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Item 5. Market for Registrant’s Common Equity

2023-05-25 compared with 2022-04-15 · 337 added, 279 removed, 39 unchanged (94% of the section changed)

Item 5 - Market for Registrant ’ s

Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our Common Stock is listed on the Nasdaq Capital

Market under the symbol “VIVK.”

As of April 5, 2022, there were

15,038,619 shares of Common Stock outstanding held by approximately 570 holders of record (not including an indeterminate number of

beneficial holders of stock held in street name).

There were no warrants issued nor outstanding

as of April 5, 2022.

- Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Common Stock is listed on the Nasdaq Capital Market under the symbol “VIVK.”

of March 27, 2023, there were 18,064,838 shares of Common Stock outstanding held by approximately 559 holders of record (not including

an indeterminate number of beneficial holders of stock held in street name).

is a warrant to purchase 80,000 shares of common stock issued and outstanding as of March 27, 2023.

date, we have not paid any dividends on our common stock and do not anticipate paying any dividends in the foreseeable future.

3 unchanged sentences

may deem relevant.

Securities Authorized for Issuance under Equity

Compensation Plans

As of December 31, 2021 the Company did not have

an equity compensation plan.

Recent Issuance of Unregistered Securities

The following sets forth information

regarding all unregistered securities sold by us in transactions that were exempt from the requirements of the Securities Act in the

last fiscal year.

Except where noted, all of the securities discussed in this Item 5 were all issued in reliance on the exemption

under Section 4(a)(2) of the Securities Act.

On January 13, 2021, the Company issued 33,667

shares of common stock at approximately $13.05 per share for $438,004 in services.

On January 28, 2021, the Company issued 3,333 shares of common stock

for a $36,000 reduction of liabilities pursuant to conversion of a promissory note at approximately $10.80 per share.

On April 16, 2021, the Company issued 24,850 shares

of common stock for a $217,800 reduction of liabilities pursuant to conversion of a promissory note at approximately $8.76 per share.

On April 22, 2021, the Company issued 16,667 shares

of common stock for a $225,000 payment to purchase a license at approximately $13.50 per share.

On May 24, 2021, the Company issued 986 shares

of common stock for a $11,000 reduction of liabilities pursuant to conversion of a promissory note at approximately $11,16 per share.

On August 5, 2021, the Company issued 19,841 shares

of common stock for an approximate $110,002 reduction of liabilities pursuant to conversion of a promissory note at approximately $5.55

On December 6, 2021, the Company issued 10,784

shares of common stock for an approximate $82,500 reduction of liabilities pursuant to conversion of a promissory note at approximately

$7.65 per share.

On December 15, 2021, the Company issued 8,818

shares of common stock for a $55,000 reduction of liabilities pursuant to conversion of a promissory note at approximately $6.24 per share.

From January 1, 2021 through December 31, 2021,

the Company issued 218,333 shares of common stock for $1,301,500 for the conversion of 216,916 shares of Series B Preferred Stock, at

an average price of approximately $6.00 per share.

From January 1, 2021 through December 31, 2021

the Company issued 473,578 shares of common stock for $3,550,176 for the conversion of 467,278 shares of Series B-1 Preferred Stock, at

$7.50 per share.

From January 1, 2021 through December 31, 2021

the Company issued 260,703 shares of common stock for $4,615,927 for the conversion of 266,328 shares of Series C-1 Preferred Stock, at

$17.70 per share.

Item 7 - Management ’ s Discussion and Analysis

of Financial Condition and Results of Operations

RESULTS OF OPERATIONS

The following discussion and analysis of our financial

condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in

this Annual Report on 10-K.

Vivakor, Inc.

is a socially responsible operator,

acquirer and developer of clean energy technologies and environmental solutions, primarily focused on soil remediation.

We specialize

in the remediation of soil and the extraction of hydrocarbons, such as oil, from properties contaminated by or laden with heavy crude

oil and other hydrocarbon-based substances.

We are focused on the remediation of contaminated

soil and water resulting from either man-made spills or naturally occurring deposits of oil.

Our primary focus has been the remediation

of oil spills resulting from the Iraqi invasion of Kuwait and naturally occurring oil sands deposits in the Uinta basin located in Eastern

We plan to expand into other markets, both in Utah and globally, where we believe our technology and services will provide a distinct

competitive advantage over our competition.

Authorized for Issuance under Equity Compensation Plans

On February 14, 2022, our 2021 Equity and

Incentive Plan went effective.

The plan was approved by our Board of Directors.

The Plan’s number of authorized shares is 2,000,000.

As of March 27, 2023, there were stock options granted to acquire 1,721,760 shares of common stock at a weighted exercise price of

$1.76 per share under the plan.

As of March 27, 2023, the Plan had 1,431,730 vested shares and 290,030 non-vested shares underlying

the stock options.

As of March 27, 2023, no options had been exercised under the Plan.

We have not issued any other type of equity

awards under the Plan.

The stock options issued under the Plan are held by certain of our current and former executive officers.

Issuance of Unregistered Securities

following sets forth information regarding all unregistered securities sold by us in transactions that were exempt from the requirements

of the Securities Act in the last fiscal year.

Except where noted, all of the securities discussed in this Item 5 were all issued

in reliance on the exemption under Section 4(a)(2) of the Securities Act.

July 19, 2022, the Company granted 16,667 shares of our common stock for a stock award, which successfully cliff vested in May 2022.

August 1, 2022, the Company consummated the transactions under the previously disclosed Membership Interest Purchase Agreement dated

June 15, 2022 (the “MIPA”), which included the issuance of an aggregate of 3,009,552 shares of Common Stock to Jorgan

Development, LLC and JBAH Holdings, LLC.

The issuances of the foregoing securities were exempt from registration pursuant to Section 4(a)(2)

of the Securities Act promulgated thereunder.

noted herein, in connection with the commencement of the trading of our Common Stock on Nasdaq Capital Market, we converted 66,667 shares

of Series A Preferred Stock in to 833,333 shares of our common stock.

This offering and sales were made in reliance on Section 4(a)(2)

of the Securities Act of 1933, as amended.

To make this determination we relied on the representations of the purchasers contained in

the securities purchase agreements signed by the purchasers, which indicated the purchasers were knowledgeable about our management and

our operations, were sophisticated investors, and understood the purchase was part of a private placement.

As noted herein, in connection with the commencement

of the trading of our Common Stock on Nasdaq Capital Market, approximately $1,144,992 in convertible notes payable were converted into

272,156 shares of our common stock.

This offering and sales were made in reliance on Section 4(a)(2) of the Securities Act of 1933,

To make this determination we relied on the representations of the purchasers contained in the securities purchase agreements

signed by the purchasers, which indicated the purchasers were knowledgeable about our management and our operations, were sophisticated

investors, and understood the purchase was part of a private placement.

noted herein, in connection with underwritten public offering of 1,600,000 shares of common stock, we issued the underwriter, EF Hutton,

a 5-year warrants to purchase 80,000 shares of common stock at an exercise price equal $5.75.

This offering and sales were made in reliance

on Section 4(a)(2) of the Securities Act of 1933, as amended.

To make this determination we relied on the representations of the

purchasers contained in the securities purchase agreements signed by the purchasers, which indicated the purchasers were knowledgeable

about our management and our operations, were sophisticated investors, and understood the purchase was part of a private placement.

- Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

OF OPERATIONS

following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial

statements and related notes included elsewhere in this Annual Report on 10-K.

is a socially responsible operator, acquirer and developer of technologies and assets in the oil and gas industry, as well as, related

environmental solutions.

Currently, our efforts are primarily focused on operating crude oil gathering, storage and transportation facilities,

as well as contaminated soil remediation services.

of our facilities sells crude oil in amounts up to 60,000 barrels per month under agreements with a large energy company.

facility owns a 120,000 barrel crude oil storage tank near Colorado City, Texas.

The storage tank is presently connected to the Lotus

pipeline system and we plan to further connect the tank to major pipeline systems.

Our soil remediation services specialize in the

remediation of soil and the extraction of hydrocarbons, such as oil, from properties contaminated by or laden with heavy crude oil and

other hydrocarbon-based substances.

Our patented process allows us to successfully recover the hydrocarbons which we believe could then

be used to produce asphaltic cement and/or other petroleum-based products.

Reclassifications

Certain reclassifications were made to prior years'

amounts to conform to the 2021 presentation.

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.

states and many countries have issued policies intended to stop or slow the further spread of the disease.

Our Kuwait operations were suspended to comply

with the social distancing measures implemented in Kuwait.

Our Utah operations were temporarily suspended from March through May 2020,

but have since resumed in full.

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.

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 in the long-term, 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.

For the years ended December 31, 2021 and

2020 we realized revenues of $1,088,428 and $1,457,781, respectively, representing a decrease of $369,353 or 25.34%.

The decrease in

revenue is primarily attributed to reopening of our Vernal site for quality control operations for the latter course of 2020 and

2021, thereby the Company diverted its resources to its primary business of manufacturing an operating RPCs for remediation and

preparing our Vernal site for production.

99% of our revenues were realized from precious metal sales from our business plan of

buying and selling precious metal commodities on the open market during the COVID-19 pandemic while our remediation operations were

shut down or delayed.

These precious metals having been acquired for immediate resale, with the Company acting as intermediary and

never keeping an inventory of precious metals.

We also realized revenues of $54,250 for the sale to a related party of our precious

metal concentrate produced from our own precious metal extraction operations.

We also received a payment of $6,000 pursuant to our

Kuwait contract for remediation services as described above, and we sold $7,735 of extracted test material from our RPCII located in

Cost of Revenue

Our cost of revenues consisted primarily of costs

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

reclassifications may have been made to prior years’ amounts to conform to the 2022 presentation.

March 11, 2020, the World Health Organization (“WHO”) declared the COVID-19 outbreak to be a global pandemic.

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.

states and many countries have issued policies intended to stop or slow the

further spread of the disease.

March 2020 we temporarily suspended operations in Kuwait and Utah due to COVID-19 government restrictions.

Utah and Kuwait have

since resumed site preparations for 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

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 in the long-term, 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.

the years ended December 31, 2022 and 2021 we realized revenues of $28,107,223 and $1,088,428, respectively, representing an increase

of $27,018,795 or 2,482.37%.

The increase in revenue is primarily attributed to our oil and natural gas liquid sales which have been

realized through the operations from our newly acquired businesses in SFD and WCCC, which were acquired through our business combination,

which closed on August 1, 2022.

For the year ended December 31, 2021, approximately 99% of our revenues were realized from

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

while our remediation operations were shut down or delayed.

These precious metals were acquired for immediate resale, with us acting

as intermediary and never keeping an inventory of precious metals.

the year ended December 31, 2022, our cost of revenues consisted primarily of costs associated with selling oil and natural gas

liquid through the operations from our newly acquired businesses in SFD and WCCC, which were acquired through our business combination

which closed on August 1, 2022.

For the year ended December 31, 2021, our cost of revenues consisted primarily of costs associated

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

For the years ended December 31, 2022 and 2021

costs of revenue were $1,050,676 and $1,356,378, respectively, representing a decrease of $305,702 or 22.54%.

The decrease in the cost

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

In 2021, the Company diverted its resources to its primary business of manufacturing an operating RPCs for remediation and preparing

our Vernal site for production.

The Company realized costs of revenue from precious metal sales from our business plan of buying and selling

precious metal commodities on the open market while our remediation operations were shut down or delayed during the COVID-19 pandemic.

Gross Profit and Gross Margin

costs of revenue were $25,239,962 and $1,050,676, respectively, representing an increase of $24,189,286 or 2,302.26%.

The increase in

the cost of revenue is primarily attributed to the cost of goods sold for our oil and natural gas liquid products realized through the

operations from our newly acquired businesses in SFD and WCCC, which were acquired through our business combination, which closed on August

Profit and Gross Margin

For the years ended December 31, 2022 and

we realized gross profit of $37,752 and $101,403, respectively, representing a decrease of $63,651 or 62.77%.

The gross profit decreased

in proportion to the revenue and costs of revenue related to the purchase and sale of precious metals as described above.

Our gross margin will continue to be affected

by a variety of factors that include the market prices of precious metals, the volume hydrocarbons produced by our RPC units, the number

of RPC units placed into production, and our ability to raise capital to continue to fund our operations and RPC unit manufacturing.

Operating Expenses

Our operating expenses consist primarily of marketing,

general and administrative expenses, bad debt expense, and amortization and depreciation expense.

Marketing expenses include marketing

fees of company representatives for marketing the business and is products and services as well as investor customer service.

and administrative expenses include professional services and legal fees associated with the costs for services in finance, accounting,

administrative activities and the formation and compliance of a public company.

Bad debt expense includes the expense associated with

assets that management analyses and estimates may be uncollectible.

Amortization and depreciation expense uses the useful life of the

asset to calculate the amortization or depreciation expense in accordance with accounting principles generally accepted in the United

States of America ("GAAP") and management’s judgment.

2021 we realized gross profit of $2,867,261 and $37,752, respectively, representing an increase of $2,829,509 or 7,494.99%.

ended December 31, 2022, the gross profit increased in proportion to the revenue and costs of revenue related to the purchase and

sale of our oil and natural gas liquid products.

For the year ended December 31, 2021, the gross profit increased in proportion to

the revenue and costs of revenue related to the purchase and sale of precious metals as described above.

gross margin will continue to be affected by a variety of factors that include the market prices of our oil products, the volume produced

by our facilities, and our ability to raise capital to continue to fund our operations or other ancillary agreements outside of the oil

gathering, transportation, and storage activities.

operating expenses consist primarily of marketing, general and administrative expenses, bad debt expense, impairment loss, and amortization

and depreciation expense.

Marketing expenses include marketing fees of company representatives for marketing the business and is products

and services as well as investor customer service.

General and administrative expenses include professional services, including audit,

tax, and legal fees associated with the costs for services in finance, accounting, administrative activities and the formation and compliance

of a public company.

Bad debt expense includes the expense associated with assets that management analyses and estimates may be uncollectible.

Impairment loss includes the expense associate with events or changes in circumstances that indicate the carrying amount of an asset

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.

Amortization and depreciation expense uses the useful life of the asset to calculate

the amortization or depreciation expense in accordance with accounting principles generally accepted in the United States of America

(“GAAP”) and management’s judgment.

For the years ended December 31,

2022 and 2021, we realized operating expenses of $25,611,216 and $6,963,668, which represents an increase of $18,647,548, or 267.78%.

Our operating expenses increased due to multiple substantial events and their associated expenses throughout 2022, including approximately

$12,300,837 in impairment loss and bad debt expense, as discussed below.

For the years ended December 31,

2022 and 2021, we realized an impairment loss of $11,138,830 and none, which represents an increase of $11,138,830 or 100%.

Our impairment

loss directly related to multiple events throughout 2022, including disruptions at our Vernal, Utah plant due to recent, supply and personnel

limitations, in which we realized an impairment loss of $447,124 on this license agreement with TBT Group and the possibilities of embedding

self-powered sensors directly into the asphaltic cement we may generate from the Vernal, Utah RPC;

After taking into consideration new

information related to the costs of building our own test facility or using new partners to test our ammonia synthesis catalyst, we realized

an impairment loss of $3,254,999 to our ammonia synthesis assets;

The operations surrounding our precious metals extraction services were

suspended until recently, although due to these suspended activities and a shift in 2022 of the Company’s focus to the oil and gas

industry, we have realized an impairment loss $6,269,998 surrounding the extraction machinery, and we reserved further against our work-in-process

precious metal concentrate in the amount of $1,166,709 as it has not been sold as anticipated in its concentrate form.

the years ended December 31, 2022 and 2021, we realized bad debt expense of $1,162,007 and none, which represents an increase

of $1,162,007 or 100%.

The increase in bad debt expense is directly related to two note receivables.

The first note receivable

relates to the sale 3,309,578 shares of marketable securities in December 2021 in a private transaction for a purchase price of

$860,491, reflecting the market price as of such time.

Such purchase price was paid in the form of $10,000 cash delivered at signing

and a note issued in favor of Vivakor in the amount of $850,491 with payments due quarterly over a five-year term.

The purchaser

made their initial payment in the first quarter of 2022 but has not made further payments.

The second note receivable is a $333,744

note receivable with TMC Capital, LLC, an affiliate of MCW Energy Group Limited.

The parties amended their agreement in

December 2021 to have the note paid on or before October 1, 2022, but we have not received payment.

December 31, 2022 we have reserved against these notes in the amount of $828,263 and $333,744.

For the years ended December 31, 2022 and

we realized operating expenses of $6,963,668 and $4,949,795, which represents an increase of $2,013,873, or 40.69%.

Our operating expenses

increased due to increased professional service expenses in regards to audit, tax, and legal expense in relation to our registration statement,

its amendments, and in preparing for an underwritten public offering of our common stock, including our preparations for an uplist of

our common stock to a senior stock exchange.

We also organized and commenced operations of VWFI in the fourth quarter of 2020, which contributed

to the approximately $1.4 million in professional service expense, and operations, for startup and management of that entity in 2021.

Loss from Operations

2021, we realized management and board of director compensation, and audit, tax, legal expenses of $6,268,684 and $1,409,267, which represents

an increase of $4,859,417 or 344.82%.

Throughout 2022 we recognized increased professional services and compensation expenses, which relate

to our registration statement, its amendments, preparing for and completing an underwritten public offering of our common stock, including

our preparations and completion of an uplist of our common stock to a senior stock exchange, and two substantial acquisitions of SFD and

For the years ended December 31, 2022 and 2021, professional services related to audit, tax, and legal, were $1,463,089 and

$404,711 which represents an increase of $1,058,378 or 261.51%.

For the years ended December 31, 2022 and 2021, the (accrued or paid)

cash compensation of management and the board of directors was $1,562,456 and $214,556 which represents an increase of $1,347,500 or 628.23%,

with management accruing approximately 85% of its salary, bonus, and signing bonus compensation (see Note 14).

The increase in salary

compensation expense was primarily attributed to new compensation agreements with management and the board members serving at that time

after the Company’s successful underwritten public offering of net proceeds of $6.2 million and uplist to Nasdaq in February 2022.

New compensation agreements were entered into as a result of previous executive management being significantly undercompensated prior

to the underwritten public offering and uplist to Nasdaq (see Note 17).

In order to retain management, in June 2022, executive salaries

were increased, signing bonuses were granted, and stock options were issued to both executives at the time as authorized and granted by

the board of directors for the two then executives (see Note 17).

In October 2022 our previous CEO resigned, and we entered into

an employment agreement with our current CEO, where the CEO salary increased to $1,000,000 annually, but is only payable in common stock

of the Company (see Note 17).

Further, the independent directors serving at that time increased their compensation, which included signing

bonuses, and granted stock options to the independent board members that vested immediately (where previously there were no signing bonuses

and stock options vested over one year), which increased board compensation expense approximately $250,000 in 2022.

For the years ended

December 31, 2022 and 2021, we realized stock option expense of $4,079,591 and $2,031,112, which represents an increase of $2,048,479,

or 100.86% increase.

the years ended December 31, 2022 and 2021, we realized amortization and depreciation expense of $2,953,629 and $1,462,492, which

represents an increase of $1,491,137 or 101.96%.

The increase in amortization and depreciation expense is primarily attributed to the

amortization of our newly acquired contracts (see Note 13) and depreciation from our newly acquired property, plant and equipment held

by SFD and WCCC, which were acquired through our business combination, which closed on August 1, 2022.

from Operations

For the years ended December 31, 2022 and

2021, we realized a loss from operations of $22,743,955 and $6,925,916, which represents an increase of $15,818,039, or 228.39%.

The increase in

loss is attributed to the increase in operating expenses discussed above.

Interest income and expense

For the years ended December 31, 2021 and 2020,

we realized interest income of $3,312 and $35,344, which represents a decrease of $32,032, or 90.63%.

The decrease in interest income

is mainly attributed to the conversion of the Odyssey note receivable in September 2020, when we converted $809,578 of our note receivable

with Odyssey into 809,578 shares of Odyssey common stock pursuant to the terms of the note.

In August 2021, we also 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.

in loss is attributed to the net effect of the increase in gross profit and increase in operating expenses discussed above.

For the years ended December 31, 2022 and

2021, we realized interest expense of $1,519,281 and $501,598, which represents an increase of $1,017,683, or 202.89%.

The increase in interest expense

is mainly attributable to the Company entering into loans and notes payable to cover operating expenses during the COVID-19 pandemic throughout

2020 and 2021, and our commencement our VWFI $25,000,000 private placement offering to sell convertible promissory notes, which accrue

interest at 12% per annum, and convert to VWFI LLC units after six months.

The proceeds of the VWFI offering are used to manufacture RPCs.

VWFI has reached $6,250,000 in funding and has released the funding for construction of RPC Series A, and commenced fundraising for RPC

Approximately $487,000 in interest has accrued, which is made up of approximately $398,000 capitalized for the construction

RPCs, and $89,000 of interest expense, all of which is related to the VWFI offering for the year ended December 31, 2021.

Throughout 2020,

the Company entered into loans and notes payable to cover operating expenses during the COVID-19 pandemic, which temporarily suspended

our operations in Utah and continues to suspend our operations in Kuwait.

Interest of approximately $179,000 and amortized loan discounts

of approximately of $194,000 are attributed to these loans for the year ended December 31, 2021.

Unrealized gain (loss) on marketable securities

For the years ended December 31, 2021 and 2020,

the company reported an unrealized loss of $1,094,054, and an unrealized gain $2,614,338 on marketable securities, which represents a

decrease of $3,708,392, or 141.85%.

Our marketable securities in Odyssey Group International, Inc.

ODYY, OTC Markets) and Scepter

Holdings, Inc.

BRZL, OTC Markets) were considered to be traded on an active market and were accounted for at a fair value based

on the quoted prices in the active markets resulting in aggregate unrealized gains as noted above.

The increase is also attributed to

the fact that our marketable securities holdings in Scepter Holdings, Inc.

were accounted for under the equity method of accounting until

the fourth quarter of 2020 when the Company was diluted to an approximate 19% holding of Scepter on a diluted basis, and thereby these

securities were accounted for at a fair value based on the quoted prices in the active markets, which resulted in the Company recording

an unrealized loss on marketable securities of $1,297,594 and an unrealized gain of $2,670,536 for the years ended December 31, 2021

In January 2020, the Odyssey securities were considered to be traded on an active market and were accounted for at a fair value

based on the quoted prices in the active markets.

For the years ended December 31, 2021 and 2020

we recorded an unrealized gain of $203,540 and an unrealized loss of $56,198 on these marketable securities for the years ended

December 31, 2020.

In December 2021 we sold such shares of Odyssey in a private transaction for a purchase price of $860,491, reflecting

the market price at that time.

Gain (loss) on conversion of note receivable

The increase in

interest expense is mainly attributable the $28,664,284 in notes payable issued as consideration for our newly acquired entities, SFD

and WCCC, which were acquired through our business combination, which closed on August 1, 2022.

The notes accrue interest of prime

plus 3% on the outstanding balance of the notes.

For the year ended December 31, 2022, the Company accrued $1,126,429 in interest on

these notes payable.

loss on marketable securities

the years ended December 31, 2022 and 2021, we reported an unrealized loss of $578,464 and $1,094,054 on marketable securities,

which represents a decrease in the unrealized loss of $515,590, or 47.13%.

Our marketable securities were considered to be traded on

an active market and were accounted for at a fair value based on the quoted prices in the active markets resulting in aggregate unrealized

losses as noted above.

disposition of assets

For the years ended December 31, 2022 and

we recorded a gain of $87,044 and a loss of $121,428 on the conversion of notes receivable, which represents an increase of $208,472,

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.

In June 2020 we converted $809,578 of our note receivable

with Odyssey into 809,578 shares of Odyssey common stock pursuant to the terms of the note at $1.00 per share.

On the date of the conversion,

the Odyssey price per share on OTC Markets was $0.85 per share, which resulted in a $121,428 loss on the disposition of the note receivable.

Provision for income tax

2021, we recorded a gain on the disposition of certain assets of $2,456 and $87,044, which represents a decrease of $84,588, or 97.18%.

In 2022 the Company sold a vehicle, which resulted in a gain on the sale of $2,456.

In August 2021 we converted $81,768 of our note

receivable with Scepter Holdings, Inc.

(“Scepter”, Ticker:

BRZL, OTC Markets) into 26,376,882 shares of the borrower’s

common stock pursuant to the terms of the note at $0.0031 per share.

On the date of the conversion, the 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.

for income tax

The Company recorded

an income tax benefit of $1,050,207 and a tax provision of $466,964 for the years ended December 31, 2021 and 2020, respectively.

Company’s effective tax rate for 2021 and 2020 was 16.48% and -21.96%, which was the result of the benefit of book losses offset

by an additional valuation allowance on the net operating losses.

The following table sets forth the primary sources

and uses of cash and cash equivalents for the years ended December 31, 2021 and 2020 as presented below:

Net cash used in operating activities

an income tax benefit of $4,436,691 and $1,050,207 for the years ended December 31, 2022 and 2021, respectively.

The Company’s

effective tax rate for 2022 and 2021 was 18.69% and 16.48%, which was the result of the benefit of book losses offset by an additional

valuation allowance on the net operating losses.

following table sets forth the primary sources and uses of cash and cash equivalents for the years ended December 31, 2022 and 2021

as presented below:

cash used in operating activities

$ (4,143,297 )

$ (2,901,696 )

Net cash used in investing activities

Net cash provided by financing activities

Liquidity and Capital Resources

cash used in investing activities

cash provided by financing activities

and Capital Resources

We have historically suffered net losses and cumulative

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and $35.7 million.

As of December 31, 2021 and 2020, we had cash

and cash equivalents of $1,493,719 and $398,904, with $199,952 and $89,500 attributed to variable interest entities, respectively.

As of December 31, 2022 and 2021, we had an working capital deficit of approximately $3.77 million and $2.09 million,

respectively.

of December 31, 2022 and 2021, we had cash and cash equivalents of $3,182,793 and $1,493,719, with $81,607 and $199,952 attributed

to variable interest entities, respectively.

To date we have financed our operations primarily

through debt financing, private equity offerings and our working interest agreements, although on February 14, 2022, 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 $8.0 million, prior to deducting underwriting discounts, commissions, and other offering expenses.

through debt financing, private equity offerings and our working interest agreements, although on February 14, 2022, 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

net proceeds of $6.2 million, after deducting underwriting discounts, commissions, and other offering expenses.

The Company’s

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2021, our net cash used in operating activities was mainly comprised of net effect of the consolidated net loss of $20,247,621 and $7,255,706,

$2,871,369, we recognized a $1,051,006 (decrease) $466,164 (increase) related to our provision for income taxes as described above,

our depreciation and amortization of $1,462,492 and $1,562,662, and an increase in accounts payable of $38,127 and $517,931 related to the building of our second RPCs.

For the years ended December 31, 2021 and 2020, we were also able to issue

stock for services of $438,004 and $281,231, common stock options issued for services in relation to a consultant and the Board of

Director of $1,585,000 and $555,000, and stock-based compensation employees of $446,112 and $146,114 in lieu of using cash.

realized interest expense on loans and notes payable of $501,598 and $71,361 related to the Company entering into loans and notes

payable to cover operating expenses during the COVID-19 pandemic, and our commencement our VWFI $25,000,000 private placement

offering to sell convertible promissory notes, which accrue interest at 12% per annum, and convert to VWFI LLC units after six

For the years ended December 31, 2021 and 2020 we also realized a $87,044 gain and $121,428 loss on conversions of notes

receivable, and an unrealized loss of $1,094,054 and an unrealized gain of $2,614,338 on marketable securities as described

a $4,437,492 and $1,051,007 (decrease) related to our provision for income taxes and deferred tax liabilities, our depreciation and amortization

of $2,953,629 and $1,462,492, an impairment loss of $11,138,830 and none, a bad debt expense of $1,162,007 and none, an decrease in accounts

receivable of $2,613,278 and 6,890, changes in accounts payable of $3,408,157 (decrease) and $38,128 (increase), changes in prepaids of

$59,900 and none, and changes inventory of $162,148, all of which are directly related to our 2022 acquisitions’ (SFD and WCCC’s)

For the years ended December 31, 2022 and 2021, we were also able to issue stock for services of $1,472,888 and $438,004,

common stock options issued for services in relation to a consultant and the Board of Director of $1,472,888 and $1,585,000, and stock-based

compensation employees of $2,606,703 and $446,112 in lieu of using cash.

We also realized interest expense on loans and notes payable

of $1,454,752 and $501,598 related to the $28,664,284 in notes payable issued as consideration for our newly acquired entities, SFD and

WCCC, which were acquired through our business combination, which closed on August 1, 2022.

For the years ended December 31,

2022 and 2021 we also realized a $2,456 and $87,044 gain on the disposition of assets, including the sale of vehicle in 2022 and the conversion

of a note receivable in 2021, and an unrealized loss of $578,464 and $1,094,054 on marketable securities as described above.

For the years ended December 31, 2022 and

our net cash used in investing activities was mainly attributed to our purchase of equipment of $4,236,276 and $1,197,922 related to the

manufacturing of our RPCs.

The Company also paid $265,000 for an additional license technology for piezo electric and energy harvesting

technologies for creating self-powered sensors for making smart roadways.

Our net cash provided by our financing activities

was mainly attributed to the net effect of the following events:

2021, our net cash used in investing activities was mainly attributed to our purchase of equipment of $2,491,174 and $4,236,276 related

to the manufacturing of our RPCs and a wash plant facilities (2022).

The Company also paid $265,000 for an additional license technology

for piezo electric and energy harvesting technologies for creating self-powered sensors for making smart roadways in 2021.

net cash provided by our financing activities was mainly attributed to the net effect of the following events:

For the year ended December 31, 2022 and

we issued none and $624,907 noncontrolling units of RDM, and we also received proceeds of $8,033,407 and $944,673 related to the issuance

of convertible bridge notes and other loans.

For the nine months ended September 30, 2021, as included in the proceeds above, we obtained

Paycheck Protection Program loans for $295,745 that may be forgiven under the CARES Act, if we can

demonstrate that the proceeds from the loan were used for eligible expenses .

For the years ended December 31, 2021 and 2020,

we issued none and $624,907 noncontrolling units of RDM, and we received proceeds of $9,135,984 and $2,231,796 related to the issuance

of convertible bridge notes and other loans, including $8,825,000 in 2021 (of which $5,560,000 of

this debt has converted to VWFI LLC units) of convertible notes issued in relation to our VWFI $25,000,000 private placement offering

to sell convertible promissory notes, which accrue interest at 12% per annum, and convert to VWFI LLC units after six months.

year ended December 31, 2021 and 2020, as included in the proceeds above, we obtained Paycheck Protection Program loans for $295,745 and

$295,745 that may be forgiven under the CARES Act, if we can demonstrate that the proceeds from

the loan were used for eligible expenses .

We also obtained a loan from the Small Business Administration in the amount of $299,900

in May 2020, as included in the proceeds above.

2021, and we received proceeds of $3,640,046 and $9,135,984related to the issuance of convertible bridge notes and other loans.

year ended December 31, 2021, as included in the proceeds above, we obtained Paycheck Protection Program loans for $295,745 that

may be forgiven under the CARES Act, if we can demonstrate that the proceeds from the loan were

used for eligible expenses .

We also received proceeds of $6,240,000 from our February 14, 2022 underwritten public offering

of 1,600,000 shares of common stock.

For the years ended December 31, 2022 and 2021 we paid down notes payable by $853,230 and $562,046

and made distributions to Viva Wealth Fund I, LLC unit holders of $861,691 and $55,050.

Capitalized interest on construction in process

was $1,614,697 and $1,025,852 for the year ended December 31, 2021 and 2020.

was none and $1,614,697 for the year ended December 31, 2022 and 2021.

There are no further existing firm obligations;

we anticipate further construction costs of approximately $1.6 million in connection with our construction in process of our RPC Series

A & B expansions;

and construction for each Nanosponge costs approximately $200,000, and we intend to manufacture for and add a Nanosponge

to our current and future RPCs.

anticipate further construction costs of approximately $1.7 million in connection with our construction in process of our RPC Series A

and construction for each Nanosponge costs approximately $200,000, and we intend to manufacture and add a Nanosponge to our current

and future RPCs.

We have historically suffered net losses and cumulative

negative cash flows from operations, and as of December 31, 2022, we had an accumulated deficit of approximately $55.2 million.

of December 31, 2022 and 2021, we had a working capital deficit of approximately $3.77 million and $2.09 million, respectively.

December 31, 2022 we had cash of $3.1 million.

In addition, we have obligations to pay approximately $17,500,000 (of which

approximately $16,500,000 can be satisfied through the issuance of our common stock under the terms of the debt and $334,000 is related

to PPP loans that are anticipated to be forgiven) of debt in cash within one year of the issuance of these financial statements.

conditions raise substantial doubt about the Company’s ability to continue as a going concern.

In February 2022, 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

net proceeds of $6.2 million, after deducting underwriting discounts, commissions, and other offering expenses.

Prior to the offering,

we financed our operations primarily through debt financing, private equity offerings, and our working interest agreements.

the liquid assets from the Company’s available for sale investments and funding provided from subsequent fundraising activities

(see Note 24) of the Company will give it adequate working capital to finance our day-to-day operations for at least twelve months through

Our CEO has also committed to provide credit support through June 2024, as necessary, for an amount up to $8 million to

provide the Company sufficient cash resources, if required, to execute its plans for the next twelve months.

Based on the above, we believe

these plans alleviate substantial doubt about the Company’s ability to continue as a going concern.

Our ability to continue to access capital could

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In such case,

we may need to suspend machine construction or further acquisitions until market conditions improve.

Contractual Obligations

we may need to suspend site and plant construction or further acquisitions until market conditions improve.

Our contractual obligations as of December 31,

2021 are for operating lease liabilities for office and warehouse space, which leases end in 2024.

Operating lease obligations as of December

31, 2021 are as follows:

Interest Rate and Market Risk

Our financing arrangements are not subject to

variable interest rates of the prime rate or LIBOR.

Inflation generally will cause suppliers to increase

2022 for finance lease liabilities are for the sale and leaseback of certain land, property, plant, and equipment that were acquired in

the closing of our business combination, which acquired SFD and WCCC on August 1, 2022, which leases end in 2025 and 2026.

lease obligations as of December 31, 2022 are as follows:

Our contractual obligations as of December 31,

2022 for operating lease liabilities are for office and warehouse space, which leases end in 2024 and 2025, and a land lease which ends

Operating lease obligations as of December 31, 2022 are as follows:

Rate and Market Risk

rate risk is the potential for reduced net interest income and other rate-sensitive income resulting from adverse changes in the level

of interest rates.

We do not have variable interest rate-sensitive income agreements.

We do have financing arrangements that were issued

on August 1, 2022 as consideration for the business combination and acquisition of SFD and WCCC, in which the three year notes have

variable interest rates based on the prime rate, which exposes us to further interest expense if the prime rate increases.

that the LIBOR is being phased out globally and do not have any financings with variable interest rates based on the LIBOR.

Risk — Equity Investments

risk is the potential for loss arising from adverse changes in the fair value of fixed-income securities, equity securities, other earning

assets, and derivative financial instruments as a result of changes in interest rates or other factors.

We own equity securities that

are publicly traded.

Because the fair value of these securities may fall below the cost at which we acquired them, we are exposed to

the possibility of loss.

Equity investments are approved, monitored, and evaluated by members of management.

periods of slow growth, significant inflationary pressures, volatility and disruption in financial markets, could lead to increased costs

of doing business.

Inflation generally will cause suppliers to increase their rates, and inflation may also increase employee salaries

and benefits.

In connection with such rate increases, we may or may not be able to increase our pricing to consumers.

Inflation could cause

both our investment and cost of revenue to increase, thereby lowering our return on investment and depressing our gross margins.

Off Balance Sheet Arrangements

Critical Accounting Policies & Use of Estimates

Management’s Discussion and Analysis of

Financial Condition and Results of Operations is based upon our consolidated financial statements included in this report, which have

been prepared in accordance with GAAP.

For further information on the critical accounting policies see Note 3 of the Notes to the Consolidated

Financial Statements.

The preparation of these financial statements requires management to make estimates and judgments that affect the

reported amounts of assets, liabilities, sales and expenses, and related disclosure of contingent assets and liabilities.

their nature are based on judgments and available information.

Our estimates are made based upon historical factors, current circumstances

and the experience and judgment of management.

Assumptions and estimates are evaluated on an ongoing basis, and we may employ outside

experts to assist in evaluations.

Therefore, actual results could materially differ from those estimates under different assumptions and

Inflation could

cause both our investment and cost of revenue to increase, thereby lowering our return on investment and depressing our gross margins.

Balance Sheet Arrangements

Accounting Policies & Use of Estimates

Discussion and Analysis of Financial Condition and Results of Operations is based upon our consolidated financial statements included

in this report, which have been prepared in accordance with GAAP.

For further information on the critical accounting policies see Note

3 of the Notes to the Consolidated Financial Statements.

The preparation of these financial statements requires management to make estimates

and judgments that affect the reported amounts of assets, liabilities, sales and expenses, and related disclosure of contingent assets

and liabilities.

Estimates by their nature are based on judgments and available information.

Our estimates are made based upon historical

factors, current circumstances and the experience and judgment of management.

Assumptions and estimates are evaluated on an ongoing basis,

and we may employ outside experts to assist in evaluations.

Therefore, actual results could materially differ from those estimates under

different assumptions and conditions.

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, lease

assets and liabilities, equity method investments, valuation of stock used to acquire assets, and derivatives.

Item 7A - Quantitative and Qualitative

Disclosures About Market Risk

Not applicable.

Item 8 - Financial Statements and Supplementary

The consolidated financial statements required

by this item begin on page F-1 of this Annual Report on Form 10-K and are incorporated herein by reference.

Item 9 - Changes in and Disagreements

with Accountants on Accounting and Financial Disclosures

Recoverability of current

and noncurrent assets, revenue recognition, stock-based compensation, income taxes, effective interest rates related to long-term debt,

marketable securities, lease assets and liabilities, valuation of stock used to acquire assets, and derivatives.

- Quantitative and Qualitative Disclosures About Market Risk

- Financial Statements and Supplementary Data

consolidated financial statements required by this item begin on page F-1 of this Annual Report on Form 10-K and are incorporated

herein by reference.

- Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

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

What changed 10-K

Item 5. Market for Registrant’s Common Equity