Vivakor (US:VIVK)2024-08-16 21:30Financial Performance - For the three months ended June 30, 2024, the company reported revenues of $16,181,122, 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, representing an increase of $2,694,434 or 21.77% from $12,375,874 in 2023[135]. - Gross profit for the three months ended June 30, 2024, was $1,110,814, a decrease of $103,950 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, an increase of $1,910,530 or 93.07% from $2,052,698 in 2023[138]. - Interest expense for the three months ended June 30, 2024, decreased to $479,947, a reduction of $783,541 or 97.41% compared to $1,263,488 in 2023[139]. - The company reported an unrealized loss of $82,638 for the six months ended June 30, 2024, compared to an unrealized loss of $330,551 in 2023, representing an increase of $247,193 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 $38 million[144]. - The company had cash and cash equivalents of $94,970 as of June 30, 2024, down from $744,307 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) in 2023[142]. - The net cash used in operating activities for the three months ended June 30, 2024, was $5,243,781, compared to $4,739,198 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 $1,588,689 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 $2,500,000 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]. - If the EBITDA for the 2024 fiscal year exceeds $12 million, the sellers could receive an earn-out payment of up to $49 million[121]. - The total purchase price, including potential adjustments, could range from $71 million to $169 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 $58,595 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 $1,167,750 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 $3,000,000 was issued to Cedarview Opportunities Master Fund LP, with $250,000 of principal and $220,000 in interest repaid by June 30, 2024, leaving a balance of $2,750,000[91]. - The company received a loan of $1 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 $1.161 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 $3 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]. - The company incurred depreciation and amortization expenses of $1,997,473 for the three months ended June 30, 2024, up from $1,452,387 in 2023[146]. - Capitalized interest on construction in process was $656,492 for the six months ended June 30, 2024, compared to $589,775 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]. - 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].