Vivakor, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q includes a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) that reflect management’s current views with respect to future events and financial performance. These statements are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by the Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used herein, the words “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating to the Company’s business, industry, and the Company’s operations and results of operations. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results. Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report. The forward-looking statements made in this report are based only on events or information as of the date on which the statements are made in this report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this report and the documents we refer to in this report and have filed as exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or performance. Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time except as required by law. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions. 19 As used in this Quarterly Report on Form 10-Q and unless otherwise indicated, the terms “Company,” “we,” “us,” and “our” refer to Vivakor, Inc., its wholly owned and majority-owned active subsidiaries, or joint ventures (collectively, the “Company”). Intercompany balances and transactions between consolidated entities are eliminated. We have the following direct and indirect wholly-owned or majority-owned active subsidiaries: Endeavor Crude, LLC, a Texas limited liability company (since October 1, 2024), and Silver Fuels Processing, LLC, a Texas limited liability company (since October 1, 2024), Meridian Equipment Leasing, LLC, a Texas limited liability company (since October 1, 2024), which owns CPE Gathering Midcon, LLC, a Delaware limited liability company, Equipment Transport, LLC, a Pennsylvania limited liability company (since October 1, 2024), which owns ET EmployeeCo, LLC, a Pennsylvania limited liability company, Silver Fuels Delhi, LLC, a Louisiana limited liability company, White Claw Colorado City, LLC, a Texas limited liability company, Vivaventures Remediation Corp., a Texas corporation, Vivaventures Management Company, Inc., a Nevada corporation, Vivaventures Oil Sands, Inc., a Utah corporation, Vivakor Supply & Trading, LLC, a Texas limited liability company, Vivakor Administration, LLC, a Texas limited liability company, Vivakor Midstream, LLC, a Texas limited liability company, Vivakor Operating, LLC, a Texas limited liability company, Vivakor Transportation, LLC, a Texas limited liability company, and VM Facilities, LLC, a Texas limited liability company. We have a 99.95% ownership interest in VivaVentures Energy Group, Inc., a Nevada Corporation; the 0.05% minority interest in VivaVentures Energy Group, Inc. is held by a private investor unaffiliated with us. We also have an approximate 49% ownership interest in Vivakor Middle East Limited Liability Company, a Qatar limited liability company. Vivakor manages and consolidates RPC Design and Manufacturing LLC, which includes a non-controlling interest investment from VivaOpportunity Fund, LLC, which is also managed by VivaVentures Management Company, Inc. Business Overview Vivakor, Inc. (“Vivakor” or the “Company”) 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 two main segments: (i) transportation logistics services and (ii) terminaling and storage facility product and services related to oil and gas production. Our transportation and facilities services primarily consist of trucking crude oil and produced water and transportation and terminaling services of crude oil via the Omega Gathering Pipeline. Our trucking services are centered in the Permian and Eagle Ford Basins. We utilize our trucking fleet to transport those products to a fully-integrated network of facilities where we blend various grades of crude oil grades of crude oil, and reuse or dispose of produced water. Our terminaling and storage product and services primary consist of two operational major crude oil terminaling facilities. One is located in Colorado City, Texas, and the other facility is located in Delhi, Louisiana. Both facilities are located at the junction of several major interstate pipelines, receive various grades of crude oil from our customers. These crude oil terminals are industrial facilities that serve as hubs for the storage, handling and distribution of crude oil and petroleum products We plan to perform remediation services utilizing our remediation processing centers (“RPCs”) at some point in the future. We are currently constructing a full-capacity RPC at the San Jacinto River & Rail Park in Harris County, Texas. Once complete, we anticipate the strategically located facility to be capable of processing oilfield solid wastes into economic byproducts such as condensate, propane, and butane. This RPC will feature an adjacent, complimentary truck wash facility from which we expect to derive additional revenue. On October 1, 2024, we acquired Endeavor Crude, LLC, a Texas limited liability company, Equipment Transport, LLC, a Pennsylvania limited liability company, Meridian Equipment Leasing, LLC, a Texas limited liability company, and Silver Fuels Processing, LLC, a Texas limited liability company (collectively with their subsidiaries, the “Endeavor Entities”), making those entities wholly-owned subsidiaries, which gave us operations in several different areas of the midstream oil and gas industry. Our management and Board of Directors is currently reviewing all aspects of the Endeavor Entities’ assets and operations, including the synergies they have with our pre-acquisition operations and the debt related to certain of those assets and operations. In the event our management and Board of Directors determines some of those assets or operations do not fit organizationally with our other assets and operations then we may seek strategic alternatives with those certain assets and/or operations. Reclassifications Certain reclassifications may have been made to prior years’ amounts to conform to the 2025 presentation, including the purchase price allocation of accrued interest and principal note payable amounts to conform to the 2025 presentation. 20 Recent Developments On February 11, 2025, we entered into a Consulting Agreement with WSGS, LLC for management consulting services. Under the terms of the Consulting Agreement, we will pay the consultant up to $1.3 million per year, payable in registered shares of our common stock under our 2023 Equity Incentive Plan. The Consulting Agreement is for an initial term of one year, with the option for a second year. The principal of WSGS, LLC is also a former officer and director of Empire Diversified Energy, Inc., a Delaware corporation, that we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with on February 26, 2024, but has not closed, and E-Starts Money Co., a Delaware corporation, which is an investor in our common stock. On February 10, 2025, we entered into a Side Letter related to our Executive Employment Agreement with Tyler Nelson, a Director and our Chief Financial Officer, and dated June 13, 2024 and the Promissory Note issued to Mr. Nelson dated June 13, 2024, under which we amended and clarified Mr. Nelson’s Employment Agreement and the Promissory Note to (i) clarify that effective October 1, 2024, Mr. Nelson’s Employment Agreement is with Vivakor Administration, LLC with all material obligations guaranteed by us, (ii) confirming the Promissory Note is still our primary obligation; (iii) confirming the payment obligations of the company are triggered but not just fund raising by the company but also fundraising by our subsidiaries, that the maturity date under the Promissory Note is extended until June 30, 2025, and that a 5% fee will be assessed on the outstanding principal and interest due under the Promissory Note as of December 31, 2024 as a result of the Promissory Note not being paid by December 31, 2024, and (iv) to clarify that no taxable event will occur related to amounts due under the Promissory Note until those amounts are actually paid by the Company to Mr. Nelson. On February 10, 2025, we entered into an Amendment No. 1 to our Employment Agreement with Mr. Les Patterson, our Vice President, Operations & Construction. Mr. Patterson’s Employment Agreement misstated Mr. Patterson’s annual equity compensation, which was agreed to be annual equity compensation equal to not less than $100,000 to be paid in equal quarterly installments of $25,000 based on a valuation formula set forth in the Employment Agreement, but was mistakenly drafted as annual equity compensation equal to not less than $25,000 to be paid in equal quarterly installments based on a valuation formula set forth in the Employment Agreement. As a result of the Amendment No. 1 to the Employment Agreement we issued Mr. Patterson 74,701 additional shares of our common stock, which is valued at $75,000 based on the valuation formula in Mr. Patterson’s Employment Agreement. These shares were issued unrestricted under the Company’s 2023 Equity and Incentive Plan as registered on Form S-8. On February 10, 2025, we entered into an Employment Agreement with Andre Johnson to be our Vice President, Human Resources As part of Mr. Johnson’s compensation we agreed to issue him 302,297 shares of our common stock as a signing bonus, as well as $75,000 worth of our common stock annually, paid in equal quarterly installments. These shares are due to be issued unrestricted under the Company’s 2023 Equity and Incentive Plan as registered on Form S-8. On March 17, 2025, the Company issued a junior secured convertible promissory note (the “Note”) due as described below, to J.J. Astor & Co. (the “Lender”), in the principal amount of $6,625,000 (the “Principal Amount”), in connection with a Loan and Security Agreement entered into by and between the Company, its subsidiaries, and the Lender (the “Agreement”). The Company received $5,000,000, before deduction of closing fees (the “Loan”). The Note is payable to the Lender over forty-two equal weekly installments of $157,739, which may be paid in cash or, at the option of the Company once an applicable resale registration statement covering the conversion shares is declared effective by the SEC, in free trading shares of its common stock issued at a twenty percent (20%) discount to the lower of either the previous day’s closing price or the average of the four lowest volume-weighted average prices during the prior twenty (20) trading days. The Note does not bear interest unless an event of default shall occur and is continuing. 0054he Company agreed to issue the Lender 250,000 shares of its common stock as additional consideration for the loan (the “Commitment Shares”) Results of Consolidated Operations for the Three Months Ended March 31, 2025 and 2024 21 Revenue For the three months ended March 31, 2025 and 2024 we realized revenues of $37,340,291 and $16,021,391, respectively, representing an increase of $21,318,900 or 133.07%. The increase in revenue is primarily attributed to the sales of logistics and terminaling realized through the operations of our newly acquired Endeavor Entities’ businesses, which were acquired through our business combination, which closed on October 1, 2024. Cost of Revenue For the three months ended March 31, 2025 and 2024, our cost of revenues consisted primarily of costs associated with selling oil and natural gas liquid as well as the operations from our newly acquired businesses in logistics, which was acquired through our business combination which closed on October 1, 2024. For the three months ended March 31, 2025 and 2024, costs of revenue were $32,581,857 and $14,953,254, respectively, representing an increase of $17,628,603 or 117.89%. The increase in the cost of revenue is primarily attributed to the cost of goods sold for our logistics and terminaling realized through the operations from our newly acquired Endeavor Entities’ businesses, which were acquired through our business combination, which closed on October 1, 2024. Gross Profit and Gross Margin For the three months ended March 31, 2025 and 2024 we realized gross profit of $4,758,434 and $1,068,137, respectively, representing an increase of $3,690,297 or 345.49%. 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. Operating Expenses For the three months ended March 31, 2025 and 2024, we realized operating expenses of $11,200,915 and $2,685,059, which represents an increase of $8,515,856, or 317.16%. Our operating expenses increased due to the operations from our newly acquired Endeavor Entities’ businesses, which were acquired through our business combination, which closed on October 1, 2024. Interest Expense For the three months ended March 31, 2025 and 2024, we realized total interest expense of $1,184,198 and $444,040, which represents an increase of $740,158, or 154.72%. The increase in interest expense is mainly attributable to the net effect of the accrued interest on newly acquired debt from the close of the acquisition of the Endeavor Entities on October 1, 2024, and the amendment of our note issued as consideration in the 2022 MIPA approved by the shareholders on November 10, 2023. As the amendment was accounted for as a troubled debt restructuring under ASC 470 – Debt (“ASC 470”) , the note was thus written to the amount of the undiscounted future cash flows on the note to maturity, and therefore no interest expense is realized for the remainder of the note to maturity. 22 Unrealized Gain/Loss on Marketable Securities For the three months ended March 31, 2025 and 2024, we reported an unrealized gain of $1,652,754 and an unrealized loss of $82,638, which represents an increase of $1,735,392, or 2,099.99%. Our marketable securities were considered to be traded on an active market and were accounted for at a fair value based on the quoted prices in the active markets resulting in aggregate unrealized gains or losses as noted above. Segment Operating Results for the Three Months Ended March 31, 2025 and 2024 Operating Results of our Terminaling and Storage Segment : 2025 2024 Change ($) Change (%) Revenues $ 21,826,502 $ 12,913,165 $ 8,913,336 69.03 % Revenues-related party 2,037,534 3,108,226 (1,070,691 ) (34.45 )% Total revenues 23,864,036 16,021,391 7,842,645 48.95 % Cost of revenues 22,815,012 14,953,254 7,861,758 52.58 % Gross profit 1,049,024 1,068,137 (19,113 ) (1.79 )% Operating expenses: General and administrative 234,692 232,954 1,738 0.75 % Amortization and depreciation 844,826 742,509 102,317 13.78 % Total operating expenses 1,079,518 975,463 104,055 10.67 % Loss from operations (30,494 ) 92,674 (123,168 ) (132.90 )% Interest expense - (125,001 ) 125,001 (100.00 )% Loss before provision for income taxes $ (30,494 ) $ (32,327 ) $ 1,833 (5.67 )% Revenue The increase in revenue is primarily attributed to the net effect of our buy-sell agreements of crude petroleum products through the Enbridge North Dakota pipeline, which contracts we entered into in November 2024, where we realized revenue from these contacts in the amount of $13,269,810 for the three months ended March 31, 2025, and decreased volumes sold through our Silver Fuels Delhi facility as we continue to renegotiate our agreements with Exxon Mobile Corporation, who purchased the Denbury, Inc. facility that is attached to our pipeline facility and purchases our product from the Silver Fuels Delhi facility. Cost of Revenue The increase in the cost of revenue is primarily attributed to the net effect of our buy-sell agreements of crude petroleum products through the Enbridge North Dakota pipeline, which contracts we entered into in November 2024, where we realized costs of revenue from these contacts in the amount of $13,243,426 for the three months ended March 31, 2025, and decreased volumes sold through our Silver Fuels Delhi facility as we continue to renegotiate our agreements with Exxon Mobile Corporation, who purchased the Denbury, Inc. facility that is attached to our pipeline facility and purchases our product from the Silver Fuels Delhi facility. 23 Operating Results of our Transportation Logistics Segment : 2025 2024 Change ($) Change (%) Revenues $ 10,962,014 - $ 10,962,014 100 % Revenues-related party 2,514,241 - 2,514,241 100 % Total revenues 13,476,255 - 13,476,255 100 % Cost of revenues 9,766,845 - 9,766,845 100 % Gross profit 3,709,410 - 3,709,410 100 % Operating expenses: General and administrative 2,355,884 - 2,355,884 100 % Amortization and depreciation 4,574,072 - 4,574,072 100 % Total operating expenses 6,929,956 - 6,929,956 100 % Loss from operations (3,220,546 ) - (3,220,546 ) 100 % Other income (expense), net (2,501,627 ) - (2,501,627 ) 100 % Loss before provision for income taxes $ (5,722,173 ) - $ (5,722,173 ) 100 % This operating segment in its entirety was acquired from our business combination acquisition of the Endeavor Entities’ businesses, which closed on October 1, 2024. Operating Results of our Corporate and Other : For information purposes, we have reported separately “Corporate and Other”, which is not determined to be an operating segment, but allows for analysis of non-operating entities and shared services and personnel that support both of the operating segments. Corporate and Other contains expenses for the corporate entity and non-operating entities, such as corporate overhead payroll expenses, stock-based compensation, corporate legal and audit expenses, impairment expense not related to operating segments, interest expense from loans at the corporate level, and amortization of intangible assets held at corporate and non-operating entities. 2025 2024 Change ($) Change (%) Operating expenses: Sales and marketing - 11,040 $ (11,040 ) (100.00 )% General and administrative $ 2,778,737 $ 1,432,012 1,346,725 94.04 % Amortization and depreciation 412,704 266,544 146,160 54.84 % Total operating expenses 3,191,441 1,709,596 1,481,845 86.68 % Loss from operations (3,191,441 ) (1,709,596 ) (1,481,845 ) 86.68 % Other income (expense): Unrealized gain (loss) on marketable securities 1,652,754 (82,638 ) 1,735,392 2,099.99 % Gain on deconsolidation of subsidiary - 177,550 (177,550 ) (100.00 )% Interest income 2,307 2,307 - - % Interest expense (191,648 ) (319,039 ) 127,391 (39.93 )% Interest expense-related parties (53,121 ) - (53,121 ) 100.00 % Other income - 54,000 (54,000 ) (100.00 )% Total other income (expense) 1,410,292 (167,820 ) 1,578,112 (940.36 )% Loss before provision for income taxes (1,781,149 ) (1,877,416 ) 96,267 (5.13 )% Provision for income taxes - (800 ) 800 (100.00 )% Consolidated net loss (1,781,149 ) (1,878,216 ) 97,067 (5.17 )% Less: Net loss attributable to noncontrolling interests (6,518 ) (28,308 ) 21,790 (76.97 )% Net loss attributable to Vivakor, Inc. $ (1,774,631 ) $ (1,849,908 ) $ 75,277 (4.07 )% 24 Operating Expenses Our operating expenses increased due to the acquisition of the workforce of the Endeavor Entities’ businesses, which were acquired through our business combination, which closed on October 1, 2024, including multiple new executives and administrative personnel, and hired additional consultants. Unrealized Gain/Loss on Marketable Securities Our marketable securities are 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. Cash flows The following table sets forth the primary sources and uses of cash and cash equivalents for the three months ended March 31, 2025 and 2024 as presented below: March 31, 2025 2024 Net cash (used) in operating activities $ (35 ) $ (1,829,679 ) Net cash provided (used) in investing activities 1,482,000 (1,028,885 ) Net cash provided (used) by financing activities (370,174 ) 2,881,530 Liquidity and Capital Resources We have historically suffered net losses and cumulative negative cash flows from operations, and as of March 31, 2025, we had an accumulated deficit of approximately $98 million. As of March 31, 2025 and December 31, 2024, we had a working capital deficit of approximately $99 million and $101.5 million, respectively. As of March 31, 2025, we had cash of approximately $4.8 million, of which $4 million is restricted cash. In addition, we have obligations to pay approximately $64.2 million of debt within one year of the issuance of these financial statements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. As of March 31, 2025 and December 31, 2024, we had cash and cash equivalents of $4,788,783 and $3,676,992, which includes $4 million and $3 million as restricted cash, respectively. 25 For the three months ended March 31, 2025 and 2024, our net cash used in operating activities was mainly comprised of net effect of the consolidated net loss of $7,533,816 and $1,910,543, and our depreciation and amortization of $5,831,602 and $1,009,053. For the three months ended March 31, 2025 and 2024, we realized stock-based compensation of $801,423 and $327,985 in lieu of using cash. We also accrued interest expense on loans and notes payable of $1,184,198 and $187,524, an increase in accounts receivable of $11,215,920 and $1,551,490, an increase in prepaid expenses of $2,654,689 and $91,393, and as increase in accounts payable and accrued expenses of $12,983,336 and $426,581. For the three months ended March 31, 2025 and 2024, our net cash used in investing activities was mainly attributed to our purchase of equipment of none and $1,028,885 related to the manufacturing of our RPC, wash plant facilities, and a White Claw Colorado City site extension on our pipeline and the $1,482,000 of proceeds received from the sale of vehicles and trailers. Our net cash provided by our financing activities was mainly attributed to the net effect of the following events: For the three months ended March 31, 2025 and 2024, we received proceeds of $6,263,261 and $3,002,192 related to the issuance of notes and other loans, of which $1,664,150 and none were from related parties. For the three months ended March 31, 2025 and 2024, we paid notes payable and lease liabilities by $6,633,435 and $120,662, of which $1,164,601 and $4,686 were to related parties. Capitalized interest on construction in process was none and $318,447 for the three months ended March 31, 2025 and 2024. There are no further existing firm obligations; however, we anticipate further construction costs of approximately $1.5 million in connection with our construction of our Texas remediation and wash plant facilities. Our ability to continue to access capital could be affected adversely by various factors, including general market and other economic conditions, interest rates, the perception of our potential future earnings and cash distributions, any unwillingness on the part of lenders to make loans to us and any deterioration in the financial position of lenders that might make them unable to meet their obligations to us. If we cannot raise capital through public or private debt financings, equity offerings, or other means, our ability to grow our business may be negatively affected. In such case, we may need to suspend site and plant construction or further acquisitions until market conditions improve. Contractual Obligations Our contractual obligations as of March 31, 2025 for finance lease liabilities are for certain land, property, plant, and equipment, which leases end in 2025 and 2026. Finance lease obligations as of March 31, 2025 are as follows: 2025 $ 3,108,270 2026 3,109,343 Total $ 6,217,612 Our contractual obligations as of March 31, 2025 for operating lease liabilities are for office warehouse space, land, and truck yards, which leases end in 2026 through 2027, except for a land lease which ends in 2042. Operating lease obligations as of March 31, 2025 are as follows: 2025 $ 1,967,902 2026 1,246,055 2027 261,441 2028 173,899 2029 177,855 Thereafter 2,724,062 Total $ 6,560,537 26 Interest Rate and Market Risk Interest 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. Market Risk - Equity Investments Market 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. Inflation Prolonged 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 None. Critical Accounting Policies & Use of Estimates There have been no material changes to our critical accounting policies and the use of estimates from these disclosures reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on April 15, 2025. Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, we are not required to provide the information required by this Item.