Vivakor, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS VIVAKOR, INC. CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2022 2021 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 4,373,926 $ 1,293,767 Cash and cash equivalents attributed to variable interest entity 147,865 199,952 Accounts Receivable, less allowances of none and $ 33,000 , respectively 5,524,133 845 Prepaid expenses 67,463 – Marketable securities 2,892,319 2,231,218 Inventories 253,609 192,000 Precious metal concentrate 1,166,709 1,166,709 Other assets 784,998 73,245 Total current assets 15,211,022 5,157,736 Other investments 4,000 4,000 Notes receivable 1,156,526 1,194,235 Property and equipment, net 31,545,826 24,692,111 Rights of use assets- operating leases 648,201 663,291 License agreement, net 2,255,610 2,370,835 Intellectual property, net 37,422,454 13,662,037 Goodwill 6,562,028 – Total assets $ 94,805,667 $ 47,744,245 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses $ 9,473,001 $ 2,023,985 Operating lease liabilities, current 364,103 287,769 Finance lease liabilities, current 652,440 – Loans and notes payable, current 971,441 1,511,447 Loans and notes payable, current attributed to variable interest entity 2,597,709 3,416,379 Long-term debt (working interest royalty programs), current 9,363 3,256 Total current liabilities 14,068,057 7,242,836 Operating lease liabilities, long term 338,532 434,109 Finance lease liabilities, long term 3,222,920 – Loans and notes payable, long term 29,376,628 1,185,970 Long-term debt (working interest royalty programs) 4,968,740 6,171,298 Deferred income tax liabilities 5,156,899 5,156,899 Total liabilities 57,131,776 20,191,112 Stockholders' equity: Convertible, preferred stock, $ .001 par value; 3,400,000 shares authorized; (1) Series A- 66,667 issued and outstanding (1) – 67 Common stock, $ .001 par value; 41,666,667 shares authorized; 18,064,838 and 12,330,859 were issued and outstanding as of September 30, 2022 and December 31, 2021 (1) 18,065 12,331 Additional paid-in capital 73,304,687 58,279,590 Treasury stock, at cost ( 20,000 ) ( 20,000 ) Accumulated deficit ( 42,817,572 ) ( 35,731,359 ) Total Vivakor, Inc. stockholders' equity 30,485,180 22,540,629 Noncontrolling interest 7,188,711 5,012,504 Total stockholders' equity 37,673,891 27,553,133 Total liabilities and stockholders’ equity $ 94,805,667 $ 47,744,245 ____________________ (1) Share and per share amounts have been retroactively adjusted to reflect the one-for-thirty reverse stock split effective February 14, 2022. See Note 1 – Organization and Basis of Presentation for additional information See accompanying notes to consolidated financial statements 4 VIVAKOR, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Revenues $ 11,765,975 $ 965,757 $ 11,765,975 $ 1,082,757 Cost of revenues 10,553,375 938,226 10,553,375 1,050,676 Gross profit 1,212,600 27,531 1,212,600 32,081 Operating expenses: Sales and marketing 50,174 11,329 360,765 839,769 General and administrative 2,373,615 1,057,710 6,609,175 3,367,104 Amortization and depreciation 1,119,737 364,509 2,053,550 1,092,423 Total operating expenses 3,543,526 1,433,548 9,023,490 5,299,296 Loss from operations ( 2,330,926 ) ( 1,406,017 ) ( 7,810,890 ) ( 5,267,215 ) Other income (expense): Unrealized gain (loss) on marketable securities 1,074,290 ( 2,481,175 ) 661,101 1,253,100 Interest income 5,782 827 18,243 3,312 Interest expense ( 512,217 ) ( 320,836 ) ( 627,163 ) ( 716,305 ) Gain on disposition asset – – 2,456 87,044 Other income 50 88,359 40,134 95,199 Total other income (expense) 567,905 ( 2,712,825 ) 94,771 722,350 Loss before provision for income taxes ( 1,763,021 ) ( 4,118,842 ) ( 7,716,119 ) ( 4,544,865 ) Provision for income taxes – 723,911 ( 800 ) – Consolidated net loss ( 1,763,021 ) ( 3,394,931 ) ( 7,716,919 ) ( 4,544,865 ) Less: Net loss attributable to noncontrolling interests ( 183,008 ) ( 485,679 ) ( 630,706 ) ( 1,741,523 ) Net loss attributable to Vivakor, Inc. ( 1,580,013 ) ( 2,909,252 ) $ ( 7,086,213 ) $ ( 2,803,342 ) Net loss attributable to common shareholders $ ( 1,580,013 ) $ ( 2,909,252 ) $ ( 7,086,213 ) $ ( 2,803,342 ) Dividend on preferred stock – – – 42,196 Net income loss to parent $ ( 1,580,013 ) $ ( 2,909,252 ) $ ( 7,086,213 ) $ ( 2,845,538 ) Basic and diluted net loss per share (1) $ ( 0.09 ) $ ( 0.24 ) $ ( 0.46 ) $ ( 0.24 ) Basic weighted average common shares outstanding (1) 17,047,489 12,303,924 15,284,240 11,863,943 ____________________ (1) Share and per share amounts have been retroactively adjusted to reflect the one-for-thirty reverse stock split effective February 14, 2022. See Note 1 – Organization and Basis of Presentation for additional information See accompanying notes to consolidated financial statements 5 VIVAKOR, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY Series A Preferred Stock Common Stock Additional Paid-in Treasury Accumulated Non-controlling Total Stockholders' Shares Amount Shares Amount Capital Stock Deficit Interest Equity June 30, 2022 (unaudited) – $ – 15,038,619 $ 15,039 $ 67,857,646 $ ( 20,000 ) $ ( 41,237,559 ) $ 7,245,917 $ 33,861,043 Common Stock issued for stock awards – – 16,667 16 ( 16 ) – – – – Common stock issued as part consideration for the purchase of Silver Fuels Delhi, LLC and White Claw Colorado City, LLC – – 3,009,552 3,010 4,284,645 – – – 4,287,655 Stock options issued for services – – – – 317,500 – – – 317,500 Stock based compensation – – – – 844,912 – – – 844,912 Distributions to noncontrolling interest – – – – – – – ( 249,198 ) ( 249,198 ) Issuance of noncontrolling interest for a reduction of debt – – – – – – – 375,000 375,000 Net loss – – – – – – ( 1,580,013 ) ( 183,008 ) ( 1,763,021 ) September 30, 2022 (unaudited) – $ – 18,064,838 $ 18,065 $ 73,304,687 $ ( 20,000 ) $ ( 42,817,572 ) $ 7,188,711 $ 37,673,891 Series A Preferred Stock Common Stock Additional Paid-in Treasury Accumulated Non-controlling Total Stockholders' Shares Amount Shares Amount Capital Stock Deficit Interest Equity December 31, 2021 (1) 66,667 $ 67 12,330,859 $ 12,331 $ 58,279,590 $ ( 20,000 ) $ ( 35,731,359 ) $ 5,012,504 $ 27,553,133 Common Stock issued for stock awards – – 16,667 16 ( 16 ) – Common Stock issued for a reduction of liabilities – – 272,156 273 1,144,719 – – – 1,144,992 Conversion of Series A Preferred Stock to Common Stock ( 66,667 ) ( 67 ) 833,333 833 ( 766 ) – – – – Common Stock issued for cash – – 1,600,000 1,600 6,238,400 – – – 6,240,000 Common stock issued for fractional shares from reverse stock split – – 2,271 2 – – – – 2 Common stock issued as part consideration for the purchase of Silver Fuels Delhi, LLC and White Claw Colorado City, LLC – – 3,009,552 3,010 4,284,645 – – – 4,287,655 Stock options issued for services – – – – 1,172,500 – – – 1,172,500 Stock based compensation – – – – 2,185,615 – – – 2,185,615 Distributions to noncontrolling interest – – – – – – – ( 593,087 ) ( 593,087 ) Issuance of noncontrolling interest for a reduction of debt – – – – – – – 3,400,000 3,400,000 Net loss – – – – – – ( 7,086,213 ) ( 630,706 ) ( 7,716,919 ) September 30, 2022 (unaudited) – $ – 18,064,838 $ 18,065 $ 73,304,687 $ ( 20,000 ) $ ( 42,817,572 ) $ 7,188,711 $ 37,673,891 6 VIVAKOR, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY Series A Preferred Stock Common Stock Additional Paid-in Treasury Accumulated Non-controlling Total Stockholders' Shares Amount Shares Amount Capital Stock Deficit Interest Equity June 30, 2021 (1) 66,667 $ 67 12,291,416 $ 12,291 $ 56,970,572 $ ( 20,000 ) $ ( 30,141,278 ) $ 758,245 $ 27,579,897 Common Stock issued for a reduction of liabilities (1) – – 19,841 20 109,982 – – – 110,002 Stock options issued for services – – – – 427,500 – – – 427,500 Stock based compensation – – – – 111,528 – – – 111,528 Issuance of noncontrolling interest for a reduction of debt – – – – – – – 1,985,001 1,985,001 Net income (loss) – – – – – – ( 2,909,252 ) ( 485,679 ) ( 3,394,931 ) September 30, 2021 (unaudited) (1) 66,667 $ 67 12,311,257 $ 12,311 $ 57,619,582 $ ( 20,000 ) $ ( 33,050,530 ) $ 2,257,567 $ 26,818,997 Series A Preferred Stock Common Stock Additional Paid-in Treasury Accumulated Non-controlling Total Stockholders' Shares Amount Shares Amount Capital Stock Deficit Interest Equity December 31, 2020 (1) 66,667 $ 67 11,255,967 $ 11,256 $ 45,623,146 $ ( 20,000 ) $ ( 30,204,992 ) 1,279,089 $ 16,688,566 Common Stock issued for services (1) – – 33,667 34 437,967 – – – 438,001 Common Stock issued for a reduction of liabilities (1) – – 49,010 49 374,753 – – – 374,802 Common Stock issued for the purchase of a license (1) 16,667 17 224,983 – – – 225,000 Conversion of temporary equity Series B, B-1, and C-1 Preferred Stock to Common Stock (1) – – 955,947 956 9,466,648 – – – 9,467,604 Stock options issued for services – – – – 1,157,500 – – – 1,157,500 Stock based compensation – – – – 334,584 – – – 334,584 Issuance of noncontrolling interest for a reduction of debt – – – – – – – 2,720,001 2,720,001 Dividend paid in Series B-1 Preferred Stock – – – – – – ( 42,196 ) – ( 42,196 ) Net income (loss) – – – – – – ( 2,803,342 ) ( 1,741,523 ) ( 4,544,865 ) September 30, 2021 (unaudited) (1) 66,667 $ 67 12,311,257 $ 12,311 $ 57,619,582 $ ( 20,000 ) $ ( 33,050,530 ) $ 2,257,567 $ 26,818,997 ________________________ (1) Share and per share amounts have been retroactively adjusted to reflect the one-for-thirty reverse stock split effective February 14, 2022. See Note 1 – Organization and Basis of Presentation for additional information See accompanying notes to consolidated financial statements 7 VIVAKOR, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Nine Months Ended September 30, 2022 2021 OPERATING ACTIVITIES: Consolidated net loss $ ( 7,716,919 ) $ ( 4,544,865 ) Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 2,053,550 1,092,423 Forgiveness of notes payable – ( 90,711 ) Common stock options issued for services 1,172,500 1,157,500 Common stock issued for services – 438,001 Unrealized gain marketable securities ( 661,101 ) ( 1,253,100 ) Gain on disposal of asset ( 2,456 ) ( 87,044 ) Deferred income taxes – ( 19,625 ) Stock-based compensation 2,185,615 334,584 Changes in operating assets and liabilities: Accounts receivable 652,851 6,890 Prepaid expenses 23,960 – Inventory 147,719 – Other assets ( 164,919 ) 13,807 Right of use assets- operating leases 15,090 162,815 Operating lease liabilities ( 16,177 ) ( 162,815 ) Accounts payable and accrued expenses ( 1,751,613 ) ( 313,879 ) Interest on notes receivable ( 18,243 ) ( 3,312 ) Interest on notes payable 627,163 716,305 Net cash used in operating activities ( 3,452,980 ) ( 2,553,026 ) INVESTING ACTIVITIES: Proceeds from notes receivable 55,952 – Payment on costs of patents – ( 11,461 ) Cash paid to purchase a business (net of cash acquired) 96,466 – Purchase of a technology license – ( 40,000 ) Proceeds from disposal of equipment 6,000 – Purchase of equipment ( 1,807,140 ) ( 2,260,458 ) Net cash used in investing activities ( 1,648,722 ) ( 2,311,919 ) FINANCING ACTIVITIES: Finance lease liabilities ( 160,650 ) – Payment of long-term debt – ( 7,735 ) Proceeds from loans and notes payable 3,177,622 8,033,407 Proceeds from sale of common stock 6,240,000 – Payment of notes payable ( 534,111 ) ( 374,065 ) Distributions to noncontrolling interest ( 593,087 ) – Net cash provided by financing activities 8,129,774 7,651,607 Net increase (decrease) in cash and cash equivalents 3,028,072 2,786,662 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,493,719 398,904 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,521,791 $ 3,185,566 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the year for: Interest $ 480,605 $ 204,713 Income taxes $ – $ – Noncash transactions : Conversion of Series A, B, B-1, and C-1 Preferred Stock to Common Stock $ 1,200,000 $ 9,467,604 Common stock issued for a reduction in liabilities $ 1,144,992 $ 374,802 Accounts payable on purchase of equipment $ 586,717 $ – Conversion of note receivable to equity investment $ – $ 81,768 Noncontrolling interest issued for a reduction in liabilities $ 3,400,000 $ 2,720,001 Preferred stock Series C-1 issued for a reduction in liabilities $ – $ 64,950 Common stock issued for the purchase of a license $ – $ 225,000 Capitalized interest on construction in process $ 499,537 $ 1,234,801 Dividend paid in Series B-1 Preferred Stock $ – $ 42,196 Common stock issued in the acquisition of Silver Fuels Delhi, LLC and White Claw Colorado City, LLC $ 4,287,655 $ – See accompanying notes to consolidated financial statements 8 VIVAKOR, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1. Basis of Presentation On February 14, 2022, we effected a 1-for-30 reverse split of our outstanding shares of common stock (the “Reverse Stock Split”) via the filing of a certificate of change with the Nevada Secretary of State which was effective at the commencement of trading of our Common Stock. No fractional shares of the Company’s common stock will be issued as a result of the Reverse Stock Split. Any fractional shares resulting from the Reverse Stock Split will be rounded up to the nearest whole share. All issued and outstanding common stock, preferred stock, and per share amounts in the consolidated financial statements and footnotes included herein have been retroactively adjusted to reflect this reverse stock split for all periods presented. COVID-19 On March 11, 2020, the World Health Organization (“WHO”) declared the COVID-19 outbreak to be a global pandemic. In addition to the devastating effects on human life, the pandemic is having a negative ripple effect on the global economy, leading to disruptions and volatility in the global financial markets. Most U.S. states and many countries have issued policies intended to stop or slow the further spread of the disease. COVID-19 and the U.S. response to the pandemic are significantly affecting the economy. There are no comparable events that provide guidance as to the effect the COVID-19 pandemic may have, and, as a result, the ultimate effect of the pandemic is highly uncertain and subject to change. We do not yet know the full extent of the effects on the economy, the markets we serve, our business, or our operations. In March 2020 we temporarily suspended operations in Kuwait and Utah due to COVID-19 government restrictions, Utah has resumed operations in full. Kuwait has allowed for the Company to obtain site personnel visas to recommence operations. We have experienced supply chain disruptions in building our Remediation Processing Centers (“RPC”) and completing certain refurbishment on our precious metal extraction machines. These suspensions have had a negative impact on our business and there can be no guaranty that we will not need to suspend operations again in the future as a result of the pandemic. Interim Financial Information The accompanying unaudited condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes for the year ended December 31, 2021. The unaudited condensed consolidated financial statements have been prepared on a basis consistent with that used to prepare the audited annual consolidated financial statements and include, in the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the condensed consolidated financial statements. The operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results expected for the full year ending December 31, 2022. Principles of Consolidation On August 1, 2022, we closed a Membership Interest Purchase Agreement, (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, 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. 9 The Company has incorporated Vivaventures Remediation Corporation, a Texas corporation, which is a wholly owned subsidiary of the Company. The Company has incorporated this entity to direct its anticipated operations in Texas. The Company follows ASC 810-10-15 guidance with respect to accounting for Variable Interest Entities (“VIE”). A VIE is an entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties, or whose equity investors lack any of the characteristics of a controlling financial interest. A variable interest is an investment or other interest that will absorb portions of a VIE’s expected losses or receive portions of the entity’s expected residual returns. For the nine months ended September 30, 2022 and year ended December 31, 2021 the following entities are considered to be a VIE and are consolidated in our consolidated financial statements: Viva Wealth Fund I, LLC and RPC Design and Manufacturing, LLC. For the nine months ended September 30, 2022 and year ended December 31, 2021 the following entities were considered to be a VIE, but were not consolidated in our consolidated financial statements due to a lack of the power criterion or the losses/benefits criterion: Vivaventures UTS I, LLC, Vivaventures Royalty II, LLC, Vivaopportunity Fund, LLC, and International Metals Exchange, LLC. For the nine months ended September 30, 2022 and year ended December 31, 2021 the unaudited financial information for the unconsolidated VIEs is as follows: Vivaventures UTSI, LLC held assets of $ 3,345,351 and $ 3,753,296 (where the primary asset represents a receivable from the Company), and liabilities of $ 47,049 and $ 12,608 . Vivaventures Royalty II, LLC held assets of $ 3,146,973 and $ 2,648,810 (where the primary asset represents a receivable from the Company), and liabilities of $ 1,720 and $ 300 . Vivaopportunity Fund LLC held assets of $ 2,119,826 and $ 2,119,961 (where the primary asset represents a noncontrolling interest in units of a consolidated entity of the Company) and $ 8,755 and no liabilities. International Metals Exchange, LLC held assets of $ 29,780 and $ 30,461 and liabilities of $ 1,900 . Silver Fuels Delhi, LLC: As of September 30, 2022, the cash and cash equivalents of this VIE are not restricted and can be used to settle the obligations of the reporting entity. As of September 30, 2022 this VIE has a note receivable with the reporting entity in the amount of $ 557,401 , which is eliminated upon consolidation. We have the primary risk (expense) exposure in financing and operating the assets and are responsible for 100% of the operation, maintenance and any unfunded capital expenditures, and the decisions related to those expenditures including budgeting, financing and dispatch of power. Based on all these facts, it was determined that we are the primary beneficiary of SFD. Therefore, SFD has been consolidated by the Company. White Claw Colorado City, LLC: As of September 30, 2022, the cash and cash equivalents of this VIE are not restricted and can be used to settle the obligations of the reporting entity. We have the primary risk (expense) exposure in financing and operating the assets and are responsible for 100% of the operation, maintenance and any unfunded capital expenditures, and the decisions related to those expenditures including budgeting, financing and dispatch of power. Based on all these facts, it was determined that we are the primary beneficiary of WCCC. Therefore, WCCC has been consolidated by the Company. RPC Design and Manufacturing, LLC: As of September 30, 2022 and year ended December 31, 2021, investors in RDM have a noncontrolling interest of $ 303,451 and $ 629,694 , respectively. As of September 30, 2022 and December 31, 2021, the cash and cash equivalents of this VIE are not restricted and can be used to settle the obligations of the reporting entity. As of September 30, 2022 and December 31, 2021 this VIE has an outstanding note payable to the reporting entity in the amount of $ 851,318 and $ 354,566 , which is eliminated upon consolidation. We have the primary risk (expense) exposure in financing and operating the assets and are responsible for 100% of the operation, maintenance and any unfunded capital expenditures, which ultimately could be 100% of a custom machine, and the decisions related to those expenditures including budgeting, financing and dispatch of power. Based on all these facts, it was determined that we are the primary beneficiary of RDM. Therefore, RDM has been consolidated by the Company. Any intercompany revenue and expense associated with RDM and its license agreement with the Company has been eliminated in consolidation. 10 Viva Wealth Fund I, LLC: As of September 30, 2022 and December 31, 2021, the cash and cash equivalents of this VIE are restricted solely for the use of proceeds of the VWFI offering (to manufacture RPCs) and cannot be used to settle the obligations of the reporting entity. As of September 30, 2022 and December 31, 2021, the Company has cash attributed to variable interest entities of $ 147,865 and $ 199,952 . As of September 30, 2022, VWFI has reached $6,250,000 in funding and has released the funding for construction of RPC Series A. VWFI has commenced fundraising for RPC Series B. In the event that VWFI does not raise at least $6,250,000 for these RPC Series by the offering termination date (which date has been extended until March 31, 2023), then the convertible notes and/or units would convert into Vivakor common stock where the minimum conversion price will be the greater of $13.50 or a 10% discount to market per share or in the event of a public offering, 200% of the per share price of the Company common stock sold in the underwritten offering, which was closed on February 14, 2022 at $5.00 per share. As of November 3, 2022, VWFI has raised approximately $5,165,000 for RPC Series B. VWFI unit holders may also sell their units to the Company for their principal investment amount on the 3 rd , 4 th , and 5 th anniversary of the offering termination date, which if this option were exercised, the Company may elect to pay the amount in either cash or common stock. The Company also has the option to purchase any LLC units where the members did not exercise their conversion option under the same terms and pricing for cash or common stock. VWFI has entered into a license agreement with the Company indicating that VWFI will pay the Company a license fee of $1,000,000 per series of equipment manufactured with the Company’s proprietary technology, however these transactions are eliminated upon consolidation. All of the operations of VWFI relate to private placement offering to fund and manufacture proprietary equipment for the Company, as intended in VWFI’s design and organization by the Company, so that the Company controls VWFI in its business purpose, use of proceeds, and selling and leasing of its equipment solely to the Company. Creditors of VWFI have no recourse to the general credit of the Company. We have the primary risk (expense) exposure in financing and operating the assets and are responsible for 100% of the operation, and any unfunded capital expenditures, and the expense to the unit holders in conversion to common stock if series of equipment cannot be fully funded, which ultimately could be 100% of any custom machine. By request of the fund manager, we are responsible for the decisions related to the expenditures of VWFI proceeds including budgeting, financing and dispatch of power surrounding the series of equipment. Based on all these facts, it was determined that we are the primary beneficiary of VWFI. Therefore, VWFI has been consolidated by the Company. Business Combinations We apply the provisions of ASC 805, Business Combinations (ASC 805), in accounting for our acquisitions. ASC 805 requires that we evaluate whether a transaction pertains to an acquisition of assets, or to an acquisition of a business. A business is defined as an integrated set of assets and activities that is capable of being conducted and managed for the purpose of providing a return to investors. Asset acquisitions are accounted for by allocating the cost of the acquisition to the individual assets and liabilities assumed on a relative fair value basis; whereas the acquisition of a business requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at the acquisition date fair values. Goodwill as of the business acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the business acquisition date as well as any contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the business acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of a business acquisition’s measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations. In addition, uncertain tax positions and tax related valuation allowances assumed in a business combination are initially estimated as of the acquisition date. We reevaluate these items quarterly based upon facts and circumstances that existed as of the business acquisition date with any adjustments to our preliminary estimates being recorded to goodwill if identified within the measurement period. Subsequent to the measurement period or our final determination of the tax allowance’s or contingency’s estimated value, whichever comes first, changes to these uncertain tax positions and tax related valuation allowances will affect our provision for income taxes in our consolidated statement of operations and could have a material impact on our results of operations and financial position. 11 Long Lived Assets The Company reviews the carrying values of its long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the expected future cash flow from the use of the asset and its eventual disposition is less than the carrying amount of the asset, an impairment loss is recognized and measured using the fair value of the related asset. No impairment charges were incurred during the nine months ended September 30, 2022 or for the year ended December 31, 2021, as the Company was still in the early phases of our business plan and operating losses were expected in our early phases. On March 11, 2020, the World Health Organization (“WHO”) declared the COVID-19 outbreak to be a global pandemic. In addition to the devastating effects on human life, the pandemic is having a negative ripple effect on the global economy, leading to disruptions and volatility in the global financial markets. Most U.S. states and many countries have issued policies intended to stop or slow the further spread of the disease. We have observed supply chain disruptions from the COVID-19 pandemic that has contributed to delays in the completion of the manufacturing of our RPCs as well as certain refurbishments to our precious metal extraction machines, although we do not believe that these delays have constituted a triggering event for impairment of our assets. Our Kuwait operations were suspended to comply with the social distancing measures implemented in Kuwait, but in 2022 has allowed for the Company to obtain site personnel visas to recommence operations. Our Utah operations were temporarily suspended from March through May 2020, but have since resumed in full in its manufacturing of its RPCs, and construction and implementation of site and infrastructure preparations in anticipation of commencing operations in 2022. The Company has been in discussions for the potential sale of the precious metal extraction business and ammonia synthesis business, or certain assets of those businesses, including its equipment. The Company is exploring all options including operating the business, creating a joint venture to operate the business, or appraising the businesses or their assets for the potential sale for at least the Company’s carrying value. There can be no assurance that market conditions will not change or demand for the Company’s services will continue, which could result in impairment of long-lived assets in the future. Asset Retirement Obligations Under ASC 410-20, Asset Retirement and Environmental Obligations – Asset Retirement Obligations, which relates to accounting requirements for costs associated with legal obligations to retire tangible, long-lived assets, the Company records an Asset Retirement Obligation (“ARO”) at fair value in the period in which it is incurred by increasing the carrying amount of the related long-lived asset. In each subsequent period, liability is accreted over time towards the ultimate obligation amount and the capitalized costs are depreciated over the useful life of the related asset. The Company did not identify any significant or material cost after review; thus, no ARO obligation is recorded for nine months ended September 30, 2022. Intangible Assets and Goodwill: We account for intangible assets and goodwill in accordance with ASC 350 “Intangibles-Goodwill and Other” (“ASC 350”). Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Intangible asset amounts represent the acquisition date fair values of identifiable intangible assets acquired. The fair values of the intangible assets were determined by using the income approach, discounting projected future cash flows based on management’s expectations of the current and future operating environment. The rates used to discount projected future cash flows reflected a weighted average cost of capital based on our industry, capital structure and risk premiums including those reflected in the current market capitalization. Definite-lived intangible assets are amortized over their useful lives, which have historically ranged from 10 to 20 years. The carrying amounts of our definite-lived intangible assets are evaluated for recoverability whenever events or changes in circumstances indicate that the entity may be unable to recover the asset’s carrying amount. We assess our intangible assets in accordance with ASC 360 “ Property, Plant, and Equipment ” (“ASC 360”). Impairment testing is required when events occur that indicate an asset group may not be recoverable (“triggering events”). As detailed in ASC 360-10-35-21, the following are examples of such events or changes in circumstances (sometimes referred to as impairment indicators or triggers): (a) A significant decrease in the market price of a long-lived asset (asset group) (b) A significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition. (c) A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator (d) An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group) (e) A current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset group) (f) A current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The term more likely than not refers to a level of likelihood that is more than 50 percent. We have evaluated our intangible assets and found that certain losses and a delay in our business plan may have constituted a triggering event for our intangible assets. We performed an analysis and assessed that there was no impairment for the nine months ended September 30, 2022 or for the year ended December 31, 2021. The Company has been in discussions for the potential sale of the ammonia synthesis business, or certain assets of that business, including its patents. The Company is exploring all options including operating the business, creating a joint venture to operate the business, or appraising the businesses or their assets for the potential sale for at least the Company’s carrying value. 12 The Company performs its annual goodwill impairment test in the fourth quarter each year, and more frequently if facts and circumstances indicate such assets may be impaired, including significant declines in actual or future projected cash flows and significant deterioration of market conditions. The Company’s goodwill impairment assessment includes a qualitative assessment to determine whether it is more likely than not that the fair value of the goodwill is below its carrying value, each year, and more often if there are significant changes in business conditions that could result in impairment. When a quantitative analysis is considered necessary for the annual impairment analysis of goodwill, the Company develops an estimated fair value for the reporting unit considering three different approaches: 1) market value, using the Company’s stock price plus outstanding debt; 2) discounted cash flow analysis; and 3) multiple of earnings before interest, taxes, depreciation and amortization based upon relevant industry data. The estimated fair value of the reporting unit is then compared to its carrying amount, including goodwill. If the estimated fair value exceeds the carrying amount, goodwill is not considered impaired. If the carrying amount, including goodwill, exceeds its estimated fair value, any excess of the carrying value of goodwill of the reporting unit over its fair value is recorded as an impairment. The Company has determined there has not been an interim impairment trigger since acquisition on August 1, 2022. Contingent liabilities From time to time the Company may work with success based professional service providers, including securities counsel for private offerings, which may require contingent payments to be made based on the future offering fundraising and financial performance of the offering. In the event that an offering does not perform or is never consummated, the Company may still be required to pay a portion of the success fees for the services provided in preparing the offering. The fair value of the contingent payments would be estimated using the present value of management's projections of the financial results. Failure to correctly project the financial results of the offering or settlement of legal fees related to the offering could materially impact our results of operations and financial position. Advertising Expense Advertising costs are expensed as incurred. The Company did not incur advertising expense for the nine months ended September 30, 2022 and 2021. Net Income/Loss Per Share Basic net income (loss) per share is calculated by subtracting any preferred interest distributions from net income (loss), all divided by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net income (loss) per common share is computed by dividing the net income (loss) by the weighted-average number of common share equivalents outstanding for the period determined using the treasury stock method if their effect is dilutive. Potential dilutive instruments as of September 30, 2022 and 2021 include the following: convertible notes payable convertible into approximately 14,560 and 177,617 shares of common stock, convertible Series A preferred stock convertible into none and 666,667 shares of common stock (due to the event of a public offering of the Company’s common stock in February 2022 this will convert to 833,333 shares), stock options granted to employees of 2,006,251 and 183,333 shares of common stock. Stock options granted to Board members or consultants of 133,333 and 466,667 shares of common stock were granted as of September 30, 2022 and 2021. There were also warrants issued and outstanding to EF Hutton of 80,000 shares of common stock as of September 30, 2022. These warrants were related to and granted during the close of the underwritten public offering in February 2022. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates, judgments, and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We believe our critical accounting estimates relate to the following: Recoverability of current and noncurrent assets, revenue recognition, stock-based compensation, income taxes, effective interest rates related to long-term debt, marketable securities, cost basis and equity method investments, lease assets and liabilities, equity method investments, valuation of stock used to acquire assets, derivatives, and fair values of the intangible assets and goodwill related to business combinations. While our estimates and assumptions are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ from these estimates and assumptions. 13 Fair Value of Financial Instruments The Company follows Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures” (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that requires the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact on the Company’s financial position or operating results but did expand certain disclosures. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: Level 1: Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2: Applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3: Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s (“FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The carrying amounts reported in the consolidated balance sheets for marketable securities are classified as Level 1 assets due to observable quoted prices for identical assets in active markets. The carrying amounts reported in the consolidated balance sheets for cash, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their estimated fair market values based on the short-term maturity of these instruments. The recorded values of notes payable approximate their current fair values because of their nature, rates, and respective maturity dates or durations. Recent accounting pronouncements The FASB issued ASU No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, in October 2021. The guidance improves the accounting for acquired revenue contracts with customers in a business combination by requiring contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC Topic 606, Revenue from Contracts with Customers, as if the acquirer had originated the contracts. This guidance will be effective for fiscal years beginning after December 15, 2022, including interim periods within that year, with early adoption permitted. The Company has early adopted this pronouncement and it has not materially impacted our consolidated financial statements. Revenue Recognition We adopted Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”). Due to the business combination in which we acquired Silver Fuels Delhi, LLC and White Claw Colorado City, LLC, for the nine months ended September 30, 2022, approximately 97 % of our sales consist of the sale of crude oil and are recognized at the time title to the product sold transfers to the purchaser, which occurs upon delivery of the product to the purchaser or to the purchaser’s designated delivery points, at contractual prices, which completes our performance obligation. After completion of our performance obligation, we have an unconditional right to consideration as outlined in our contracts. Due to the nature of our product we do not accept returns. Our receivables will generally be collected in less than three months, in accordance with the underlying payment terms. 14 Major Customers and Concentration of Credit Risk The Company has two major customers, which account for approximately 96 % of the balance of accounts receivable as of September 30, 2022 and for 99 % of the Company’s revenues for the nine months ended September 30, 2022. Additionally, the Company operates in the crude oil industry. The industry concentration has the potential to impact the Company’s overall exposure to credit risk in that its customer may be similarly affected by changes in economic, industry or other conditions. There is risk that the Company would not be able to identify and access replacement markets at comparable margins. Note 2. Liquidity We have historically suffered net losses and cumulative negative cash flows from operations, and as of September 30, 2022, we had an accumulated deficit of approximately $ 42.8 million . As of September 30, 2022 we had cash of $ 4,521,791 . The Company closed an underwritten public offering of 1,600,000 shares of common stock, at a public offering price of $5.00 per share, for aggregate gross proceeds of $ 8 million , prior to deducting underwriting discounts, commissions, and other offering expenses. Prior to the offering, we financed our operations primarily through debt financing, private equity offerings our working interest agreements. We believe we have other liquid assets that may be used to assist in financing the operations of the Company if needed, including marketable securities in Scepter, which hold a fair value $ 2,892,319 as of September 30, 2022 and have been deposited for trading. We believe the liquid assets from the Company’s available for sale investments and funding provided from subsequent fundraising activities (see Note 19) of the Company give it adequate working capital to finance our day-to-day operations for at least twelve months through November 2023. Note 3. Business Combination On June 15, 2022, we entered into a Membership Interest Purchase Agreement (the “MIPA”), with Jorgan Development, LLC ("Jorgan") and JBAH Holdings, LLC (“JBAH” and, together with Jorgan, the “Sellers”), as the equity holders of Silver Fuels Delhi, LLC (“SFD”) and White Claw Colorado City, LLC (“WCCC”) whereby, at closing, which occurred on August 1, 2022, the Company acquired 100% 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 $32.9 million, after post-closing adjustments, paid for by the Company with a combination of shares of the issuance of 3,009,552 of the Company’s common stock and secured three-year promissory notes made by the Company in favor of the Sellers in an aggregate amount of $ 28,664,284 . For the acquisition of Silver Fuels Delhi, LLC and White Claw Colorado City, LLC, the following table summarizes the acquisition date fair value of consideration paid, identifiable assets acquired and liabilities assumed: Schedule of business combination Common stock $ 4,287,655 Note payable to seller 28,664,284 Fair value of total consideration paid $ 32,951,939 Net assets acquired and liabilities assumed Assets acquired in business combination Current assets $ 6,573,359 Finance lease right-of-use assets (property, plant and equipment) 4,464,217 Other assets 546,834 Contract-based intangible assets 25,195,644 Total assets acquired $ 36,780,054 Liabilities assumed in business combination Current liabilities $ ( 7,054,734 ) Long term liabilities ( 3,335,409 ) Total liabilities acquired $ ( 10,390,143 ) Total net assets acquired $ 26,389,911 Goodwill $ 6,562,028 15 The value of goodwill represents SFD and WCCC’s ability to generate profitable operations going forward. Management estimated the provisional fair values of the intangible assets and goodwill at September 30, 2022. The measurement of assets acquired and liabilities assumed in the business combination is based on preliminary estimates made by management and subject to adjustment within twelve months. Management is performing a valuation study to calculate the fair value of the acquired intangible assets and goodwill, which it plans to complete within the one-year measurement period. The acquired contracts are amortized over the 9 year, 5 month life of the contracts. Business combination related costs were expensed as incurred and consisted of various advisory, legal, accounting, valuation and other professional fees totaling $174,592 for the nine months ended September 30, 2022. These costs are included in general and administrative expense in our consolidated statement of operations. Since the date of acquisition on August 1, 2022 through September 30, 2022 $11,738,062 of sales in aggregate is attributed to SFD and WCCC. The unaudited financial information in the table below summarizes the combined results of operations of the Company, SFD, and WCCC for the nine months ended September 30, 2022 2021, on a pro forma basis, as though the companies had been combined as of January 1, 2021. The pro forma earnings for the nine months ended September 30, 2022 and 2021, were adjusted to include intangible amortization expense of contracts acquired of $2,006,662, respectively. The pro forma earnings for the nine months ended September 30, 2022 and 2021, were adjusted to include interest expense on notes payable that were issued as consideration of $1,539,093 and $691,705, respectively. The $174,592 of acquisition-related expenses were excluded from the nine months ended September 30, 2022, and included in the nine months ended September 30, 2021, as if the acquisition occurred at January 1, 2021. The unaudited pro forma financial information does not purport to be indicative of the Company’s combined results of operations which would actually have been obtained had the acquisition taken place on January 1, 2021, nor should it be taken as indicative of future consolidated results of operations. Schedule of proforma information (Unaudited) Nine months ended September 30, Nine months ended September 30, 2022 2021 Total net sales $ 47,667,690 $ 23,835,514 Loss from operations ( 7,143,460 ) ( 4,018,231 ) Net loss (attributable to Vivakor, Inc.) $ ( 8,402,844 ) $ ( 4,670,569 ) Basic and diluted loss per share ( 0.55 ) ( 0.31 ) Weighted average shares outstanding 15,284,240 14,873,495 16 Note 4. Accounts receivable Accounts receivable primarily relates to sales to trade accounts receivable of customers for crude oil. Differences between the amounts due from customers less an estimated allowance for doubtful accounts, if deemed necessary by management, and based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts, if any, by identifying troubled accounts and by using historical experience applied to an aging of accounts. As of September 30, 2022 no allowance for doubtful accounts was deemed necessary. An allowance for doubtful accounts was considered necessary by management as of December 31, 2021 in the amount of $ 33,000 . Trade accounts receivable are zero interest bearing. Trade accounts receivable of $ 1,186,803 and other accounts receivable of $ 33,602 are with vendors or companies who share a beneficiary, James Ballengee, with Jorgan and JBAH, which in aggregate hold approximately 16% of our common stock. Note 5. Prepaid Expenses and Other Assets As of September 30, 2022, our prepaid expenses mainly consist of prepaid insurances. As of September 30, 2022 our other assets mainly consist of various deposits with vendors, professional service agents, security deposits on office and warehouse leases, and security deposits on finance leases. As of September 30, 2022 and December 31, 2021 we had office and warehouse lease deposits in the amount of $ 61,676 and $ 73,245 . As of September 30, 2022 we had deposits in the amounts of $ 130,000 with professional service agencies and a reclamation bond with the Utah Division of Oil, Gas and Mining in the amount of $ 14,288 . As of September 30, 2022 we had finance lease deposits of $ 579,034 , which will be returned at the end of the finance leases after we have complied with the terms of the lease (see Note 12). Note 6. Marketable Securities As of December 31, 2020, the Company owned 3,309,758 shares of common stock in Odyssey Health, Inc. (“Odyssey”) ticker: ODYY, OTC Markets. In December 2021 we sold such shares of Odyssey in a private transaction for a purchase price of $ 860,491 , with $10,000 cash delivered at signing and a note issued in favor of Vivakor in the amount of $850,491, reflecting the market price at that time. The Company accounted for such securities based on the quoted price from the OTC Markets where the stock is traded, which resulted in the Company recording an unrealized loss of $ 379,011 on these marketable securities for the three months ended September 30, 2021 compared to an unrealized gain of $ 402,114 for the nine months ended September 30, 2021. The Company has an investment of $ 881,768 or 826,376,882 shares of common stock in Scepter Holdings, Inc. (“Scepter”), ticker: BRZL, OTC Markets. The Company currently holds an 18% equity holding in Scepter, and is not deemed to have significant influence and is classified as marketable securities with the change in unrealized gains and losses on the investment included in the statement of operations for the three and nine months ended September 30, 2022 and 2021. In August 2021 we converted $ 81,768 of our note receivable with Scepter into 26,376,882 shares of Scepter common stock pursuant to the terms of the note at $0.0031 per share. On the date of the conversion, the Scepter price per share on OTC Markets was $0.0062 per share, which resulted in a $ 87,044 gain on the disposition of the note receivable. The Company has accounted for such securities based on the quoted price from the OTC Markets where the stock is traded, which resulted in the Company recording an unrealized loss on marketable securities of $ 1,074,290 and $ 1,389,014 for the three months ended September 30, 2022 and 2021 compared to an unrealized gain of $ 661,101 and 850,985 for the nine months ended September 30, 2022 and 2021. As of September 30, 2022 and December 31, 2021 our Scepter marketable securities were valued at $ 1,818,029 and $ 2,231,218 . As of June 30, 2022 and December 31, 2021, marketable securities were $ 2,892,319 and $ 2,231,218 . For the three months ended September 30, 2022 and 2021, the Company recorded a total unrealized loss of $ 1,074,290 and $ 2,481,175 compared to an unrealized gain of $ 661,101 and $ 1,253,100 for the nine months ended September 30, 2022 and 2021 on marketable securities in the statement of operations. Note 7. Inventories As of September 30, 2022, inventories consist of crude oil and Fenix iron. The crude oil is related to our oil gathering facility in Delhi, Louisiana. The nano Fenix Iron are finished goods that have a 20-year shelf life and were acquired at cost for $ 192,000 . As of December 31, 2021, inventories consist primarily of the Fenix Iron. Inventories are valued at the lower of cost or market (net realizable value). 17 Note 8. Property and Equipment The following table sets forth the components of the Company’s property and equipment at September 30, 2022 and December 31, 2021: Schedule of property and equipment, net September 30, 2022 December 31, 2021 Gross Carrying Amount Accumulated Depreciation Net Book Value Gross Carrying Amount Accumulated Depreciation Net Book Value Office furniture and equipment $ 27,998 $ 5,434 $ 22,564 $ 14,998 $ 4,000 $ 10,998 Vehicles 36,432 24,288 12,144 48,248 26,306 21,942 Finance lease right-of-use assets 5,810,339 1,471,848 4,338,551 – – – Precious metal extraction machine- 1 ton 2,280,000 342,000 1,938,000 2,280,000 228,000 2,052,000 Precious metal extraction machine- 10 ton 5,320,000 798,000 4,522,000 5,320,000 532,000 4,788,000 Construction in process: Bioreactors 1,440,000 – 1,440,000 1,440,000 – 1,440,000 Nanosponge/Cavitation device 44,603 – 44,603 22,103 – 22,103 Remediation Processing Unit 1 6,116,013 – 6,116,013 6,249,082 – 6,249,082 Remediation Processing Unit 2 5,714,894 – 5,714,894 5,201,098 – 5,201,098 Remediation Processing Unit System A 3,739,637 – 3,739,637 2,561,467 – 2,561,467 Remediation Processing Unit System B 3,657,420 – 3,657,420 2,345,421 – 2,345,421 Total fixed assets $ 34,187,396 $ 2,641,570 $ 31,545,826 $ 25,482,417 $ 790,306 $ 24,692,111 For the year ended December 31, 2021 the Company issued 5,413 shares of Series C-1 Preferred Stock value at $ 64,950 for equipment, which has been valued based on similar cash purchases of the Series C-1 Preferred Stock at approximately $12.00 per share. For the nine months ended September 30, 2022 and 2021 depreciation expense was $ 500,352 and $ 8,671 . For the nine months ended September 30, 2022 and 2021 capitalized interest to equipment from debt financing was $ 499,537 and $ 1,234,801 . Equipment that is currently being manufactured is considered construction in process and is not depreciated until the equipment is placed into service. The Company has been in discussions for the potential sale of the precious metal extraction business and ammonia synthesis business, or certain assets of those businesses, including its precious metal extraction machines and bioreactors. The Company is exploring all options including operating the business, creating a joint venture to operate the business, or appraising the businesses or their assets for the potential sale for at least the carrying value. Note 9. Intellectual Property, Net and Goodwill The following table sets forth the components of the Company’s intellectual property at September 30, 2022 and December 31, 2021: Schedule of components of intellectual property September 30, 2022 December 31, 2021 Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value Extraction Technology patents $ 113,430 $ 10,565 $ 102,865 $ 113,430 $ 5,560 $ 107,870 Extraction Technology 16,385,157 6,280,977 10,104,180 16,385,157 5,666,534 10,718,623 Acquired crude oil contracts 25,195,644 445,925 24,749,719 – – – Ammonia synthesis patents 4,931,380 2,465,690 2,465,690 4,931,380 2,095,836 2,835,544 Total Intellectual property $ 46,625,611 $ 9,203,157 $ 37,422,454 $ 21,429,967 $ 7,767,930 $ 13,662,037 The changes in the carrying amount of goodwill are as follows: Schedule of goodwill Goodwill January 1, 2021 $ – Acquisition 6,562,028 September 30, 2022 $ 6,562,028 On August 1, 2022, the Company closed a Membership Interest Purchase Agreement, (the “MIPA”), with Jorgan Development, LLC, and JBAH Holdings, LLC, 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, the Company acquired all of the issued and outstanding membership interests in each of SFD and WCCC making SFD and WCCC wholly owned subsidiaries of the Company. The purchase price for the Membership Interests is approximately $ 32.9 million , after post-closing adjustments. 18 In the business combination of acquiring WCCC we also acquired WCCC’s Oil Storage Agreement with White Claw Crude, LLC (“WC Crude”), who shares a beneficiary, James Ballengee, with Jorgan and JBAH, whom in aggregate now hold approximately 16% of our common stock. Under this agreement, WC Crude has the right, subject to the payment of service and maintenance fees, to store volumes of crude oil and other liquid hydrocarbons at a certain crude oil terminal operated by WCCC. WC Crude is required to pay $150,000 per month even if the storage space is not used. The agreement expires on December 31, 2031. In the business combination of acquiring SFD, we acquired an amended Crude Petroleum Supply Agreement with WC Crude (the “Supply Agreement”), under which WC Crude supplies volumes of Crude Petroleum to SFD, which provides for the delivery to SFD a minimum of 1,000 sourced barrels per day, and includes a guarantee that when SFD resells these barrels, if SFD does not make at least a $5.00 per barrel margin on the oil purchased from WC Crude, then WC Crude will pay to SFD the difference between the sales price and $5.00 per barrel. In the event that SFD makes more than $5.00 per barrel, SFD will pay WC Crude a profit-sharing payment in the amount equal to 10% of the excess price over $5.00 per barrel, which amount will be multiplied by the number of barrels associated with the sale. The Supply Agreement expires on December 31, 2031. The measurement of assets acquired and liabilities assumed in the business combination is based on preliminary estimates made by management and subject to adjustment within twelve months. Management estimated the provisional fair values of the intangible assets and goodwill at September 30, 2022. Management is performing a valuation study to calculate the fair value of the acquired intangible assets and goodwill, which it plans to complete within the one-year measurement period. Management has estimated the provisional fair values of goodwill and the acquired contracts (described above) to be $ 6,562,028 and $ 25,195,644 . The acquired contracts are amortized over a 9 year, 5 month life. Based on the estimated fair value, the three and nine months ended September 30, 2022 the amortization expense of the acquired contracts was $ 445,925 , and amortization expense for the year 2022 is estimated to be $ 1,114,812 , and for the years 2023 through 2027 is $ 2,675,644 in each respective year. As of September 30, 2022 the estimated net value of the acquired contracts is $ 24,749,719 . The Company has been in discussions for the potential sale of the ammonia synthesis business, or certain assets of that business, including its patents. The Company is exploring all options including operating the business, creating a joint venture to operate the business, or appraising the businesses or their assets for the potential sale for at least the carrying value. Note 10. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consist of the following: Schedule of accounts payable and accrued expenses September 30, December 31, 2022 2021 Accounts payable $ 6,524,550 $ 1,450,531 Office access deposits 340 340 Accrued compensation 603,207 175,000 Unearned revenue 41,871 – Accrued interest (various notes and loans payable 335,559 – Accrued interest (working interest royalty programs) 1,562,160 – Accrued tax penalties and interest 405,314 398,114 Accounts payable and accrued expenses $ 9,473,001 $ 2,023,985 As of September 30, 2022, our accounts payable are primarily made up of trade payable for the purchase of for crude oil . Trade accounts payables in the amount of $ 3,731,888 is with a vendor who shares a beneficiary, James Ballengee, with Jorgan and JBAH, whom in aggregate now hold approximately 16% of our common stock. $67,446 of accounts payable, which are not trade receivable, are with companies who share a beneficiary with Jorgan and JBAH, whom in aggregate now hold approximately 16% of our common stock. $43,434 of accounts payable, which are not trade receivable, are with a related party where our Chief Financial Officer sits on the board of the directors and is an officer. As of December 31, 2021 the Company accrued $225,000 for a milestone payment to be paid to TBT Group, Inc. (of which an independent Vivakor Board member is a 7% shareholder) related to our worldwide, exclusive license agreement for the license of piezo electric and energy harvesting technologies for creating self-powered sensors for making smart roadways. This milestone payment was paid in March 2022. 19 Note 11. Loans and Notes Payable Loans and Notes payable consist of the following: Schedule of loans and notes payable September 30, December 31, 2022 2021 Various promissory notes and convertible notes $ 50,960 $ 50,960 Novus Capital Group LLC Note (a) 281,268 378,854 Triple T Notes 337,044 353,330 National Buick GMC 16,977 19,440 Various Convertible Bridge Notes (b) – 1,075,813 Blue Ridge Bank 410,200 410,200 Small Business Administration 299,900 318,175 JP Morgan Chase Bank 90,645 90,645 JBAH Holdings, LLC (c) 286,643 – Jorgan Development, LLC (c) 28,377,641 – Various Promissory Notes (d) 2,794,500 3,416,379 Total Notes Payable $ 32,945,778 $ 6,113,796 Loans and notes payable, current $ 971,441 $ 1,511,447 Loans and notes payable, current attributed to variable interest entity $ 2,597,709 $ 3,416,379 Loans and notes payable, long term $ 29,376,628 $ 1,185,970 Schedule of maturities of loans and notes payable 2022 $ 2,461,420 2023 1,980,382 2024 16,756,429 2025 11,392,317 2026 124,285 Thereafter 230,945 Total $ 32,945,778 __________________ (a) On September 5, 2017, the Company acquired patents in the amount of $4,931,380 in which the Company also agreed to assume the encumbering debt on asset in the amount of $334,775 due in December 2019 with no interest accruing until 2020 and a deferred tax liability of $1,043,398. As of April 1, 2022, the lender agreed to extend the maturity of the note to April 1, 2023 with an initial payment of $52,448 and approximate monthly payment of $29,432 thereafter until the note is fully paid. (b) In 2021 and 2020 the Company entered into various convertible promissory notes as follows: Throughout 2021 and 2020 the Company entered into convertible promissory notes with an aggregate principal of $415,000. The notes accrue interest at 10% per annum and have a maturity of the earlier of 12 months or the consummation of the Company listing its Common Stock on a senior stock exchange. The notes are convertible at the Company’s option into shares of the Company’s common stock at a price equal to 80% of the opening price of the Company’s common stock on the national exchange or the offering price paid by the investors in the financing in connection with the uplist, whichever is lower, or (ii) repaid in cash in an amount equal to the indebtedness being repaid plus a premium payment equal to 15% of the amount being repaid. If an event of default has occurred and the Company does not convert the amounts due under the Note into the Company’s common stock, then the Company will have the option to convert the outstanding indebtedness into shares of the Company’s common stock at a price equal to 80% of the weighted average trading price of the Company’s common stock on the OTC Markets, or be repaid in cash in an amount equal to all principal and interest due under the Note. All of these notes were converted to common stock as of September 30, 2022. 20 On October 13, 2020, the Company entered into a convertible promissory note in an amount of $280,500 having an interest rate of 12% per annum. The note bears a 10% Original Issue Discount. The loan shall mature in 1 year and may be convertible at the lower of $12.00 or 80% of the lowest median daily traded price over ten trading days prior to conversion, but in the event of a Qualified Uplist the note may be converted at a 30% discount to market. The Company also issued 3,333 restricted shares with no registration rights in conjunction with this note, which was recorded as a debt discount in the amount of $44,000, which is amortized to interest expense over the term of the agreements using the effective interest method. On March 28, 2021 the parties amended this agreement to state that in no event shall the conversion price be lower than $3.00 per share. In October 2021 the parties agreed to extend the maturity of this loan to April 13, 2022 in exchange for an increase in principal owed of $30,000. This note has been converted to common stock as of September 30, 2022. On February 4, 2021, the Company entered into a convertible promissory note in an amount of $277,778 having an interest rate of 12% per annum. The note bears a 10% Original Issue Discount. The loan shall mature in 1 year and may be convertible at the lower of $12.00 or 80% of the lowest median daily traded price over ten trading days prior to conversion, but in the event of a Qualified Uplist the note may be converted at a 30% discount to market. The Company also issued 3,333 restricted shares with no registration rights in conjunction with this note, which was recorded as a debt discount in the amount of $36,000, which is amortized to interest expense over the term of the agreements using the effective interest method. On March 28, 2021 the parties amended this agreement to state that in no event shall the conversion price be lower than $3.00 per share. In February 2022 the parties agreed to extend the maturity of this loan to August 8, 2022 in exchange for an increase in principal owed of $25,000. This note has been converted to common stock as of September 30, 2022. (c) On August 1, 2022, we closed a Membership Interest Purchase Agreement, (the “MIPA”), with Jorgan Development, LLC, ("Jorgan") and JBAH Holdings, LLC (“JBAH”), as the equity holders of Silver Fuels Delhi, LLC ("SFD") and White Claw Colorado City, LLC ("WCCC" ) whereby, the Company acquired all of the issued and outstanding membership interests in each of SFD and WCCC, making SFD and WCCC wholly owned subsidiaries of the Company. The consideration for the membership interests included secured three-year promissory notes in the amount of $286,643 to JBAH and $28,377,641 to Jorgan, which accrue interest of prime plus 3% on the outstanding balance of the notes. Under the MIPA, the Company has committed to make a payment to Jorgan and JBAH on or before February 1, 2024 in the amounts of $16,306,754 to Jorgan and $164,715 to JBAH, whether in cash or unrestricted common stock. In the event of a breach of the terms of the notes, the sole and exclusive remedy of the holder of the notes will be to unwind the MIPA transaction. The principal amount of the notes, together with any and all accrued and unpaid interest thereon, will be paid to on a monthly basis in an amount equal to the Monthly Free Cash Flow continuing thereafter on the twentieth (20 th ) calendar day of each calendar month thereafter. Monthly Free Cash Flow means cash proceeds received by SFD and WCCC from its operations minus any capital expenditures (including, but not limited to, maintenance capital expenditures and expenditures for personal protective equipment, additions to the land/current facilities and pipeline connections) and any payments on the lease obligations of SFD and WCCC. Subsequent to September 30, 2022, we entered into an agreement amending the notes issued as consideration in the MIPA, whereby, as soon as is practicable, following and subject to the approval of the Company’s shareholders, and provided there are no applicable prohibitions under the rules of The Nasdaq Capital Market or other restrictions, the Company will issue 7,042,254 restricted shares of the Company’s common stock as a payment of $10,000,000 toward the principal of the notes on a pro rata basis, reflecting a conversion price of $1.42 per share. 6,971,831 shares will be issued to Jorgan and $9,900,000 of principal owed to Jorgan will be cancelled and 70,423 shares will be issued to JBAH and $100,000 of principal owed to JBAH will be cancelled. Once the registration statement is declared effective by the SEC, the Note Payment will count against the threshold payment amount, as defined in the notes and the MIPA. (d) The balance of these various promissory notes are related to the special purchase vehicle, Viva Wealth Fund I, LLC (VWFI) of which the balance primarily related to an offering up to $25,000,000 in convertible notes in a private offering. As of September 30, 2022, VWFI has raised $11,125,000 and converted $8,950,000 of this debt to VWFI LLC units. A convertible note will automatically convert into the LLC units at the earlier of (i) the date that the Equipment is placed into quality control and testing or (ii) six months from the date of investment. The convertible notes will accrue interest at 12% per annum and are paid quarterly. At the maturity date, remaining interest will be paid, at which time no further interest payments will accrue. Upon the offering termination date, all units accepted for any series of equipment will automatically convert to Vivakor common stock if the Company has not accepted subscriptions for at least $6,250,000 for a series of equipment. The conversion price of the automatic stock conversion will be the greater of $13.50 or a 10% discount to market per share or in the event of a public offering, 200% of the per share price of the Company common stock sold in an underwritten offering, which was closed on February 14, 2022 at $5.00 per share. The termination date of the offering has been extended until March 31, 2023 in the sole discretion of the Company. As of April 28, 2021 VWFI has reached $6,250,000 in funding and has released the funding for construction of RPC Series A. VWFI has commenced fundraising for RPC Series B, and as of September 30, 2022, VWFI has raised approximately $4,875,000 to manufacture RPC Series B as of September 30, 2022. Subsequent to September 30, 2022 an additional $290,000 has been raised in relation this offering, and $290,000 of this debt has been converted into units of the LLC. VWFI has also entered into various master revolving notes outside of the offering: $329,500, from a related party of VWFI, which accrues 6% interest per annum, has a maturity date of October 11, 2023, where no payments are made prior to the maturity date unless at the option of the fund; $300,000, from a related party of VWFI, which accrues 5% interest per annum, has a maturity date of July 14, 2024, where no payments are made prior to the maturity date unless at the option of the fund; $184,415, made up of two loans with the Company, which accrue between 3-5% interest per annum, have maturity dates of October 14, 2023 and April 20, 2024, where no payments are made prior to the maturity date unless at the option of the fund, and all principal and interest of these two loans is eliminated upon consolidation. 21 Note 12. Commitments and Contingencies Finance Leases In the business combination where we acquired Silver Fuels Delhi, LLC (SFD) and White Claw Colorado City, LLC (WCCC), we acquired certain finance leases contracts and liabilities as described below: On March 17, 2020, the SFD entered into two sale and leaseback transactions with Maxus Capital Group, LLC (“Maxus”). The first transaction involved the Company assigning twelve 400-barrel steel storage tanks, two truck offloading transfer meters and two pipeline transfer meters located in Richland Parish, Louisiana to Maxus for consideration of $ 1,025,000 and subsequently entering into an agreement to lease the assets back from Maxus for 60 monthly payments of $ 22,100 . At the end of the lease term there is an option purchase the assets back from Maxus at a purchase price of $ 1 . The second transaction involved the Company assigning all remaining property at the oil gathering facility in Richland Parish, Louisiana with the exception of land, to Maxus for consideration of $ 1,350,861 and subsequently entering into an agreement to lease the assets back from Maxus for 60 monthly payments of $ 18,912 . At the end of the lease term, there is an option to purchase the assets back from Maxus at a purchase price of $ 877,519 . The 9.39 acres of land located Richland Parish, Louisiana, which contains the oil gathering facility, is being used as collateral for both lease obligations. We are required to make minimum cash reserve payments of at least $ 24,000 ($ 8,945 and $ 15,055 for the first and second lease, respectively) each month in addition to the base lease payments. The cash reserve payments are to be used in the event of a default. At the end of the term, Maxus will return the balance of any cash reserve payments. As of September 30, 2022, the balances of the cash reserves for these leases were $ 369,109 and $216,000, respectively. As these leases grant the lessee an option to purchase the underlying asset that the lessee is reasonably certain to be exercised, the leases are accounted for as finance leases. We have recorded right of use assets in our property, plant, and equipment, and depreciated them on a straight-line basis. We have also recorded a finance lease liability due to Maxus. The Company is using imputed interest rates of 12.39 % and 10.36 % for the first and second lease obligations, respectively, which results in the carrying value of the financial liabilities equating the estimated book value of the leased assets at the end of the lease terms and the dates at which the Company may exercise its buy-back options. Future minimum lease payments for each of the next four years under the Maxus lease obligations is as follows: 2022 $ 123,063 , 2023 $ 492,145 , 2024 $ 492,145 , and 2025 $ 82,024 . On December 28, 2021, the WCCC entered into a sale and leaseback transaction with Maxus, where WCCC assigned the crude oil, natural gas liquids, condensate, and liquid hydrocarbon receipt, throughput, processing, gathering, and delivery terminal, commonly known as the China Grove Station (the “China Grove Station”), located in Colorado City, Texas to Maxus for consideration of $ 2,500,000 and entered into a lease agreement to lease the China Grove Station back from Maxus for 60 monthly payments of $ 39,313 . At the end of the lease term, the Company has an option to purchase the China Grove Station back from Maxus at 35% of the original cost, or $ 875,000 . The Company has pledged 100% of its interests in accounts receivable as collateral for the lease obligation. The Company is required to make minimum cash reserve payments of at least $ 16,100 each month in addition to the base lease payments until Maxus has received $ 471,756 . The cash reserve payments are to be used in the event of default. As of September 30, 2022, the balance of the cash reserves for these leases were $ 138,913 . As these leases grant the lessee an option to purchase the underlying asset that the lessee is reasonably certain to be exercised, the leases are accounted for as finance leases. We have recorded right of use assets in our property, plant, and equipment, and depreciated them on a straight-line basis. We have also recorded a finance lease liability due to Maxus. The Company is using an imputed interest rate of 8.54 % for the lease obligation, which results in the carrying value of the financial liability equating the estimated book value of the China Grove Station at the end of the lease term and the date at which the Company may exercise its buy-back option. Future minimum lease payments for each of the next five years under the Maxus lease obligation are as follows: 2022 $ 117,939 , 2023 $ 471,756 , 2024 $ 471,756 , 2025 $ 471,756 , and 2026 $ 432,443 . On December 28, 2021, WCCC incurred $ 82,400 in financing fees related to the Maxus lease. Such costs have been deferred and are being amortized on a straight-line basis over the five-year term of the related lease. Debt issuance costs amortized to interest expense from the acquisition date on August 1, 2022 to September 30, 2022 were $ 2,746 . The Maxus lease obligation, net of current portion is recorded on the accompanying balance sheet net of unamortized debt issuance costs. The components of the finance lease cost from the date of acquisition on August 1, 2022 to September 30, 2022 is as follows: Finance lease cost Amortization of right of use asset $ 112,666 Interest on lease liabilities 66,481 Total lease cost $ 179,147 The aggregate finance lease liabilities as of September 30, 2022 was $ 3,875,360 , net unamortized financing fees. 22 The following table reconciles the undiscounted cash flows for the finance leases as of September 30, 2022 to the finance lease liability recorded on the balance sheet: Schedule of financing lease liability 2022 $ 240,975 2023 963,901 2024 963,901 2025 553,780 2026 432,443 Total undiscounted lease payments 3,155,000 Less: Imputed interest 962,598 Present value of lease payments 2,192,401 Add: carrying value of lease obligation at end of lease term 1,753,000 Present value of lease payments 2,192,401 Total finance lease obligations 3,945,401 Less: Unamortized financing fees 70,041 Total lease obligations, net $ 3,875,360 Finance lease liabilities, current $ 652,440 Finance lease liabilities, long-term $ 3,222,920 Weighted-average remaining lease term 3.47 Weighted-average discount rate 9.93 % 23 Operating Leases Commencing on September 15, 2019, the Company entered into a five-year lease with Jamboree Center 1 & 2 LLC covering approximately 6,961 square feet of office space in Irvine, CA. Under the terms of the lease agreement, we are required to make the following monthly lease payments: Year 1 $ 21,927 , Year 2 $ 22,832 , Year 3 $ 23,737 , Year 4 $ 24,712 , Year 5 $ 25,686 . As a condition of the lease, we were required to provide a $ 51,992 security deposit. On February 1, 2022, the Company entered into a lease agreement for approximately 2,533 square feet of office and manufacturing space located in Las Vegas, Nevada. Commencing on March 1, 2022, the Company entered into a three-year lease with Speedway Commerce Center, LLC. Under the terms of the lease agreement, we are required to make the following monthly lease payments: Year 1 $ 1,950 , Year 2 $ 2,028 , Year 3 $ 2,110 . As a condition of the lease, we were required to provide a $ 2,418 security deposit. On March 28, 2022, the Company entered into a lease agreement for approximately 1,469 square feet of office space located in Lehi, Utah. Commencing on April 1, 2022, the Company entered into a three-year lease with Victory Holdings, LLC. Under the terms of the lease agreement, we are required to make the following monthly lease payments: Year 1 is comprised of April to May 2022 $ 867 , June 2022 to March 2023 $ 3,550 , Year 2 $ 3,657 , Year 3 $ 3,766 . As a condition of the lease, we were required to provide a $ 3,766 security deposit. On April 1, 2022, the Company entered into a lease agreement for approximately 2,000 square feet of office and warehouse space located in Houston, Texas. Commencing on April 1, 2022, the Company entered into a month-to-month lease with JVS Holdings, Inc. The lease may be terminated at any time or for any reason with a 30-day written notice to terminate. The lease requires a monthly lease payment of $ 2,000 as long as the Company remains in the space. The right-of-use asset for operating leases as of September 30, 2022 and December 31, 2021 was $ 648,201 and $ 663,291 . Rent expense for the nine months ended September 30, 2022 and 2021 was $ 294,382 and $ 246,526 . The following table reconciles the undiscounted cash flows for the leases as of September 30, 2022 to the operating lease liability recorded on the balance sheet: Schedule of lessee operating lease liability 2022 $ 91,560 2023 370,902 2024 304,892 2025 16,135 Total undiscounted lease payments 783,489 Less: Imputed interest 80,854 Present value of lease payments $ 702,635 Operating lease liabilities, current $ 364,103 Operating lease liabilities, long-term $ 338,531 Weighted-average remaining lease term 2.11 Weighted-average discount rate 7.00 % The discount rate is the Company’s incremental borrowing rate, or the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Based on an assessment of the Company’s borrowings at the time the operating leases were entered into, the incremental borrowing rate was determined to be 7%. 24 Employment Agreements On September 30, 2022, the Board of Directors of the Company received notice from Matthew Nicosia, the Company’s Chief Executive Officer and Chairman of the Board of Directors of his resignation from such positions. Such resignations are not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices and the resignation is considered to be without good reason. On October 28, 2022 we entered into an executive employment agreement with a new Chief Executive Officer (see Note 19). In June 2022, the Company entered into employment agreements with its previous Chief Executive Officer and its current Chief Financial Officer, which provided for annual base salaries of $375,000 and $350,000, respectively, and provided for incremental increases in their salaries upon the Company’s achievement of specific performance metrics. The Company is currently accruing substantial portions of executive base salaries (see Note 10). The employment agreements provided for the grant of stock options to the previous Chief Executive Officer and the current Chief Financial Officer to purchase up to 955,093 and 917,825 shares of the Company’s common stock, respectively, at an exercise price equal to 110% and 100% of the fair market value of the Company’s common stock on the date of grant. The previous Chief Executive Officer vested in 503,935 of these stock options before his resignation without good reason with the remainder of his stock options cancelled. The total stock options for the Chief Executive Officer vest over two years of continuous employment, subject to acceleration if terminated without cause or resignations for good reason. The Chief Financial Officer’s agreement also provides that it is anticipated that the executive will receive bonuses for 2022 which will be determined by the Company’s Compensation Committee and Board of Directors after taking into account the general business performance of the Company, including any completed financings and or acquisitions. Contingent liabilities From time to time the Company may work with success based professional service providers, including securities counsel for private offerings, which may require contingent payments to be made based on the future offering fundraising and financial performance of the offering. In the event that an offering does not perform or is never consummated, the Company may still be required to pay a portion of the success fees for the services provided in preparing the offering. The fair value of the contingent payments would be estimated using the present value of management's projections of the financial results. Failure to correctly project the financial results of the offering or settlement of legal fees related to the offering could materially impact our results of operations and financial position. Note 13. Long-term Debt To assist in funding the manufacture of the Company’s Remediation Processing Centers, between 2015 and 2017, the Company entered into two agreements which include terms for the purchase of participation rights for the sale of future revenue of the funded RPCs. The RPCs are estimated to enter scaled up operations in 2023 and make estimated payments. The Company estimates future payments based on revenue projections for the RPCs. Due to delays in scaled up operations (see Note 1 Long Lived Assets ) the effective interest rate of these agreements increased from approximately 28% to 31%. Long-term debt consists of the following: Schedule Of Long-Term Debt 2022 2021 Principal $ 2,196,233 $ 2,196,233 Accrued interest 2,997,529 4,205,144 Debt discount ( 215,659 ) ( 226,823 ) Total long term debt $ 4,978,103 $ 6,174,554 Long term debt, current $ 9,363 $ 3,256 Long term debt $ 4,968,740 $ 6,171,298 25 The following table sets forth the estimated payment schedule of long-term debt as of September 30, 2022: Schedule of long-term debt maturities 2022 $ 950 2023 11,598 2024 15,002 2025 19,409 2026 25,114 Thereafter 2,124,160 Total $ 2,196,233 Note 14. Stockholders' Equity On August 1, 2022, we closed a Membership Interest Purchase Agreement, (the “MIPA”), with Jorgan Development, LLC, (“Jorgan”) and JBAH Holdings, LLC, ("JBAH"), as the equity holders of Silver Fuels Delhi, LLC (“SFD”) and White Claw Colorado City, LLC (“WCCC”), whereby, the Company acquired all of the issued and outstanding membership interests in each of SFD and WCCC, making SFD and WCCC wholly owned subsidiaries of the Company. The purchase price for the Membership Interests is approximately $ 32.9 million , after post-closing adjustments, payable in part by the issuance of 3,009,552 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 closing. JBAH and Jorgan have entered into 18-month lock-up agreements to the 3,009,552 common shares issued for consideration. Note 15. Temporary Equity All Series B, B-1, and C-1 Preferred Stock was converted to Common Stock as of June 30, 2021. There was no activity for Series B, B-1, and C-1 Preferred Stock, which remain at a zero balance, for the three months ended September 30, 2021. Schedule of temporary equity Convertible Preferred Stock Series B Series B-1 Series C-1 Shares Amount Shares Amount Shares Amount December 31, 2020 216,916 $ 1,301,500 467,728 $ 3,507,981 255,289 $ 4,550,977 Series C-1 Issue for a reduction in stock payables – – – – 5,413 64,950 Dividend paid in Series B-1 Preferred Stock – – – – 5,626 – Conversion of Series B and B-1 Preferred Stock to Common Stock ( 216,916 ) ( 1,301,500 ) ( 467,728 ) ( 3,507,981 ) ( 266,328 ) ( 4,615,927 ) September 30, 2021 – $ – – $ – – $ – During the year ended December 31, 2021, all shares of Series B, B-1, and C-1 Preferred Stock were converted to common stock. 26 Note 16. Noncontrolling Interest For the nine months ended September 30, 2022 and 2021, the Company converted $ 3,400,000 and $ 2,720,000 in Viva Wealth Fund I, LLC convertible promissory notes into 680 and 544 units of noncontrolling interest in Viva Wealth Fund I, LLC. For the nine months ended September 30, 2022 and 2021, the Company paid distributions to Viva Wealth Fund I, LLC unit holders of $ 593,087 and none . Note 17. Share-Based Compensation & Warrants Options Generally accepted accounting principles require share-based payments to employees, including grants of employee stock options, warrants, and common stock to be recognized in the income statement based on their fair values at the date of grant, net of estimated forfeitures. As of September 30, 2022 and December 31, 2021, the Company has granted stock-based compensation to employees, including a 16,667 share stock award, which was issued in 2018 and vested in May 2022, 166,667 in employee stock options that were issued in 2020 to cliff vest at the end of five years, but were cancelled on September 1, 2022 by the parties in conjunction with the issuance of 1,872,918 employee stock options granted in June 2022 that were to vest over a period of two years, for which 451,158 of these options were cancelled with the resignation without cause of our Chief Executive Officer. For the nine months ended September 30, 2022 and 2021, stock-based compensation was $ 2,185,615 and $ 334,584 . In 2020, the Company also granted non-statutory stock options, including 133,333 stock options to the Board of Directors, which vested over 1 year, and a 333,334 stock option to a consultant, which was to vest over 4 years, but was cancelled on September 1, 2022 by the parties which concluded that is was not probable that certain performance targets would be met, as agreed upon by both parties. Non-statutory stock-based compensation was $ 1,172,500 and $ 1,157,500 for the nine months ended September 30, 2022 and 2021. In 2022, the Company closed on its underwritten public offering in which the Company granted the underwriter, EF Hutton, division of Benchmark Investments, LLC (“EF Hutton”), a 45-day option to purchase up to an additional 240,000 shares of Common Stock at the public offering price per share, less the underwriting discounts and commissions, to cover over-allotments, if any. These options were not exercised and expired. There were no other options granted during the nine months ended September 30, 2022 and 2021, respectively. The assumptions used in the Black-Scholes option pricing model to determine the fair value of the options on the date of issuance are as follows: Schedule of warrant assumptions December 31, 2020 through September 30, 2022 Risk-free interest rate 0.24 – 3.04 % Expected dividend yield None Expected life of warrants 3.33 - 10 years Expected volatility rate 169 - 273 % 27 The following table summarizes all stock option activity of the Company for the nine months ended September 30, 2022 and 2021: Schedule of option activity Weighted Weighted Average Average Remaining Number Exercise Contractual of Shares Price Life (Years) Outstanding, December 31, 2021 650,000 $ 12.00 7.53 Granted 2,112,919 2.24 6.60 Exercised ( 16,667 ) 11.10 – Forfeited/canceled ( 740,000 ) 10.00 – Outstanding, September 30, 2022 2,006,251 $ 2.56 6.93 Exercisable, December 31, 2021 180,000 $ 12.00 7.01 Exercisable, September 30, 2022 1,175,059 $ 2.67 7.09 Outstanding, December 31, 2020 650,000 $ 12.00 8.53 Outstanding, September 30, 2021 650,000 $ 12.00 7.78 Exercisable, December 31, 2020 47,083 $ 12.00 6.27 Exercisable, September 30, 2021 144,167 $ 12.00 7.01 As of September 30, 2022 and December 31, 2021, the aggregate intrinsic value of the Company’s outstanding options was approximately none. The aggregate intrinsic value will change based on the fair market value of the Company’s common stock. Warrants As of September 30, 2022 and December 31, 2021, the Company had 80,000 and no warrants outstanding. On February 14, 2022, the Company closed on its underwritten public offering of 1,600,000 shares of common stock, at a public offering price of $5.00 per share. In addition, the Company has issued the underwriter, EF Hutton, 5-year warrants to purchase 80,000 shares of common stock at an exercise price equal $ 5.75 . and were valued with a fair market value of $374,000. We used the Black-Scholes option pricing model to determine the fair value of the warrants, with assumptions of a risk free rate of 1.92%, an expected life of 5 years, and volatility of 167%. The impact of these warrants has no effect on stockholder’s equity, as they are considered equity-like instruments, and are considered a direct expense of the offering. 28 Note 18. Income Tax The Company calculates its quarterly tax provision pursuant to the guidelines in ASC 740 Income Taxes. ASC 740 requires companies to estimate the annual effective tax rate for current year ordinary income. In calculating the effective tax rate, permanent differences between financial reporting and taxable income are factored into the calculation, and temporary differences are not. The estimated annual effective tax rate represents the Company’s estimate of the tax provision in relation to the best estimate of pre-tax ordinary income or loss. The estimated annual effective tax rate is then applied to year-to-date ordinary income or loss to calculate the year-to-date interim tax provision. The Company recorded a provision for income taxes of $ 800 and none for the nine months ended September 30, 2022 and 2021, respectively. The Company is projecting a (0.01)% effective tax rate for the year ending December 31, 2022, which is primarily the result of projected provision from book loss incurred for the year offset by additional valuation allowance on the net operating losses. The Company’s effective tax rate for 2021 was 9.18 % which was the result of the benefit of book income for the year. As of December 31, 2021, the Company had estimated federal and state net operating loss (NOL) carryforwards of approximately $ 14.3 million. Federal NOL carryforwards begin to expire in 2028. Note 19. Subsequent Events The Company has evaluated subsequent events through the date the financial statements were available to issue. On October 24, 2022, the Board of Directors resolved to increase their compensation to (i) $50,000 per year in cash effective August 1, 2022, in equal quarterly payments, with the first such payment, in the amount of $12,500 due November 1, 2022 and, thereafter, $12,500 every February 1, May 1, August 1 and November 1, and (ii) 100,000 stock options priced at $2.50 per share, vesting immediately. In addition, the Board of Directors approved a one-time payment of $10,000 to each Mr. Trent Staggs and Mr. Al Ferrara for serving as the Chairperson of the Compensation Committee and Chairperson of the Audit Committee of the Board of Directors, respectively, payable on November 1, 2022. On October 28, 2022, we entered into an executive employment agreement with James Ballengee (the “Employment Agreement”) with respect to the Company’s appointment of Mr. Ballengee as Chief Executive Officer and Chairman of the Board of Directors (the “Board”). Pursuant to the Employment Agreement, Mr. Ballengee will receive annual compensation of $1,000,000 payable in shares of the Company’s common stock, issued in four equal quarterly installments, priced at the volume weighted average price (VWAP) for the five trading days preceding the date of the Employment Agreement and each anniversary thereof (the “CEO Compensation”). The CEO Compensation shall be subject to satisfaction of Nasdaq rules, the provisions of the Company’s equity incentive plan and other applicable requirements and shall be accrued if such issuance is due prior to satisfaction of such requirements. Additionally, Mr. Ballengee shall be eligible for a discretionary performance bonus. The Employment Agreement may be terminated by either party for any or no reason, by providing a five days’ notice of termination. Pursuant to the Employment Agreement, Mr. Ballengee is granted the right to nominate two additional directors for appointment to the Board in his sole discretion, as well as a third additional director upon issuance of the Note Payment Shares (defined below), subject to such directors passing a background check. On October 28, 2022, in connection with the Employment Agreement, the Company and Jorgan and JBAH entered into an agreement amending the notes issued as consideration in the MIPA (the “Note Amendment”), whereby, as soon as is practicable, following and subject to the approval of the Company’s shareholders, and provided there are no applicable prohibitions under the rules of The Nasdaq Capital Market or other restrictions, the Company will issue 7,042,254 restricted shares of the Company’s common stock (the “Note Payment Shares”) as a payment of $10,000,000 toward the principal of the notes on a pro rata basis, reflecting a conversion price of $1.42 per share (the “Note Payment”). 6,971,831 shares will be issued to Jorgan and $9,900,000 of principal owed to Jorgan will be cancelled, and 70,423 shares will be issued to JBAH and $100,000 of principal owed to JBAH will be cancelled. Once the registration statement is declared effective by the SEC, the Note Payment will count against the Threshold Payment Amount, as defined in the notes and the MIPA. As of October 28, 2022, and in connection with Mr. Ballengee’s appointment as Chief Executive Officer, the following parties, of whom Mr. Ballengee is a beneficiary of, will be disclosed as related parties: Jorgan (MIPA note payable), JBAH (MIPA note payable), WC Crude (oil supply agreement and oil storage agreement, both acquired in the business combinations closed August 1, 2022), Endeavor Crude, LLC (shared services agreement acquired in the business combination closed on August 1, 2022). Subsequent to September 30, 2022, VWFI has raised $290,000 in conjunction with the $25,000,000 private placement offering to sell convertible promissory notes, which convert to VWFI LLC units, to accredited investors to raise funds to manufacture equipment that manufacture RPC Series B. Subsequent to September 30, 2022, VWFI has also converted $290,000 of convertible debt into VWFI LLC units. 29