Item 1. Business
Item 1 - Business
Vivakor, Inc. is a socially responsible operator,
acquirer and developer of clean energy technologies and environmental solutions, primarily focused on soil remediation. We specialize
in the remediation of soil and the extraction of hydrocarbons, such as oil, from properties contaminated by or laden with heavy crude
oil and other hydrocarbon-based substances. Our patented process allows us to successfully recover the hydrocarbons which we believe could
then be used to produce asphaltic cement and/or other petroleum-based products.
We are focused on the remediation of contaminated
soil and water resulting from either man-made spills or naturally occurring deposits of oil. Our primary focus has been the remediation
of oil spills resulting from the Iraqi invasion of Kuwait and naturally occurring oil sands deposits in the Uinta basin located in Eastern
Utah. We plan to expand into other markets, both in Utah and globally, where we believe our technology and services will provide a distinct
competitive advantage over our competition.
Our current focus is on the clean-up of greater
than 7% hydrocarbon contaminated soil located in Kuwait as a result of the Iraqi invasion, and naturally occurring oil sands deposits
in Utah. We have deployed two RPC units to date including one unit to Kuwait (for which operations were temporarily suspended due to COVID-19)
and another to Vernal, Utah (which is presently operating). We expect to deploy two additional RCPs to Vernal, Utah and believe that there
may be an opportunity to deploy additional RPCs in Utah as well as to Kuwait and the Middle East.
Our Technologies
We own and/or license a number of technologies
that allow us to effectively operate our remediation and recovery business along with other technologies that provide synergies with our
core business. The description of these various technologies follows.
Hydrocarbon Extraction Technology
In 2015, we acquired and improved technology aimed
at remediating contaminated soil and recovering usable hydrocarbons, which we refer to as RPCs. We presently have two US patents and pending
foreign applications related to our RPCs. Our RPCs each have the potential to clean a minimum of 20 tons of contaminated material per
hour, depending on the oil contamination percentage in the processed material. Each RPC has the capacity to extract on a 24-hour operation
500 tons or more of contaminated material per day. The amount of extracted hydrocarbon recovered depends on the extent to which the material
is contaminated. For example, we estimate that for every 480 tons of contaminated material processed per day that contains at least 10%
oil, we will recover approximately 250 barrels of extracted hydrocarbons. The above example has been calculated as follows: contaminated
material that is 10% oil is comprised of 200 pounds of oil per ton; one gallon of oil weighs 8.44 pounds, resulting in 23.69 gallons of
oil per ton of contaminated material (200/8.44); there are 42 gallons per barrel, resulting in 0.56 barrels of oil per ton of contaminated
material (23.69/42); 20 tons of contaminated material can typically be processed per hour, resulting in 11.2 barrels of oil per hour (0.56*20);
and operations continue 24 hours per day, resulting in 268.8 barrels per day (11.2*24).
We believe our RPCs are
significantly more advanced than other oil remediation technologies or offerings presently available on the market. Our RPCs have successfully
cleaned contaminated soil containing greater than 7% hydrocarbon content, while, to our knowledge, our competitors are limited to projects
containing less than 5% hydrocarbon contamination. We believe our ability to clean soil with higher percentages of hydrocarbon contamination
is a distinctive advantage that will allow us to operate on a global basis in any location that has suffered from oil spills or naturally
occurring oil sands deposits. While our primary focus and mandate will be on the manufacture and deployment of our RPCs, we intend to
continue to develop, acquire or license additional clean energy technologies and environmental solutions that will directly enhance and
expand our current technologies and service offerings.
We have designed our
RPCs to provide an environmentally friendly solution to the remediation of hydrocarbon-contaminated soil, as they do not utilize water.
Our RPCs operate by loading contaminated soil onto a feeder and conveyor system that effectively delivers the material prepares the material
into a fully contained, closed-loop system. Physical separation of the hydrocarbons from the contaminated soil does not utilize water
or steam and is instead accomplished using a proprietary extraction fluid to dissolve the hydrocarbon components.
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In the first stage of the process, hydrocarbon
contaminated soil is mixed with our proprietary solvent which forms a slurry of sand, hydrocarbon and extraction fluid. This slurry moves
from the mixing chamber into a separation chamber where the sand is separated from the hydrocarbon/extraction fluid mix by gravity. The
soil is then dried and transported via a conveyer to a lined pit where extensive testing is performed to ensure the hydrocarbons have
been properly removed. Meanwhile, the extracted hydrocarbon and solvent travels to a separate chamber where the hydrocarbons are separated
from the extraction solvent. The solvent is then reclaimed.
The entire extraction process is completed in
a series of sealed chambers. The reclaimed extraction fluid is then recycled back into the process, which ensures that no toxic chemicals
are released into the soil or the environment. Upon completion of our remediation and separation process, the extracted hydrocarbons are
placed into holding tanks to be picked up by our customers, while clean soil is returned to the environment.
Our RPCs are manufactured in Denver, Colorado.
In the future, we expect to finance our RPCs through special purpose vehicles pursuant to 5-year sale/leaseback arrangements. In each
instance, the special purpose vehicle will finance the RPC through third party investors, and we will act as the manager of such special
purpose vehicle and we may hold an approximate 1% ownership interest. Management believes that utilizing this structure provides significant
benefits to our shareholders, as these financings are less dilutive in nature.
Automation and Machine Learning
The RPC systems we build are automated and controlled
by software enabling us to maximize efficiencies. We believe that these automations may ultimately allow us to operate the RPCs twenty-four
hours a day, resulting in continuous feed capabilities that will allow us to manage our systems remotely world-wide. Each RPC unit is
designed with a focus on automation to achieve our Key Performance Indicators (KPIs). We have deployed data analytics and machine learning,
to enable operations to be predictive, reduce risk, improve safety, and reduce costs.
Metallic Separation Technology
In 2015, we obtained two metal extraction systems
and a perpetual license to use the proprietary technology and machinery for extracting precious metals from sand-based ore materials for
$7.6 million from Vivaventures Precious Metals, LLC (“VV Precious Metals”), pursuant to our loan outstanding to VV Precious
Metals being extinguished. We also received a 75% ownership interest in the concentrated unrefined flakes of precious metals and rare
earth minerals that had already been recovered from soils by VV Precious Metals through a royalty agreement. We divested our 39% interest
in VV Precious Metals in July 2020. Such divestiture has had a de minimis impact on our business.
Our proprietary metallic separation technology
uses a thermal vapor process to extract and process micro particles of precious metals and rare earth minerals, including gold, silver,
platinum, palladium and rhodium from soils. After we complete our soil remediation services, we evaluate the post-remediated soil and,
if we find that the soil contains more than 1% concentration of these metals, we process it through this technology to extract and concentrate
these micro particles of precious metals and rare earth minerals into a concentrated, unrefined flake form.
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If contracted to do so, our metal extraction systems
allows us to provide precious metal extraction services on a service fee basis for customers. We also market and sell the precious metals
we have extracted from our own contaminated soil. As we continue our efforts, we anticipate increased opportunities to monetize our precious
metals end product.
Hydrocarbon Upgrading Technologies
We have acquired and/or licensed two separate
technologies described below that will enable us to upgrade the hydrocarbons recovered from our remediation process. These processes have
been proven in laboratory tests, but we have not yet performed this upgrading in a commercial setting.
On September 30, 2020, we entered into an Intellectual
Property License Agreement (“BGreen License Agreement”)with BGreen, LLC (“BGreen”), pursuant to which we have
been granted a worldwide, exclusive, non-transferable license to the intellectual property embodied in BGreen’s cavitation technology
to develop, manufacture, have manufactured, use market, import, have imported, offer for sale and sell cavitation devices built from the
licensed intellectual property. The BGreen License Agreement also grants us the first right of refusal to purchase all devices and all
intellectual property associated with the cavitation technology. The BGreen License Agreement extends for the lifetime of the Intellectual
Property. In 2021 we made an initial payment of $5,000 after delivery of the first simple cavitation device. The Company may use these
devices in its own operations or it may sell them to third parties. Upon sale of a cavitation device to a third party we will be obligated
to pay 50% of the net profits to the BGreen. Additionally, under the terms of the BGreen License Agreement, at such time as we successfully
improve and manufacture a cavitation device with a processing rate equal to, or greater than, 30 barrels per hour, we will be required
to issue 33,333 shares of our common stock to BGreen. Third party, independent testing conducted by the University of Utah has shown that
this proprietary technology increases the API gravity of hydrocarbons by elongating the hydrocarbon chains without cutting or cracking
these chains.
In addition, in 2017, we acquired from CSS Nanotech
an exclusive right to use their nano-sponge technology for $2,416,572 in Series C Preferred Stock, which has since converted to common
stock. The technology essentially serves as a micro-upgrader, transforming hydrocarbon product into a more useful product, such as petroleum
or gasoline, as an addition to our hydrocarbon extraction technology. The inventor of this technology subsequently joined us as our Chief
Scientific Officer. This patented technology allows for hydrocarbon material to be absorbed by a specialized sponge. Low energy microwaves
are then introduced into the process and the sponge, which is made of a highly thermally conductive material, absorbs this energy causing
an instant thermal effect, which essentially refines the crude by cutting or cracking the carbon chains. We intend to add this system
to our process of upgrading the heavy crude recovered by our RPCs.
We believe that each of these technologies has
the ability to upgrade the heavy crude that is recovered from our recovery and remediation process based on our needs and demand, and
we intend to fully integrate these technologies into our process. For example, if there is a high demand for fuels we would process the
extracted crude through the nano-sponge technology to refine and upgrade the product into diesel fuel. If the demand is instead for certain
types of asphaltic cement, where the heavy crude is not refined but processed, we would utilize the CHU technology.
Market Opportunity
We believe that the market for remediating oil
from both soil and water is significant. According to Grandview Research, the market for environmental clean-up of oil spills will reach
$177 billion by 2025. We believe that a large portion of that market will originate from contamination of more than 7% hydrocarbon content
and that our technology is currently the only one that can economically remediate these environmental disasters, while allowing for the
capture and reuse of the crude.
In addition, we believe that the heavy crude that
we have been recovering in Utah is ideal for producing asphaltic cement. The demand for asphaltic cement in the United States is presently
estimated to be $93 billion this year according to Transparency Market Research. We provided our material to asphalt companies for testing
to determine what modifications, if any, needed to be made to meet general asphalt specifications. We recently received notification that
our asphaltic cement now meets the general classification of AC20 asphaltic cement and that it passed the specifications of several potential
clients. We are expecting several orders in the near term and we believe that we will be able to offer our product at very competitive
prices and in an environmentally friendly manner.
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Revenue
We presently have two projects utilizing our first
two manufactured RPCs - our project in Kuwait (which was temporarily suspended due to COVID-19) and our project in Vernal, Utah (which
is currently operating).
In Kuwait, pursuant to an agreement with Al Dali
International Co., a company organized under the laws of Kuwait (“DIC”), we will receive $50,000 for the successful remediation
of the first 100 tons ($500 per ton) under its subcontractor services for the Kuwait Oil Company (“KOC”) Remediation Contract.
In addition, we will receive $20 per treated ton of soil after the initial 100 tons. The treatment process using the RPC plants is anticipated
to generate a bitumen sub-product. We have agreed with DIC to sell this sub-product and share the net profits equally (50% to the us and
50% to DIC), after allocating 30% of the net profits to DIC in the form of a sales and marketing payment, which will be invoiced on a
monthly basis, in accordance with the Agreement. Pursuant to the Agreement, we will have a stockpile of at least 444,311 tons with at
least 5% oil contamination for us to remediate.
Our RPC situated in Vernal, Utah has the capacity
to process 500 tons or more of naturally occurring oil sands deposits per day. We estimate that if the extracted material is composed
of at least 10% oil, we will recover approximately 250 barrels of extracted hydrocarbons each day, which could then be sold for energy
or converted to asphaltic cement and sold for use in roads at higher prices.
We provide precious metal extraction services
on a service fee basis for customers. We also market and sell the precious metals we have extracted from our own soils. As we continue
our efforts, we anticipate increased opportunities to monetize our precious metals end product.
Kuwait Project
The United Nations (UN) had allocated up to $14.7
billion for post-Iraq war reparations in order to clean up Kuwait. Kuwait suffered extensive contamination as a result of the 1991 Persian
Gulf War. At the close of the Gulf War, Saddam Hussein ordered Kuwaiti oil wells to be blown up, resulting in the destruction of approximately
600 oil wells. The damage resulting from such fires, which burned for seven months, included a layer of hardened “tarcrete,”
caused by the sand and gravel on the land's surface combining with oil and soot, forming over almost 5% of the country's area.
We were engaged by a subcontractor, DIC, which
is approved by KOC for the Kuwait Environmental Remediation Program (“KERP”) project.
Our technology has been successful in reducing
the amount of contaminated material in Kuwait from 20% hydrocarbon contamination to just 0.2% hydrocarbon contamination, based on third
party independent testing performed by ALS Arabia in March 2020. We believe we possess the only technology that has been successful at
remediating such highly contaminated soil (defined as anything above 20% hydrocarbon contamination), while also returning usable hydrocarbons.
The KERP project is anticipated to involve approximately
26 million cubic meters of contaminated oil sands requiring remediation. We expect that as much as 20% of the contaminated soil will contain
more than 5% hydrocarbon contamination. Our agreement with DIC is for cleanup of a portion of the KERP project.
The oil recovered from these projects in Kuwait
is considered a sovereign asset, so the ability to reclaim this asset also creates a social value for the country. In order to remediate
all of the contaminated sand exhibiting greater than 7% contamination in the timeframe required by the UN, the Company anticipates obtaining
further agreements through KOC to expand its service contract to deploy 10 RPC units to Kuwait over the next several years.
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On December 14, 2021, we, together with our subsidiary,
Vivaventures Energy Group, Inc., entered into a Services Agreement (the “Services Agreement”) with Al Dali International Co.,
a company organized under the laws of Kuwait (“DIC”). The Government of Kuwait and the United Nations, acting through the
Kuwait Oil Company (“KOC”) has awarded to Enshaat Al Sayer rights to remediate contaminated soil under the Kuwait Remediation
Program pursuant to the South Kuwait Excavation, Transportation and Remediation Project (“KOC Remediation Contract”). To fulfill
its role, Enshaat Al Sayer has engaged the Company, through the Company’s agreement with DIC, to perform contaminated soil treatment
for the KOC Remediation Contract using the Company’s patented technology for extracting hydrocarbons, through the Company’s
Remediation Processing Center (“RPC”) plants. The Services Agreement is subject to DIC and Enshaat Al Sayer entering into
a subcontractor agreement and the Company has received a notice letter from such parties, which confirms that such subcontractor agreement
has been entered into and is in full force and effect. Such subcontractor agreement is subject to termination upon terms substantially
similar to those set forth in the Services Agreement, specifically, providing for a 42-month term with termination upon (i) written consent
of both parties; (ii) bankruptcy, dissolution or similar event; (iii) for material breach that is not cured within 60 days’ notice
thereof (other than non-payment, which is not subject to a cure period); and (iv) non-approval of total optimized study including the
bench scale study and pilot plant commissioning results by KOC.
Pursuant to the Services Agreement, the Company
and DIC will work together in performing remediation treatment services as subcontractors to Enshaat Al Sayer for the KOC Remediation
Contract. Under the Agreement, the Company will supply one pilot RPC plant already located in Kuwait, one 40-ton per hour RPC plant, and
one technical expert to oversee the hydrocarbons contaminated soil treatment service operations pertaining to this contract.
The Company will receive $50,000 for the successful
remediation of the first 100 tons ($500 per ton) under its subcontractor services for the KOC Remediation Contract. In addition, the Company
will receive $20 per treated ton of soil after the initial 100 tons. The treatment process using the RPC plants is anticipated to generate
a bitumen sub-product. The Company and DIC have agreed to sell this sub-product and share the net profits equally (50% to the Company
and 50% to DIC), after allocating 30% of the net profits to DIC in the form of a sales and marketing payment, which will be invoiced on
a monthly basis, in accordance with the Agreement. Pursuant to the Agreement, we will have a stockpile of at least 444,311 tons with at
least 5% oil contamination for us to remediate.
Pursuant to the Agreement, we will provide our
pilot RPC plant (already in Kuwait) within two to four months after retrofitting, and we will provide a RPC plant within one year capable
of processing 40 tons of soil per hour. We will bear the cost of the related manufacturing, deployment, break-down and spare parts of
the RPCs. The RPC plant remediation services must reduce TPH contamination to less than 1%. DIC will provide all other costs for bonds,
infrastructure, and operations of the plant.
Other International Projects
In addition to managing the projects in Kuwait,
the UN is overseeing the funds allocated to the remediation and clean-up of the Ogoni Lands in Africa, which is estimated to contain millions
of tons of both contaminated soil and water and has allocated significant funding for its cleanup. Taking into consideration this particular
environmental disaster, plus other global oil contamination projects involving oversight by the UN, together with our successful testing
on the UN-managed SEED Project in Kuwait and our recent agreement with DIC, we believe we will be a contender for significant additional
contracts.
Vernal, Utah Project
The State of Utah has, according to the U.S. Geological
Survey, approximately 14 billion barrels of measured oil in place with an additional estimated 23 to 28 billion barrels of oil contained
in contaminated oil sands that are deposited near the ground surface. We believe that the crude from these oil sands can be turned into
asphaltic cement for making roads, or upgraded for polymers or fuel. Vernal is the county seat, and largest city in Uintah County, located
in northeastern Utah, approximately 175 miles east of Salt Lake City, and 20 miles west of the Colorado border. In June 2021, we entered
into an agreement with the owner of such parcel of land that permitted us to continue to operate on the land on a month-to-month basis.
In March 2022, we entered into a land lease with the land owner for a five year term, with an optional 5 year extension, allowing us to
process up to 2,000 tons per day of oil sand material, with a guarantee by the land owner to deliver material with a minimum of 10% hydrocarbon
by weight, which would produce up to 200 tons of asphalt cement product per day when processed through four of our patented
RPCs.
The Vernal property contains approximately 100
million cubic yards of oil sand material available for processing. The property is located on approximately 600 acres. We believe that
we could ultimately recover as much as 40 million barrels of oil from this property as a whole if we are able to economically scale our
operations and obtain further land leases from the land owner. We believe, based on the number of estimated barrels of oil contained in
oil sands deposits located on SITLA property, that if the State of Utah would allow us to process the oil sand material on these properties
over the next thirty years that we would need as many as 100 RPCs to process the oil sands deposits owned by the State of Utah.
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Material extracted from our Vernal, Utah project
can be sold for energy or converted into asphaltic cement, which we believe is less affected by daily changes in oil prices. With our
one RPC unit, assuming full utilization, we anticipate producing approximately 50 tons of asphaltic cement per day. We anticipate that
we will be able to sell our asphaltic cement for, referencing present pricing, approximately $450 per ton.
Competitive Strengths and Growth Strategy
We are focused on the remediation of contaminated
soil and water resulting from either man-made spills or naturally occurring deposits of oil. Our primary focus has been the remediation
of oil spills resulting from the Iraqi invasion of Kuwait and naturally occurring oil sands deposits in the Uinta basin located in Eastern
Utah. We plan to expand into other markets, both in Utah and globally, where we believe our technology and services will provide a distinct
competitive advantage over our competition.
Competitive Strengths
We believe the following strengths provide us
with a distinct competitive advantage and will enable us to effectively compete on a global basis:
·
Proprietary
patented technology;
·
Environmental
advantages;
·
Strong
relationships with customers and regulatory agencies; and
·
Experienced
and highly-skilled management, Board of Directors and Advisory Board.
Proprietary Patented Technology
In total, we, together with our subsidiaries,
have intellectual property that is in the form of both proprietary knowledge and patents. Our patent portfolio consists of four issued
U.S. patents, one pending international patent application filed through the Paris Cooperation Treaty (PCT), and one pending patent application
in Kuwait. In addition, we have licensed from our partners the right to use additional patented technologies.
We presently have two US patent and pending foreign
applications related to our RPCs and two issued US patents related to our other remediation technologies.
We believe, based on direct and ongoing conversations
with our customers and third-party independent test results, that our technology is the only commercially available technology that can
not only clean soil that contains greater than 7% hydrocarbon, but also preserves the hydrocarbons extracted from such soil for future
use. We believe that this provides us with a true competitive advantage.
Our main technology has been tested and validated
for all of its claims by separate, independent expert firms both in the United States and the Middle East, whose reports confirm that
we have reclamation technology, which has been tested and reviewed, that possesses the ability to clean soil with more than 7% hydrocarbon
contamination and still leave the recovered hydrocarbons in a usable state.
Environmental Advantages
Among our key corporate objectives is to be at
the forefront of social responsibility for its technological impact. We strive for all of our systems to ultimately become closed loop
systems, to minimize adverse impacts on air quality and reduce the need for use of clean water. Our ability to turn waste into value is
in line with this core objective. Our remediation projects in Kuwait are expected to reduce emissions from vaporization of the oil spilled
in the soil. The ability to clean produced water from oil production can eliminate the need for evaporation ponds, improving air quality
and saving on the use of clean water.
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We believe our technology and service offerings
will position us well to conduct our business in any geographical region in which soil or water has been contaminated by hydrocarbons.
Strong Relationships with Customers and Regulatory
Agencies
We have developed close relationships with customers
and government agencies, including SITLA and the KOC. We anticipate receiving access to additional oil sands deposits located in Utah
from SITLA, based on our existing relationship with SITLA and our conversations with them. Indeed, our relationships have helped give
rise to our December 2021 agreement with DIC in Kuwait, which will result in our having a stockpile of at least 444,311 tons with at least
5% oil contamination for us to remediate. We also anticipate receiving additional contracts from KOC to remediate contaminated properties
in Kuwait, based on our existing relationship with KOC and conversations with them.
Experienced and Highly Skilled Management,
Board of Directors and Advisory Board
Our management team has started and successfully
grown numerous technology-based companies and has utilized this experience to develop a strategic vision for the Company. The implementation
of this plan has resulted in the acquisition and in-house development of numerous technologies, which are currently in operation. We have
demonstrated the effectiveness of our technologies in both Vernal, Utah and Kuwait, accomplishing the clean-up of contaminated areas while
also recovering precious metals through our metallic separation technology.
Our Board of Directors is comprised of accomplished
professionals who bring decades of experience to the Company. Our Board of Directors includes a director who has served as a member of
the Executive Committee of one of the largest global accounting firms and has served on the Board of Directors of two multi-billion dollar
publicly traded companies, a former director of technology investment banking at Goldman Sachs, a successful investor and entrepreneur
who has founded and provided initial financing for numerous life science companies, several of which have grown to multi-billion dollar
publicly traded companies, and the mayor of a city in Utah.
In addition, we have an Advisory Board comprised
of former senior members of oil and gas companies, both in the United States and in the Middle East. Our Advisory Board is led by one
member who is an accomplished business professional and a member of a royal family based in the Middle East and another member who is
an experienced health and safety expert operating in the oil and gas industries.
We rely on our Board of Directors and Advisory
Board to provide it both high level advice and guidance along with using their contacts to help open various markets. Additionally, the
Advisory Board acts as a preliminary informal sounding board for the Board and management for these particular areas in which the Advisory
Board members have expertise. We believe the combination of our management team, Board of Directors and Advisory Board provides us with
a significant competitive advantage over our competitors due to their breadth of experiences and relationships.
Growth Strategies
We will strive to grow our business by pursuing
the following strategies:
·
Expansion
of our oil recovery projects in Utah;
·
Expansion
of our remediation projects in Kuwait;
·
Expansion
into new and complementary markets;
·
Increase
of revenue via new service and product offerings;
·
Strategic
acquisitions and licenses targeting complementary technologies; and
·
Redeployment
of the metallic separation technologies.
Expansion of our Oil Recovery Projects in Utah
The State of Utah has, according to the U.S. Geological
Survey, approximately 14 billion barrels of measured oil in place with an additional estimated 23 to 28 billion barrels of oil contained
in contaminated oil sands that are deposited near the ground surface. The majority of these oil sands deposits are located on land owned
by SITLA. While our current project in Vernal, Utah is not located on SITLA land and we do not yet have a definitive agreement, SITLA
has expressed an interest in providing us leased access to these lands in exchange for a royalty to be paid by us in an amount equal to
8% of all revenue generated from any hydrocarbon-based products produced by us from hydrocarbons extracted from these lands. All royalty
payments to SITLA would result in direct funding to the State’s school system. We will seek to acquire additional properties and
mineral rights in the vicinity of Vernal, Utah from individual land owners and the State of Utah.
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Expansion of our Remediation Projects in Kuwait
Our RPC technology was successfully used in our
initial project for KOC in Kuwait, where we removed hydrocarbons from soil with more than 7% contamination and, following the process,
the hydrocarbon contamination level of the soil was reduced to less than 0.5%, which was lower than the level needed to meet the project
specifications. There is still approximately 26 million cubic meters of soil contaminated by oil from the Iraqi invasion of Kuwait. Pursuant
to our recent agreement with DIC, we will receive $50,000 for the successful remediation of the first 100 tons ($500 per ton) under its
subcontractor services for the KOC Remediation Contract. In addition, we will receive $20 per treated ton of soil after the initial 100
tons. The treatment process using the RPC plants is anticipated to generate a bitumen sub-product. We have agreed with DIC to sell this
sub-product and share the net profits equally (50% to us and 50% to DIC), after allocating 30% of the net profits to DIC in the form of
a sales and marketing payment, which will be invoiced on a monthly basis, in accordance with the Agreement. Pursuant to the Agreement,
we will have a stockpile of at least 444,311 tons with at least 5% oil contamination for us to remediate. Other technologies may also
be used for the less contaminated soils.
Expansion into New and Complementary Markets
We intend to explore expansion opportunities on
a global basis, including in places with extreme contamination such as the Ogoni Lands region of Nigeria, oil spill lakes located in Saudi
Arabia and Turkmenistan, and naturally occurring oil sands deposits in Kazakhstan, where we believe our technology and service offerings
may provide a distinct competitive advantage. We are currently in discussions with several groups for deploying our RPCs for remediation
projects (primarily for oil spills, tank bottom sludge and drill cuttings) in Saudi Arabia, Qatar and Texas. Saudi Arabia has the objective
to create a circular carbon economy that will ultimately have zero wasted hydrocarbons. Our technology is able to process tank bottom
sludge, drill cuttings, and soils form hydrocarbon spills, returning the sand to less than 0.5% contamination while reclaiming the oil
for waste energy use.
Increase of Revenue via New Service and Product
Offerings
To date, we have focused on the remediation of
soil contaminated by oil. We intend to target other hydrocarbon remediation businesses that focus on, among other things, the cleaning
of tank bottom sludge, and the cleaning of the water used from drilling oil wells. Oil producers generally pay to dispose of sludge at
the bottom of storage tanks and contaminated water produced from the drilling of oil wells. We believe that our technologies could be
used to clean the contaminated water produced from drilling, while simultaneously recovering the heavy crude. We believe we will be able
to offer these services at a cost that is very competitive with current methods and that our ability to recover the heavy crude for resale
will give us a competitive advantage. We are currently in early stage discussions relating to some of these remediation projects.
Strategic Acquisitions and Licenses Targeting
Complementary Technologies
We intend to seek out opportunities to acquire
or license only specific technologies that are either complementary to our existing product offerings or that will allow us to expand
into the environmental infrastructure markets. We recently entered into a worldwide, exclusive license
agreement with TBT Group, Inc. to license piezo electric and energy harvesting technologies for creating self-powered sensors for making
smart roadways , which we believe could be embedded directly into the asphaltic cement we intend to produce from the hydrocarbons
we extract, providing the basis for smart roads and infrastructure. We believe that these sensors, which are self-powered, could be used
to provide information about traffic, road conditions and repair needs as well as allowing the roads to communicate directly with autonomous
vehicles enabling these vehicles to sense the road in all weather conditions. By complementing the asphaltic cement we expect to produce
with integrated sensors for automated vehicles, we believe that we will be able to offer a smart road.
Redeployment of the Metallic Separation Technology
Our licensed metallic separation technology has
successfully recovered precious metals including, but not limited to, gold, palladium, platinum, rodium and silver. We intend to redeploy
our metallic separation technology machines to standalone locations to process mine tailings and other soils.
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Other Holdings
Historically, as part of our strategy to find
and invest in technologies that might develop synergies with our existing businesses, we have invested in other companies and/or entities.
Not all of our investments to date have developed into complementary technologies and/or businesses, but with our management’s assistance,
many of them have still become successful and accretive to our Company’s value. Over time, we intend to divest our ownership of
companies that are not synergistic with our business.
Scepter Holdings
In 2019, we received 800,000 shares of preferred stock in Scepter Holdings, Inc.
(OTCMarkets: BRZL), a company that manages the sales and development of consumer-packaged goods, to release Scepter from a secured loan
financing that encumbered its assets. In 2019 we entered into a Convertible Master Revolving Note with Scepter and over the course of
approximately two years lent them $71,000, which accrued 7% interest per annum. In August 2021 we exercised our conversion rights in
the note and converted the principal balance and all accrued interest in to 26,376,882 shares of common stock of Scepter, which represents
holdings of 826,376,882 shares of Scepter (approximately 19% of Scepter’s outstanding stock) and a market value of approximately
$3,553,241 as of April 5, 2022.
Odyssey Group International
In 2014, we acquired a minority interest in Odyssey
Group International, Inc. (“Odyssey”) (OTCQB: ODYY), a trans-disciplinary product development enterprise involved in the discovery,
development and commercialization of a broad range of products applied to targeted segments of the health care industry. We also have
provided a $750,000 secured loan to Odyssey, which they used to acquire a license to use and develop a new technology called CardioMap®,
which is an advanced technology for early non-invasive testing for heart disease. During June 2020, we converted the outstanding secured
loan into 809,578 shares of Odyssey common stock. We owned 3,309,578 shares of Odyssey common stock through December 2021 at which time
we sold such 3,309,578 shares of Odyssey in a private transaction for a purchase price of $860,491, reflecting the market price as of
such time. Such purchase price was paid in the form of $10,000 cash delivered at signing and a note issued in favor of Vivakor in the
amount of $850,491 accruing interest at 3% per annum, with payments due quarterly over a five-year term.
Future Products; Research and Acquisition
We intend to identify, develop or acquire, and
bring to market products primarily in the Clean Tech sector with a primary focus on the petroleum, mining and minerals, and alternative
energy industries, as well opportunities that may arise in the natural and formulary products industry. Our general approach is to select
products or processes that are at or near commercial viability, or that we believe can be substantially developed for commercialization.
We then negotiate agreements to either acquire or to provide secured loan financing to these companies to complete their development,
testing and product launches in exchange for control of, or a significant ownership interest in, the products or companies.
History
The Company was originally organized on November
1, 2006 as a limited liability company in the State of Nevada as Genecular Holdings, LLC. The Company’s name was changed to NGI
Holdings, LLC on November 3, 2006. On April 30, 2008, the Company was converted to a Nevada corporation and changed its name to Vivakor,
Inc. pursuant to Articles of Conversion filed with the Nevada Secretary of State.
We have the following direct and indirect wholly-owned
active subsidiaries: VivaVentures Management Company, Inc., a Nevada corporation, VivaSphere, Inc., a Nevada corporation, VivaVentures
Oil Sands, Inc., a Utah corporation, and RPC Design and Manufacturing LLC (“RDM”), a Utah 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 the Company. We also have an approximate 49% ownership interest in Vivakor
Middle-East Limited Liability Company, a Qatar limited liability company.
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Regulations Affecting our Business
Our business is subject to federal, state and local laws, regulations
and policies, including laws regulating the removal of natural resources from the ground and the discharge of materials into the environment.
These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set
forth limitations on the generation, transportation, storage and disposal of solid and hazardous waste. Exploration and exploitation activities
are also subject to federal, state and local laws and regulations which seek to maintain health and safety standards by regulating the
design and use of exploration methods and equipment. Environmental and other legal standards imposed by federal, state or local authorities
are constantly evolving, and typically in a manner which will require stricter standards and enforcement, and increased fines and penalties
for noncompliance. Such changes may prevent us from conducting planned activities or increase our costs of doing so, which would have
material adverse effects on our business. Moreover, compliance with such laws may cause substantial delays or require capital outlays
in excess of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other
environmental damages that we may not be able to or elect not to insure against due to prohibitive premium costs and other reasons. Unknown
environmental hazards may exist on our mining claims, or we may acquire properties in the future that have unknown environmental issues
caused by previous owners or operators, or that may have occurred naturally.
Failure to comply with applicable federal, state,
local or foreign laws or regulations could subject our company to enforcement action, including product seizures, recalls, withdrawal
of marketing clearances and civil and criminal penalties, any one or more of which could have a material adverse effect on our company’s
businesses. We believe that our company is in substantial compliance with such governmental regulations. However, federal, state, local
and foreign laws and regulations regarding the manufacture and sale of medical devices are subject to future changes. There can be no
assurance that such changes would not have a material adverse effect on our company.
Intellectual Property
We own four issued US patents and two pending
international PCT patent application covering our propriety technology, specifically:
·
US Patent 7,282,167 for methods for producing nano-scale particles by vaporizing raw material and then cooling the vaporized raw material
using a cooling gas, granted October 16, 2007 and expiring July 23, 2025;
·
US Patent 9,272,920 for methods for producing ammonia by mixing a first catalyst including a millimeter-sized, granular, ferrous material
and a promoter and a second catalyst including discrete nano-sized ferrous catalyst particles that comprise a metallic core with an oxide
shell and then reacting hydrogen and nitrogen in the presence of the mixture, granted March 1, 2016 and expiring November 7, 2028; and
·
US Patent 10,913,903 for SYSTEM AND METHOD FOR USING A FLASH EVAPORATOR TO SEPARATE BITUMEN AND
HYDROCARBON CONDENSATE granted February 9, 2021 and expiring August 28, 2039;
·
US Patent 7,282,167 for U S Patent 10,947,456 for SYSTEMS FOR THE EXTRACTION OF BITUMEN FROM OIL
SAND MATERIAL granted on March 16, 2021 to expire on December 3, 2038 ;
·
Pending US Patent Series Nos. 16/177,210 and 16/554,158, International PCT Application No. PCT Application No. PCT/US2019/048587, and
pending Kuwait application KW/P/2020/000111 relating to systems and processes for extracting bitumen from oil sands material which employ
a centrifuge and a flash evaporator.
Employees
As of the date of this Annual Report on 10-K,
we have 25 full-time or contracted employees, consisting of our CEO, CFO, and additional administrative and direct operations personnel.
None of these employees are represented by a labor union or subject to a collective bargaining agreement. We have never experienced a
work stoppage and our management believes that our relations with employees are satisfactory.
Properties
We do not own real property. We currently lease
executive office space in Lehi, Utah, Las Vegas, Nevada, Houston, Texas, and Irvine, California. The Company also leases warehouses in
Las Vegas, Nevada and Houston, Texas, and have paid to be on a land site in Vernal, UT. We believe these facilities are in good condition
but that we may need to expand our leased space and warehouses as business increases.
Legal Proceedings
From time to time, we may become involved in various
legal actions that arise in the normal course of business. We are not currently involved in any material disputes and do not have any
material litigation matters pending.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.