This Management's Discussion and Analysis of Financial Condition and Results of
Operations and other parts of this annual report contain forward-looking
statements that involve risks and uncertainties. Forward-looking statements can
also be identified by words such as "anticipates," "expects," "believes,"
"plans," "predicts," and similar terms. Forward-looking statements are not
guarantees of future performance and our actual results may differ significantly
from the results discussed in the forward-looking statements. Factors that might
cause such differences include but are not limited to those discussed in the
subsection entitled Forward-Looking Statements and Factors That May Affect
Future Results and Financial Condition below. The following discussion should be
read in conjunction with our financial statements and notes thereto included in
this report. Our fiscal year end is December 31.
Discussion and Analysis
Overview
Arvana closed the acquisition of Down2Fish on February 3, 2023, on those terms
and conditions required by the Business Purchase Agreement dated November 16,
2022. Prior to the acquisition, Arvana's sole business purpose was to enter into
an acquisition of or merger with an existing company. The effect of the
transaction was that Arvana acquired the business of Down2Fish and ceased to be
a shell company.
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.
On May 21, 2021, Arvana signed a non-binding term sheet intent on acquiring a
multi-media platform. The term sheet required that the owner of the acquisition
target to secure voting control of Arvana as a pre-condition to facilitating a
transaction. On October 26, 2021, Arvana signed a rescission agreement and
mutual release with the owner of the intended acquisition that included a return
of voting control, as the parties were unable to agree on the structure of the
prospective transaction.
Plan of Operation
Our plan of operation is to support the further development of our 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 establish the Down2Fish brand, attract more customers
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 (6)
customers on each fishing charter. A vessel designed primarily for dolphin tours
can carry from fifty (50) to one hundred (100) 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 options will become available or that if such did
become available, that the financing terms would be tenable for our business.
Unless or until we can offer excursions that cater to a greater number of
customers on each excursion, we will continue to focus on offering more fishing
charter excursions to build revenue and improve our results of operations.
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Results of Operations
During the years ended December 31, 2022, and December 31, 2021, Arvana
extinguished debt, capital to sustain operations, evaluated business
opportunities, pursued certain businesses, and entered into an agreement to
purchase Down2Fish as a wholly owned subsidiary. The purchase closed post-year
end 2022.
Our results of operations for the year ended December 31, 2022, as compared to
the year ended December 31, 2021, were as follows below:
Twelve Months Ended December 31
2022 2021 Change
Revenue $ - $ - $ -
Operating expenses 165,831 102,704 57,847
Loss from Operations (165,831 ) (102,704 ) (57,847 )
Interest income 22 - 22
Interest expense (587 ) (19,207 ) 18,620
Foreign exchange gain - 6,708 6,708
Loss on debt settlement - (12,460,079 ) 12,460,079
Other income 15,000 458,833 (443,833 )
Total Other Income (Expense) 14,435 (12,013,744 ) 12,028,079
Net loss $ (151,396 ) $ (12,116,448 ) $ 11,853,364
Loss from Operations
Revenue
We did not generate revenue during each of the respective twelve-month periods
ended December 31, 2022, and 2021.
Revenue is anticipated over the next twelve-months given our recently acquired
fishing charter business.
Operating Expenses
Operating expenses for the twelve-month period ended December 31, 2022,
increased to $165,831 as compared to $102,704 for the twelve-month period ended
December 31, 2021, an increase of 56%. The increase in operating expenses over
the twelve-month period ended December 31, 2022, is attributed to an increase in
general and administrative expenses due to costs associated with a change in our
controlling stockholder, a private placement, and accounting costs attendant to
our purchase of Down2Fish, offset by a decrease in professional fees.
We expect operating expenses to increase in future periods as we recognize
expenses related to the purchase of Down2Fish and work to build on our business
plan.
Other Income (Expense)
Other income for the twelve-month period ended December 31, 2022, was $14,435 as
compared to other expense of $12,013,744 for the twelve-month period ended
December 31, 2021. The transition from other expense to other income over the
comparative periods can be primarily attributed to the loss on debt settlement,
offset by other income realized from the extinguishment of debt in the prior
twelve-month period. Other income in the current twelve-month period can be
attributed to an amount forgiven in connection with a rescission agreement and
mutual release agreement dated October 26, 2021.
We expect other expense to increase over future periods as interest accrues
against amounts due to the seller of Down2Fish, and against debt instruments
tied to the fishing charter vessels.
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Net Loss
Net loss for the year ended December 31, 2022, was $151,395 as compared to net
loss of $12,116,448 for the year ended December 31, 2021, a decrease of 99%. The
decrease in net loss in the current twelve-month period over the prior
comparable period is attributed to other income offset by the increase in
operating expenses.
We expect to continue to realize net losses from operations over the near term
as management works to implement its business model.
Capital Expenditures
We expended no amounts on capital expenditures for the respective twelve-month
periods ended December 31, 2022, and December 31, 2021.
Liquidity and Capital Resources
Since inception, Arvana has experienced significant changes in liquidity,
capital resources, and stockholders' deficit.
We had assets of $142,365 as of December 31, 2022, that consisted solely of
cash, and a working capital surplus of $104,495, as compared to assets of $3,340
as of December 31, 2021, that consisted solely of cash, and a working capital
deficit of $101,585. Net stockholders' equity in Arvana was $104,495 at December
31, 2022, as compared to a net stockholders' deficiency in Arvana of $101,585 at
December 31, 2021.
The following table shows a summary of our cash flows for the periods presented:
Twelve Months Ended December 31
2022 2021 Change
Net cash (used in) provided by $ - $ - $ -
Operating activities $ (132,651 ) (33,579 ) 166,907
Investing activities - - -
Financing activities 271,676 31,925 240,338
Increase (decrease) in cash 139,025 (1,654 ) 140,679
Cash Used in Operating Activities
Net cash provided by operating activities for the twelve-month period ended
December 31, 2022, was $132,651 as compared to net cash used in operating
activities of $33,579 for the twelve-month period ended December 31, 2021. Net
cash used in operating activities in the current period can be attributed to
book expense items that do not affect the total amount relative to actual cash
used, such as share based compensation. Balance sheet accounts that affect cash
but are not income statement related that are added or deducted to arrive at
cash used in operating activities, include other income, accounts payable and
amounts due to related parties.
We expect net cash provided by operating activities to continue over the next
twelve months as we implement our business plan.
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Cash Used in Investing Activities
Net cash used in investing activities for the year ended December 31, 2022, and
December 31, 2021, was $nil.
We expect to use net cash in investing activities in the near term as investment
will be required of us in connection with the expansion our fishing charter
business.
Cash Flows from Financing Activities
Cash flow provided by financing activities for the year ended December 31, 2022,
was $271,676, as compared to $31,925 for the year ended December 31, 2021. Cash
flows provided from financing activities in the current period consisted of
proceeds from a private placement, offset by loan repayments and financing
costs.
We expect to continue to use net cash provided by financing activities to expand
our business.
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
December 31, 2022.
Arvana had no commitments for future capital expenditures at December 31, 2022.
Arvana has adopted the Arvana Inc. 2022 Stock Incentive Plan and has an
employment agreement with its executive officer.
Arvana plans to purchase an additional vessel to be used in offering dolphin
tours in the near term, subject to satisfactory financing being available,
though it has no contractual commitment to do so.
Arvana has no current plans to make any changes in the number of employees.
Critical Accounting Policies
The preparation of financial statements in accordance with U.S. GAAP requires us
to make estimates and assumptions affecting the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
net revenues and expenses in the reporting period. We base our estimates and
assumptions on current facts, historical experience, and various other factors
that we believe to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities and the accrual of costs and expenses that are not readily apparent
from other sources. We continually review the estimates and underlying
assumptions to ensure they are appropriate for the circumstances. Accounting
assumptions and estimates are inherently uncertain and actual results may differ
materially from our estimates.
A summary of our critical accounting policies is provided in Note 1 to the
audited financial statements for the years ended December 31, 2022, and 2021,
that are included in this Form 10-K. We discuss accounting policies that are
significant in determining results of operations and the currency of its
financial position.
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."
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ARVANA INC. 
