What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-22 compared with 2022-05-13 · 186 added, 61 removed, 148 unchanged (63% of the section changed)

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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.

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

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a distinct competitive advantage over our competition.

Recent Developments

Off-Take Agreement

On April 26, 2022, our subsidiary Vivaventures Energy Group, Inc., entered into a Product Off-Take Agreement (the “Off-Take Agreement”), with

Hot Oil Transport, LLC, a Nevada limited liability company (“HOT”).

Pursuant to the Off-Take Agreement, the Company plans

to produce asphalt that meets the specifications for PG 64-22 grade, as set forth by the Nevada Department of Transportation and the American

Association of State Highway and Transportation Officials (the “Product”) from a to-be-scaled processing plant to be located

in Uintah County, Utah, and as may be relocated from time to time by the Company (the “Plant”).

HOT will be obligated to purchase

from the Company certain quantities of the Product from the Plant once the Plant begins to produce the Product, on the terms and conditions

set forth in the Off-Take Agreement.

The quantity of the Product

to be sold and purchased pursuant to this Agreement will be (i) 1,000 tons of the Product per week, or (ii) the entirety of any lesser

amount that may be produced by the Company during any given week.

HOT will also have the first right of refusal to purchase all or any

portion of additional Product that may be produced by the Company within the state of Utah upon the same terms and conditions, except

that the purchase price shall be at market rate as determined in the Company’s sole discretion.

Pursuant to the Off-Take

Agreement, the rates for the sale and purchase of up to 1,000 tons of Product per week will be determined on the basis of an average 1,000

tons per week, a price per ton using the “Argus Rockies Rail Low” price for asphalt in the Rocky Mountain region as set forth

in the most recent edition of Argus Americas Asphalt report, produced by Argus Media Group, as of the date of delivery

(the “Unit Price”).

Once calculated, the weekly purchase price will be reduced by $1,500 in order to compensate Buyer for

costs associated with testing, providing storage tanks for Buyer’s minimum quantity purchases, and certifying the quality of the

Product, for so long as Buyer is providing the testing facilities for the Product.

As noted above, the purchase price for any Product

over 1,000 tons per week will be at market rate, as determined by the Company.

In the event the Unit Price drops below $250, the Company

will have the right to suspend production of the Product upon written notice to HOT.

The Off-Take Agreement

provides for an initial term of ten years.

The Off-Take Agreement will automatically renew for two successive ten-year terms, subject

to the Company’s right to continue operating at the current Plant site, unless either party terminates the Off-Take Agreement by

written notice to the other party not less than three months prior to the expiration of the term.

During a term, the Off-Take Agreement

can only be terminated for (i) abandonment or termination of Project by the Company;

(ii) default by the other party;

or (iii) in connection

with occurrence of a force majeure.

Membership Interest

Purchase Agreement

On June 15, 2022, we

entered into a Membership Interest Purchase Agreement, a copy of which is filed herewith as Exhibit 2.1 (the “MIPA”), with

Jorgan Development, LLC, a Louisiana limited liability company ("Jorgan") and JBAH Holdings, LLC, a Texas limited liability

company (“JBAH” and, together with Jorgan, the “Sellers”), as the equity holders of Silver Fuels Delhi, LLC, a Louisiana

limited liability company (“SFD”) and White Claw Colorado City, LLC, a Texas limited liability company (“WCCC”) whereby,

at closing, which occurred on August 1, 2022, the Company acquired all of the issued and outstanding membership interests in each of SFD

and WCCC (the “Membership Interests”), making SFD and WCCC wholly owned subsidiaries of the Company.

The purchase price for

the Membership Interests is approximately $37.4 million, subject to post-closing adjustments, payable by the Company in a combination

of shares of the Company’s common stock, amount equal to 19.99% of the number of issued and outstanding shares of the Company’s

common stock immediately prior to issuance, secured three-year promissory notes made by the Company in favor of the Sellers, in the form

of Exhibit 4.1 The purchase price is subject to certain assumptions and adjustments set forth in the MIPA.

The MIPA is also subject to

unwinding in the event of a breach of a material term of the MIPA, as set forth in the MIPA.

The MIPA contains customary

representations and warranties, pre- and post-closing covenants of each party and customary closing condition.

The principal amount

of the Notes, together with any and all accrued and unpaid interest thereon, will be paid to the Sellers on a monthly basis in an amount

equal to the Monthly Free Cash Flow beginning, assuming a closing under the MIPA after July 1, 2022, on August 20, 2022, and continuing

thereafter on the twentieth (20 th ) calendar day of each calendar month thereafter, as set forth in the MIPA.

Without in any way limiting

the foregoing, the then outstanding principal amount of the Notes, together with any and all accrued and unpaid interest thereon, will

be due and payable in full in cash or unrestricted common stock of the Company on or prior to the three-year anniversary of the date of

issuance, as set forth in the MIPA.

The obligations of the

Company under the MIPA are secured by the membership units of SFD and WCCC.

The timely and full payment

of any and all principal, interest and other amounts due and owing to the Sellers pursuant to the Notes and the other transaction documents

and the payment of any and all other obligations owed to the Sellers by the Company under the Notes or thereunder are guaranteed solely

by, and to the extent set forth in, the Guaranty Agreements, in the form of Exhibit 10.4 hereto, between each of the Sellers and SFD and

SFD owns and operates

a crude oil gathering, storage, and transportation facility located on approximately 9.3 acres near Delhi, Louisiana.

Under existing agreements,

a subsidiary of a large NYSE traded energy company (the “Purchaser”) is obligated to purchase blended crude oil from SFD in

amounts up to 60,000 barrels per month.

With prior approval, SFD is eligible to sell to the Purchaser amounts greater than 60,000 barrels

of crude oil per month.

Additionally, for a period of 10 years, SFD is, under existing crude oil supply agreements with WC Crude, guaranteed

a minimum gross margin of $5.00 per barrel on all quantities of blended crude oil sold thereunder.

At present, SFD is blending and selling

approximately 1,400 to 1,700 barrels of blended crude oil on a daily basis.

Additionally, the acquisition of SFD would provide the Company

with the infrastructure needed to place a Remediation Processing Machine (“RPC”) to clean soil which has been contaminated

by hydrocarbons as well as tank bottom sludge.

Management believes SFD’s location in the heart of the Smackover formation would

provide the Company with access to significant amounts of tank bottom sludge and contaminated soil.

WCCC owns a 120,000 barrel

crude oil storage tank, in the heart of the Permian Basin, located near Colorado City, Texas.

The storage tank is presently connected

to the Lotus pipeline system and the Company intends to further connect the tank to the Medallion and Wolf pipeline systems if the acquisition

of WCCC is successfully completed.

Under the terms of an existing agreement, WC Crude has agreed to lease the oil storage tank for a period

As with SFD, WCCC would provide the Company with the infrastructure to blend and sell oil which has been recovered via a

RPC machine from tank bottom sludge and contaminated soil which exists in the Permian Basin.

This disclosure should be read in connection

with, and is subject to, the MIPA, a copy of which is attached hereto as Exhibit 2.1.

On March 11, 2020, the World Health Organization

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know the full extent of the effects on the economy, the markets we serve, our business, or our operations.

Results of Operations for the Three Months

ended March 31, 2022 and 2021

For the three months ended March 31, 2022 and

Results of Operations for the Three and Six

Months ended June 30, 2022 and 2021

For the three months ended June 30, 2022 and 2021

we realized revenues of none and $22,000, respectively, representing a decrease of $22,000 or 100%.

The decrease in revenue is primarily

attributed to the Company diverting its resources away from its precious metals business that was entered into during COVID-19 mandated

shutdowns, and back to its primary business of manufacturing and site preparations for reopening its Remediation Processing Centers (RPCs)

for remediation and production.

For the three months ended March 31, 2021, approximately 99% of our revenues were realized from precious

metal sales from our business plan of buying and selling precious metal commodities on the open market during the COVID-19 pandemic while

our remediation operations were shut down or delayed.

These precious metals having been acquired for immediate resale, with the Company

acting as intermediary and never keeping an inventory of precious metals.

For the six months ended June 30,

2022 and 2021 we realized revenues of none and $117,000, respectively, representing a decrease of $117,000 or 100%.

The decrease in revenue

is primarily attributed to our decision to divert our resources away from our precious metals business that we entered into during COVID-19

mandated shutdowns, and back to its primary remediation business and the manufacturing and site preparations for reopening our Remediation

Processing Centers (RPCs) for remediation and production.

For the three and six months ended June 30, 2021, approximately 99% of our revenues

were realized from precious metal sales from our business plan of buying and selling precious metal commodities on the open market during

the COVID-19 pandemic while our remediation operations were shut down or delayed.

These precious metals were acquired for immediate resale,

with us acting as intermediary and never keeping an inventory of precious metals.

Cost of Revenue

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associated with selling our precious metals on the open market and precious metal commodity broker fees.

For the three months ended March 31, 2022 and

For the three months ended June 30, 2022 and 2021

costs of revenue were none and $20,530, respectively, representing a decrease of $25,530 or 100%.

The decrease in the cost of revenue

directly relates to costs associated with selling our precious metals on the open market and precious metal commodity broker fees.

the decrease in revenue is primarily attributed to the Company diverting its resources away from its precious metals business in 2022

that was entered into during COVID-19 mandated shutdowns, and back to its primary business of manufacturing an site preparations for reopening

its RPCs for remediation and production, the Company did not realize costs of revenue from precious metal sales from buying and selling

precious metal commodities for the three months ended March 31, 2022.

For the six months ended June 30, 2022

and 2021 costs of revenue were none and $112,450, respectively, representing a decrease of $112,450 or 100%.

The decrease in the cost

of revenue directly relates to costs associated with selling our precious metals on the open market and precious metal commodity broker

As the decrease in revenue is primarily attributed to our decision to divert its resources away from our precious metals business

in 2022 that was entered into during COVID-19 mandated shutdowns, and back to our primary remediation business, and the manufacturing

an site preparations for reopening our RPCs for remediation and production, we did not realize costs of revenue from precious metal sales

from buying and selling precious metal commodities for the three and six months ended June 30, 2022.

Gross Profit and Gross Margin

For the three months ended March 31, 2022 and

For the three months ended June 30, 2022 and 2021

we realized gross profit of none and $1,470, respectively, representing a decrease of $1,470 or 100%.

For the six months ended June 30,

2022 and 2021 we realized gross profit of none and $4,550, respectively, representing a decrease of $4,550 or 100%.

The gross profit decreased

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Operating Expenses

For the three months ended March 31, 2022 and

2021, we realized operating expenses of $1,879,364 and $2,139,652, which represents a decrease of $260,288, or 12.16%.

Our operating expenses

decreased due to decreased professional service expenses in regards to reduced operations in Viva Wealth Fund I, LLC, including sales

and marketing expense mainly related to the generation of leads and investor sourcing.

For the three months ended June 30, 2022 and 2021,

we realized operating expenses of $3,600,600 and $1,726,096, which represents an increase of $1,618,766, or 108.60%.

For the six months

ended June 30, 2022 and 2021, we realized operating expenses of $5,479,964 and $3,865,748, which represents an increase of $1,618,766,

The increase in our operating expenses were mainly attributed to accrued signing bonuses and employee stock options that were

issued related to the executive employment agreements entered into in June 2022 after the Company’ successful underwritten public

offering of gross proceeds of $8.0 million and uplist to Nasdaq in February 2022.

Whereas prior to the underwritten public offering and

uplist to Nasdaq, the executive employment agreements had no signing bonuses, paid the executives $50,000 per year, and only one executive

had a stock option grant.

Although the executives are currently accruing substantial portions of their wages and signing bonuses to assist

the Company, the new employment agreements issued stock options to all executives, increased annual wages for all executives, and the

company paid or accrued signing bonuses of $225,000, For the three months ended June 30, 2022 and 2021, we realized employee stock option

expense of $1,229,175 and $111,528, which represents an increase of $1,121,466, or 1,002.1% increase.

For the six months ended June 30,

2022 and 2021, we realized employee stock option expense of $1,321,466 and $200,000, which represents an increase of $1,121,466, or 561%

Other income and expense

For the three months ended March 31, 2022 and

2021, other income was $1,154,129 and $12,351,960, which represents a decrease of $11,377,871, or 90.79%.

The decrease in other income

is mainly attributed to unrealized gains of $1,239,566 and 12,683,444 on marketable securities, which represents a decrease of $11,443,878,

or 90.23% in marketable securities.

These securities were accounted for at a fair value based on the quoted prices in the active markets

and fluctuate based on market prices of the securities.

For the three months ended June 30, 2022 and 2021,

other expense was $1,627,263 and $9,096,785, which represents a decrease of $7,469,522, or 82.11%.

The decrease is mainly attributed to

unrealized loss of $1,652,755 and $8,949,169 on marketable securities, which represents a decrease of $7,296,414, or 81.53% in marketable

For the six months ended June 30, 2022 and 2021, other income (expense) was $(473,134) and $3,435,175, which represents a

decrease of $3,908,309, or 113.77%.

The decrease in other income is mainly attributed to unrealized gain (loss) of $(413,189) and 3,734,275

on marketable securities, which represents a decrease of $4,147,464, or 111.06% in marketable securities.

These securities were accounted

for at a fair value based on the quoted prices in the active markets and fluctuate based on market prices of the securities.

Provision for income tax

The Company recorded an income tax provision of

$800 and $1,020,388 for the three months ended March 31, 2022 and 2021, respectively, representing a decrease of $1,019,588 or 99.92%.

The effective tax rate in the first quarter of 2022 was (0.04)% compared to 9.18% in the first quarter of last year.

The difference in

effective tax rate was primarily due to the decrease in unrealized gains on marketable securities for the three months ended March 31,

2022 and 2021.

none and $296,477 for the three months ended June 30, 2022 and 2021, respectively, representing a decrease of $296,477 or 100%.

recorded an income tax provision of $800 and $723,911 for the six months ended June 30, 2022 and 2021, respectively, representing a decrease

of $723,111 or 99.89%.

The effective tax rate as of June 30, 2022 and 2021 was (0.04)% and 9.18%.

The difference in effective tax rate

was primarily due to the decrease in unrealized gains on marketable securities for the six months ended June 30, 2022 and 2021.

The following table sets forth the primary sources

and uses of cash and cash equivalents for the three months ended March 31, 2022 and 2021 as presented below:

and uses of cash and cash equivalents for the six months ended June 30, 2022 and 2021 as presented below:

Net cash used in operating activities

$ (2,808,793 )

$ (2,053,627 )

Net cash used in investing activities

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We have historically suffered net losses and cumulative

negative cash flows from operations and, as of March 31, 2022 and 2021, we had an accumulated deficit of approximately $36.3 million and

negative cash flows from operations and, as of June 30, 2022 and 2021, we had an accumulated deficit of approximately $41.2 million and

$30.1 million.

As of March 31, 2022 and December 31, 2021, we

As of June 30, 2022 and December 31, 2021, we

had cash and cash equivalents of $5,204,591 and $1,493,719, with $296,257 and $199,952 attributed to variable interest entities, respectively.

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Common Stock began trading on the Nasdaq Capital Market under the symbol “VIVK”.

For the three months ended March 31, 2022 and

2021, our net cash used in operating activities was driven by the consolidated net income (loss) of ($726,035) and 9,375,000, which change

is mainly attributed to unfavorable changes in the market which decreased unrealized gains on marketable securities as described above.

For the three months ended March 31, 2022 and

2021, our net cash used in investing activities was mainly attributed to our purchase of equipment of $206,298 and $427,374 related to

the manufacturing of our RPCs.

For the three months ended March 31, 2022 and

For the six months ended June 30, 2022 and 2021,

our net cash used in operating activities was driven by the consolidated net loss of $5,953,898 and 1,149,934, which change is mainly

attributed to unfavorable changes in the market which decreased unrealized gains on marketable securities and the increase in stock-based

compensation as described above.

For the six months ended June 30, 2022 and 2021,

our net cash used in investing activities was mainly attributed to our purchase of equipment of $1,129,515 and $1,334,123 related to the

manufacturing of our RPCs.

For the six months ended June 30, 2022 and 2021,

our net cash provided by our financing activities was mainly attributed to proceeds of $1,968,261 and $6,666,811 related to the issuance

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of 1,600,000 shares of common stock.

We made distributions to noncontrolling interests of $343,889 and none for the six months ended June

30, 2022 and 2021.

We also made payments on notes payable of $277,145 and $2,464 for the six months ended June 30, 2022 and 2021.

There are no further existing firm obligations;

however we anticipate further construction costs of approximately $1 million in connection with our construction in process of our RPCs.

however we anticipate further construction costs of approximately $1.35 million in connection with our construction in process of our

Our ability to continue to access capital could

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to grow our business may be negatively affected.

We believe the liquid assets of the Company give it adequate working

capital to finance our day-to-day operations for at least twelve months through August 2023.

Contractual Obligations

Our contractual obligations as of March 31, 2022

are for operating lease liabilities for office and warehouse space, which leases end in 2025.

Operating lease obligations as of March

31, 2022 are as follows:

Our contractual obligations as of June 30, 2022

are for operating lease liabilities for office and warehouse space, which leases end in 2024 and 2025.

Operating lease obligations as

of June 30, 2022 are as follows:

Interest Rate and Market Risk

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accounting policies and the use of estimates from these disclosures reported in the Amendment No.

1 to our Annual Report on Form 10-K

1 to our Annual Report on Form 10-K/A

for the fiscal year ended December 31, 2021 filed with the Securities and Exchange Commission on May 2, 2022.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis