UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the Quarterly Period Ended
or
For the Transition Period from _________ to _________
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(Exact name of registrant as specified in its charter)
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| ☒ | Smaller reporting company | ||
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As of May 20, 2025, there were shares of the registrant’s common stock outstanding.
VIVAKOR, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025
TABLE OF CONTENTS
i
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VIVAKOR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, 2025 |
December 31, 2024 |
|||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Cash- restricted | ||||||||
| Accounts receivable | ||||||||
| Accounts receivable- related party | ||||||||
| Prepaid expenses | ||||||||
| Marketable securities | ||||||||
| Inventories | ||||||||
| Total current assets | ||||||||
| Other assets | ||||||||
| Notes receivable | ||||||||
| Property and equipment, net | ||||||||
| Right of use assets- operating leases | ||||||||
| Intellectual property, net | ||||||||
| Customer relationships, net | ||||||||
| Goodwill | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accounts payable and accrued expenses- related parties | ||||||||
| Accrued compensation | ||||||||
| Unearned revenue | ||||||||
| Operating lease liabilities, current | ||||||||
| Finance lease liabilities, current | ||||||||
| Loans and notes payable, current | ||||||||
| Loans and notes payable, current- related parties | ||||||||
| Total current liabilities | ||||||||
| Operating lease liabilities, long term | ||||||||
| Finance lease liabilities, long term | ||||||||
| Loans and notes payable, long term | ||||||||
| Deferred tax liability | ||||||||
| Total liabilities | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $ par value; shares authorized, and outstanding as of March 31, 2025 and December 31, 2024 | $ | |||||||
| Common stock, $ par value; shares authorized; and were issued and outstanding as of March 31, 2025 and December 31, 2024, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Treasury stock, at cost | ( |
) | ( |
) | ||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Total Vivakor, Inc. stockholders’ equity | ||||||||
| Noncontrolling interest | ( |
) | ( |
) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to consolidated financial statements
1
VIVAKOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenues | ||||||||
| Terminaling and storage | $ | $ | ||||||
| Terminaling and storage- related party | ||||||||
| Transportation logistics | ||||||||
| Transportation logistics- related party | - | |||||||
| Total revenues | ||||||||
| Cost of revenues | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Sales and marketing | ||||||||
| General and administrative | ||||||||
| Amortization and depreciation | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( |
) | ( |
) | ||||
| Other income (expense): | ||||||||
| Unrealized gain (loss) on marketable securities | ( |
) | ||||||
| Loss on disposition of asset | ( |
) | ||||||
| Gain on deconsolidation of subsidiary | ||||||||
| Interest income | ||||||||
| Interest expense | ( |
) | ( |
) | ||||
| Interest expense- related parties | ( |
) | ||||||
| Other income | ||||||||
| Total other income (expense) | ( |
) | ( |
) | ||||
| Loss before provision for income taxes | ( |
) | ( |
) | ||||
| Provision for income taxes | ( |
) | ||||||
| Consolidated net loss | ( |
) | ( |
) | ||||
| Less: Net loss attributable to noncontrolling interests | ( |
) | ( |
) | ||||
| Net loss attributable to Vivakor, Inc. | $ | ( |
) | $ | ( |
) | ||
| Series A Preferred Stockholder Dividends | $ | $ | ||||||
| Net loss to common shareholders | ( |
) | ( |
) | ||||
| Basic and diluted net loss per share | $ | ) | $ | ) | ||||
| Basic weighted average common shares outstanding | ||||||||
See accompanying notes to consolidated financial statements
2
VIVAKOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
| Series A Preferred Stock |
Common Stock | Additional Paid-in |
Treasury | Accumulated | Non-controlling | Total Stockholders’ |
||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Stock | Deficit | Interest | Equity | ||||||||||||||||||||||||||||
| December 31, 2024 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||
| Issuance of common stock for a reduction of liabilities | - | |||||||||||||||||||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||||||||||||||||||
| Stock based compensation- Consultant | - | |||||||||||||||||||||||||||||||||||
| Common stock distributable- Series A Preferred Stock Dividends | - | ( |
) | |||||||||||||||||||||||||||||||||
| Net loss | - | - | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| March 31, 2025 (unaudited) | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||
| Series A Preferred Stock |
Common Stock | Additional Paid-in |
Treasury | Accumulated | Non-controlling | Total Stockholders’ |
||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Stock | Deficit | Interest | Equity | ||||||||||||||||||||||||||||
| December 31, 2023 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||||||||
| Issuance of common stock for a reduction of liabilities | - | |||||||||||||||||||||||||||||||||||
| Stock based compensation | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| March 31, 2024 (unaudited) | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||||||||
See accompanying notes to consolidated financial statements
3
VIVAKOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Consolidated net loss | $ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation | ||||||||
| Stock-based compensation- consultant | ||||||||
| Unrealized (gain) loss- marketable securities | ( |
) | ||||||
| Loss on disposition of assets | ||||||||
| Gain on deconsolidation of subsidiary | ( |
) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( |
) | ( |
) | ||||
| Prepaid expenses | ( |
) | ( |
) | ||||
| Inventory | ( |
) | ||||||
| Other assets | ( |
) | ||||||
| Right of use assets- operating leases | ||||||||
| Operating lease liabilities | ( |
) | ( |
) | ||||
| Accounts payable and accrued expenses | ||||||||
| Interest on notes receivable | ( |
) | ( |
) | ||||
| Interest on notes payable | ||||||||
| Net cash used in operating activities | ( |
) | ( |
) | ||||
| INVESTING ACTIVITIES: | ||||||||
| Proceeds from the sale of vehicles and trailers | ||||||||
| Purchase of equipment | ( |
) | ||||||
| Net cash provided (used) in investing activities | ( |
) | ||||||
| FINANCING ACTIVITIES: | ||||||||
| Payment on financing lease liabilities | ( |
) | ( |
) | ||||
| Proceeds from loans and notes payable | ||||||||
| Proceeds from loans and notes payable- related party | ||||||||
| Payment of notes payable | ( |
) | ||||||
| Payment of notes payable- related party | ( |
) | ( |
) | ||||
| Net cash provided (used) by financing activities | ( |
) | ||||||
| Net increase in cash and cash equivalents | ||||||||
| CASH AND CASH EQUIVALENTS, and CASH RESTRICTED, BEGINNING OF PERIOD | ||||||||
| CASH AND CASH EQUIVALENTS, and CASH RESTRICTED, END OF PERIOD | $ | $ | ||||||
| SUPPLEMENTAL CASHFLOW INFORMATION: | ||||||||
| Cash paid during the year for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Noncash transactions: | ||||||||
| Accounts payable on purchase of equipment | $ | $ | ||||||
| Capitalized interest on construction in process | $ | $ | ||||||
| Common stock issued with debt | $ | $ | |
|||||
| Common stock issued for a reduction in liabilities | $ | |
$ | |||||
| Series A preferred shareholder stock dividend | $ | $ | ||||||
See accompanying notes to consolidated financial statements
4
VIVAKOR, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Basis of Presentation
Interim Financial Information
The accompanying unaudited condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes for the year ended December 31, 2024 that were filed with our Form 10-K. The unaudited condensed consolidated financial statements have been prepared on a basis consistent with that used to prepare the audited annual consolidated financial statements and include, in the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the condensed consolidated financial statements. The operating results for the three months ended March 31, 2025 are not necessarily indicative of the results expected for the full year ending December 31, 2025.
Business
Vivakor, Inc. (“Vivakor” or the “Company”) is a socially responsible operator, acquirer and developer of technologies and assets in the oil and gas industry, as well as related environmental solutions. Currently, our efforts are primarily focused on operating two main segments: (i) transportation logistics services and (ii) terminaling and storage facility product and services related to oil and gas production.
Our transportation and facilities services primarily consist of trucking crude oil and produced water and transportation and terminaling services of crude oil via the Omega Gathering Pipeline. Our trucking services are centered in the Permian and Eagle Ford Basins. We utilize our trucking fleet to transport those products to a fully-integrated network of facilities where we blend various grades of crude oil grades of crude oil, and reuse or dispose of produced water.
Our terminaling and storage product and services primary consist of two operational major crude oil terminaling facilities. One is located in Colorado City, Texas, and the other facility is located in Delhi, Louisiana. Both facilities are located at the junction of several major interstate pipelines, receive various grades of crude oil from our customers. These crude oil terminals are industrial facilities that serve as hubs for the storage, handling and distribution of crude oil and petroleum products
We plan to perform remediation services utilizing our remediation processing centers (“RPCs”) at some point in the future. We are currently constructing a full-capacity RPC at the San Jacinto River & Rail Park in Harris County, Texas. Once complete, we anticipate the strategically located facility to be capable of processing oilfield solid wastes into economic byproducts such as condensate, propane, and butane. This RPC will feature an adjacent, complimentary truck wash facility from which we expect to derive additional revenue.
On October 1, 2024, we acquired Endeavor Crude, LLC, a Texas limited liability company, Equipment Transport, LLC, a Pennsylvania limited liability company, Meridian Equipment Leasing, LLC, a Texas limited liability company, and Silver Fuels Processing, LLC, a Texas limited liability company (collectively with their subsidiaries, the “Endeavor Entities”), making those entities wholly-owned subsidiaries, which gave us operations in several different areas of the midstream oil and gas industry. Our management and Board of Directors is currently reviewing all aspects of the Endeavor Entities’ assets and operations, including the synergies they have with our pre-acquisition operations and the debt related to certain of those assets and operations. In the event our management and Board of Directors determines some of those assets or operations do not fit organizationally with our other assets and operations then we may seek strategic alternatives with those certain assets and/or operations.
5
Deconsolidation
On September 7, 2023 we entered into an Acquisition Agreement (the “Agreement”) to sell 100% of the common stock of VivaSphere, Inc. (“VivaSphere”) and its assets, which were completely impaired by the Company in the fiscal year 2022, to a private buyer. The transaction closed on February 15, 2024. Under the terms of the Agreement, the purchase price of approximately $
Reclassifications
Certain reclassifications have been made to prior years’ purchase price allocation of accrued interest and principal note payable amounts to conform to the 2025 presentation.
Restricted Cash
The Company acquired an accounts receivable factoring agreement on October 1, 2024 in the acquisition of the Endeavor Entities, where the Company is required to maintain a reserve account with the factoring institution which is included as restricted cash.
Long Lived Assets
The Company reviews the carrying values of its long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the expected future cash flow from the use of the asset and its eventual disposition is less than the carrying amount of the asset, an impairment loss is recognized and measured using the fair value of the related asset. For the three months ended March 31, 2025, the Company evaluated, and determined that there was no trigger event, and therefore no impairment incurred. There can be no assurance that market conditions will not change or demand for the Company’s services will continue, which could result in impairment of long-lived assets in the future.
Intangible Assets and Goodwill
We account for intangible assets and goodwill in accordance with ASC 350 “Intangibles-Goodwill and Other” (“ASC 350”). We assess our intangible assets in accordance with ASC 360 “Property, Plant, and Equipment” (“ASC 360”). Impairment testing is required when events occur that indicate an asset group may not be recoverable (“triggering events”). As detailed in ASC 360-10-35-21, the following are examples of such events or changes in circumstances (sometimes referred to as impairment indicators or triggers): (a) A significant decrease in the market price of a long-lived asset (asset group) (b) A significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition. (c) A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator (d) An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group) (e) A current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset group) (f) A current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The term more likely than not refers to a level of likelihood that is more than 50 percent. We performed an analysis and assessed no triggering event has occurred, and no impairment for the three months ended March 31, 2025.
6
Revenue Recognition
For
the three months ended March 31, 2025, our sales consisted of storage services and the sale of crude oil or like products and
transportation logistic services. For the three months ended March 31, 2025 and 2024, disaggregated revenue by customer type was as
follows: $
Related Party Revenues
Our revenue from related parties for the three months ended March 31, 2025 and 2024 was $
We sell crude oil or like products and provide storage services to related parties under long-term contracts. We acquired these contracts in our August 1, 2022 acquisition of Silver Fuels Delhi, LLC and White Claw Colorado City, LLC and our October 1, 2024 acquisition of Silver Fuels Processing, LLC. These contracts were entered into in the normal course of our business. We also provide pipeline throughput and trucking logistics services to related parties under long-term contracts. We acquired these contracts in our October 1, 2024 acquisition of Endeavor Crude, LLC, Meridian Equipment Leasing, LLC. These contracts were entered into in the normal course of our business.
Major Customers and Concentration of Credit Risk
The
Company has two major customers, which account for approximately
Advertising Expense
Advertising costs are expensed as incurred. The Company did not incur advertising expense for the three months ended March 31, 2025 and 2024.
Basic net income (loss) per share is calculated by subtracting any preferred interest distributions from net income (loss), all divided by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net income (loss) per common share is computed by dividing the net income (loss) by the weighted-average number of common share equivalents outstanding for the period determined using the treasury stock method if their effect is dilutive. Potential dilutive instruments have been excluded from the calculation of the weighted-average number of common shares outstanding when the Company is in a net loss position. For the three and three months ended March 31, 2025 and 2024 our potential dilutive instruments were excluded from the weighted-average calculation as they were antidilutive. Potential dilutive instruments as of March 31, 2025 and 2024 include the following: convertible notes payable, which are convertible into approximately and shares of common stock, stock options and vesting or unissued stock awards granted to previous and current employees of and shares of common stock, stock options and vesting or unissued stock awards granted to board members or consultants of and shares of common stock. The Company issued free standing stock options to purchase
7
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates, judgments, and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We believe our critical accounting estimates relate to the following: Recoverability of current and noncurrent assets, stock-based compensation, income taxes, effective interest rates related to long-term debt, lease assets and liabilities, valuation of stock used to acquire assets, derivatives, and fair values of the intangible assets and goodwill.
While our estimates and assumptions are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ from these estimates and assumptions.
Fair Value of Financial Instruments
The Company follows Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures” (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that requires the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact on the Company’s financial position or operating results but did expand certain disclosures.
ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
| Level 1: | Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. |
| Level 2: | Applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. |
| Level 3: | Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. |
The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s (“FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The carrying amounts reported in the consolidated balance sheets for marketable securities are classified as Level 1 assets due to observable quoted prices for identical assets in active markets. The carrying amounts reported in the consolidated balance sheets for cash, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their estimated fair market values based on the short-term maturity of these instruments. The recorded values of notes payable approximate their current fair values because of their nature, rates, and respective maturity dates or durations.
8
Note 2. Going Concern & Liquidity
We have historically suffered net losses and cumulative negative cash flows from operations, and as of March 31, 2025, we had an accumulated deficit of approximately $98 million. As of March 31, 2025 and December 31, 2024, we had a working capital deficit of approximately $
During the three months ended March 31, 2025, subject to available cash flows,
Based on the above, we believe there is substantial doubt about the Company’s ability to continue as a going concern. The Company has prepared the consolidated financial statements on a going concern basis. If the Company encounters unforeseen circumstances that place constraints on its capital resources, management will be required to take various measures to conserve liquidity. Management cannot provide any assurance that the Company will be able to execute its plans to raise additional capital, close its merger and acquisitions, or that its operations or business plan will be profitable.
Note 3. Property and Equipment
The following table sets forth the components of the Company’s property and equipment at March 31, 2025 and December 31, 2024:
| March 31, 2025 |
December 31, 2024 |
|||||||||||||||||||||||
| Gross Carrying Amount |
Accumulated Depreciation |
Net Book Value |
Gross Carrying Amount |
Accumulated Depreciation |
Net Book Value |
|||||||||||||||||||
| Vehicles and trailers | $ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||
| Equipment | ( |
) | ( |
) | ||||||||||||||||||||
| Land | ||||||||||||||||||||||||
| Building | ( |
) | ( |
) | ||||||||||||||||||||
| Crude & NGL terminal and related equipment | ( |
) | ( |
) | ||||||||||||||||||||
| Crude Oil Transfer Stations | ( |
) | ( |
) | ||||||||||||||||||||
| Pipeline and related facilities | ( |
) | ( |
) | ||||||||||||||||||||
| Finance lease- Right of use assets | ( |
) | ( |
) | ||||||||||||||||||||
| Construction in process: | ||||||||||||||||||||||||
| Wash Plant Facilities | ||||||||||||||||||||||||
| Remediation Processing Unit System A | ||||||||||||||||||||||||
| Remediation Processing Unit System B | ||||||||||||||||||||||||
| WCCC Tank Expansion | ||||||||||||||||||||||||
| Total fixed assets | $ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||
For
the three months ending March 31, 2025 and 2024, depreciation expense was $
9
Note 4. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consist of the following:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Accounts payable | $ | $ | ||||||
| Accrued interest (various notes and loans payable) | ||||||||
| Accrued tax penalties and interest | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Accounts payable- related parties | $ | $ | ||||||
| Accrued interest (notes payable)- related parties | ||||||||
| Accounts payable and accrued expenses- related parties | $ | $ | ||||||
| Accrued compensation | $ | $ | ||||||
For the three months ended March 31, 2025, our accounts payable and accrued expenses include unverified billings from a service provider in the amount of $
As of March 31, 2025 and December 31, 2024, our accounts payable are primarily made up of trade payables.
As of March 31, 2025 and December 31, 2024, trade accounts payables in the amount of $
As of March 31, 2025, accrued compensation to current employees includes $
10
Note 5. Loans and Notes Payable
Loans and notes payable and their maturities consist of the following:
Third party debt:
| March 31, 2025 |
December 31, 2024 |
|||||||
| Various promissory notes and convertible notes | $ | $ | ||||||
| Various promissory notes for vehicle financing | ||||||||
| Blue Ridge Bank | ||||||||
| Small Business Administration | ||||||||
| Al Dali International for Gen. Trading & Cont. Co. | ||||||||
| RSF, LLC | ||||||||
| Justin Ellis | ||||||||
| Cedarview Opportunities Master Fund LP | ||||||||
| Business First Bank | ||||||||
| Note payable to Pilot OFS Holdings, LLC | ||||||||
| Maxus Capital Group, LLC | ||||||||
| Curve Capital, LLC | ||||||||
| Agile Capital Funding, LLC | ||||||||
| JJ Astor & Co. (a) | ||||||||
| Total notes payable | $ | $ | ||||||
| Loans and notes payable, current | $ | $ | ||||||
| Loans and notes payable, long term | $ | $ | ||||||
11
Related party debt:
| March 31, 2025 |
December 31, 2024 |
|||||||
| Jorgan Development, LLC (l) | $ | |||||||
| Ballengee Holdings, LLC (m) | ||||||||
| Tyler Nelson (n) | ||||||||
| Triple T Trading Company LLC | ||||||||
| Waskom, LLC (o) | ||||||||
| Total notes payable- related parties | $ | $ | ||||||
| Loans and notes payable, current- related parties | $ | $ | ||||||
| Loans and notes payable, long term- related parties | $ | $ | ||||||
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total | $ |
| (a) | On March 17, 2025, the Company issued a junior secured convertible promissory note due to J.J. Astor & Co. (the “Lender”), in the principal amount of $6,625,000, in connection with a Loan and Security Agreement entered into by and between the Company, its subsidiaries, and the Lender. The Company received $5,000,000, before deduction of closing fees. The note is payable to the Lender over forty-two equal weekly installments of $157,739, which may be paid in cash or, at the option of the Company once an applicable resale registration statement covering the conversion shares is declared effective by the SEC, in free trading shares of its common stock issued at a twenty percent (20%) discount to the lower of either the previous day’s closing price or the average of the four lowest volume-weighted average prices during the prior twenty (20) trading days. The note does not bear interest unless an event of default shall occur and is continuing. The Company agreed to issue the Lender 250,000 shares of its common stock as additional consideration for the loan. |
Note 6. Commitments and Contingencies
On February 11, 2025, we entered into a Consulting Agreement with WSGS, LLC for management consulting services. Under the terms of the Consulting Agreement, we will pay the consultant up to $1.3 million per year, payable in registered shares of our common stock under our 2023 Equity Incentive Plan. The Consulting Agreement is for an initial term of one year, with the option for a second year. The principal of WSGS, LLC is also a former officer and director of Empire Diversified Energy, Inc., a Delaware corporation, that we entered into an Agreement and Plan of Merger with on February 26, 2024, but has not closed, and E-Starts Money Co., a Delaware corporation, which is an investor in our common stock.
On February 10, 2025, we entered into a Side Letter related to our Executive Employment Agreement with our Chief Financial Officer, and dated June 13, 2024 and the Promissory Note issued to Mr. Nelson dated June 13, 2024, under which we amended and clarified Mr. Nelson’s Employment Agreement and the Promissory Note to (i) clarify that effective October 1, 2024, Mr. Nelson’s Employment Agreement is with Vivakor Administration, LLC with all material obligations guaranteed by us, (ii) confirming the Promissory Note is still our primary obligation; (iii) confirming the payment obligations of the company are triggered but not just fund raising by the company but also fundraising by our subsidiaries, that the maturity date under the Promissory Note is extended until June 30, 2025, and that a 5% fee will be assessed on the outstanding principal and interest due under the Promissory Note as of December 31, 2024 as a result of the Promissory Note not being paid by December 31, 2024, and (iv) to clarify that no taxable event will occur related to amounts due under the Promissory Note until those amounts are actually paid by the Company to Mr. Nelson.
12
On February 10, 2025, we entered into an Amendment No. 1 to our Employment Agreement with Mr. Les Patterson, our Vice President, Operations & Construction. Mr. Patterson’s Employment Agreement misstated Mr. Patterson’s annual equity compensation, which was agreed to be annual equity compensation equal to not less than $100,000 to be paid in equal quarterly installments of $25,000 based on a valuation formula set forth in the Employment Agreement, but was mistakenly drafted as annual equity compensation equal to not less than $25,000 to be paid in equal quarterly installments based on a valuation formula set forth in the Employment Agreement. As a result of the Amendment No. 1 to the Employment Agreement we issued Mr. Patterson 74,701 additional shares of our common stock, which is valued at $75,000 based on the valuation formula in Mr. Patterson’s Employment Agreement. These shares were issued unrestricted under the Company’s 2023 Equity and Incentive Plan as registered on Form S-8.
On February 10, 2025, we entered into an Employment
Agreement with
Stock Options & Awards
Generally accepted accounting principles require share-based payments to employees, including grants of employee stock options, warrants, and common stock to be recognized in the income statement based on their fair values at the date of grant, net of estimated forfeitures.
The Company has granted stock-based compensation to employees, including stock options and stock awards in conjunction with our Board of Director and executive employment agreements, including stock awards and bonuses that are prorated or vest.
In 2025, we issued additional stock awards to
our Chief Executive Officer, of shares
of our common stock (net of tax withholdings) under the terms of his employment agreement for his services rendered from October 28,
2024 to January 27, 2025. Based on the renewal of the CEO’s employment agreement, we owe Mr. Ballengee 688,891 shares of
Common Stock for his employment period beginning October 28, 2024 through October 27, 2025, to be paid in three equal quarterly
installments of 172,222 shares of Common Stock, and one installment of 172,225 shares (prior to tax withholdings). Under our
employment agreement with our Chief Financial Officer, he is due bonuses at various times and/or upon certain events happening,
namely an annual cash incentive bonus for December 31, 2024 of $
13
There were no other options or awards granted during the three months ended March 31, 2025. The following table summarizes all stock option activity of the Company for the three months ended March 31, 2025 and 2024:
| Number of Shares |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Life (Years) |
||||||||||
| Outstanding, December 31, 2024 | $ | |||||||||||
| Granted | - | |||||||||||
| Exercised | - | |||||||||||
| Forfeited | - | |||||||||||
| Outstanding, March 31, 2025 | $ | |||||||||||
| Outstanding, December 31, 2023 | $ | |||||||||||
| Granted | - | |||||||||||
| Exercised | - | |||||||||||
| Forfeited | - | |||||||||||
| Outstanding, March 31, 2024 | $ | |||||||||||
| Exercisable, December 31, 2024 | $ | |||||||||||
| Exercisable, March 31, 2025 | $ | |||||||||||
| Exercisable, December 31, 2023 | $ | |||||||||||
| Exercisable, March 31, 2024 | $ | |||||||||||
As of March 31, 2025 and 2024, the aggregate intrinsic value of the Company’s outstanding options was approximately . The aggregate intrinsic value will change based on the fair market value of the Company’s common stock.
Note 8. Income Tax
The Company calculates its quarterly tax provision pursuant to the guidelines in ASC 740 Income Taxes. ASC 740 requires companies to estimate the annual effective tax rate for current year ordinary income. In calculating the effective tax rate, permanent differences between financial reporting and taxable income are factored into the calculation, and temporary differences are not. The estimated annual effective tax rate represents the Company’s estimate of the tax provision in relation to the best estimate of pre-tax ordinary income or loss. The estimated annual effective tax rate is then applied to year-to-date ordinary income or loss to calculate the year-to-date interim tax provision.
The
Company recorded a provision for income taxes of none and $
14
Note 9. Related Party Transactions
On June 15, 2022, we entered into a Membership Interest Purchase Agreement (the “MIPA”), with Jorgan Development, LLC, (“Jorgan”) and JBAH Holdings, LLC, (“JBAH” and, together with Jorgan, the “Sellers”), as the equity holders of Silver Fuels Delhi, LLC (“SFD”) and White Claw Colorado City, LLC (“WCCC”) whereby, the consideration for the membership interests included the notes in the amount of $
In the business combination of acquiring WCCC we also acquired WCCC’s Oil Storage Agreement with White Claw Crude, LLC (“WC Crude”), who shares a beneficiary, James Ballengee, with Jorgan and JBAH. Under this agreement, WC Crude has the right, subject to the payment of service and maintenance fees, to store volumes of crude oil and other liquid hydrocarbons at a certain crude oil terminal operated by WCCC. WC Crude is required to pay $150,000 per month even if the storage space is not used. The agreement expires on December 31, 2031. We have received tank storage revenue of approximately $
In the business combination of acquiring SFD, we acquired an amended Crude Petroleum Supply Agreement with WC Crude (the “Supply Agreement”), under which WC Crude supplies volumes of Crude Petroleum to SFD, which provides for the delivery to SFD a minimum of 1,000 sourced barrels per day, and includes a guarantee that when SFD resells these barrels, if SFD does not make at least a $5.00 per barrel margin on the oil purchased from WC Crude, then WC Crude will pay to SFD the difference between the sales price and $5.00 per barrel. In the event that SFD makes more than $5.00 per barrel, SFD will pay WC Crude a profit-sharing payment in the amount equal to 10% of the excess price over $5.00 per barrel, which amount will be multiplied by the number of barrels associated with the sale. The Supply Agreement expires on December 31, 2031. For the three months ended March 31, 2025 and 2024, we made crude oil purchases from WC Crude of $
In the business combination of acquiring SFD and WCCC we also entered into a Shared Services Agreement with Endeavor Crude, LLC (“Endeavor”), who shares a beneficiary, James Ballengee, with Jorgan and JBAH. Under this agreement, we had the right, but not the obligation to use Endeavor for consulting services. Since acquiring Endeavor this contract is eliminated upon consolidation for the three months ended March 31, 2025. For the three months ended March 31, 2024, Endeavor rendered services in the amount of $
We have an existing note payable issued to Triple T, which is owned by Dr. Khalid Bin Jabor Al Thani, the
Upon the Closing of our acquisition of the Endeavor Entities on October 1, 2024, we acquired Trucking Transportation Agreement & Addendum with White Claw Crude, LLC (“WC Crude”), who shares a beneficiary, James Ballengee, with Jorgan and JBAH. Under this agreement, WC Crude must, through its own operations or source for the Company, a minimum volume of 75,000 barrels of product per day for our trucking logistics services. The agreement expires on December 31, 2034. For the three months ended March 31, 2025, we realized related party trucking revenue related to this agreement of $
15
Upon the Closing of our acquisition of the Endeavor
Entities on October 1, 2024, we acquired a Station Throughput Agreement with Posse Wasson, LLC (Posse Monroe, LLC) (“Posse”),
who shares a beneficiary, James Ballengee, with Jorgan and JBAH. Under this agreement, Possee must source for the Company, a minimum volume
of 230,000 barrels per month through our storage facility at $0.275 per barrel, guaranteeing $759,000 of throughput revenue on an annual
basis. The agreement expires on December 31, 2034. For the three months ended March 31, 2025, we realized revenue related to this
agreement of $
Upon the Closing of our acquisition of the Endeavor
Entities on October 1, 2024, we acquired a Station Throughput Agreement with WC Crude, who shares a beneficiary, James Ballengee, with
Jorgan and JBAH. Under this agreement, WC Crude must source for the Company, a minimum volume of 200,000 barrels per month through our storage
Omega Gathering Pipeline at $1.00 per barrel, guaranteeing $2,400,000 of throughput revenue on an annual basis. The agreement expires
on December 31, 2034. For the three months ended March 31, 2025, we realized revenue related to this agreement of $
Note 10. Segments
The Company has two reportable operating segments, which consist of trucking logistics services and terminaling and storage product and services, and uses segment income/(loss) from operations to assess performance against forecasted results and allocate resources to its segments. Segment income/(loss) from operations is determined on the same basis as consolidated income/(loss) from operations presented in the Company’s consolidated statements of operations.
For information purposes, we have reported separately “Corporate and Other”, which is not determined to be an operating segment, but allows for analysis of non-operating entities and shared services and personnel that support both of the operating segments. Corporate and Other contains expenses for the corporate entity and non-operating entities, such as corporate overhead payroll expenses, stock-based compensation, corporate legal and audit expenses, impairment expense not related to operating segments, interest expense from loans at the corporate level, and amortization of intangible assets held at corporate and non-operating entities.
16
Our chief operating decision maker (CODM) is our Chief Executive Officer, James Ballengee. The CODM uses segment income/(loss) from operations before income taxes for purposes of allocating resources and evaluating financial performance predominantly in the annual budget and forecasting process. The CODM considers budget-to-actual variances on a quarterly basis using the segment income/(loss) before taxes measure when making decisions about allocating capital and personnel to the segments. The CODM does not review assets in evaluating the results of the operating segments, and therefore, such information is not presented. Segment revenue, significant segment expenses, income/(loss) from operations, other income/(expense) and income/(loss) before income tax for the three months ended March 31, 2025 are as follows:
Three Months Ended March 31, 2025
| Transportation Logistics Segment |
Terminaling and Storage Segment |
Corporate and other |
Total |
|||||||||||||
| Revenues | $ | $ | $ | |||||||||||||
| Revenues- related party | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | $ | |||||||||||||||
| Amortization and depreciation | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other income (expense): | ||||||||||||||||
| Unrealized gain (loss) on marketable securities | ||||||||||||||||
| Loss on disposition of asset | ( |
) | ( |
) | ||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( |
) | ( |
) | ( |
) | ||||||||||
| Interest expense- related parties | ( |
) | ( |
) | ||||||||||||
| Other income | ||||||||||||||||
| Total other income (expense) | ( |
) | ( |
) | ||||||||||||
| Loss before provision for income taxes | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Consolidated net loss | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Less: Net loss attributable to noncontrolling interests | ( |
) | ( |
) | ||||||||||||
| Net loss attributable to Vivakor, Inc. | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
17
Note 11. Subsequent Events
The Company has evaluated subsequent events through the date the financial statements were available to issue.
On April 9, 2025, a Side Letter (the “Cedarview Side Letter”) with Cedarview Capital Management LLC (“Cedarview”) went effective which amended the terms of that certain Loan and Security Agreement we issued to Cedarview dated October 31, 2024 (the “Cedarview Loan”).
Between May 14, 2025 and May 19, 2025, we issued convertible promissory notes (the “Notes”), to several accredited investors
(the “Holders”), in the aggregate principal amount of $575,000 in connection with a Securities Purchase Agreement entered
into by and between the Company and the Holders (the “SPA”).
On May 16, 2025, our subsidiary, Meridian Equipment Leasing, extended two lending agreements with Maxus Capital Gorup, LLC, which had an aggregate principal balance of $4.8 million and a maturity of May 2025 to November 2025.
On May 20, 2025,
On May 20, 2025
On May 20, 2025,
This summary is not a complete description of all of the terms of the SPA and the Notes and are qualified in their entirety by reference to the full text of the SPA and the Notes, forms of which are filed as Exhibits 10.1 and 10.2, respectively to our Current Report on Form 8-K filed with the Commission on May 20, 2025, which are incorporated by reference into this disclosure.
18
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) that reflect management’s current views with respect to future events and financial performance. These statements are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by the Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used herein, the words “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating to the Company’s business, industry, and the Company’s operations and results of operations. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.
Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report. The forward-looking statements made in this report are based only on events or information as of the date on which the statements are made in this report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this report and the documents we refer to in this report and have filed as exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or performance. Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time except as required by law. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions.
19
As used in this Quarterly Report on Form 10-Q and unless otherwise indicated, the terms “Company,” “we,” “us,” and “our” refer to Vivakor, Inc., its wholly owned and majority-owned active subsidiaries, or joint ventures (collectively, the “Company”). Intercompany balances and transactions between consolidated entities are eliminated. We have the following direct and indirect wholly-owned or majority-owned active subsidiaries: Endeavor Crude, LLC, a Texas limited liability company (since October 1, 2024), and Silver Fuels Processing, LLC, a Texas limited liability company (since October 1, 2024), Meridian Equipment Leasing, LLC, a Texas limited liability company (since October 1, 2024), which owns CPE Gathering Midcon, LLC, a Delaware limited liability company, Equipment Transport, LLC, a Pennsylvania limited liability company (since October 1, 2024), which owns ET EmployeeCo, LLC, a Pennsylvania limited liability company, Silver Fuels Delhi, LLC, a Louisiana limited liability company, White Claw Colorado City, LLC, a Texas limited liability company, Vivaventures Remediation Corp., a Texas corporation, Vivaventures Management Company, Inc., a Nevada corporation, Vivaventures Oil Sands, Inc., a Utah corporation, Vivakor Supply & Trading, LLC, a Texas limited liability company, Vivakor Administration, LLC, a Texas limited liability company, Vivakor Midstream, LLC, a Texas limited liability company, Vivakor Operating, LLC, a Texas limited liability company, Vivakor Transportation, LLC, a Texas limited liability company, and VM Facilities, LLC, a Texas limited liability company. We have a 99.95% ownership interest in VivaVentures Energy Group, Inc., a Nevada Corporation; the 0.05% minority interest in VivaVentures Energy Group, Inc. is held by a private investor unaffiliated with us. We also have an approximate 49% ownership interest in Vivakor Middle East Limited Liability Company, a Qatar limited liability company. Vivakor manages and consolidates RPC Design and Manufacturing LLC, which includes a non-controlling interest investment from VivaOpportunity Fund, LLC, which is also managed by VivaVentures Management Company, Inc.
Business Overview
Vivakor, Inc. (“Vivakor” or the “Company”) is a socially responsible operator, acquirer and developer of technologies and assets in the oil and gas industry, as well as related environmental solutions. Currently, our efforts are primarily focused on operating two main segments: (i) transportation logistics services and (ii) terminaling and storage facility product and services related to oil and gas production.
Our transportation and facilities services primarily consist of trucking crude oil and produced water and transportation and terminaling services of crude oil via the Omega Gathering Pipeline. Our trucking services are centered in the Permian and Eagle Ford Basins. We utilize our trucking fleet to transport those products to a fully-integrated network of facilities where we blend various grades of crude oil grades of crude oil, and reuse or dispose of produced water.
Our terminaling and storage product and services primary consist of two operational major crude oil terminaling facilities. One is located in Colorado City, Texas, and the other facility is located in Delhi, Louisiana. Both facilities are located at the junction of several major interstate pipelines, receive various grades of crude oil from our customers. These crude oil terminals are industrial facilities that serve as hubs for the storage, handling and distribution of crude oil and petroleum products
We plan to perform remediation services utilizing our remediation processing centers (“RPCs”) at some point in the future. We are currently constructing a full-capacity RPC at the San Jacinto River & Rail Park in Harris County, Texas. Once complete, we anticipate the strategically located facility to be capable of processing oilfield solid wastes into economic byproducts such as condensate, propane, and butane. This RPC will feature an adjacent, complimentary truck wash facility from which we expect to derive additional revenue.
On October 1, 2024, we acquired Endeavor Crude, LLC, a Texas limited liability company, Equipment Transport, LLC, a Pennsylvania limited liability company, Meridian Equipment Leasing, LLC, a Texas limited liability company, and Silver Fuels Processing, LLC, a Texas limited liability company (collectively with their subsidiaries, the “Endeavor Entities”), making those entities wholly-owned subsidiaries, which gave us operations in several different areas of the midstream oil and gas industry. Our management and Board of Directors is currently reviewing all aspects of the Endeavor Entities’ assets and operations, including the synergies they have with our pre-acquisition operations and the debt related to certain of those assets and operations. In the event our management and Board of Directors determines some of those assets or operations do not fit organizationally with our other assets and operations then we may seek strategic alternatives with those certain assets and/or operations.
Reclassifications
Certain reclassifications may have been made to prior years’ amounts to conform to the 2025 presentation, including the purchase price allocation of accrued interest and principal note payable amounts to conform to the 2025 presentation.
20
Recent Developments
On February 11, 2025, we entered into a Consulting Agreement with WSGS, LLC for management consulting services. Under the terms of the Consulting Agreement, we will pay the consultant up to $1.3 million per year, payable in registered shares of our common stock under our 2023 Equity Incentive Plan. The Consulting Agreement is for an initial term of one year, with the option for a second year. The principal of WSGS, LLC is also a former officer and director of Empire Diversified Energy, Inc., a Delaware corporation, that we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with on February 26, 2024, but has not closed, and E-Starts Money Co., a Delaware corporation, which is an investor in our common stock.
On February 10, 2025, we entered into a Side Letter related to our Executive Employment Agreement with Tyler Nelson, a Director and our Chief Financial Officer, and dated June 13, 2024 and the Promissory Note issued to Mr. Nelson dated June 13, 2024, under which we amended and clarified Mr. Nelson’s Employment Agreement and the Promissory Note to (i) clarify that effective October 1, 2024, Mr. Nelson’s Employment Agreement is with Vivakor Administration, LLC with all material obligations guaranteed by us, (ii) confirming the Promissory Note is still our primary obligation; (iii) confirming the payment obligations of the company are triggered but not just fund raising by the company but also fundraising by our subsidiaries, that the maturity date under the Promissory Note is extended until June 30, 2025, and that a 5% fee will be assessed on the outstanding principal and interest due under the Promissory Note as of December 31, 2024 as a result of the Promissory Note not being paid by December 31, 2024, and (iv) to clarify that no taxable event will occur related to amounts due under the Promissory Note until those amounts are actually paid by the Company to Mr. Nelson.
On February 10, 2025, we entered into an Amendment No. 1 to our Employment Agreement with Mr. Les Patterson, our Vice President, Operations & Construction. Mr. Patterson’s Employment Agreement misstated Mr. Patterson’s annual equity compensation, which was agreed to be annual equity compensation equal to not less than $100,000 to be paid in equal quarterly installments of $25,000 based on a valuation formula set forth in the Employment Agreement, but was mistakenly drafted as annual equity compensation equal to not less than $25,000 to be paid in equal quarterly installments based on a valuation formula set forth in the Employment Agreement. As a result of the Amendment No. 1 to the Employment Agreement we issued Mr. Patterson 74,701 additional shares of our common stock, which is valued at $75,000 based on the valuation formula in Mr. Patterson’s Employment Agreement. These shares were issued unrestricted under the Company’s 2023 Equity and Incentive Plan as registered on Form S-8.
On February 10, 2025, we entered into an Employment Agreement with Andre Johnson to be our Vice President, Human Resources As part of Mr. Johnson’s compensation we agreed to issue him 302,297 shares of our common stock as a signing bonus, as well as $75,000 worth of our common stock annually, paid in equal quarterly installments. These shares are due to be issued unrestricted under the Company’s 2023 Equity and Incentive Plan as registered on Form S-8.
On March 17, 2025, the Company issued a junior secured convertible promissory note (the “Note”) due as described below, to J.J. Astor & Co. (the “Lender”), in the principal amount of $6,625,000 (the “Principal Amount”), in connection with a Loan and Security Agreement entered into by and between the Company, its subsidiaries, and the Lender (the “Agreement”). The Company received $5,000,000, before deduction of closing fees (the “Loan”). The Note is payable to the Lender over forty-two equal weekly installments of $157,739, which may be paid in cash or, at the option of the Company once an applicable resale registration statement covering the conversion shares is declared effective by the SEC, in free trading shares of its common stock issued at a twenty percent (20%) discount to the lower of either the previous day’s closing price or the average of the four lowest volume-weighted average prices during the prior twenty (20) trading days. The Note does not bear interest unless an event of default shall occur and is continuing. 0054he Company agreed to issue the Lender 250,000 shares of its common stock as additional consideration for the loan (the “Commitment Shares”)
Results of Consolidated Operations for the Three Months Ended March 31, 2025 and 2024
21
Revenue
For the three months ended March 31, 2025 and 2024 we realized revenues of $37,340,291 and $16,021,391, respectively, representing an increase of $21,318,900 or 133.07%. The increase in revenue is primarily attributed to the sales of logistics and terminaling realized through the operations of our newly acquired Endeavor Entities’ businesses, which were acquired through our business combination, which closed on October 1, 2024.
Cost of Revenue
For the three months ended March 31, 2025 and 2024, our cost of revenues consisted primarily of costs associated with selling oil and natural gas liquid as well as the operations from our newly acquired businesses in logistics, which was acquired through our business combination which closed on October 1, 2024.
For the three months ended March 31, 2025 and 2024, costs of revenue were $32,581,857 and $14,953,254, respectively, representing an increase of $17,628,603 or 117.89%. The increase in the cost of revenue is primarily attributed to the cost of goods sold for our logistics and terminaling realized through the operations from our newly acquired Endeavor Entities’ businesses, which were acquired through our business combination, which closed on October 1, 2024.
Gross Profit and Gross Margin
For the three months ended March 31, 2025 and 2024 we realized gross profit of $4,758,434 and $1,068,137, respectively, representing an increase of $3,690,297 or 345.49%. The gross profit increased in proportion to the revenue and costs of revenue related to the purchase and sale of our oil and natural gas liquid products.
Operating Expenses
For the three months ended March 31, 2025 and 2024, we realized operating expenses of $11,200,915 and $2,685,059, which represents an increase of $8,515,856, or 317.16%. Our operating expenses increased due to the operations from our newly acquired Endeavor Entities’ businesses, which were acquired through our business combination, which closed on October 1, 2024.
Interest Expense
For the three months ended March 31, 2025 and 2024, we realized total interest expense of $1,184,198 and $444,040, which represents an increase of $740,158, or 154.72%. The increase in interest expense is mainly attributable to the net effect of the accrued interest on newly acquired debt from the close of the acquisition of the Endeavor Entities on October 1, 2024, and the amendment of our note issued as consideration in the 2022 MIPA approved by the shareholders on November 10, 2023. As the amendment was accounted for as a troubled debt restructuring under ASC 470 – Debt (“ASC 470”), the note was thus written to the amount of the undiscounted future cash flows on the note to maturity, and therefore no interest expense is realized for the remainder of the note to maturity.
22
Unrealized Gain/Loss on Marketable Securities
For the three months ended March 31, 2025 and 2024, we reported an unrealized gain of $1,652,754 and an unrealized loss of $82,638, which represents an increase of $1,735,392, or 2,099.99%. Our marketable securities were considered to be traded on an active market and were accounted for at a fair value based on the quoted prices in the active markets resulting in aggregate unrealized gains or losses as noted above.
Segment Operating Results for the Three Months Ended March 31, 2025 and 2024
Operating Results of our Terminaling and Storage Segment:
| 2025 | 2024 | Change ($) | Change (%) | |||||||||||||
| Revenues | $ | 21,826,502 | $ | 12,913,165 | $ | 8,913,336 | 69.03 | % | ||||||||
| Revenues-related party | 2,037,534 | 3,108,226 | (1,070,691 | ) | (34.45 | )% | ||||||||||
| Total revenues | 23,864,036 | 16,021,391 | 7,842,645 | 48.95 | % | |||||||||||
| Cost of revenues | 22,815,012 | 14,953,254 | 7,861,758 | 52.58 | % | |||||||||||
| Gross profit | 1,049,024 | 1,068,137 | (19,113 | ) | (1.79 | )% | ||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | 234,692 | 232,954 | 1,738 | 0.75 | % | |||||||||||
| Amortization and depreciation | 844,826 | 742,509 | 102,317 | 13.78 | % | |||||||||||
| Total operating expenses | 1,079,518 | 975,463 | 104,055 | 10.67 | % | |||||||||||
| Loss from operations | (30,494 | ) | 92,674 | (123,168 | ) | (132.90 | )% | |||||||||
| Interest expense | - | (125,001 | ) | 125,001 | (100.00 | )% | ||||||||||
| Loss before provision for income taxes | $ | (30,494 | ) | $ | (32,327 | ) | $ | 1,833 | (5.67 | )% | ||||||
Revenue
The increase in revenue is primarily attributed to the net effect of our buy-sell agreements of crude petroleum products through the Enbridge North Dakota pipeline, which contracts we entered into in November 2024, where we realized revenue from these contacts in the amount of $13,269,810 for the three months ended March 31, 2025, and decreased volumes sold through our Silver Fuels Delhi facility as we continue to renegotiate our agreements with Exxon Mobile Corporation, who purchased the Denbury, Inc. facility that is attached to our pipeline facility and purchases our product from the Silver Fuels Delhi facility.
Cost of Revenue
The increase in the cost of revenue is primarily attributed to the net effect of our buy-sell agreements of crude petroleum products through the Enbridge North Dakota pipeline, which contracts we entered into in November 2024, where we realized costs of revenue from these contacts in the amount of $13,243,426 for the three months ended March 31, 2025, and decreased volumes sold through our Silver Fuels Delhi facility as we continue to renegotiate our agreements with Exxon Mobile Corporation, who purchased the Denbury, Inc. facility that is attached to our pipeline facility and purchases our product from the Silver Fuels Delhi facility.
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Operating Results of our Transportation Logistics Segment:
| 2025 | 2024 | Change ($) | Change (%) |
|||||||||||||
| Revenues | $ | 10,962,014 | - | $ | 10,962,014 | 100 | % | |||||||||
| Revenues-related party | 2,514,241 | - | 2,514,241 | 100 | % | |||||||||||
| Total revenues | 13,476,255 | - | 13,476,255 | 100 | % | |||||||||||
| Cost of revenues | 9,766,845 | - | 9,766,845 | 100 | % | |||||||||||
| Gross profit | 3,709,410 | - | 3,709,410 | 100 | % | |||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | 2,355,884 | - | 2,355,884 | 100 | % | |||||||||||
| Amortization and depreciation | 4,574,072 | - | 4,574,072 | 100 | % | |||||||||||
| Total operating expenses | 6,929,956 | - | 6,929,956 | 100 | % | |||||||||||
| Loss from operations | (3,220,546 | ) | - | (3,220,546 | ) | 100 | % | |||||||||
| Other income (expense), net | (2,501,627 | ) | - | (2,501,627 | ) | 100 | % | |||||||||
| Loss before provision for income taxes | $ | (5,722,173 | ) | - | $ | (5,722,173 | ) | 100 | % | |||||||
This operating segment in its entirety was acquired from our business combination acquisition of the Endeavor Entities’ businesses, which closed on October 1, 2024.
Operating Results of our Corporate and Other:
For information purposes, we have reported separately “Corporate and Other”, which is not determined to be an operating segment, but allows for analysis of non-operating entities and shared services and personnel that support both of the operating segments. Corporate and Other contains expenses for the corporate entity and non-operating entities, such as corporate overhead payroll expenses, stock-based compensation, corporate legal and audit expenses, impairment expense not related to operating segments, interest expense from loans at the corporate level, and amortization of intangible assets held at corporate and non-operating entities.
| 2025 | 2024 | Change ($) | Change (%) | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing | - | 11,040 | $ | (11,040 | ) | (100.00 | )% | |||||||||
| General and administrative | $ | 2,778,737 | $ | 1,432,012 | 1,346,725 | 94.04 | % | |||||||||
| Amortization and depreciation | 412,704 | 266,544 | 146,160 | 54.84 | % | |||||||||||
| Total operating expenses | 3,191,441 | 1,709,596 | 1,481,845 | 86.68 | % | |||||||||||
| Loss from operations | (3,191,441 | ) | (1,709,596 | ) | (1,481,845 | ) | 86.68 | % | ||||||||
| Other income (expense): | ||||||||||||||||
| Unrealized gain (loss) on marketable securities | 1,652,754 | (82,638 | ) | 1,735,392 | 2,099.99 | % | ||||||||||
| Gain on deconsolidation of subsidiary | - | 177,550 | (177,550 | ) | (100.00 | )% | ||||||||||
| Interest income | 2,307 | 2,307 | - | - | % | |||||||||||
| Interest expense | (191,648 | ) | (319,039 | ) | 127,391 | (39.93 | )% | |||||||||
| Interest expense-related parties | (53,121 | ) | - | (53,121 | ) | 100.00 | % | |||||||||
| Other income | - | 54,000 | (54,000 | ) | (100.00 | )% | ||||||||||
| Total other income (expense) | 1,410,292 | (167,820 | ) | 1,578,112 | (940.36 | )% | ||||||||||
| Loss before provision for income taxes | (1,781,149 | ) | (1,877,416 | ) | 96,267 | (5.13 | )% | |||||||||
| Provision for income taxes | - | (800 | ) | 800 | (100.00 | )% | ||||||||||
| Consolidated net loss | (1,781,149 | ) | (1,878,216 | ) | 97,067 | (5.17 | )% | |||||||||
| Less: Net loss attributable to noncontrolling interests | (6,518 | ) | (28,308 | ) | 21,790 | (76.97 | )% | |||||||||
| Net loss attributable to Vivakor, Inc. | $ | (1,774,631 | ) | $ | (1,849,908 | ) | $ | 75,277 | (4.07 | )% | ||||||
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Operating Expenses
Our operating expenses increased due to the acquisition of the workforce of the Endeavor Entities’ businesses, which were acquired through our business combination, which closed on October 1, 2024, including multiple new executives and administrative personnel, and hired additional consultants.
Unrealized Gain/Loss on Marketable Securities
Our marketable securities are considered to be traded on an active market and were accounted for at a fair value based on the quoted prices in the active markets resulting in aggregate unrealized gains as noted above.
Cash flows
The following table sets forth the primary sources and uses of cash and cash equivalents for the three months ended March 31, 2025 and 2024 as presented below:
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net cash (used) in operating activities | $ | (35 | ) | $ | (1,829,679 | ) | ||
| Net cash provided (used) in investing activities | 1,482,000 | (1,028,885 | ) | |||||
| Net cash provided (used) by financing activities | (370,174 | ) | 2,881,530 | |||||
Liquidity and Capital Resources
We have historically suffered net losses and cumulative negative cash flows from operations, and as of March 31, 2025, we had an accumulated deficit of approximately $98 million. As of March 31, 2025 and December 31, 2024, we had a working capital deficit of approximately $99 million and $101.5 million, respectively. As of March 31, 2025, we had cash of approximately $4.8 million, of which $4 million is restricted cash. In addition, we have obligations to pay approximately $64.2 million of debt within one year of the issuance of these financial statements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
As of March 31, 2025 and December 31, 2024, we had cash and cash equivalents of $4,788,783 and $3,676,992, which includes $4 million and $3 million as restricted cash, respectively.
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For the three months ended March 31, 2025 and 2024, our net cash used in operating activities was mainly comprised of net effect of the consolidated net loss of $7,533,816 and $1,910,543, and our depreciation and amortization of $5,831,602 and $1,009,053. For the three months ended March 31, 2025 and 2024, we realized stock-based compensation of $801,423 and $327,985 in lieu of using cash. We also accrued interest expense on loans and notes payable of $1,184,198 and $187,524, an increase in accounts receivable of $11,215,920 and $1,551,490, an increase in prepaid expenses of $2,654,689 and $91,393, and as increase in accounts payable and accrued expenses of $12,983,336 and $426,581.
For the three months ended March 31, 2025 and 2024, our net cash used in investing activities was mainly attributed to our purchase of equipment of none and $1,028,885 related to the manufacturing of our RPC, wash plant facilities, and a White Claw Colorado City site extension on our pipeline and the $1,482,000 of proceeds received from the sale of vehicles and trailers.
Our net cash provided by our financing activities was mainly attributed to the net effect of the following events:
For the three months ended March 31, 2025 and 2024, we received proceeds of $6,263,261 and $3,002,192 related to the issuance of notes and other loans, of which $1,664,150 and none were from related parties. For the three months ended March 31, 2025 and 2024, we paid notes payable and lease liabilities by $6,633,435 and $120,662, of which $1,164,601 and $4,686 were to related parties.
Capitalized interest on construction in process was none and $318,447 for the three months ended March 31, 2025 and 2024. There are no further existing firm obligations; however, we anticipate further construction costs of approximately $1.5 million in connection with our construction of our Texas remediation and wash plant facilities.
Our ability to continue to access capital could be affected adversely by various factors, including general market and other economic conditions, interest rates, the perception of our potential future earnings and cash distributions, any unwillingness on the part of lenders to make loans to us and any deterioration in the financial position of lenders that might make them unable to meet their obligations to us. If we cannot raise capital through public or private debt financings, equity offerings, or other means, our ability to grow our business may be negatively affected. In such case, we may need to suspend site and plant construction or further acquisitions until market conditions improve.
Contractual Obligations
Our contractual obligations as of March 31, 2025 for finance lease liabilities are for certain land, property, plant, and equipment, which leases end in 2025 and 2026. Finance lease obligations as of March 31, 2025 are as follows:
| 2025 | $ | 3,108,270 | ||
| 2026 | 3,109,343 | |||
| Total | $ | 6,217,612 |
Our contractual obligations as of March 31, 2025 for operating lease liabilities are for office warehouse space, land, and truck yards, which leases end in 2026 through 2027, except for a land lease which ends in 2042. Operating lease obligations as of March 31, 2025 are as follows:
| 2025 | $ | 1,967,902 | ||
| 2026 | 1,246,055 | |||
| 2027 | 261,441 | |||
| 2028 | 173,899 | |||
| 2029 | 177,855 | |||
| Thereafter | 2,724,062 | |||
| Total | $ | 6,560,537 |
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Interest Rate and Market Risk
Interest rate risk is the potential for reduced net interest income and other rate-sensitive income resulting from adverse changes in the level of interest rates. We do not have variable interest rate-sensitive income agreements. We do have financing arrangements that were issued on August 1, 2022 as consideration for the business combination and acquisition of SFD and WCCC, in which the three year notes have variable interest rates based on the prime rate, which exposes us to further interest expense if the prime rate increases.
Market Risk - Equity Investments
Market risk is the potential for loss arising from adverse changes in the fair value of fixed-income securities, equity securities, other earning assets, and derivative financial instruments as a result of changes in interest rates or other factors. We own equity securities that are publicly traded. Because the fair value of these securities may fall below the cost at which we acquired them, we are exposed to the possibility of loss. Equity investments are approved, monitored, and evaluated by members of management.
Inflation
Prolonged periods of slow growth, significant inflationary pressures, volatility and disruption in financial markets, could lead to increased costs of doing business. Inflation generally will cause suppliers to increase their rates, and inflation may also increase employee salaries and benefits. In connection with such rate increases, we may or may not be able to increase our pricing to consumers. Inflation could cause both our investment and cost of revenue to increase, thereby lowering our return on investment and depressing our gross margins.
Off Balance Sheet Arrangements
None.
Critical Accounting Policies & Use of Estimates
There have been no material changes to our critical accounting policies and the use of estimates from these disclosures reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on April 15, 2025.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a smaller reporting company, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact there are resource constraints and management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
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Our management, with the participation of our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer), evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Based on management’s evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as a result of the material weaknesses described below, as of March 31, 2025, our disclosure controls and procedures are not designed at a reasonable assurance level and are ineffective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The material weaknesses, which relate to internal control over financial reporting, that were identified are: (1) We did not have enough personnel in our accounting and financial reporting functions. Due to insufficient personnel in our accounting department, we were not able to achieve adequate segregation of duties, and, as a result, we did not have adequate review controls surrounding: (i) our technical accounting matters in our financial reporting process, and (ii) the work of specialists involved in the estimation process. (2) Due to certain relationships with a banking institution and consultants we were not able to achieve adequate controls surrounding the review and dual authorization of certain treasury transactions and fixed assets. (3) We do not always follow certain review and authorization procedures related to corporate governance and the release of information to the public. After failing to adhere to certain corporate governance administrative procedures, we did not achieve adequate review at the executive or independent Board of Director level over certain accounting and risk assessments or the timely reporting of material transactions. We also did not achieve adequate review of certain public reports and disclosures prior to the public disclosure of the information. These control deficiencies, which are pervasive in nature, result in a reasonable possibility that material misstatements of the financial statements will not be prevented or detected on a timely basis. Management believes that the hiring of additional personnel who have the technical expertise and knowledge will result in both proper drafting, review, authorization, recording and reporting of these transactions. Since our assessment as of March 31, 2025, we continue to seek to retain additional experienced personnel, and we are working to retain additional qualified valuation experts that report on their internal controls. We have also implemented further review controls and processes surrounding treasury and fixed assets, and the Audit Committee is reviewing the material weaknesses, and will be making recommendations to the Company on implementing further internal controls to assist the Company to adhere to its corporate review, authorization, and reporting policies.
We will continue to monitor and evaluate the effectiveness of our disclosure controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.
Changes in Internal Control Over Financial Reporting
As noted above, we continue to contract with additional external accounting staff in order to attempt to remediate our material weaknesses. Such changes include multiple additional reviewers of financial information before it is submitted for filing with the SEC. There were no other changes in our internal controls identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 under the Exchange Act that occurred during the three months ended March 31, 2025 that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
SRAX, Inc. v. Vivakor, Inc., et al., Case No. 2023CUB014131 (Sup. Ct. Ventura Cty., Cal.—Sept. 18, 2023)—Plaintiff asserts claims for breach of contract for Defendant’s failure to pay Plaintiff for financial technology services. Plaintiff seeks $28,000 in damages, and 173,972 shares of the Company’s common stock for liquidated damages through the date of the Complaint, with further liquidated damages continuing to accrue. Defendant disputes Plaintiff’s claims on grounds that the services were not rendered in accordance with the contract, and that Plaintiff terminated the contract. The Defendant did not timely file an Answer and the Plaintiff moved for a default judgment. Defendant intends to vigorously defend Plaintiff’s claims. Defendant has not reserved anything for this dispute.
Julie Ridenhour Tonroy, as the Personal Representative of the Estate of John Ridenhour, Deceased, v. Endeavor Crude, LLC, et al., Case No. CJ-2024-40, Blaine Cty. Dist. Ct., Okla.—Sept. 24, 2024)—Plaintiff asserts claims of negligence, respondent superior, and wrongful death of decedent related to a motor vehicle accident involving a driver for Endeavor Crude, LLC while operating motor vehicle equipment owned or leased by Meridian Equipment Leasing, LLC, both subsidiaries of the Company, and presently seeks damages in excess of $1,000,000. The case is set for trial in September 2025. Defendants have not reserved anything for this dispute.
Miguel Angel Munoz, et al., v. Endeavor Crude, LLC, et al., No. D-101-CV-2023-02491 (1st Dist. Ct., Santa Fe Cty., New Mex.—Oct. 11, 2023)—Plaintiff suffered injuries in connection with a motor vehicle accident involving Plaintiff and an Endeavor Crude, LLC (“EC”) driver and tractor-trailer. Plaintiff alleges negligence, respondent superior, negligent entrustment, hiring, retention, supervision and training, and is presently seeking damages in excess of $2,000,000. Defendant is vigorously contesting the case and has not reserved anything for this dispute. Defendant believes certain costs for the defense and prospective liability are covered by applicable insurance policies.
Misty Kitson, Blaine County Assessor v. Meridian Equipment Leasing, LLC, Case No. EQ-2023-57 (Ct. of Tax Review, Okla.—Aug. 2, 2023)—Plaintiff governmental taxing authority seeks appeal of Defendant’s fair cash value valuation of certain personal property in Blaine County, Oklahoma. Plaintiff seeks a property tax valuation far in excess of Defendant’s valuation, and seeks overdue taxes in excess of $1,126,005.22, plus statutory interest, penalties, and fees. The case is in discovery. Defendant is vigorously contesting the case based on the property’s sale valuation as established by written agreement.
Novella Strmiska v. Endeavor Crude, LLC, et al., Case No. 25-01-00013-CVK (81st Dist. Ct., Karnes Cty., Tex.—Jan. 27, 2025)—Plaintiff alleges breach of contract, trespass to land, trespass to chattels, negligence, and unjust enrichment, seeking damages, interest, attorneys’ fees, and costs of court, in relation to a commercial truck yard lease. Defendants intend to vigorously contest the case based on false invoices.
Mikasa McKnight v. Endeavor Crude, LLC, et al., Case No. 202422195 (190th Dist. Ct., Harris Cty., Tex.—Jul. 2, 2024)—Plaintiff alleges negligence, negligent hiring, negligent entrustment, and respondent superior relating to a motor vehicle accident involving a tractor-trailer operated under the motor carrier authority of Defendant EC, and seeks damages in excess of $1,000,000. Defendant EC is contesting the case. The case is set for trial on August 4, 2025. Defendant is vigorously contesting the case, and Defendant’s defense and prospective liability are covered by applicable insurance policies.
Echo Contracting, LLC v. CPE Gathering Midcon, LLC, et al., Case No. CJ-2025-73 (Dist. Ct., Blaine Cty., Okla.—Feb. 14, 2025)—Plaintiff Echo Contracting asserted claims of breach of contract, quantum meriut, and foreclosure of mechanics and materialmen’s lien filed in Blaine County against properties of Defendants. Defendants CPE Gathering Midcon, LLC and Vivakor, Inc. settled such claims pursuant to confidential agreement March 28, 2025, and such claims are pending dismissal and such liens are pending release. Co-Defendant Validus Energy II Midcon, LLC prevailed upon a motion to consolidate Case No. CJ-2025-73 with the proceeding. Defendant Validus Energy II Midcon, LLC has levied claims for declaratory judgment, indemnification, contribution, and unjust enrichment against Defendants CPE Gathering Midcon, LLC and Vivakor, Inc. and seeks damages of $431,652.42, plus attorney’s fees.
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Gudeil Gonzales, et al. v. Equipment Transport, LLC, et al., Case No. 202508937 (165th Dist. Ct., Harris Cty., Tex.—Feb. 7, 2025)—Lead Plaintiff, a former field employee of ET EmployeeCo, LLC f/k/a PWS EmployeeCo, LLC, asserts claims for negligence, gross negligence, and premises liability in connection with a jobsite injury, and seek damages in excess of $1,000,000, plus interest, fees, and costs. Defendant intends to vigorously contest the suit. Defendant ET has not reserved anything for the dispute.
Viva Wealth Fund I, LLC, v. Vivakor, Inc., et al., Case No. 30-2025-04169418-CU-FR-WJC, County of Orange, Superior Ct. of CA—Apr. 1, 2021)—Plaintiff asserts claims of fraud, conversion, unfair competition, intentional interference with contractual relations, breach of contract, breach of covenant of good faith and fair dealing, accounting, declaratory relief, etc. The Complaint alleges that the Plaintiff raised approximately $14 million for Vivakor, Inc. to manufacture and deploy two remediation processing centers and that the defendants allegedly misrepresented the process for Vivakor, Inc. to manufacture and deploy its remediation processing centers. The Complaint seeks unspecified general, special and punitive damages to be awarded according to proof at trial, as well as certain equitable relief. Vivakor, Inc. was served with the Complaint on April 24, 2025. Vivakor, Inc. plans to timely file a responsive pleading and vigorously defend itself against this lawsuit. Vivakor, Inc. has not reserved anything for this dispute.
Vivakor, Inc. v. Al-Dali International General Trading and Contracting Company, et al., Case No. JDFC603 251052410 (Kuwait Court of First Instance, Mar. 25, 2025)—Plaintiff has asserted claims for breach of contract, unjust enrichment, and injunctive relief against Defendants Al-Dali Global Trading and Contracting Company, Al-Sayer Construction General Trading and Contracting Company, and Kuwait Oil Company relating to the placement and operation of oilfield remediation processing equipment in Kuwait.
From time to time, we may become involved in various legal actions that arise in the normal course of business. We intend to defend vigorously against any future claims and litigation. We are not currently involved in any material disputes and do not have any material litigation matters pending.
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ITEM 1A. RISK FACTORS
Our business, financial condition, results of operations, and cash flows may be impacted by a number of factors, many of which are beyond our control, including those set forth in our most recent Annual Report on Form 10-K and in our other filings with the SEC, the occurrence of any one of which could have a material adverse effect on our actual results. There have been no material changes to the Risk Factors previously disclosed in our Annual Report on Form 10-K and our other filings with the SEC.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following sets forth information regarding all unregistered securities sold by us in transactions that were exempt from the requirements of the Securities Act during the three months ended March 31, 2025. Except where noted, all of the securities discussed in this Item 2 were all issued in reliance on the exemption under Section 4(a)(2) of the Securities Act.
On February 26, 2025, we issued Tysadco Partners, LLC 139,535 restricted shares for payment of $180,000 in outstanding invoices.
On February 11, 2025, we issued 15,982 restricted shares related to the issuance of a 2024 convertible note to a non-affiliated individual lender.
On February 11, 2025, we issued 21,552 restricted shares related to the issuance of a 2024 convertible note to Ballengee Holdings, LLC, an entity controlled by James Ballengee, the Company’s Chairman, President, and Chief Executive Officer.
On February 11, 2025, we issued 50,000 restricted shares for a reduction in liabilities related to our consulting agreement with 395 Group, LLC.
We issued the Sellers in the acquisition of the Endeavor Entities transaction an additional 24,291 shares of our common stock on February 26, 2025, and 107,789 shares of our Series A Preferred Stock on April 11, 2025 as part of the consideration for the transaction, all of which are considered to have been issued as of December 31, 2024 for accounting purposes.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
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ITEM 5.
Amendment to Articles of Incorporation
On February 6, 2025, we filed a Certificate of Amendment (the “Amendment to Articles”) to the Company’s Amended and Restated Articles of Incorporation, as amended, with the Secretary of State of the State of Nevada in order to withdraw all previously designated series of preferred stock. As a result, as of February 6, 2025 we had 15,000,000 shares of preferred stock authorized with no shares designated to any series and no shares of preferred stock outstanding.
Consulting Agreement
On February 11, 2025, in order to assist our management in managing our new, combined business operations after the acquisition of the Endeavor Entities, we entered into a Consulting Agreement with WSGS, LLC, which has extensive experience in assisting public companies in the energy sector. Under the terms of the Consulting Agreement, we will pay the consultant up to $1.3M per year, payable in registered shares of our common stock under our 2023 Equity Incentive Plan. The Consulting Agreement is for an initial term of one year, with the option for a second year. The principal of WSGS, LLC is also a former officer and director of Empire Diversified Energy, Inc., a Delaware corporation, that we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with on February 26, 2024, but has not closed, and E-Starts Money Co., a Delaware corporation, which is an investor in our common stock.
Side Letter
On February 10, 2025, we entered into a Side Letter related to our Executive Employment Agreement with Tyler Nelson, a Director and our Chief Financial Officer, and dated June 13, 2024 and the Promissory Note issued to Mr. Nelson dated June 13, 2024, under which we amended and clarified Mr. Nelson’s Employment Agreement and the Promissory Note to (i) clarify that effective October 1, 2024, Mr. Nelson’s Employment Agreement is with Vivakor Administration, LLC with all material obligations guaranteed by us, (ii) confirming the Promissory Note is still our primary obligation; (iii) confirming the payment obligations of the company are triggered but not just fund raising by the company but also fundraising by our subsidiaries, that the maturity date under the Promissory Note is extended until June 30, 2025, and that a 5% fee will be assessed on the outstanding principal and interest due under the Promissory Note as of December 31, 2024 as a result of the Promissory Note not being paid by December 31, 2024, and (iv) to clarify that no taxable event will occur related to amounts due under the Promissory Note until those amounts are actually paid by the Company to Mr. Nelson.
This summary only a brief description of the material terms of, and does not purport to be a complete description of, the rights and obligations of the parties to the agreements in connection with the agreements, and such description is qualified in its entirety by reference to the full text of the agreements and its exhibits, which attached as Exhibits 10.1 and 10.2 to our Current Report on Form 8-K filed with the Commission on February 14, 2025.
Loan and Security Agreement and Issuance of a Junior Secured Convertible Promissory Note
On March 17, 2025, we issued a junior secured convertible promissory note (the “Jr. Note”) due as described below, to J.J. Astor & Co. (the “Lender”), in the principal amount of $6,625,000 (the “Principal Amount”), in connection with a Loan and Security Agreement entered into by and between the Company, its subsidiaries, and the Lender (the “Agreement”). The Company received $5,000,000, before deduction of closing fees (the “Loan”), and will use the net proceeds of the Loan for general working capital purposes and to repay certain indebtedness. The Company received the funds on March 18, 2025.
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The Jr. Note is payable to the Lender over forty-two equal weekly installments of $157,739, which may be paid in cash or, at the option of the Company once an applicable resale registration statement covering the conversion shares is declared effective by the SEC, in free trading shares of its common stock issued at a twenty percent (20%) discount to the lower of either the previous day’s closing price or the average of the four lowest volume-weighted average prices during the prior twenty (20) trading days. The Jr. Note does not bear interest unless an event of default shall occur and is continuing. The Jr. Note is subject to mandatory prepayment upon the receipt of proceeds from identified sales of equity interests in the Company and/or the receipt of certain extraordinary cash payments. The Jr. Note is secured by a junior lien in all assets of the Company and its subsidiaries, subject to exceptions for existing debt covenants of the Company. The Company reserved 21,554,274 shares of its common stock for issuance in connection with a conversion under the Jr. Note and the Company agreed to issue the Lender 250,000 shares of its common stock as additional consideration for the loan (the “Commitment Shares”).
Under the terms of a Registration Rights Agreement (the “RRA”), the Company is obligated to file a resale registration statement with the SEC registering any shares of its common stock issuable under the Note (the “Conversion Shares”) as well as the Commitment Shares by a date which shall be not later than sixty (60) days after closing.
This summary is not a complete description of all of the terms of the Agreement, the Jr. Note, and the RRA and are qualified in their entirety by reference to the full text of the Agreement, the Jr. Note and the RRA, forms of which are filed as Exhibits 10.1, 10.2 and 10.3, respectively to our Current Report on Form 8-K filed with the Commission on March 21, 2025, which are incorporated by reference into this disclosure.
Employment Agreements
On February 10, 2025, we entered into an Amendment No. 1 to our Employment Agreement with Mr. Les Patterson, our Vice President, Operations & Construction. Mr. Patterson’s Employment Agreement misstated Mr. Patterson’s annual equity compensation, which was agreed to be annual equity compensation equal to not less than $100,000 to be paid in equal quarterly installments of $25,000 based on a valuation formula set forth in the Employment Agreement, but was mistakenly drafted as annual equity compensation equal to not less than $25,000 to be paid in equal quarterly installments based on a valuation formula set forth in the Employment Agreement. As a result of the Amendment No. 1 to the Employment Agreement we issued Mr. Patterson 74,701 additional shares of our common stock, which is valued at $75,000 based on the valuation formula in Mr. Patterson’s Employment Agreement. These shares were issued unrestricted under the Company’s 2023 Equity and Incentive Plan as registered on Form S-8.
On February 10, 2025, we entered into an Employment Agreement with Andre Johnson to be our Vice President, Human Resources As part of Mr. Johnson’s compensation we agreed to issue him 302,297 shares of our common stock as a signing bonus, as well as $75,000 worth of our common stock annually, paid in equal quarterly installments. These shares are due to be issued unrestricted under the Company’s 2023 Equity and Incentive Plan as registered on Form S-8.
Additional Debt Financing
Between May 14, 2025 and May 19, 2025, we issued convertible promissory notes (the “Notes”), to several accredited investors (the “Holders”), in the aggregate principal amount of $575,000 in connection with a Securities Purchase Agreement entered into by and between the Company and the Holders (the “SPA”). Under the terms of the SPA and the Notes, we received $500,000, the Notes mature twelve months from the date of issuance, have a 15% original issuance discount, have a one-time ten percent (10%) interest charge applied at the issuance date, and are convertible at eighty percent (80%) of the lower of (a) the closing price of the Company’s common stock as traded on either the Nasdaq or the New York Stock Exchange or the NYSE Amex Exchange (as applicable) on the trading day immediately prior to the date a notice of conversion is submitted in writing to the Company under the Note (each a “Notice Date”), or (b) the average of the four lowest VWAPS over the twenty (20) trading days prior to the applicable Notice Date. In connection with the issuances of the Notes, we will issue the Holders 75,000 shares of our common stock as additional incentive to enter into the SPA and the Notes.
This summary is not a complete description of all of the terms of the SPA and the Notes and are qualified in their entirety by reference to the full text of the SPA and the Notes, forms of which are filed as Exhibits 10.1 and 10.2, respectively to our Current Report on Form 8-K filed with the Commission on May 20, 2025, which are incorporated by reference into this disclosure.
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ITEM 6. EXHIBITS
EXHIBIT INDEX
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| * | Management contract or compensatory plan or arrangement. |
| ** | These exhibits are being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
| VIVAKOR, INC. | ||
| By: | /s/ James Ballengee | |
| James Ballengee | ||
| Chief Executive Officer (Principal Executive Officer) | ||
| Date: | May 20, 2025 | |
| VIVAKOR, INC. | ||
| By: | /s/ Tyler Nelson | |
| Tyler Nelson | ||
| Chief Financial Officer (Principal Financial and Accounting Officer) | ||
| Date: | May 20, 2025 | |
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