ) | ||||
| Notes Payable, Net of Current Portion | $ | $ | ||||||
13
Note 7 – Notes Payable – (continued)
Principal maturities of notes payable are as follows:
| Year | Amount | ||||
| Remainder of 2024 | $ | ||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| Thereafter | |||||
| Total | $ | ||||
Note 8 – Related-Party Transactions and Notes Payable to Stockholders
Effective
September 1, 2022, the Company signed an employment agreement with its Chief Executive Officer at the time for $
During
the year ended December 31, 2022, the Company issued shares of common stock at a price of $ with a fair value of $
At
September 30, 2024 and December 31, 2023, the Company included $
At
September 30, 2024 and December 31, 2023, the Company owed $
During the nine months ended September 30, 2024 and the year ended December 31, 2023, the Company recorded stock-based compensation of $ and $ for the grant of stock options to its Chief Executive Officer, board members, and other parties. See Note 10 for more information.
During
the nine months ended September 30, 2024 and the year ended December 31, 2023, the Company has repaid non-interest-bearing notes payable
to related parties totaling $
The
Company has an interest-bearing note payable to a related party for $
The
Company has a non-interest-bearing note payable to a related party for $
14
Note 8 – Related-Party Transactions and Notes Payable to Stockholders – (continued)
On April 4, 2024, the Company paid the annual interest payment due to the seller of Down2Fish in connection with the note payable related to the purchase of Down2Fish.
Subsequent
to the issuance of the previous financial statements, the Company executed a series of amendments to promissory notes with various parties
to modify the terms of the notes including extensions of their respective maturity dates (see Note 7 for more information). The terms
of the amended agreement for one promissory note related to the purchase of Down2Fish, with a principal amount of $
Note 9 – Common Stock
The Company is authorized to issue shares of common stock. As of September 30, 2024, a total of shares were issued and outstanding. As of December 31, 2023, shares were issued, of which shares were outstanding and shares were classified as treasury stock.
During
the year ended December 31, 2022, the Company issued shares of its restricted common stock at a price of $ per share for
total gross proceeds of $
During
the year ended December 31, 2022, the Company issued shares of common stock at a price of $ with a fair value of $
On April 19, 2023, the Company effected a 3-for-1 forward stock split for shareholders of record as of March 31, 2023. All share and per-share data have been retroactively adjusted to reflect the impact of the stock split in all periods presented.
During the nine months ended September 30, 2024, the Company issued shares of restricted common stock at an approximate price of $ per share as part of executing a consulting services agreement with its majority stockholder. The Company accounts for stock-based compensation awards in accordance with the provisions of ASC 718, which requires that the cost of all equity-based compensation be reflected in the financial statements over the vesting period based on the estimated fair value of the awards. Subsequent to the end of the reporting period, the Board of Directors approved the decision to exercise the claw-back provision included in the consulting services agreement, and the claw-back provision was formally exercised by the Company for all shares before December 31, 2024. Due to the exercise of the claw-back provision, the stock-based compensation expense associated with this award was fully reversed and no net expense was recorded.
15
Note 9 – Common Stock – (continued)
Subsequent to the issuance of the previous financial statements, the Company conducted an examination of its stock records and determined shares previously reported as treasury stock were no longer held by the Company as of January 1, 2024. The Company concluded the shares were reissued in a prior period, and the impact is immaterial. The Company has removed the shares from treasury stock and made a corresponding adjustment to additional paid-in capital. The impact of this adjustment is immaterial, and it did not affect net loss or cash flows in any period presented.
other shares of common stock were issued during the nine months ended September 30, 2024 or the year ended December 31, 2023.
Note 10 – 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, Compensation—Stock Compensation, which addresses the accounting for employee stock options and 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 September 30, 2024 and December 31, 2023, the Company had options outstanding with vesting periods ranging from to years and exercise prices of approximately $ per share. During the three months ended September 30, 2024, a total of options—consisting of vested options and unvested options—were forfeited by the former Chief Executive Officer and a former member of the board. In addition, the Board of Directors approved a resolution to modify the terms of the options granted to the former Chief Executive Officer to cancel any vested options not exercised within 30 days of termination for cause. The Company accounts for forfeitures when they occur; accordingly, a reduction in stock-based compensation expense of $ was recorded in the three months ending September 30, 2024.
Subsequent
to the issuance of the previous financial statements, the Company conducted an examination of its accounting policies for stock-based
compensation and determined certain awards were not properly expensed in prior periods due to the application of incorrect vesting periods
and other computational errors. As a result, the cumulative stock-based compensation expense was understated by $
16
Note 10 – Stock Options – (continued)
Total stock-based compensation was $ for the nine months ended September 30, 2024, and $ for the year ended December 31, 2023. The Company will recognize the remaining $ as follows:
| Year | Amount | ||||
| Remainder of 2024 | $ | ||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| Total | $ | ||||
Note 11 – Subsequent Events
The Company evaluated its September 30, 2023, consolidated financial statements for subsequent events through November 14, 2023, the date the financial statements were originally issued. The Company is aware of the following subsequent events which would require recognition or disclosure in the financial statements.
The Company received loans from its controlling stockholder in the aggregate amount of $
17
Note 12 – Restatements
Per ASC 250-10, Accounting Changes and Error Corrections, the Company’s condensed consolidated financial statements were restated to include changes and corrections made to reflect accounting principles in accordance with U.S. GAAP. The restated financial statements include the following:
| • | Balance Sheet as of September 30, 2024 |
| • | Statements of Operations for the Three and Nine Months Ended September 30, 2024 |
| • | Statements of Stockholders’ Deficit for the Three and Nine Months Ended September 30, 2024 |
| • | Statements of Cash Flows for the Three and Nine Months Ended September 30, 2024 |
| • | Notes to Condensed Consolidated Financial Statements |
Restatements to Condensed Consolidated Balance Sheet
The Condensed Consolidated Balance Sheet as of September 30, 2024 was restated. The Consolidated Balance Sheet as of December 31, 2023 was previously audited, and no changes have been made. The table on the following page shows the effects of the restatements made to the Condensed Consolidated Balance Sheet as of September 30, 2024. The restatements include the following significant items:
| • | Intangible
Assets, Net increased by $ |
| • | Accounts
Payable was decreased by $ |
| • | Related-Party
Payables was increased by $ |
| • | Current
Portion of Notes Payable was decreased by $ |
18
Note 12 – Restatements – (continued)
| • | Related-Party
Notes Payable, Net of Current Portion were increased by $ |
| • | Additional
Paid-in Capital was decreased by $ |
| • | Accumulated
Deficit was increased by $ |
| • | Less:
Treasury Stock was decreased by $ |
19
Note 12 – Restatements – (continued)
The following table summarizes the changes made to the Condensed Consolidated Balance Sheet as of September 30, 2024:
| As of September 30, 2024 | ||||||||||||
| As Previously | Effect of | As | ||||||||||
| ASSETS | Issued | Restatement | Restated | |||||||||
| Cash and Cash Equivalents | $ | $ | $ | |||||||||
| Other Current Assets | ||||||||||||
| Property and Equipment, Net | ||||||||||||
| Intangible Assets, Net | ||||||||||||
| Total Assets | $ | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||||||
| Accounts Payable | $ | $ | ( | ) | $ | |||||||
| Deferred Revenue | ||||||||||||
| Other Current Liabilities | ||||||||||||
| Related-Party Payables (Note 8) | ||||||||||||
| Current Portion of Notes Payable (Note 7) | ( | ) | ||||||||||
| Current Portion of Related-Party Notes Payable | ||||||||||||
| Notes Payable, Net of Current Portion | ( | ) | ||||||||||
| Related-Party Notes Payable, Net of Current Portion | ||||||||||||
| Total Liabilities | ||||||||||||
| Common Stock | ||||||||||||
| Additional Paid-in Capital | ( | ) | ||||||||||
| Accumulated Deficit | ( | ) | ( | ) | ||||||||
| Less: Treasury Stock | ( | ) | ||||||||||
| Total Stockholders' Deficit | ( | ) | ( | ) | ||||||||
| Total Liabilities and Stockholders' Deficit | $ | $ | $ | |||||||||
20
Note 12 – Restatements – (continued)
Restatements to Condensed Consolidated Statements of Operations
The Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 were restated. The tables included in the following pages show the effects of the restatements for both years, which include the following significant items for the three and nine months ended September 30, 2024:
| • | Lease
Revenue, as included in Gross Profit, was increased by $ |
| • | Previously,
Cost of Sales was included in Operating Expenses on the statement of operations. Cost of
Sales was relabeled Cost of Services to conform to industry standards, and then it was reclassified
for inclusion in Gross Profit. This reclassification was done to bring presentation on the
statement of operations in line with industry standards and reports for subsequent quarters.
Cost of Services was decreased by $ |
| • | Gross
Profit was increased by $ |
| • | Amortization
was increased by $ |
| • | General
and Administrative expenses were decreased by $ |
| • | Professional
Fees were increased by $ |
| • | Interest
Expense was decreased by $ |
| • | Net
Loss was decreased by $ |
21
Note 12 – Restatements – (continued)
The following table summarizes the changes made to the Condensed Consolidated Statement of Operations for the Three Months Ended September 30, 2024:
| For the Three Months Ended September 30, 2024 | ||||||||||||
| As Previously | Effect of | As | ||||||||||
| Issued | Restatement | Restated | ||||||||||
| Revenue: | ||||||||||||
| Charter Revenue | $ | $ | $ | |||||||||
| Lease Revenue | ||||||||||||
| Total Revenue | ||||||||||||
| Cost of Services | ||||||||||||
| Gross Profit | ||||||||||||
| Operating Expenses: | ||||||||||||
| Cost of Sales | ( | ) | ||||||||||
| Amortization Expense | ||||||||||||
| Depreciation Expense | ( | ) | ||||||||||
| General and Administrative | ( | ) | ( | ) | ||||||||
| Professional Fees | ||||||||||||
| Total Operating Expenses | ( | ) | ||||||||||
| Operating Loss | ( | ) | ( | ) | ||||||||
| Other Income and Expenses: | ||||||||||||
| Lease Income | ( | ) | ||||||||||
| Depreciation | ||||||||||||
| Interest Income | ||||||||||||
| Interest Expense | ( | ) | ( | ) | ( | ) | ||||||
| Loss on Asset Purchase | ||||||||||||
| Total Other Income and Expenses | ( | ) | ( | ) | ( | ) | ||||||
| Net Loss | $ | ( | ) | $ | $ | ( | ) | |||||
22
Note 12 – Restatements – (continued)
The following table summarizes the changes made to the Condensed Consolidated Statement of Operations for the Nine Months Ended September 30, 2024:
| For the Nine Months Ended September 30, 2024 | ||||||||||||
| As Previously | Effect of | As | ||||||||||
| Issued | Restatement | Restated | ||||||||||
| Revenue: | ||||||||||||
| Charter Revenue | $ | $ | $ | |||||||||
| Lease Revenue | ||||||||||||
| Total Revenue | ||||||||||||
| Cost of Services | ||||||||||||
| Gross Profit | ||||||||||||
| Operating Expenses: | ||||||||||||
| Cost of Sales | ( | ) | ||||||||||
| Amortization Expense | ||||||||||||
| Depreciation Expense | ( | ) | ||||||||||
| General and Administrative | ( | ) | ||||||||||
| Professional Fees | ||||||||||||
| Total Operating Expenses | ( | ) | ||||||||||
| Operating Loss | ( | ) | ( | ) | ||||||||
| Other Income and Expenses: | ||||||||||||
| Lease Income | ( | ) | ||||||||||
| Depreciation | ||||||||||||
| Interest Income | ||||||||||||
| Interest Expense | ( | ) | ( | ) | ( | ) | ||||||
| Loss on Asset Purchase | ||||||||||||
| Total Other Income and Expenses | ( | ) | ( | ) | ( | ) | ||||||
| Net Loss | $ | ( | ) | $ | $ | ( | ) | |||||
23
| 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 or D2F refer to Down 2 Fish Charters, LLC, a wholly owned subsidiary of Arvana.
FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties including our capital needs, business plans, regulatory environment, stock price volatility, and cost structure. Any statements that are not historical facts may be deemed forward-looking, and can often be identified by words such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, or “continue”, as well as their negative forms or similar expressions.
Forward-looking statements are based on assumptions and analyses made by management in light of our experience, historical trends, current conditions, and expected future developments, among other factors we believe are appropriate under the circumstances. Actual results may differ materially from those anticipated. We disclaim any obligation to publicly update forward-looking statements or disclose any differences between actual results and those reflected in such statements. Given these uncertainties, readers are cautioned not to place undue reliance on forward-looking statements.
The Company’s fiscal year end is December 31. All information presented herein relates to the three and nine months ended September 30, 2024 and 2023, as well as the three months ended June 30, 2024 and the year ended December 31, 2023. This Management’s Discussion and Analysis (MD&A) includes restated results for the three and nine months ended September 30, 2024 and 2023. See Note 12 to the financial statements for explanations of the restatements.
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. The Company 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 including 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. Down2Fish generates its revenue from the sale and provision of fishing charter services to the general public as well as an operating lease of its equipment to a related party.
Stockholders approved a forward stock split of the Company’s common shares on a 3-for-1 basis 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.
The Company’s principal office is located at 299 Main Street, 13th Floor, Salt Lake City, Utah 84111, and our telephone number is (702) 899-1072.
24
The Company’s registered agent in the State of Nevada is AA Registered Agents, located at 4869 Nightwood Court, Las Vegas, Nevada 89149.
The Company is traded on the OTC Markets Group, Inc.’s Pink Sheets Current Information market platform under the symbol “AVNI.”
The Company has continued to seek business opportunities in real estate development while continuing to operates its fishing charter business. On December 12, 2023, the Company announced a non-binding memorandum of understanding to acquire a Nevada-based company which is 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 have ended their discussions of the proposed transaction, and management is evaluating alternative options for pursuing this business model.
Plan of Operation
The Company’s plan of operation is to support the development of its business, and to build on its existing business model. The Company believes 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. The Company believes dolphin tours can return net revenue on a consistent basis if Down2Fish is able to attract sufficient customers to each excursion. Down2Fish is 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. The Company’s primary impediment for equipment procurement and installation is cost. The Company is presently considering financing options that might become available in the near term, but it has no assurance that financing options will become available or that the financing terms would be tenable for the Company’s business. Unless or until the Company can offer excursions catering to a greater number of customers on each excursion, the Company will continue to focus on offering more fishing charter excursions to build revenue and improve the results of operations.
Restatement Impact
As discussed in Note 12, the Company identified errors in its application of certain accounting policies including the capitalization of website development costs, accrual of professional fees, and accounting for stock-based compensation. These errors resulted in the misstatement of net loss for the first three quarters of 2024. As a result, the Company has restated its financial statements for the affected periods.
The financial statements and related disclosures presented in this Quarterly Report reflect revised and corrected amounts. The Management’s Discussion and Analysis (MD&A) section below reflects restated results for all affected periods.
25
Results of Operations
During the nine months ended September 30, 2024, the Company obtained financing through related-party debt to sustain operations, maintain the charter fishing business, and provide management the resources needed to evaluate other business opportunities.
The Company’s results of operations for the three and nine months ended September 30, 2024, as compared to the three and nine months ended September 30, 2023, were as follows:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Total Revenue | $ | 18,134 | $ | 22,580 | $ | 55,964 | $ | 55,634 | ||||||||
| Cost of Services | 8,412 | 14,973 | 26,802 | 23,384 | ||||||||||||
| Gross Profit | 9,722 | 7,607 | 29,162 | 32,250 | ||||||||||||
| Operating Expenses | 49,952 | 112,740 | 309,957 | 381,883 | ||||||||||||
| Operating Loss | (40,230 | ) | (105,133 | ) | (280,795 | ) | (349,633 | ) | ||||||||
| Other Income and Expenses | (18,975 | ) | (15,594 | ) | (55,346 | ) | (813,763 | ) | ||||||||
| Net Loss | $ | (59,205 | ) | $ | (120,727 | ) | $ | (336,141 | ) | $ | (1,163,396 | ) | ||||
Revenue
Total revenue from operations as $55,964 for the nine months ended September 30, 2024, compared to $55,634 for the nine months ended September 30, 2023, an increase of 0.59%. Total revenue from operations was $18,134 for the three months ended September 30, 2024, compared to $22,580 for the three months ended September 30, 2023, a decrease of 19.69%. Revenue was comprised of fishing charter services and lease income from the lease of the Company’s marine equipment. The Company expects charter revenue to taper off in the fourth quarter as the fishing season comes to an end.
Cost of Services
Cost of services for operations was $26,802 for the nine months ended September 30, 2024, compared to $23,384 for the nine months ended September 30, 2023, an increase of 14.62%. Cost of services for operations was $8,412 for the three months ended September 30, 2024, compared to $14,973 for the three months ended September 30, 2023, a decrease of 43.82%. Cost of services was comprised of expenses directly related to operating the Company’s marine equipment.
Operating Expenses
Operating expenses were $309,957 for the nine months ended September 30, 2024, compared to $381,883 for the nine months ended September 30, 2023, a decrease of 18.83%. Operating expenses were $49,952 for the three months ended September 30, 2024, compared to $112,740 for the three months ended September 30, 2023, a decrease of 55.69%. The changes in operating expenses over the comparative periods were attributed to reductions in general and administrative expenses including stock-based compensation and executive payroll. There was also a significant reduction in general and administrative expenses due to the $59,602 adjustment related to forfeitures of unvested stock options. The Company expects operating expenses to increase in future periods as management’s business development strategies are implemented including increases in accounting and auditing fees.
26
Other Income and Expenses
Other income and expenses resulted in a net expense of $55,346 for the nine months ended September 30, 2024, compared to $813,763 for the nine months ended September 30, 2023. Other income and expenses resulted in a net expense of $18,975 for the three months ended September 30, 2024, compared to $15,594 for the three months ended September 30, 2023. The changes in other income and expenses over the comparative periods was primarily attributed to the loss recognized with the acquisition of Down2Fish. The Company expects to continue to recognize other income and expenses in future periods as debt instruments tied to the fishing charter vessels continue to incur interest.
Net Loss
Net loss was $336,141 for the nine months ended September 30, 2024, compared to $1,163,396 for the nine months ended September 30, 2023, a decrease of 71.11%. Net loss was $59,205 for the three months ended September 30, 2024, compared to $120,727 for the three months ended September 30, 2023, a decrease of 50.96%. The change in net loss over the comparative periods was primarily attributed to a decrease in losses from operating expenses and the loss recognized on the asset purchase of Down2Fish. The Company expects to continue to realize net losses from operations over the next twelve months as management works to implement its business model.
Capital Expenditures
Capital expenditures during the nine months ended September 30, 2024 consisted of $25,000 for website development costs. Capital expenditures during the nine months ended September 30, 2023 consisted of the property and equipment acquired as part of Down2Fish.
Liquidity and Capital Resources
Since inception, the Company has experienced significant changes in liquidity, capital structure, and stockholders’ deficit.
The Company had current assets of $10,794 as of September 30, 2024, consisting of cash and a bond, compared to $16,386 as of September 30, 2023 and $27,171 as of December 31, 2023, with a similar asset composition. Total assets were $202,538 as of September 30, 2024, including current assets, property and equipment, and intangible assets, compared to $209,283 as of September 30, 2023 and $216,549 as of December 31, 2023.
The Company had current liabilities of $859,323 as of September 30, 2024 consisting of accounts payable, deferred revenue, related-party payables, and the current portion of long-term debt, compared to current liabilities of $201,136 as of September 30, 2023 and to $338,487 as of December 31, 2023, with a similar composition. Total liabilities were $1,387,951 as of September 30, 2024, consisting of current liabilities and notes payable, compared to $201,136 as of September 30, 2023 and to $1,178,675 as of December 31, 2023. The increase in current liabilities in the nine months ended September 30, 2024 was attributed primarily to funds borrowed from related parties partially offset by repayments of notes payable and the transition of notes payable from long-term debt to the current portion of notes payable as the maturity dates of certain promissory notes draw near.
27
The Company had a working capital deficit of $848,529 as of September 30, 2024, compared to $184,750 as of September 30, 2023, and to $311,316 as of December 31, 2023. The fluctuation in these deficits was primarily attributed to the transition of long-term debt to current liabilities as notes payable reached their maturity dates and were paid off using funds received from the issuance of new related-party notes payable.
Stockholders’ deficit was $1,185,43 as of September 30, 2024, compared to $871,437 as of September 30, 2023, and to $962,126 as of December 31, 2023. The stockholders’ deficit has continued to increase as the Company incurs professional fees and other expenses related to developing management’s business plans.
Cash Flows from Operating Activities
Net cash used in operating activities was $208,123 for the nine months ended September 30, 2024, compared to $148,773 for the nine months ended September 30, 2023. Non-cash items impacting net cash used in operating activities included depreciation, stock-based compensation, and loss on asset purchase. In addition, changes in balance sheet accounts—such as current assets, accounts payable, deferred revenue, and related-party payables—also affected operating cash flow. The Company expects to continue to have net cash flow used in operating activities over the next twelve months or until such time as Down2Fish generates sufficient revenue from operations to sustain the costs of operations.
The Company has no current plans to make any additional changes in the number of employees.
Cash Flows from Investing Activities
Net cash used in investing activities was $25,000 for the nine months ended September 30, 2024, compared to $45,911 for the nine months ended September 30, 2023. The Company anticipates future needs for cash used in investing activities due to expected investments in the expansion of its fishing charter business. However, as of September 30, 2024, the Company had no formal commitments for capital expenditures.
Cash Flows from Financing Activities
Net cash provided by financing activities was $221,746 for the nine months ended September 30, 2024, compared to net cash provided by financing activities of $61,348 for the nine months ended September 30, 2023. Net cash provided by financing activities in the nine months ended September 30, 2024 was primarily due to funds received from related-party notes payable, partially offset by repayments of existing notes payable and related-party obligations. Net cash provided by financing activities for the nine months ended September 30, 2023 was attributed to funds received from the issuance of notes payable related to the acquisition of Down2Fish. The Company expects to continue to use net cash provided by financing activities over the next twelve months generated through additional private equity placements, public offerings, or private debt to fund continued expansion of its business.
The Company’s assets were insufficient as of September 30, 2024 to implement its plan of operation to expand its business operations. Management anticipates conducting additional private equity offerings to meet the Company’s objectives, and may seek additional loans in the short term to sustain operations. Management is confident the Company’s efforts to realize additional funding will be successful. As of September 30, 2024, the Company had no lines of credit or other bank financing arrangements, and it does not anticipate paying cash dividends in the foreseeable future.
28
Off-Balance Sheet Arrangements
The Company does 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 management 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. Management bases its estimates and assumptions on current facts, historical experience, and various other factors it believes 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. Management continually reviews these 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 management’s estimates. A summary of the Company’s critical accounting policies is provided in Note 1 to the audited financial statements for the years ended December 31, 2023 and 2022, which are included in the Company’s most recent Form 10-K. In the notes management discusses accounting policies that are significant in determining the Company’s results of operations and financial position.
For the nine months ended September 30, 2024, the Company identified and corrected errors related to its application of several accounting policies including the capitalization of website development costs, accrual of professional fees, and accounting for stock-based compensation.
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Not required for smaller reporting companies.
| ITEM 4. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this Quarterly Report, the Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 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 SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.
Based on this evaluation, management concluded that the Company’s disclosure controls and procedures were not effective as of September 30, 2024, due to material weaknesses in internal controls related to the application of certain accounting policies, including the capitalization of website development costs, accrual of professional fees, and accounting for stock-based compensation. These material weaknesses resulted in the restatement of the Company’s previously filed financial statements.
29
To support the implementation of remedial actions and strengthen the Company’s financial reporting process, the Board of Directors appointed a new Chief Financial Officer on May 20, 2025.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the three months ended September 30, 2024, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
However, as disclosed above, subsequent to the end of the reporting period, the Company began implementing remedial measures to address the identified control deficiencies. These measures include:
| • | Hiring a new Chief Financial Officer to oversee the implementation of remedial actions; |
| • | Enhancing internal review and approval processes for accounting estimates and journal entries; |
| • | Improving documentation and evaluation of complex or judgmental accounting matters; and |
| • | Increasing oversight over third-party service providers involved in financial reporting. |
Management will continue to monitor the effectiveness of these remediation efforts and will make further changes as necessary to ensure internal control over financial reporting is effective in future periods.
30
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 |
Disclosure Regarding Rule 10b5-1 and non-Rule 10b5-1 Trading Arrangements
During
the three months ended September 30, 2024, no director or officer, as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934
(as amended), of the Company has
CYBERSECURITY
Risk Management and Strategy for Handling Sensitive Data
The Company is committed to maintaining the integrity and security of sensitive data collected, maintained, or transmitted across its systems. In the ordinary course of business, the Company and its third-party service providers—such as charter booking platforms—handle sensitive information, including confidential business data and personal information. Protecting this data is critical to its operations and reputation.
The Company employs administrative, technical, and physical safeguards to mitigate cybersecurity risks. However, its risk management strategy has certain limitations due to factors such as the evolving nature of cyber threats, resource constraints, and the inherent vulnerabilities associated with the technologies used by both the Company and its third-party service providers. The Company relies on cloud service providers, consultants, and other vendors for core business functions. These providers may have access to sensitive data or information systems, and management oversees them through vendor diligence processes. Vendors are generally assessed for cybersecurity risk based on the type of service provided, level of access, and related supply chain exposure.
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While the Company has adopted a cybersecurity governance framework designed to identify, assess, and manage material risks from cybersecurity threats, the Company acknowledges that its current risk management strategy may not fully mitigate all potential risks posed by emerging technologies or sophisticated threat actors. A cybersecurity incident could result in reputational damage, regulatory liability, financial loss, and disruption of business operations.
The Company has not, to date, experienced any cybersecurity incidents. However, there is no guarantee that its systems—or those of its third-party vendors—will remain unaffected by future attacks or breaches.
Governance of Cybersecurity Issues
The Company has implemented a cybersecurity governance framework under which management is responsible for identifying, assessing, and managing material cybersecurity risks. The Company has not engaged any third-party cybersecurity consultants, nor does it currently have personnel with specialized cybersecurity expertise.
Under the governance framework, any material cybersecurity threats identified by management are promptly reported to the Audit Committee of the Board of Directors. The Audit Committee holds primary oversight responsibility for cybersecurity matters, including:
| • | Management risks relating to data privacy, technology, and information security; |
| • | Evaluation of The Company’s cybersecurity safeguards and backup systems; |
| • | Oversight of internal controls, cybersecurity policies, and procedures; and |
| • | Coordination with management and auditors regarding information security practices. |
The Audit Committee receives an annual briefing on material cybersecurity threats and incidents, including topics such as risk assessments, vendor relationships, control decisions, and responses to actual or attempted breaches. The Committee may also recommend changes or enhancements to the Company’s cybersecurity policies and controls based on these discussions.
The Company has not identified any material cybersecurity risks or incidents as of the date of this filing. However, the Company cannot guarantee its cybersecurity safeguards will prevent breaches or breakdowns of third-party service providers’ information technology systems, particularly in the face of continually evolving cybersecurity threats and increasingly sophisticated threat actors.
A cybersecurity incident could materially affect our business, results of operations, financial condition, and reputation, in addition to potentially subjecting the Company to government investigations, litigation, fines, penalties, or other damages.
| ITEM 6. | EXHIBITS |
All exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page 44 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.
Date: July 11, 2025
By: /s/ James Kim
James Kim
Chief Executive Officer
Date: July 11, 2025
By: /s/ Andrew E. Morrison
Andrew E. Morrison
Chief Financial Officer
33
| ARVANA INC. |
| INDEX TO EXHIBITS |
| ARVANA INC. |
| INDEX TO EXHIBITS |
| S-K Number | Description | |
| 2.1 | Business Purchase Agreement filed with the Commission as an exhibit to Form 8-K on November 16, 2022. | |
| 3.1 | Articles of Incorporation filed with the Commission as an exhibit to Form 10-SB on May 24, 2000. | |
| 3.1.1 | Amended and Restated Articles of Incorporation filed with the Commission as an exhibit to Form 8-K on October 12, 2010. | |
| 3.1.2 | Amended and Restated Articles of Incorporation filed with the Commission as an exhibit to Schedule 14C on February 2, 2021. | |
| 3.2 | Amended and Restated Bylaws filed with the Commission as an exhibit to Form 10-SB on May 24, 2000. | |
| 10.1 | Arvana 2022 Stock Incentive Plan dated September 30, 2022 filed with the Commission as an exhibit to Form 10-Q on November 22, 2022. | |
| 10.2 | Employment Agreement dated September 1, 2022 filed with the Commission as an exhibit on Form 10-Q on November 22, 2022. | |
| 10.3 | Business Purchase Agreement dated November 16, 2022 filed with the Commission as an exhibit on Form 8-K on November 16, 2022. | |
| 21 | Subsidiaries filed with the Commission on Form 8-K on February 3, 2023. | |
| 31.1 | Certifications of Chief Executive Officer pursuant to Rule 13a-14 of the Securities and Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2 | Certifications of Chief Financial Officer pursuant to Rule 13a-14 of the Securities and Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1 | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 99.10 | Audited financial statements of Down 2 Fish Charters LLC for the years ended December 31, 2021 and 2020 filed with the Commission on February 3, 2023. | |
| 99.20 | Unaudited financial statements of Down 2 Fish Charters LLC for the three and nine months ended September 30, 2022 and 2021 filed with the Commission on February 3, 2023. | |
| 99.30 | Unaudited Pro Forma Combined Financial Statements for the year ended December 31, 2021 and nine months ended September 30, 2022 filed with the Commission on February 3, 2023. |
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CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, James Kim, certify that:
| 1) | I have reviewed this Amendment No. 1 to the Quarterly Report on Form 10-Q of Arvana Inc; |
| 2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4) | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5) | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: July 11, 2025
By: /s/ James Kim
James Kim
Chief Executive Officer
35
CERTIFICATIONS OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Andrew Morrison, certify that:
| 1) | I have reviewed this Amendment No. 1 to the Quarterly Report on Form 10-Q of Arvana Inc; |
| 2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4) | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5) | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: July 11, 2025
By: /s/ Andrew E. Morrison
Andrew E. Morrison
Chief Financial Officer
36
CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Amendment No. 1 to the Quarterly Report of Arvana Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officers of the Company certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of our knowledge and belief:
| 1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Arvana Inc. |
Date: July 11, 2025
By: /s/ James Kim
James Kim
Chief Executive Officer
Date: July 11, 2025
By: /s/ Andrew E. Morrison
Andrew E. Morrison
Chief Financial Officer
37