Vivakor, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS VIVAKOR, INC. CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2024 December 31, 2023 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 94,970 $ 744,307 Accounts receivable, net 3,372,685 2,458,730 Accounts receivable- related party 106,000 174,083 Prepaid expenses 180,385 74,876 Marketable securities 413,188 495,826 Inventories 75,167 44,632 Other assets 1,511,254 1,118,188 Total current assets 5,753,649 5,110,642 Other investments 4,000 4,000 Notes receivable 217,781 213,168 Property and equipment, net 27,641,821 24,299,317 Right of use assets- operating leases 1,353,507 1,534,870 License agreements, net 1,590,910 1,651,324 Intellectual property, net 22,133,251 23,437,654 Goodwill 14,984,768 14,984,768 Total assets $ 73,679,687 $ 71,235,743 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses $ 18,307,013 $ 16,578,642 Accounts payable and accrued expenses- related parties 3,242,052 1,933,817 Accrued compensation 834,448 1,968,063 Operating lease liabilities, current 153,985 435,906 Finance lease liabilities, current 481,950 963,900 Loans and notes payable, current 3,960,231 2,477,970 Loans and notes payable, current- related parties 16,740,820 15,626,168 Total current liabilities 43,720,499 39,984,466 Operating lease liabilities, long term 1,291,488 1,193,915 Finance lease liabilities, long term 2,096,882 1,852,178 Loans and notes payable, long term 879,645 856,034 Loans and notes payable, long term- related parties 5,590,008 5,590,008 Long-term debt (working interest royalty programs) 4,947,524 4,433,630 Deferred tax liability 120,076 88,323 Total liabilities 58,646,122 53,998,554 Stockholders’ equity: Preferred stock, $ 0.001 par value; 15,000,000 shares authorized, none outstanding Common stock, $ 0.001 par value; 200,000,000 shares authorized; 29,135,547 and 26,220,508 were issued and outstanding as of June 30, 2024 and December 31, 2023, respectively 29,136 26,221 Additional paid-in capital 86,134,795 83,097,553 Treasury stock, at cost ( 20,000 ) ( 20,000 ) Accumulated deficit ( 71,103,639 ) ( 65,908,406 ) Total Vivakor, Inc. stockholders’ equity 15,040,292 17,195,368 Noncontrolling interest ( 6,727 ) 41,821 Total stockholders’ equity 15,033,565 17,237,189 Total liabilities and stockholders’ equity $ 73,679,687 $ 71,235,743 See accompanying notes to consolidated financial statements 1 VIVAKOR, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 Revenues Product revenue - third parties $ 13,310,515 $ 11,570,742 $ 26,223,680 $ 22,765,208 Product revenue - related party 2,870,607 2,019,896 5,978,833 6,370,302 Total revenues 16,181,122 13,590,638 32,202,513 29,135,510 Cost of revenues 15,070,308 12,375,874 30,023,562 26,407,588 Gross profit 1,110,814 1,214,764 2,178,951 2,727,922 Operating expenses: Sales and marketing 628 628 11,668 1,217 General and administrative 2,974,180 1,384,203 4,639,146 3,237,124 Amortization and depreciation 988,420 667,867 1,997,473 1,452,387 Total operating expenses 3,963,228 2,052,698 6,648,287 4,690,728 Loss from operations ( 2,852,414 ) ( 837,934 ) ( 4,469,336 ) ( 1,962,806 ) Other income (expense): Unrealized gain (loss) on marketable securities - 165,275 ( 82,638 ) ( 330,551 ) Gain deconsolidation of subsidiary - - 177,550 - Interest income 2,306 - 4,613 - Interest expense ( 479,947 ) ( 459,079 ) ( 923,987 ) ( 910,373 ) Interest expense- related parties - ( 804,409 ) - ( 1,558,784 ) Other income 30,000 14,116 84,000 24,116 Total other income (expense) ( 447,641 ) ( 1,084,097 ) ( 740,462 ) ( 2,775,592 ) Loss before provision for income taxes ( 3,300,055 ) ( 1,922,031 ) ( 5,209,798 ) ( 4,738,398 ) Provision for income taxes ( 33,183 ) - ( 33,983 ) ( 800 ) Consolidated net loss ( 3,333,238 ) ( 1,922,031 ) ( 5,243,781 ) ( 4,739,198 ) Less: Net loss attributable to noncontrolling interests ( 20,240 ) ( 77,358 ) ( 48,548 ) ( 359,933 ) Net loss attributable to Vivakor, Inc. $ ( 3,312,998 ) $ ( 1,844,673 ) $ ( 5,195,233 ) $ ( 4,379,265 ) Basic and diluted net loss per share $ ( 0.12 ) $ ( 0.10 ) $ ( 0.19 ) $ ( 0.24 ) Basic weighted average common shares outstanding 27,987,899 18,064,838 27,189,918 18,064,838 See accompanying notes to consolidated financial statements 2 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 March 31, 2024 (unaudited) - $ - 26,520,508 $ 26,521 $ 83,710,538 $ ( 20,000 ) $ ( 67,790,641 ) $ 13,513 $ 15,939,931 Issuance of common stock for services - - 483,292 483 381,317 - - - 381,800 Issuance of common stock for a reduction of liabilities - - 100,000 100 93,890 - - - 93,990 Issuance of common stock on conversion of debt 903,095 903 1,047,590 - - - 1,048,493 Issuance of warrants for services - - - - 92,522 - - - 92,522 Stock based compensation - - 1,128,652 1,129 808,938 - - - 810,067 Net loss - - - - - - ( 3,312,998 ) ( 20,240 ) ( 3,333,238 ) June 30, 2024 (unaudited) - $ - 29,135,547 $ 29,136 $ 86,134,795 $ ( 20,000 ) $ ( 71,103,639 ) $ ( 6,727 ) $ 15,033,565 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, 2023 - $ - 26,220,508 $ 26,221 $ 83,097,553 $ ( 20,000 ) $ ( 65,908,406 ) $ 41,821 $ 17,237,189 Issuance of common stock for services - - 483,292 483 381,317 - - - 381,800 Issuance of common stock for a reduction of liabilities - - 400,000 400 378,890 - - - 379,290 Issuance of common stock on conversion of debt 903,095 903 1,047,590 - - - 1,048,493 Issuance of warrants for services - - - - 92,522 - - - 92,522 Stock based compensation - - 1,128,652 1,129 1,136,923 - - - 1,138,052 Net loss - - - - - - ( 5,195,233 ) ( 48,548 ) ( 5,243,781 ) June 30, 2024 (unaudited) - $ - 29,135,547 $ 29,136 $ 86,134,795 $ ( 20,000 ) $ ( 71,103,639 ) $ ( 6,727 ) $ 15,033,565 Series A Preferred Stock Common Stock Additional Paid-in Treasury Accumulated Non-controlling Total Stockholders’ Shares Amount Shares Amount Capital Stock Deficit Interest Equity March 31, 2023 (unaudited) - $ - 18,064,838 $ 18,065 $ 74,026,163 $ ( 20,000 ) $ ( 57,704,373 ) $ 8,345,037 $ 24,664,892 Distributions to noncontrolling interest - - - - - - - ( 317,234 ) ( 317,234 ) Issuance of noncontrolling interest for a reduction of debt - - - - - - - 625,000 625,000 Non-qualified stock options issued to third party - - - - 467,509 - - - 467,509 Net loss - - - - - - ( 1,844,673 ) ( 77,358 ) ( 1,922,031 ) June 30, 2023 (unaudited) - $ - 18,064,838 $ 18,065 $ 74,493,672 $ ( 20,000 ) $ ( 59,549,046 ) $ 8,575,445 $ 23,518,136 Series A Preferred Stock Common Stock Additional Paid-in Treasury Accumulated Non-controlling Total Stockholders’ Equity Shares Amount Shares Amount Capital Stock Deficit Interest (Deficit) December 31, 2022 - $ - 18,064,838 $ 18,065 $ 74,026,163 $ ( 20,000 ) $ ( 55,169,781 ) $ 8,206,614 $ 27,061,061 Distributions to noncontrolling interest - - - - - - - ( 606,236 ) ( 606,236 ) Issuance of noncontrolling interest for a reduction of debt - - - - - - - 1,335,000 1,335,000 Non-qualified stock options issued to third party - - - - 467,509 - - - 467,509 Net loss - - - - - - ( 4,379,265 ) ( 359,933 ) ( 4,739,198 ) June 30, 2023 (unaudited) - $ - 18,064,838 $ 18,065 $ 74,493,672 $ ( 20,000 ) $ ( 59,549,046 ) $ 8,575,445 $ 23,518,136 See accompanying notes to consolidated financial statements 3 VIVAKOR, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30, 2024 2023 OPERATING ACTIVITIES: Consolidated net loss $ ( 5,243,781 ) $ ( 4,739,198 ) Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 1,997,473 1,452,387 Forgiveness of liabilities - ( 24,116 ) Stock-based compensation 1,138,052 - Unrealized loss- marketable securities 82,638 330,551 Gain on deconsolidation of variable interest entity ( 177,550 ) - Deferred income taxes 31,753 - Changes in operating assets and liabilities: Accounts receivable ( 845,872 ) ( 42,934 ) Prepaid expenses ( 105,509 ) ( 94,191 ) Inventory ( 30,535 ) ( 2,339 ) Other assets ( 393,066 ) ( 167,208 ) Right of use assets- finance leases 83,943 523,878 Right of use assets- operating leases 181,363 153,664 Operating lease liabilities ( 184,348 ) ( 164,405 ) Accounts payable and accrued expenses 2,331,635 ( 111,556 ) Interest on notes receivable ( 4,613 ) - Interest on notes payable 313,103 1,588,689 Net cash used in operating activities ( 825,314 ) ( 1,296,778 ) INVESTING ACTIVITIES: Purchase of equipment ( 2,176,798 ) ( 2,025,303 ) Net cash used in investing activities ( 2,176,798 ) ( 2,025,303 ) FINANCING ACTIVITIES: Payment on financing lease liabilities ( 237,246 ) ( 195,497 ) Proceeds from loans and notes payable 3,132,959 3,213,666 Proceeds from loans and notes payable- related party 635,150 771,000 Payment of notes payable ( 477,610 ) - Payment of notes payable- related party ( 700,478 ) ( 405,674 ) Distributions to noncontrolling interest - ( 606,236 ) Net cash provided by financing activities 2,352,775 2,777,259 Net increase (decrease) in cash and cash equivalents ( 649,337 ) ( 544,822 ) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 744,307 3,182,793 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 94,970 $ 2,637,971 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the year for: Interest $ 222,924 $ 1,458,418 Income taxes $ - $ - Noncash transactions : Accounts payable on purchase of equipment $ 1,069,380 $ 560,109 Noncontrolling interest issued for a reduction in liabilities $ - $ 1,335,000 Capitalized interest on construction in process $ 656,492 $ 589,775 Common stock issued with debt $ 379,290 $ - Non-qualified stock options issued with debt $ - $ 467,509 Common stock issued for services $ 381,800 $ - Stock Warrants issued for services $ 92,522 $ - Common stock issued on conversion of debt $ 1,048,493 $ - See accompanying notes to consolidated financial statements 4 VIVAKOR, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1. Basis of Presentation 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, 2023 that were filed with our Form 10-K. 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 six months ended June 30, 2024 are not necessarily indicative of the results expected for the full year ending December 31, 2024. Deconsolidation of VivaSphere On September 7, 2023 we entered into an Acquisition Agreement (the “Agreement”) to sell 100% of the common stock of VivaSphere, Inc. (“VivaSphere”) and its assets, which were completely impaired by the Company in the fiscal year 2022, to a private buyer. The transaction closed on February 15, 2024. Under the terms of the Agreement, the purchase price of approximately $ 7.5 million consists of a promissory note payable (the “Convertible Note”) to the Company payable in full four years after the closing date. In the event the buyer does not close a transaction with a public company within one year from the close of the transaction, then the Company has the right to foreclose on and repossess the assets. The Convertible Note is convertible into common shares of a public company after the buyer closes a transaction to become a public company, which has a ceiling of 17.99% of the total number of shares outstanding of the public company. The “Conversion Price” shall equal the greater of (a) $0.75 per share or (b) the lesser of (i) 90% of the volume weighted average price for the Common Stock during the ten (10) consecutive trading days of the Common Stock immediately preceding the applicable Conversion Date on which the Company elects to convert all or part of this Note or (ii) $2.25 per share. Due to uncertainty of the collectability of the principal amount of the Convertible Note, we have established an allowance for the entire amount, and we have not accrued any interest receivable in connection with the Convertible Note. In accordance with ASC 810, as of October 1, 2023, we deconsolidated Viva Wealth Fund I, LLC (VWFI), recognizing a gain on deconsolidation of $ 438,099 in the fourth quarter of fiscal year 2023, and as of February 15, 2024 we deconsolidated Vivasphere, Inc. (Vivasphere), recognizing a gain of $ 177,550 for the six months ended June 30, 2024. The assets, liabilities and equity related to VWFI and Vivasphere were removed from our financial statements on their respective deconsolidation dates, resulting in the gains on deconsolidation. 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. For the six months ended June 30, 2024, the Company continued to build its wash plant for planned operations at its Houston, Texas site. The Company evaluated, and determined that there was no trigger event, and therefore there was no impairment incurred during the six months ended June 30, 2024. 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. 5 Intangible Assets and Goodwill We account for intangible assets and goodwill in accordance with ASC 350 “Intangibles-Goodwill and Other” (“ASC 350”). 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 performed an analysis and assessed no triggering event has occurred, and no impairment for the six months ended June 30, 2024. Revenue Recognition For the six months ended June 30, 2024, our sales consisted of storage services and the sale of crude oil or like products. For the six months ended June 30, 2024, disaggregated revenue by customer type was as follows: $ 26,223,680 in crude oil sales and $ 5,078,482 in product related to natural gas liquids sales. Related Party Revenues We sell crude oil or like products and provide storage services to related parties under long-term contracts. We acquired these contracts in our August 1, 2022 acquisition of Silver Fuels Delhi, LLC and White Claw Colorado City, LLC. Our revenue from related parties for 2024 and 2023 was $ 5,978,833 and $ 6,370,302 . Major Customers and Concentration of Credit Risk The Company has two major customers, which account for approximately 100 % of the balance of accounts receivable as of June 30, 2024 and 2023. Our two major customers (one of which is a related party) accounted for 100 % of the Company’s revenues for the six months ended June 30, 2024 and 2023. Advertising Expense Advertising costs are expensed as incurred. The Company did no t incur advertising expense for the six months ended June 30, 2024 and 2023. 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 have been excluded from the calculation of the weighted-average number of common shares outstanding when the Company is in a net loss position. For the three months June 30, 2024 and 2023 our potential dilutive instruments were excluded from the weighted-average calculation as they were antidilutive. Potential dilutive instruments as of June 30, 2024 and 2023 include the following: convertible notes payable, which are convertible into approximately 234,560 and 14,560 shares of common stock, stock options and vesting or unissued stock awards granted to previous and current employees of 2,617,320 and 1,421,760 shares of common stock, stock options and vesting or unissued stock awards granted to board members or consultants of 572,948 and 395,139 shares of common stock. The Company issued free standing stock options to purchase 1,000,000 shares of our common stock to a third party in a bundled transaction with debt during 2023 (see Note 9). The Company also has warrants outstanding to purchase 399,040 shares of common stock as of June 30, 2024 and 2023. 6 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, stock-based compensation, income taxes, effective interest rates related to long-term debt, lease assets and liabilities, valuation of stock used to acquire assets, derivatives, and fair values of the intangible assets and goodwill. 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. 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. 7 Note 2. Going Concern & Liquidity We have historically suffered net losses and cumulative negative cash flows from operations, and as of June 30, 2024, we had an accumulated deficit of approximately ( 71,103,639 ) $71.1 million. As of June 30, 2024 and 2023, we had a working capital deficit of approximately $ 38 million and $ 34.9 million, respectively. As of June 30, 2024, we had cash of approximately $ 95 thousand. As of June 30, 2024, we have current obligations to pay approximately $20.7 million of debt. Of the $20.7 million, $14.5 million can be satisfied through the issuance of registered common stock under the terms of the debt. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. During the six months ended June 30, 2024, subject to available cash flows, the Company continued to develop its technologies, its strategy to monetize its intellectual properties and execute its business plan. To date we have financed our operations primarily through debt financing, private and public equity offerings and our working interest agreements. For the fiscal year 2023 we raised approximately $3 million through debt financings with individual investors, $2.2 million through a sale lease back agreement, and during the six months ended June 30, 2024, we raised an additional $3.6 million through additional debt financing (Note 9). The Company entered into merger and acquisition agreements with anticipated closing dates in 2024, which were disclosed with our Form 10-K. Even though these merger and acquisition transactions are projected to close in 2024 and yield substantial cash flow that may provide adequate working capital to finance its day-to-day operations and current obligations, these events were not considered probable as of June 30, 2024 because they have not closed as of the date of our filing. Based on the above, we believe there is substantial doubt about the Company’s ability to continue as a going concern. The Company has prepared the consolidated financial statements on a going concern basis. If the Company encounters unforeseen circumstances that place constraints on its capital resources, management will be required to take various measures to conserve liquidity. Management cannot provide any assurance that the Company will be able to execute its plans to raise additional capital, close its merger and acquisitions, or that its operations or business plan will be profitable. Note 3. Accounts receivable As of June 30, 2024 and December 31, 2023, an allowance for doubtful accounts of none was deemed necessary. As of June 30, 2024 and December 31, 2023, trade accounts receivable of none and $ 152,083 are with a vendor of which our CEO is a beneficiary. In 2023 we began subleasing office space to a tenant where the officers of WealthSpace, LLC, Fund Manager of Viva Wealth Fund I, LLC, also manage the tenant of our sublease. The tenant owes rent of $ 106,000 to the Company as of June 30, 2024. Note 4. Prepaid Expenses and Other Assets As of June 30, 2024 and December 31, 2023, the Company had other assets of $ 1,511,254 and $ 1,118,188 , which consist of various security deposits on office and warehouse leases, a deposit for a reclamation bond, and finance lease deposits. As of June 30, 2024 and December 31, 2023, the Company prepaid expenses of $ 180,385 and $ 74,876 mainly consists of prepaid insurances. Note 5. Inventories As of June 30, 2024 and December 31, 2023, inventories of $ 75,167 and $ 44,632 consist of crude oil. The crude oil is related to the Company’s oil gathering facility in Delhi, Louisiana. 8 Note 6. Property and Equipment The following table sets forth the components of the Company’s property and equipment at June 30, 2024 and December 31, 2023: Schedule of property and equipment, net June 30, 2024 December 31, 2023 Gross Carrying Amount Accumulated Depreciation Net Book Value Gross Carrying Amount Accumulated Depreciation Net Book Value Office furniture $ 14,998 $ 8,779 $ 6,219 $ 14,998 $ 7,823 $ 7,175 Vehicles 36,432 36,432 0 36,432 33,396 3,036 Equipment 942,880 504,962 437,918 942,880 435,260 507,620 Property 17,000 - 17,000 17,000 0 17,000 Finance lease- Right of use assets 3,579,544 1,970,796 1,608,748 3,579,544 1,484,324 2,095,220 Construction in process: Wash Plant Facilities 5,279,190 - 5,279,190 3,344,968 - 3,344,968 Cavitation device 72,201 - 72,201 72,201 - 72,201 Remediation Processing Unit 1 4,549,925 - 4,549,925 4,464,513 - 4,464,513 Remediation Processing Unit 2 8,785,484 - 8,785,484 8,187,425 - 8,187,425 Remediation Processing Unit System A 2,906,315 - 2,906,315 2,795,391 - 2,795,391 Remediation Processing Unit System B 2,906,315 - 2,906,315 2,795,391 - 2,795,391 WCCC Tank Expansion 1,072,506 - 1,072,506 9,377 - 9,377 Total fixed assets $ 30,162,790 $ 2,520,969 $ 27,641,821 $ 26,260,120 $ 1,960,803 $ 24,299,317 For the six months ending June 30, 2024 and 2023, depreciation expense was $ 73,694 and $ 74,302 . Equipment that is currently being manufactured is considered construction in process and is not depreciated until the equipment is placed into service. Equipment that is temporarily not in service is not depreciated until placed into service. Note 7. Intangible Assets, Net and Goodwill The following table sets forth the components of the Company’s intangible assets at June 30, 2024 and December 31, 2023: Schedule of components of intellectual property June 30, 2024 December 31, 2023 Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value Extraction Technology patents $ 113,430 $ 22,241 $ 91,189 $ 113,430 $ 18,905 $ 94,525 Extraction Technology 16,385,157 7,714,678 8,670,479 16,385,157 7,305,049 9,080,108 Acquired crude oil contracts 16,788,760 3,417,177 13,371,583 16,788,760 2,525,739 14,263,021 Total intangible assets $ 33,287,347 $ 11,154,096 $ 22,133,251 $ 33,287,347 $ 9,849,693 $ 23,437,654 The changes in the carrying amount of goodwill are as follows: Schedule of goodwill Goodwill January 1, 2023 $ 12,678,108 Business combination acquisition (1) 2,306,660 December 31, 2023 $ 14,984,768 June 30, 2024 $ 14,984,768 (1) 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 hired a valuation expert who performed a valuation study to calculate the fair value of the acquired assets, assumed liabilities and goodwill within twelve months. Based on the valuation study, we increased the fair value of goodwill and decreased the value of the acquired contracts by $2.3 million in 2023. 9 Note 8. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consist of the following: Schedule of accounts payable and accrued expenses June 30, December 31, 2024 2023 Accounts payable $ 6,702,091 $ 5,226,071 Office access deposits - - Unearned revenue 9,107,297 9,107,297 Accrued interest (various notes and loans payable) 209,962 178,999 Accrued interest (working interest royalty programs) 1,546,569 1,396,528 Accrued tax penalties and interest 741,094 669,747 Accounts payable and accrued expenses $ 18,307,013 $ 16,578,642 Schedule of accounts payable and accrued expenses related parties June 30, December 31, 2024 2023 Accounts payable- related parties $ 3,237,329 $ 1,933,817 Accrued interest (notes payable)- related parties 4,723 - Accounts payable and accrued expenses- related parties $ 3,242,052 $ 1,933,817 Accrued compensation $ 834,448 $ 1,968,063 For the six months ended June 30, 2024, our accounts payable and accrued expenses include recently received unverified billings from a service provider in the amount of $ 371,075 , of which the Company is in the process of reviewing and may dispute in the near future. As of June 30, 2024 and December 31, 2023, our accounts payable are primarily made up of trade payables for the purchase of crude oil. Trade accounts payables in the amount of $ 2,810,785 and $ 1,933,817 is with a vendor who our CEO is a beneficiary of. As of June 30, 2024 and December 31, 2023, accounts payable related to services rendered of $ 426,544 and $ 178,325 , which are not trade payables, are with a vendor who our CEO is a beneficiary of. As of June 30, 2024, accrued compensation to current employees includes $ 128,697 in accrued vacation pay due to our Chief Executive Officer, which may be payable in cash or stock if unused, and $ 207,124 due to our Chief Financial Officer, with $ 90,002 in accrued sick and vacation pay is payable in cash if unused. Accrued compensation includes prorated year end accrued cash bonuses that are considered probable. On June 13, 2024, we entered into a new executive employment agreement with our Chief Financial Officer, and in connection with the executive employment agreement we also entered into a settlement agreement with respect to accrued compensation owed by the Company to our Chief Financial Officer (the “Settlement Agreement”). Pursuant to the new employment agreement, our Chief Financial Officer will receive: (i) $450,000 annually (the “Base Salary”); (ii) an annual cash incentive bonus of a minimum of 50% of the Base Salary (a portion of which may be payable in the form of restricted common stock of the Company) and a maximum of 120% of the Base Salary; and (iii) an annual equity incentive bonus of a minimum of 25% of the Base Salary and a maximum of 120% of the Base Salary in shares of restricted stock. He will also be eligible for a cash transaction bonus (the “Transaction Bonus”) for Qualified Transactions, as defined in the new employment agreement, of 0.5% of the enterprise value of the assets, equity or business sold or acquired or the listing value of the equity or debt being listed on a national exchange. For each of the closing of the Merger Agreement and Endeavor MIPA (as defined herein), he will receive a bonus of $200,000, with $100,000 for each such bonus to be paid in cash and the remaining $100,000 for each such bonus to be paid in shares of the Company’s common stock, valued on the date of close of the Merger Agreement and the Endeavor MIPA, respectively. The foregoing bonuses are in lieu of a Transaction Bonus for either the Merger Agreement or the Endeavor MIPA. The new employment agreement is for an initial term of two years and will auto-renew for subsequent one-year terms if not terminated by either party at the end of a term, which requires 90 days prior notice. The new employment agreement may also be terminated under standard cause and without cause termination and resignation provisions. At the time of the termination of the previous executive employment agreement, the Company owed its CFO $ 1,167,750 in accrued salary and bonuses, plus interest (together, the “Accrued Compensation”), for serving as the Company’s Chief Financial. Pursuant to the Settlement Agreement, the Company and our CFO agreed the Accrued Compensation would be paid to our CFO under the terms of a straight promissory note in the principal amount of the Accrued Compensation (the “Note”) (see Note 9). 10 On June 26, 2024, we entered into an executive employment agreement with Patrick M. Knapp to join the Company as its Executive Vice President, General Counsel, & Secretary (the “Knapp Agreement”). The Knapp Agreement provides for an annual base salary of $ 350,000 . In addition, the Knapp Agreement provides for annual incentive cash and equity compensation of up to $ 840,000 based on certain performance goals as further set forth therein. As an inducement to enter into the Knapp Agreement, Mr. Knapp received a one-time signing grant of Company common stock equivalent in value to $ 250,000 , which are priced per share based on the volume-weighted average price for the preceding five (5) trading days prior to the day of such grant (calculated to be 140,190 shares based on the effective date of the Knapp Agreement), subject to an eighteen (18)-month lockup period and a conditional clawback obligation concurrent therewith, which shares were issued to him on July 2, 2024. Note 9. Loans and Notes Payable Loans and notes payable and their maturities consist of the following: Third party debt: Schedule of loans and notes payable June 30, December 31, 2024 2023 Various promissory notes and convertible notes $ 50,960 $ 50,960 Novus Capital Group LLC Note - 171,554 National Buick GMC 13,556 13,556 Blue Ridge Bank 410,200 410,200 Small Business Administration 349,579 299,900 Al Dali International for Gen. Trading & Cont. Co. 1,088,159 974,594 RSF, LLC 500,000 500,000 Keke Mingo (a) - 913,240 Cedarview Opportunities Master Fund LP 2,427,422 - Total notes payable $ 4,839,876 $ 3,334,004 Loans and notes payable, current $ 3,960,231 $ 2,477,970 Loans and notes payable, long term $ 879,645 $ 856,034 Related party debt: Schedule of loans and notes payable related parties June 30, December 31, 2024 2023 Jorgan Development, LLC $ 20,140,574 $ 20,841,052 Ballengee Holdings, LLC (b) 635,150 - Tyler Nelson (c) 1,167,750 - Triple T Trading Company LLC 387,354 375,124 Total notes payable- related parties $ 22,330,828 $ 21,216,176 Loans and notes payable, current- related parties $ 16,740,820 $ 15,626,168 Loans and notes payable, long term- related parties $ 5,590,008 $ 5,590,008 11 Schedule of maturities of loans and notes payable 2024 $ 19,737,489 2025 7,089,709 2026 37,007 2027 17,232 2028 17,232 Thereafter 272,035 Total $ 27,170,704 (a) On April 8, 2024, we executed an amended and restated convertible promissory note for the original promissory note (the “Amended Note”). The convertible promissory note replaces an original promissory note between the Company and the holder dated December 5, 2023 (the “Original Note”), but maintains the same interest rate and maturity date of the Original Note, and the obligation to issue 100,000 shares of the Company’s restricted stock remains in effect. Pursuant to the terms of the Amended Note the holder can convert the outstanding principal and interest due under the Amended Note into shares of our common stock at price equal to 90% of the average closing price of the Company’s common stock for the previous three (3) trading days prior to the conversion date, with a floor conversion price of $0.75 per share. The holder may not convert amounts owed under the Amended Note if such conversion would cause him to own more than 4.99% of our common stock after giving effect to the issuance, which limitation may be raised to 9.99% upon no less than 61 days notice to us regarding his desire to increase the conversion limitation percentage. In May 2024, the lender converted all outstanding amounts ($1,048,493) into 903,095 shares of common stock at approximately $1.161 per share. (b) As previously disclosed, on May 14, 2024, we issued a promissory note (the “Note”), to James Ballengee, in the principal amount of up to $1,500,000, for which loan advances will be made to the Company as requested. The Company will use the proceeds of the Note for general working capital purposes and to repay certain indebtedness. The intent of the Note is to be short term in nature and be repaid in 30 days. Any amounts that are not repaid in 30 days will bear interest thereafter at a rate of 11% per annum. Each advance matures after six months from the date the Company receives the funds. On May 23, 2024, we issued a promissory note to Ballengee Holdings, LLC, of which our Chief Executive Officer is the beneficial owner, which replaced and rescinded the above referenced note with James Ballengee effective back to May 14, 2024, under the same terms such that all obligations under the notes are the responsibility of Ballengee Holdings, LLC and the prior note with James Ballengee is no longer enforceable. (c) On June 13, 2024, the Company owed our Chief Financial Officer $1,167,750 in accrued salary and bonuses, plus interest (together, the “Accrued Compensation”), for serving as the Company’s Chief Financial, and executed a Settlement Agreement, where the Company and the CFO agreed the Accrued Compensation would be paid under of a straight promissory note in the principal amount of the Accrued Compensation (the “Note”). Under the terms of the Note, the amounts due will accrue interest at 8% per annum and will be paid by paying 5% of any money received by the Company from closed future financings or acquisition/merger/sale transactions until the Note has been paid in full. In the event the Note has not been paid in full by December 31, 2024, the Note will mature and any amounts due thereunder will be due and payable in full on such date. Note 10. Commitments and Contingencies Finance Leases On June 18, 2024, our subsidiary White Claw Colorado City, LLC (“WCCC”), entered into a supplement (“Supplement No. 3”) to an existing Master Agreement (the “Master Agreement”) with Maxus Capital Group, LLC (“Maxus”). Under Supplement No. 3, Maxus agreed to finance approximately $1 million for the build-out of certain equipment and facilities related to the wash plant we are in the process of constructing on land leased by our subsidiary, VivaVentures Remediation Corp., in Houston, Texas. Once the relevant equipment is constructed Maxus will own the equipment and we will lease these additions to our wash plant facility from Maxus under the terms of Supplement No. 3. Under the terms of the lease, we expect our lease payments to Maxus to be approximately $ 58,595 per month over four years, with an early buyout option or option at the end of the base term to purchase the wash plant equipment for approximately $ 683,000 or lease-end option to purchase the facilities for the fair market value. We anticipate that the lease will commence in the fourth quarter of 2024. 12 As previously disclosed, on May 23, 2023 we entered into a supplement (“Supplement No. 2”) to the Master Agreement Maxus, under which Maxus funded approximately $2.2 million to finance the build-out of other Houston wash plant equipment additions, which such lease was anticipated to commence in the second quarter of 2024. As of June 30, 2024, we anticipate that this lease will now commence in the fourth quarter of 2024. Under the terms of this lease, we expect our lease payments to Maxus under the supplement to be approximately $ 57,962 per month over four years, with an early buyout option of approximately $ 685,000 or lease-end option to purchase the facilities for the fair market value. Because we were involved in the construction of the wash plant and were responsible for paying a portion of the construction costs, we evaluated the control criteria in ‘build to suit’ lease accounting guidance under GAAP ASC 842 (Leases) where the Company was deemed, for accounting purposes, to have control of the wash plant during the construction period. Accordingly, the Company recorded project construction costs incurred during the construction period for the wash plant incurred by the landlord as a construction-in-process asset and a related financing obligation on our consolidated balance sheets. The total $ 4.8 million of project construction costs (which includes a total of $2.2 million of costs funded by Maxus, and another $1 million that is to be funded) have been capitalized and recorded to construction-in-process within ‘Property and equipment, net’. The total $ 3.2 million of construction costs funded by Maxus have been recorded as a component of ‘Accounts payable and accrued expenses’. Employment Agreements On June 13, 2024, we entered into a new executive employment agreement with our Chief Financial Officer, and in connection with the executive employment agreement we also entered into a settlement agreement with respect to accrued compensation owed by the Company to our Chief Financial Officer (the “Settlement Agreement”). Pursuant to the new employment agreement, our Chief Financial Officer will receive: (i) $450,000 annually (the “Base Salary”); (ii) an annual cash incentive bonus of a minimum of 50% of the Base Salary (a portion of which may be payable in the form of restricted common stock of the Company) and a maximum of 120% of the Base Salary; and (iii) an annual equity incentive bonus of a minimum of 25% of the Base Salary and a maximum of 120% of the Base Salary in shares of restricted stock. He will also be eligible for a cash transaction bonus (the “Transaction Bonus”) for Qualified Transactions, as defined in the new employment agreement, of 0.5% of the enterprise value of the assets, equity or business sold or acquired or the listing value of the equity or debt being listed on a national exchange. For each of the closing of the Merger Agreement and Endeavor MIPA (as defined herein), he will receive a bonus of $200,000, with $100,000 for each such bonus to be paid in cash and the remaining $100,000 for each such bonus to be paid in shares of the Company’s common stock, valued on the date of close of the Merger Agreement and the Endeavor MIPA, respectively. The foregoing bonuses are in lieu of a Transaction Bonus for either the Merger Agreement or the Endeavor MIPA. The new employment agreement is for an initial term of two years and will auto-renew for subsequent one-year terms if not terminated by either party at the end of a term, which requires 90 days prior notice. The new employment agreement may also be terminated under standard cause and without cause termination and resignation provisions. At the time of the termination of the previous executive employment agreement, the Company owed its CFO $ 1,167,750 in accrued salary and bonuses, plus interest (together, the “Accrued Compensation”), for serving as the Company’s Chief Financial. Pursuant to the Settlement Agreement, the Company and our CFO agreed the Accrued Compensation would be paid to our CFO under the terms of a straight promissory note in the principal amount of the Accrued Compensation (the “Note”) (see Note 9). On June 26, 2024, we entered into an executive employment agreement with Patrick M. Knapp to join the Company as its Executive Vice President, General Counsel, & Secretary (the “Knapp Agreement”). The Knapp Agreement provides for an annual base salary of $ 350,000 . In addition, the Knapp Agreement provides for annual incentive cash and equity compensation of up to $ 840,000 based on certain performance goals as further set forth therein. As an inducement to enter into the Knapp Agreement, Mr. Knapp received a one-time signing grant of Company common stock equivalent in value to $ 250,000 , which are priced per share based on the volume-weighted average price for the preceding five (5) trading days prior to the day of such grant (calculated to be 140,190 shares based on the effective date of the Knapp Agreement), subject to an eighteen (18)-month lockup period and a conditional clawback obligation concurrent therewith, which shares were issued to him on July 2, 2024. 13 Note 11. Share-Based Compensation & Warrants Stock Options & Awards 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. The Company has granted stock-based compensation to employees, including stock options and stock awards in conjunction with our Board of Director and executive employment agreements, including stock awards and bonuses that are prorated or vest. In 2024, we issued additional stock awards for 371,954 common shares that vested immediately or that will vest quarterly in conjunction with annual compensation for current and a new Board of Direct compensation, and two executed executive employment contracts (see Note 9). In 2023, our CEO’s executive employment agreement renewed including stock awards of 1,657,016 common shares that vest quarterly, and the continued vesting of two stock incentive awards issued to our Executive Vice President, Operations quarterly of 245,536 common shares, one of which vests quarterly and second cliff vests at 12 and 18 months. For the six months ended June 30, 2024, stock-based compensation was $ 1,136,923 . Non-statutory stock-based compensation was $ 92,522 for the six months ended June 30, 2024. There were no other options or awards granted during the six months ended June 30, 2024. The following table summarizes all stock option activity of the Company for the six months ended June 30, 2024 and 2023: Schedule of option activity Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Outstanding, December 31, 2023 2,816,900 $ 2.03 4.08 Granted - - - Exercised - - - Forfeited - - - Outstanding, June 30, 2024 2,816,900 $ 2.03 4.08 Outstanding, December 31, 2022 1,833,566 $ 2.59 6.47 Granted 1,000,000 1.18 2.00 Exercised - - - Forfeited ( 16,667 ) 12.00 - Outstanding, June 30, 2023 2,816,899 $ 2.03 4.58 Exercisable, December 31, 2023 2,720,221 $ 2.05 3.93 Exercisable, June 30, 2024 2,816,900 $ 2.03 3.58 Exercisable, December 31, 2022 1,526,869 $ 2.65 5.94 Exercisable, June 30, 2023 2,526,869 $ 2.07 4.08 As of June 30, 2024 and 2023, the aggregate intrinsic value of the Company’s outstanding options was approximately $ 723,354 and none . The aggregate intrinsic value will change based on the fair market value of the Company’s common stock. 14 Note 12. 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 $ 33,983 and $800 for the six months ended June 30, 2024 and 2023, respectively. The Company is projecting a ( - 0.69 % ) effective tax rate for the year ending December 31, 2024, which is primarily the result of permanent book to tax differences, increase in the valuation allowance, and the change in the naked credit deferred tax liability. The Company’s effective tax rate for the year ending December 31, 2023 was ( - 0.87 % ), which was primarily the result of prior year true-ups and permanent adjustments. Note 13. Related Party Transactions In 2023 we subleased office space to Spectra Global Cuisine, LLC (Spectra), which shares officers with WealthSpace, LLC (the Fund Manager of VWFI). For the six months ended June 30, 2024, we realized $ 84,000 in office sublease lease revenue from Spectra. As of June 30, 2024, the Company is carrying accounts receivable of $ 106,000 related to this sublease. 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, we acquired all of the issued and outstanding membership interests where the consideration included secured three-year promissory notes issued by us in favor of the Sellers (the “Notes”). At the time of the closing of these transactions Jorgan, JBAH, and our newly hired CEO, James Ballengee were not considered related parties. As James Ballengee is now our Chief Executive Officer and is the beneficiary of Jorgan and JBAH, and the Sellers are significant shareholders, certain transactions, as noted below, related to Jorgan, JBAH, and James Ballengee are now considered related party transactions. As of June 30, 2024 and 2023, we have accrued interest of approximately of none and $ 452,283 owed on the Note. For the six months ended June 30, 2024 and 2023, we made cash payments of $ 700,478 and $ 1,705,590 on the Note. 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. 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. For the six months ended June 30, 2024 and 2023, we realized tank storage revenue of approximately $ 900,000 for each period. 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. For the six months ended June 30, 2024 and 2023, we made crude oil purchases from WC Crude of $ 23,143,488 and $ 15,931,252 , respectively. In addition, SFD entered into a sales agreement on April 1, 2022 with WC Crude to sell a natural gas liquid product to WC Crude. We produced and sold crude and natural gas liquids to WC Crude in the amount of $ 5,078,482 and $ 6,428,026 , respectively, for the six months ended June 30, 2024 and 2023. 15 In the business combination of acquiring SFD and WCCC we also entered into a Shared Services Agreement with Endeavor Crude, LLC (“Endeavor”), who shares a beneficiary, James Ballengee, with Jorgan and JBAH. Under this agreement, we have the right, but not the obligation to use Endeavor for certain consulting services. For the six months ended June 30, 2024 and 2023, Endeavor rendered services in the amount of $ 183,344 and $ 156,845 , respectively. On May 14, 2024, we issued a promissory note, to James Ballengee, in the principal amount of up to $ 1,500,000 , for which loan advances will be made to the Company as requested. The Company will use the proceeds of the promissory note for general working capital purposes and to repay certain indebtedness. The intent of the promissory note is to be short term in nature and be repaid in 30 days. Any amounts that are not repaid in 30 days will bear interest thereafter at a rate of 11 % per annum. Each advance matures after six months from the date the Company receives the funds. On May 23, 2024, we issued a promissory note to Ballengee Holdings, LLC, of which our Chief Executive Officer is the beneficial owner, which replaced and rescinded the above referenced note with James Ballengee effective back to May 14, 2024, under the same terms such that all obligations under the notes are the responsibility of Ballengee Holdings, LLC and the prior note with James Ballengee is no longer enforceable. As of June 30, 2024, the balance of this note was $ 635,150 . On June 13, 2024, we owed our Chief Financial Officer $ 1,167,750 in accrued salary and bonuses, plus interest (together, the “Accrued Compensation”), for serving as the Company’s Chief Financial Officer, and executed a Settlement Agreement where the Accrued Compensation would be paid under the terms of a straight promissory note in the principal amount of the Accrued Compensation. Under the terms of the note, the amounts due will accrue interest at 8% per annum and will be paid by paying 5% of any money received by the Company from closed future financings or acquisition/merger/sale transactions until the note has been paid in full. In the event the note has not been paid in full by December 31, 2024, the note will mature and any amounts due thereunder will be due and payable in full on such date. As of June 30, 2024 the balance of principal and accrued interest was $ 1,172,472 . We have an existing note payable issued to Triple T, which is owned by Dr. Khalid Bin Jabor Al Thani, the 51% majority-owner of Vivakor Middle East LLC The note is interest free, has no fixed maturity date and will be repaid from revenues generated by Vivakor Middle East LLC. As of June 30, 2024 and 2023, the balance owed was $ 387,354 and $ 359,241 , respectively. Note 14. Subsequent Events The Company has evaluated subsequent events through the date the financial statements were available to issue. On July 2, 2024, the Company issued Mr. Knapp 140,190 shares of its common stock at approximately $ 1.84 per share for the $ 250,000 signing bonus related to his executive employment agreement. On July 5, 2024, the Company received a loan from Ballengee Holdings, LLC, an entity controlled by James Ballengee, the Company’s Chairman and Chief Executive Officer, in the principal amount of Five Hundred Thousand Dollars ($500,000) and, in connection therewith, the Company agreed to issue 21,552 restricted shares of the Company’s common stock as an equity incentive for the loan. The note bears interest at the rate of 10 % per annum, was amended on July 19, 2024 to mature on September 30, 2025 . The note allows the holder to convert the outstanding principal and interest due under the loan into shares of our common stock at price equal to 90 % of the average closing price of our common stock for the previous five (5) trading days prior to the conversion date, with a floor conversion price of $ 1.00 per share. The lender may not convert amounts owed under the note if such conversion would cause him to own more than 4.99 % of our common stock after giving effect to the issuance, which limitation may be raised to 9.99 % upon no less than 61 days notice to us regarding his desire to increase the conversion limitation percentage. On July 5, 2024, the Company entered into a Consulting Agreement with 395 Group, LLC, a Nevada limited liability company (“395”), under which 395 agreed to provide the Company with general advisory and business development services. Specifically, 395 agreed to advise the Company for the next four (4) months regarding capitalization, business development, business relationships, industry guidance, and assist with understanding what is happening in the Company’s market space. In exchange for 395’s services, the Company agreed to pay total cash compensation of $ 340,000 and equity compensation of 50,000 shares of the Company’s restricted common stock, with one-half of the cash compensation and all the equity compensation due upon signing of the agreement and the other half of the cash compensation due thirty (30) days after signing. As of the date of this report, the Company has paid $255,000 of the cash compensation. 16 On July 8, 2024, the Company received a loan from a non-affiliated individual lender in the principal amount of Three Hundred Fifty Thousand Dollars ($350,000) and, in connection therewith, the Company agreed to issue 15,982 restricted shares of the Company’s common stock as an equity incentive for the loan. The note bears interest at the rate of 10 % per annum, and was amended on July 19, 2024 to mature on September 30, 2025. The note allows the holder to convert the outstanding principal and interest due under the loan into shares of our common stock at price equal to 90 % of the average closing price of our common stock for the previous five (5) trading days prior to the conversion date, with a floor conversion price of $ 1.00 per share. The lender may not convert amounts owed under the loan if such conversion would cause him to own more than 4.99 % of our common stock after giving effect to the issuance, which limitation may be raised to 9.99 % upon no less than 61 days notice to us regarding his desire to increase the conversion limitation percentage. One July 26, 2024, the Company entered into that certain Strata Purchase Agreement with ClearThink Capital Partners, LLC (the “ClearThink ELOC” and “ClearThink”, respectively), pursuant to which ClearThink agreed to purchase a number of shares of common stock in tranches as directed by the Company, up to $ 5,000,000 worth of common stock. Each tranche request is limited to the lesser of $ 1,000,000 or 500% of the daily average shares traded value for the 10 days prior to the date of any Company request to purchase. The minimum purchase notice allowable is $ 25,000 , and there must be a minimum of 10 trading days between purchase notices unless the parties mutually agree otherwise. The Company cannot issue a purchase notice if it would cause ClearThink to own more than 9.99% of the Company’s outstanding common stock. The Company also executed a registration rights agreement and stock purchase agreement with ClearThink under the terms of the ClearThink ELOC. On July 31, 2024, the Company entered into a stock purchase agreement under which the Company agreed to sell an aggregate of 1,600,000 shares of restricted common stock to a non-affiliate in exchange for $ 800,000 . In July 2024, Maxus Capital Group, LLC funded approximately $600,000 under the Supplement No. 3 to finance the build-out of certain equipment and facilities related to our wash plant in Houston, Texas. 17