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Vivakor (VIVK) - 2024 Q2 - Quarterly Report
VIVKVivakor (VIVK)2024-08-16 21:30

Financial Performance - For the three months ended June 30, 2024, the company reported revenues of 16,181,122,anincreaseof16,181,122, an increase of 2,590,484 or 19.06% compared to the same period in 2023[134]. - The cost of revenues for the three months ended June 30, 2024, was 15,070,308,representinganincreaseof15,070,308, representing an increase of 2,694,434 or 21.77% from 12,375,874in2023[135].−GrossprofitforthethreemonthsendedJune30,2024,was12,375,874 in 2023[135]. - Gross profit for the three months ended June 30, 2024, was 1,110,814, a decrease of 103,950or8.56103,950 or 8.56% compared to 1,214,764 in 2023[137]. - Operating expenses for the three months ended June 30, 2024, were 3,963,228,anincreaseof3,963,228, an increase of 1,910,530 or 93.07% from 2,052,698in2023[138].−InterestexpenseforthethreemonthsendedJune30,2024,decreasedto2,052,698 in 2023[138]. - Interest expense for the three months ended June 30, 2024, decreased to 479,947, a reduction of 783,541or97.41783,541 or 97.41% compared to 1,263,488 in 2023[139]. - The company reported an unrealized loss of 82,638forthesixmonthsendedJune30,2024,comparedtoanunrealizedlossof82,638 for the six months ended June 30, 2024, compared to an unrealized loss of 330,551 in 2023, representing an increase of 247,193or75.00247,193 or 75.00%[140]. - As of June 30, 2024, the company had an accumulated deficit of approximately 71.1 million and a working capital deficit of approximately 38million[144].−Thecompanyhadcashandcashequivalentsof38 million[144]. - The company had cash and cash equivalents of 94,970 as of June 30, 2024, down from 744,307asofDecember31,2023[144].−ThenetcashusedinoperatingactivitiesforthesixmonthsendedJune30,2024,was744,307 as of December 31, 2023[144]. - The net cash used in operating activities for the six months ended June 30, 2024, was (825,314), an improvement from (1,296,778)in2023[142].−ThenetcashusedinoperatingactivitiesforthethreemonthsendedJune30,2024,was(1,296,778) in 2023[142]. - The net cash used in operating activities for the three months ended June 30, 2024, was 5,243,781, compared to 4,739,198forthesameperiodin2023[146].−Interestexpenseonloansandnotespayablewas4,739,198 for the same period in 2023[146]. - Interest expense on loans and notes payable was 313,103 for the six months ended June 30, 2024, down from 1,588,689in2023[146].MergersandAcquisitions−ThecompanyhasenteredintoamergeragreementwithEmpireEnergyAcquisitionCorp.,whichwillbecomeawholly−ownedsubsidiaryuponclosing[81].−ThecompanyenteredintoamergeragreementwithEmpireEnergyAcquisitionCorp.andEmpireDiversifiedEnergy,Inc.,withatotalconsiderationof1,588,689 in 2023[146]. Mergers and Acquisitions - The company has entered into a merger agreement with Empire Energy Acquisition Corp., which will become a wholly-owned subsidiary upon closing[81]. - The company entered into a merger agreement with Empire Energy Acquisition Corp. and Empire Diversified Energy, Inc., with a total consideration of 67,200,000 in Parent common stock[88][93]. - The merger agreement requires Empire to have a minimum of 2,500,000inunrestrictednetcashatclosing[95].−ThecompanyplanstofilearegistrationstatementwiththeSECforthesharestobeissuedtoEmpirestockholdersfollowingthemerger[97].−Theboardofdirectorswillconsistofsevenmemberspost−merger,includingthreechosenbyEmpireandtwobytheParent[99].−TheParent′sobligationstoconsummatethemergerarecontingentuponvariousconditions,includingtheapprovalofthemergerbystockholders[100].−TheCompanyenteredintoaMembershipInterestPurchaseAgreementtoacquireEndeavorCrude,LLCandrelatedentitiesforatotalpurchasepriceof2,500,000 in unrestricted net cash at closing[95]. - The company plans to file a registration statement with the SEC for the shares to be issued to Empire stockholders following the merger[97]. - The board of directors will consist of seven members post-merger, including three chosen by Empire and two by the Parent[99]. - The Parent's obligations to consummate the merger are contingent upon various conditions, including the approval of the merger by stockholders[100]. - The Company entered into a Membership Interest Purchase Agreement to acquire Endeavor Crude, LLC and related entities for a total purchase price of 120 million[116]. - The purchase price will be paid in a combination of common stock and Series A Preferred Stock, with the Preferred Stock offering a cumulative 6% annual dividend[116]. - The acquisition is subject to a post-closing working capital adjustment based on a target working capital amount of 150,000[118].−IftheEBITDAforthe2024fiscalyearexceeds150,000[118]. - If the EBITDA for the 2024 fiscal year exceeds 12 million, the sellers could receive an earn-out payment of up to 49million[121].−Thetotalpurchaseprice,includingpotentialadjustments,couldrangefrom49 million[121]. - The total purchase price, including potential adjustments, could range from 71 million to 169million[121].−TheCompanywillissuesharesrepresenting19.99169 million[121]. - The Company will issue shares representing 19.99% of its outstanding common stock to the sellers at closing, subject to ownership limitations[117]. - The sellers will enter into 18-month lock-up agreements regarding the common stock consideration received[117]. - The Company is required to file a registration statement for the resale of shares within 45 days of closing[122]. Financing Activities - The company entered into a financing agreement for approximately 1 million for equipment related to a wash plant in Houston, with expected lease payments of about 58,595permonthoverfouryears[77].−ApromissorynotewasissuedtoBallengeeHoldings,LLCforupto58,595 per month over four years[77]. - A promissory note was issued to Ballengee Holdings, LLC for up to 1,500,000, intended for general working capital and to repay certain indebtedness[79]. - The company issued a promissory note to the Chief Financial Officer for 1,167,750inaccruedsalaryandbonuses,accruinginterestat81,167,750 in accrued salary and bonuses, accruing interest at 8% per annum[85]. - The company granted 917,825 stock options to the Chief Financial Officer at an exercise price of 1.80, fully vested as of June 9, 2024[86]. - A secured promissory note of 3,000,000wasissuedtoCedarviewOpportunitiesMasterFundLP,with3,000,000 was issued to Cedarview Opportunities Master Fund LP, with 250,000 of principal and 220,000ininterestrepaidbyJune30,2024,leavingabalanceof220,000 in interest repaid by June 30, 2024, leaving a balance of 2,750,000[91]. - The company received a loan of 1millionwitha101 million with a 10% interest rate, maturing on December 31, 2024, and secured by 100,000 restricted shares[113]. - The lender converted the outstanding loan amount of 1,048,493 into 903,095 shares of common stock at approximately 1.161pershareinMay2024[113].−ForthesixmonthsendedJune30,2024,thecompanyraisedapproximately1.161 per share in May 2024[113]. - For the six months ended June 30, 2024, the company raised approximately 3.6 million through additional debt financing, following 3millionraisedinfiscalyear2023[145].OperationalActivities−ThecompanyoperatesacrudeoilfacilityinDelhi,Louisiana,sellingupto60,000barrelspermonthunderagreementswithalargeenergycompany[75].−Thecompanyhasa120,000barrelcrudeoilstoragetanknearColoradoCity,Texas,currentlyconnectedtotheLotuspipelinesystem,withplansforfurtherconnections[75].−ThecompanyisfocusingsoilremediationeffortsonprojectsinKuwaitandHouston,Texas,utilizingpatentedprocessestorecoverhydrocarbons[76].−Thecompanyanticipatesfurtherconstructioncostsofapproximately3 million raised in fiscal year 2023[145]. Operational Activities - The company operates a crude oil facility in Delhi, Louisiana, selling up to 60,000 barrels per month under agreements with a large energy company[75]. - The company has a 120,000 barrel crude oil storage tank near Colorado City, Texas, currently connected to the Lotus pipeline system, with plans for further connections[75]. - The company is focusing soil remediation efforts on projects in Kuwait and Houston, Texas, utilizing patented processes to recover hydrocarbons[76]. - The company anticipates further construction costs of approximately 1.5 million for its Texas remediation and wash plant facilities[147]. - The company may need to suspend site and plant construction or further acquisitions if it cannot raise capital through various financing means[148]. - The company has finance lease obligations related to the sale and leaseback of certain assets, with total operating lease obligations amounting to 3,638,810[150].−Thecompanyincurreddepreciationandamortizationexpensesof3,638,810[150]. - The company incurred depreciation and amortization expenses of 1,997,473 for the three months ended June 30, 2024, up from 1,452,387in2023[146].−Capitalizedinterestonconstructioninprocesswas1,452,387 in 2023[146]. - Capitalized interest on construction in process was 656,492 for the six months ended June 30, 2024, compared to 589,775in2023[147].ExecutiveCompensation−ThenewemploymentagreementfortheChiefFinancialOfficerincludesabasesalaryof589,775 in 2023[147]. Executive Compensation - The new employment agreement for the Chief Financial Officer includes a base salary of 450,000 and potential bonuses totaling up to 120% of the base salary[83]. - The company has a performance-based incentive compensation plan for Mr. Knapp, with potential earnings of up to 840,000[87].−Thecompanyhasalock−upperiodof18monthsforthesigninggrantofcommonstocktoMr.Knapp,valuedat840,000[87]. - The company has a lock-up period of 18 months for the signing grant of common stock to Mr. Knapp, valued at 250,000[87]. Accounting Policies - The company has no material changes to its critical accounting policies from the previous fiscal year[155].