Vivakor (VIVK) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Vivakor's H1 2025 revenue grew to $66.4 million, but a $20.1 million net loss and $105.8 million working capital deficit raise going concern doubts Condensed Consolidated Balance Sheets Total assets increased to $244.5 million, but liabilities grew to $146.5 million, worsening the working capital deficit to $105.8 million Condensed Consolidated Balance Sheet Highlights (in USD) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $30,638,393 | $11,974,500 | | Total Assets | $244,539,413 | $241,040,684 | | Total Current Liabilities | $136,429,747 | $111,927,697 | | Total Liabilities | $146,496,229 | $125,922,040 | | Total Stockholders' Equity | $98,043,184 | $115,118,644 | | Working Capital (Deficit) | ($105,791,354) | ($99,953,197) | Condensed Consolidated Statements of Operations Revenue significantly increased, but rising costs and expenses led to a net loss of $20.1 million for the six months ended June 30, 2025 Statement of Operations Summary (in USD) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $29,099,446 | $16,181,122 | $66,439,737 | $32,202,513 | | Gross Profit | $4,579,669 | $1,110,814 | $9,338,103 | $2,178,951 | | Loss from Operations | ($6,776,747) | ($2,852,414) | ($13,219,192) | ($4,469,336) | | Net Loss Attributable to Vivakor, Inc. | ($12,536,370) | ($3,312,998) | ($20,063,632) | ($5,195,233) | | Basic and Diluted Net Loss Per Share | ($0.30) | ($0.12) | ($0.52) | ($0.19) | Condensed Consolidated Statements of Cash Flows Operating cash outflow increased to $7.0 million, while investing activities provided $1.9 million and financing provided $5.1 million Cash Flow Summary for the Six Months Ended June 30 (in USD) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($6,980,336) | ($825,314) | | Net cash provided by (used in) investing activities | $1,860,000 | ($2,176,798) | | Net cash provided by financing activities | $5,108,500 | $2,352,775 | | Net decrease in cash and cash equivalents | ($11,836) | ($649,337) | Notes to Condensed Consolidated Financial Statements Notes detail business segments, accounting policies, going concern issues, debt, related party transactions, and subsequent events - The company operates in two main segments: transportation logistics services and terminaling and storage facility services[17] - On October 1, 2024, the company acquired the "Endeavor Entities," which significantly expanded its operations in the midstream oil and gas industry[21] - There is substantial doubt about the Company's ability to continue as a going concern due to a historical net losses, an accumulated deficit of approximately $112.1 million, a working capital deficit of $105.8 million, and approximately $74 million of debt due within one year[39] - On July 30, 2025, the company sold two subsidiaries, Meridian Equipment Leasing, LLC, and Equipment Transport, LLC, to Jorgan Development, LLC (a related party) for $11.1 million in Series A Convertible Preferred Stock[74] Management's Discussion and Analysis of Financial Condition and Results of Operations Revenue surged due to acquisitions, but increased expenses and interest led to larger net losses and a $105.8 million working capital deficit, raising going concern risks Business Overview Vivakor develops oil and gas technologies, operating in crude oil transportation and terminaling/storage facility services - The company's two main operating segments are (i) crude oil transportation services and (ii) facility services for terminaling and storage of crude oil[83] - On October 1, 2024, Vivakor acquired the Endeavor Entities, expanding its operations in the midstream oil and gas industry[87] - On July 30, 2025, the company sold its water trucking subsidiaries (Meridian Equipment Leasing and Equipment Transport) to Jorgan Development, LLC, an entity controlled by CEO James Ballengee, for $11.1 million in Series A Preferred Stock[88] Results of Operations Revenue significantly increased due to acquisitions, but surging operating and interest expenses led to a wider net loss Results of Operations for the Three Months Ended June 30 (in USD) | Metric | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $29,099,446 | $16,181,122 | 79.8% | | Gross Profit | $4,579,669 | $1,110,814 | 312.3% | | Operating Expenses | $11,356,416 | $3,897,740 | 191.4% | | Interest Expense | $4,383,710 | $479,947 | 813.4% | Results of Operations for the Six Months Ended June 30 (in USD) | Metric | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $66,439,737 | $32,202,513 | 106.3% | | Gross Profit | $9,338,103 | $2,178,951 | 328.6% | | Operating Expenses | $22,557,295 | $6,648,287 | 239.3% | | Interest Expense | $5,567,908 | $923,987 | 502.6% | Liquidity and Capital Resources Significant liquidity challenges include a $112.1 million accumulated deficit, $105.8 million working capital deficit, and $74 million debt due within one year - As of June 30, 2025, the company had an accumulated deficit of approximately $112.1 million and a working capital deficit of $105.8 million[135] - The company has debt obligations of approximately $74 million due within one year of the financial statement issuance date[135] - Cash and cash equivalents totaled approximately $3.7 million as of June 30, 2025, with $3.2 million of that amount being restricted cash[135] Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Vivakor is not required to provide market risk disclosures - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[148] Controls and Procedures Management concluded disclosure controls and procedures were ineffective due to material weaknesses in internal control over financial reporting - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were ineffective[151] - Material weaknesses identified include: (1) insufficient personnel in accounting and financial reporting functions, leading to inadequate segregation of duties and review controls; (2) inadequate controls over treasury transactions and fixed assets; and (3) failure to follow review and authorization procedures for corporate governance and public information release[151] PART II. OTHER INFORMATION Legal Proceedings The company is involved in numerous legal proceedings, including a $15 million breach of contract claim in Kuwait and multiple U.S. lawsuits - The company has filed a lawsuit in Kuwait against Al-Dali International and others, seeking over $15 million in damages for breach of contract related to oilfield remediation equipment[155] - Subsidiary Endeavor Crude, LLC is a defendant in multiple negligence and wrongful death lawsuits related to motor vehicle accidents, with damages sought in excess of $1 million in each case[163][166] - The company is contesting a property tax valuation in Oklahoma where the taxing authority seeks a valuation of $27.5 million versus the company's valuation of $4.0 million, resulting in a dispute over $1.1 million in overdue taxes[167] - A former CFO, Tyler Nelson, has filed a lawsuit alleging breach of contract and failure to pay wages, seeking over $2.1 million in damages[174] Risk Factors No material changes to the Risk Factors have occurred since the last Annual Report on Form 10-K - No material changes to the Risk Factors have occurred since the last Annual Report on Form 10-K[177] Unregistered Sales of Equity Securities and Use of Proceeds The company issued various unregistered equity securities, including common stock for dividends and convertible promissory notes for financing - On April 11, 2025, issued 1,298,453 shares of restricted common stock for four months of dividends to holders of Series A Preferred Stock[181] - Between May and June 2025, issued convertible promissory notes with an aggregate principal amount of over $5.8 million to accredited investors, receiving over $4.8 million in cash proceeds before fees[182][183][184] Other Information This section details significant corporate actions and subsequent events, including new financing agreements and subsidiary sales - On March 17, 2025, the company entered into a loan agreement for $5 million in proceeds, issuing a junior secured convertible promissory note with a principal amount of $6.625 million[187] - On July 9, 2025, the company entered into a forbearance agreement and an additional loan agreement, receiving net proceeds of $971,026 and restructuring existing debt[191][192] - On July 30, 2025, the company sold its subsidiaries Meridian Equipment Leasing and Equipment Transport to Jorgan Development, LLC, an entity controlled by the CEO, for $11.1 million in Series A Preferred Stock[195] Exhibits This section provides an index of all exhibits filed with the Form 10-Q, including agreements and certifications