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. 20 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 (from October 1, 2024 to July 30, 2025), CPE Gathering Midcon, LLC, a Delaware limited liability company, Equipment Transport, LLC, a Pennsylvania limited liability company (from October 1, 2024 to July 30, 2025), 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 and Vivakor Company Limited Liability Company, both Qatar limited liability companies. 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) crude oil transportation services, and (ii) facility services for terminaling and storage of crude oil and constituent petroleum products and byproducts, including waste streams. Our transportation services primarily consist of trucking transportation of crude oil and constituent products, including crude oil waste streams, and pipeline transportation of crude oil via the Omega Gathering Pipeline. Our truck transportation services are centered in Colorado’s DJ Basin, Central Oklahoma’s (STACK play, and the Permian and Eagle Ford Basins of Texas. These basins are among the most active regions for oil and natural gas exploration and development in the United States. 1 On average, each new oil well in the Permian Basin produces approximately 1,300 barrels of crude oil or more per day. 2 We utilize a crude oil trucking fleet to transport oil to a network of facilities where we blend waste streams and off-spec grades of crude oil. Immediate access to flexible and scalable truck transportation solutions are a vital component of oil and natural gas exploration and development. Likewise, our Omega Gathering Pipeline is an approximately forty-five (45) mile crude oil gathering and shuttle pipeline in Blaine County, Oklahoma, the heart of the STACK play. It is tied into the Cushing, Oklahoma storage hub via a connection to the Plains STACK Pipeline. Our facilities services are comprised of fifteen (15) operated crude oil pipeline injection truck stations, the majority of which are centered in the Permian Basin. In addition, we have two operational major crude oil terminaling facilities. One is located in Colorado City, Texas, and is underpinned by a ten (10) year contract for a 100,000 per barrel per month minimum volume commitment. The other, located in Delhi, Louisiana, is backed by a contract with Denbury Onshore, LLC, a subsidiary of ExxonMobil Corporation, and provides for the sale of 60,000 net barrels per month of crude oil. Both facilities are located at the junction of several major interstate pipelines. In addition, we are currently constructing a remediation processing center (“ RPC ”) strategically located at the San Jacinto River & Rail Park in Harris County, Texas. Once complete, we expect the facility to be capable of processing oilfield solid wastes into economic byproducts such as condensate, propane, butane, and caliche. The RPC features an adjacent, complimentary truck wash facility from which we expect to derive additional revenue. We expect the RPC to commence operations in the fourth quarter of 2025. In 2023, we moved our other full-capacity RPC to Kuwait, where we are currently in negotiations with Kuwait Oil Company to potentially use the RPC to clean sands contaminated with oil, primarily from production wells destroyed during the Persian Gulf War. 1 See: https://www.resilience.org/stories/2024-07-03/the-status-of-u-s-oil-production-2024-update-everything-shines-by-dimming 2 See: https://www.eia.gov/petroleum/drilling/ 21 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. On July 30, 2025, we sold all of the issued and outstanding limited liability company membership interests in Meridian Equipment Leasing, LLC, a Texas limited liability company, and Equipment Transport, LLC, a Pennsylvania limited liability company (the “Water Trucking Sale”), pursuant to that certain Membership Interest Purchase Agreement of even date therewith by and between Vivakor Transportation, LLC, as Seller, and Jorgan Development, LLC, as Buyer (the “Water Trucking Sale Agreement”), in exchange for $11,058,235 USD paid in 11,058 shares of Series A Convertible Preferred Stock of Vivakor, Inc., which shares will no longer be considered outstanding or be entitled to the relevant annual dividend. The Buyer of such entities is controlled by James Ballengee, our Chairman, President, and Chief Executive Officer. The sale is subject to a one-time post-closing purchase price adjustment based on the sold subsidiaries’ financial results as reflected on Vivakor’s Form 10-Q Quarterly Report for the period ended June 30, 2025, which will be settled in Series A Convertible Preferred Stock of Vivakor, Inc. Prior to consummating the Water Trucking Sale, we transferred certain assets and liabilities between affiliates to comply with pre-existing debt covenants, facilitate crude oil trucking operations, and minimize potential operational disruption to our crude oil-focused businesses. In connection with the Water Trucking Sale, and among other agreements as further set forth in the Water Trucking Sale Agreement, (i) affiliates of Vivakor, and the Ballengee Family Office Affiliates, amended and restated that certain Transition Services Agreement dated October 1, 2024, to account for new and additional services to be provided by various parties thereto, (ii) the parties amended and restated that certain Secured Promissory Note dated August 15, 2022, by and between Vivakor, as Borrower, and Jorgan Development, LLC, as Lender, reducing the payments to Lender thereunder from ninety-nine percent (99%) of Monthly Free Cash Flow, as defined therein, to fifty percent (50%) of Monthly Free Cash Flow, and (iii) Mr. Ballengee and certain Ballengee Family Office Affiliates voluntarily suspended the right to receive dividends and distributions upon Series A Convertible Preferred Stock of Vivakor, Inc. held by them for the period from August 1, 2025 to January 1, 2026. 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. Recent Developments 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. The Company agreed to issue the Lender 250,000 shares of its common stock as additional consideration for the loan (the “Commitment Shares”). 22 On May 20, 2025, we issued an aggregate of 1,764,964 shares of our restricted common stock for three months of dividends to the holders of our Series A Preferred Stock. Of those shares, 1,384,311 were issued to Jorgan Development, LLC and 13,983 were issued to JBAH Holdings, LLC, both of which are controlled by James Ballengee, our Chief Executive Officer. Between May 14, 2025 and June 9, 2025, we issued convertible promissory notes (the “Notes”), to seven non-affiliated accredited investors (the “Holders”), in the aggregate principal amount of $5,911,764 in connection with a Securities Purchase Agreement entered into by and between the Company and the Holders (the “SPA”). Under the terms of the SPA and the Notes, we received $5,025,000 prior to deducting placement agent fees of $391,500, Holders attorney’s fees of $20,000 and escrow fees of $5,000. The Notes matures twelve months from the date of issuance, have a 15% original issuance discount, have a one-time ten percent (10%) interest charge applied at the issuance date, and is convertible at eighty percent (80%) of the lower of (a) the closing price of the Company’s common stock as traded on either the Nasdaq or the New York Stock Exchange or the NYSE Amex Exchange (as applicable) on the trading day immediately prior to the date a notice of conversion is submitted in writing to the Company under the Note (each a “Notice Date”), or (b) the average of the four lowest VWAPS over the twenty (20) trading days prior to the applicable Notice Date. In connection with the issuance of the Notes, we issued the Holders 753,750 shares of our common stock as additional incentive to enter into the SPA and the Notes. As stated above, on March 17, 2025, Vivakor, Inc. (the “Company”), issued a junior secured convertible promissory note (the “Initial Note”) to J.J. Astor & Co. (the “Lender”), in the principal amount of $6,625,000 (the “Principal Amount”), in relation to a Loan and Security Agreement by and between the Company, its subsidiaries, and the Lender (the “Loan Agreement”). The Company received $5,000,000, before fees. The Company received the funds on March 18, 2025. In relation to the Loan Agreement, the Company also entered into a Registration Rights Agreement with the Lender (the “RRA”), under which the Company was obligated to file a resale registration statement with the SEC registering any shares of its common stock issuable under the Note no later than sixty (60) days after closing. On July 9, 2025, we entered into a Second Amendment to Loan Agreement and Registration Rights Agreement (the “Amendment”), and an Additional Junior Secured Convertible Note (the “Additional Note”, together with the Amendment, the “New Loan Documents”), under which we agreed to issue the Lender the Note in the principal amount of $5,940,000. Under the New Loan Documents, we will receive net proceeds of $971,026, with the remainder of the principal amount going to (a) a $176,000 origination fee, (b) an aggregate of $3,232,976 (the “Holdback Amounts”) representing (i) a $891,000 holdback amount to be applied to pay the first six Weekly Installment Payments when due under the Additional Note (hereinafter defined), (ii) $1,395,540 to be applied to pay the seven past due Weekly Installment Payments under the Initial Note, plus accrued interest thereon, and (iii) $946,434 to secure and cover the payment of the next six Weekly Installment Payments due under the Initial Note, (c) $20,000 to pay Lender’s legal fees, and (d) and original issuance discount of $1,540,000. The Note is payable over forty equal weekly installments of $148,500, which may be paid in cash or, at the option of the Company once an applicable registration statement is effective, 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 in default and is subject to mandatory prepayment upon the receipt of proceeds from identified sales of equity interests in the Company and/or the receipt of certain extraordinary cash payments. In the event we default on the terms of the Initial Note or the Additional Note, the conversion price under the notes is a 50% discount to 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 lender is secured by a junior lien in all assets of the Company, subject to exceptions for existing debt covenants of the Company. The Company reserved 15,000,000 shares of its common stock for issuance in connection with a conversion under the Additional Note and the Company agreed to issue the Lender 150,000 shares of its common stock as additional consideration for the loan (the “Commitment Shares”). We received the funds under the New Loan Documents on July 15, 2025. 23 On July 9, 2025, we entered into a Forbearance and Amendment to Loan Agreement and Note, which amended the terms of the Loan Agreement, Initial Note and RRA (the “Forbearance Agreement”). Under the terms of the Forbearance Agreement: (i) the Lender agreed to loan us an additional amount up to $4,400,000 under similar terms as the Initial Note (funds from which we received on July 15, 2025, as set forth below), (ii) the Lender agreed to permit us to raise an additional $3,000,000 under terms set forth on Exhibit I of the Loan Agreement, (iii) the filing date for the resale registration statement under the RRA was extended to July 18, 2025, (iv) the Outstanding Principal Amount of the Initial Note was $6,151,783 on the Forbearance Agreement Effective Date, (v) the principal amount under the Initial Note was increased to $6,766,961 (the “Amended Principal Amount”), representing 110% of the Outstanding Principal Amount of the Note as of the Forbearance Agreement Effective Date, (vi) the Weekly Installment Payments under the Initial Note stayed the same, (vii) the fee of $615,178 was added to the Amended Principal Amount of the Initial Note and shall be due and payable by the Company on or before January 7, 2026, (viii) past due interest totaling $291,367, that has accrued between the Forbearance Agreement Effective Date and the Effective Date, shall also be paid on or before January 7, 2026, and (ix) both the $615,178 fee and the $291,367 of past due interest shall be paid in full in cash on or before January 7, 2026. On July 19, 2025, the Board of Directors of Vivakor received notice from Tyler Nelson, Vivakor’s Chief Financial Officer and Member of the Board of Directors of his resignation from such positions effective immediately. On July 24, 2025, Vivakor Administration, LLC (the “Company”) entered into an executive employment agreement with Kimberly Hawley (the “Employment Agreement”) with respect to her appointment as Executive Vice President, Chief Financial Officer, and Treasurer of the Company and Vivakor, Inc. (“Vivakor”). Pursuant to the Employment Agreement, Ms. Hawley will receive annual compensation of $350,000. Additionally, Ms. Hawley shall be eligible for performance bonus compensation as further set forth therein. The Employment Agreement may be terminated by either party for any or no reason, by providing five business days’ notice of termination, but a termination without cause will trigger certain severance provisions, including a lump sum payment equal to one (1) calendar year’s pay. On July 30, 2025, Vivakor Transportation, LLC, as Seller, executed and entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Jorgan Development, LLC (“Jorgan”) to sell all of the issued and outstanding limited liability company membership interests in and to Meridian Equipment Leasing, LLC, and Equipment Transport, LLC (the “Targets”), two indirectly wholly-owned subsidiaries of Vivakor, Inc. (“Vivakor”, and the “Transaction”, respectively). The purchase price paid to the Seller thereunder consisted of $11,058,235 USD to be remitted in Series A Convertible Preferred Stock of Vivakor, which shares will no longer be considered outstanding or be entitled to the relevant annual dividend. The purchase price is subject to upward or downward adjustment based on any difference in net equity of the Targets as reflected by the Targets’ final financial results for the period ending June 30, 2025. The Targets were principally engaged in the truck transportation of oilfield produced water and associated equipment leasing operations. In connection with the Transaction, and among other agreements as further set forth in the Purchase Agreement, (i) affiliates of Vivakor, and certain related parties controlled directly or indirectly by James H. Ballengee, Vivakor’s Chairman, President, and Chief Executive Officer (the “Ballengee Family Office Affiliates”) will amend and restate that certain Transition Services Agreement dated October 1, 2024, to account for new and additional services to be provided by various parties thereto, (ii) the parties will amend and restate that certain Secured Promissory Note dated August 15, 2022, by and between Vivakor, as Borrower, and Jorgan Development, LLC, as Lender, reducing the payments to Lender thereunder by almost one-half (1/2), from ninety-nine percent (99%) of certain free cash flow from certain of Vivakor’s terminal operations to fifty percent (50%) of free cash flow from such operations, and (iii) Mr. Ballengee and certain Ballengee Family Office Affiliates will voluntarily suspend the right to receive dividends and distributions upon Series A Convertible Preferred Stock of Vivakor, held by them for the period from August 1, 2025 to January 1, 2026. 24 On July 30, 2025, Silver Fuels Delhi, LLC, White Claw Colorado City, LLC, Silver Fuels Processing, LLC, CPE Gathering Midcon, LLC, Vivakor, and Vivakor Transportation, LLC (collectively, the “Vivakor Obligors”), James H. Ballengee, Vivakor’s Chairman, President, and Chief Executive Officer, and certain related parties controlled directly or indirectly by Mr. Ballengee (collectively, the “Ballengee Obligors”), executed and entered into a Forbearance Agreement with Maxus Capital Group, LLC (“Maxus” and the “Forbearance Agreement”, respectively). Pursuant to the terms of the Forbearance Agreement, the Vivakor Obligors and the Ballengee Obligors agreed that (A) various events of default have occurred and are continuing to occur with respect to (i) Master Agreement No. 1450 dated March 17, 2020, by and between Maxus Capital Group, LLC, as Lessor, Silver Fuels Delhi, LLC, as Lessee, and Jorgan Development, LLC, as Co-Lessee, and all Schedules and Leases made subject thereto (collectively, the “1450 Lease”), (ii) Master Agreement No. 1452 dated December 28, 2021, by and between Maxus Capital Group, LLC, as Lessor, Meridian Equipment Leasing, LLC, as Lessee, and Jorgan Development, LLC, as Co-Lessee, and all Schedules and Leases made subject thereto (collectively, the “1452 Lease”), (iii) Master Agreement No. 1462 dated December 28, 2021, by and between Maxus Capital Group, LLC, as Lessor, White Claw Colorado City, LLC, as Lessee, and Jorgan Development, LLC, as Co-Lessee, and all Schedules and Leases made subject thereto (collectively, the “1462 Lease”, and together with the 1450 Lease and the 1452 Lease, the “Maxus Leases”), (B) Maxus will forbear and refrain from further action to enforce its rights under the Maxus Leases so long as no further events of default occur pursuant to the Forbearance Agreement, and (C) pursuant to the Maxus Leases, the Vivakor Obligors and Ballengee Obligors will pay or cause to be paid to Maxus the sum of $3,288,067 on or before September 1, 2025, the sum of $1,418,660 on or before October 1, 2025, the sum of $1,500,000 on or before November 30, 2025, the sum of $3,000,000 on or before November 30, 2025, the sum of $41,012.06 per month pursuant to the 1450 Lease, the sum of $592,974 per month pursuant to the 1452 Lease, and the sum of $188,031 per month pursuant to the 1462 Lease. Upon the execution of the Forbearance Agreement, the Vivakor Obligors and Ballengee Obligors must remit to Maxus a forbearance fee equal to (x) $250,000.00 cash and (b) restricted common shares of Vivakor in an amount equal to $250,000.00, priced per share based on the average closing price for the three (3) days preceding their issuance. Pursuant to a Transition Agreement dated August 3, 2025, by and between Vivakor and Vivakor Administration, LLC, as Company, and Russ M. Shelton (the “Transition Agreement), Mr. Shelton, resigned his position as Executive Vice President and Chief Operating Officer of the Company, concurrent therewith and agreed to assist in transitioning his responsibilities to his replacement. Mr. Shelton’s resignation is not the result of any disagreement with Vivakor or its independent auditors regarding its accounting or financial practices. On August 12, 2025, we entered into a Second Amendment to the Employment Agreement with Les Patterson (the “Amended Agreement”), which amended that certain Employment Agreement dated July 1, 2025, as amended. Under the Amended Agreement, Mr. Patterson accepted the position of Vice President and Chief Operating Officer of Vivakor, Inc. in exchange for a base annual salary of $375,000 and annual equity compensation of shares of Vivakor’s common stock equal to not less than $125,000, paid to Mr. Patterson in four equal quarterly installments priced per share based on the volume-weighted average price for the preceding five (5) NASDAQ trading days prior to the Effective Date or annual anniversary of the Amended Agreement, as applicable, with the shares issued as registered common stock under a registered equity compensation plan. The Employment Agreement may be terminated by either party for any or no reason, by providing five business days’ notice of termination, but a termination without cause will trigger certain severance provisions, including a lump sum payment equal to six (6) months pay. Mr. Patterson will also receive a one-time signing bonus within seven (7) days from signing the Amended Agreement of Two Hundred Fifty Thousand Dollars ($250,000.00) of Vivakor common stock, which shall be issued pursuant to Vivakor’s Form S-8 Registration Statement filed with the U.S. Securities and Exchange Commission and shall be priced per share based on the volume-weighted average price for the preceding five (5) NASDAQ trading days prior to the date of this Second Amendment. Results of Consolidated Operations for the Three Months Ended June 30, 2025 and 2024 Revenue For the three months ended June 30, 2025 and 2024 we realized revenues of $29,099,446 and $16,181,122, respectively, representing an increase of $12,918,324 or 79.8%. 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 June 30, 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 June 30, 2025 and 2024, costs of revenue were $24,519,777 and $15,070,308, respectively, representing an increase of $9,449,469 or 62.7%. 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. 25 Gross Profit For the three months ended June 30, 2025 and 2024 we realized gross profit of $4,579,669 and $1,110,814, respectively, representing an increase of $3,468,855 or 312.28%. 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 June 30, 2025 and 2024, we realized operating expenses of $11,356,416 and $3,897,740 which represents an increase of $7,458,676 or 191.36%. 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 June 30, 2025 and 2024, we realized total interest expense of $4,383,710 and $479,947, which represents an increase of $3,903,763, or 813.37%. The increase was primarily due to debt instruments entered into during the second quarter of 2025, along with the net effect of accrued interest on debt and finance leases assumed in connection with the acquisition of the Endeavor Entities on October 1, 2024. Unrealized Gain/Loss on Marketable Securities For the three months ended June 30, 2025 and 2024, we reported an unrealized loss of $1,731,160 and an unrealized loss of $0, which represents an increase of $1,731,160. Our marketable securities were considered to be traded on an active market and were accounted for at a fair value based on the quoted prices in the active markets resulting in aggregate unrealized gains or losses as noted above. Segment Operating Results for the Three Months Ended June 30, 2025 and 2024 Operating Results of our Terminaling and Storage Segment : 2025 2024 Change ($) Change (%) Revenues $ 13,396,481 $ 13,310,515 $ 85,966 1 % Revenues- related party 5,246,692 2,870,607 2,376,085 83 % Total revenues 18,643,173 16,181,122 2,462,051 15 % Cost of revenues 17,156,132 15,070,308 2,085,824 14 % Gross profit 1,487,041 1,110,814 376,227 34 % Operating expenses: - - General and administrative 643,684 40,738 602,946 1480 % Amortization and depreciation 995,397 1,048,339 (52,943 ) (5 ) % Total operating expenses 1,639,081 1,089,077 550,003 51 % Gain (loss) from operations (152,040 ) 21,737 (173,776 ) (799 )% - - Other income (expense): - - Unrealized gain (loss) on marketable securities - - - - Loss on disposition of asset - - - - Gain deconsolidation of subsidiary - - - - Interest income - - - - Interest expense - (237,185 ) 237,185 (100 )% Interest expense- related parties - - - - Other income - - - - Total other income (expense) - (237,185 ) 237,185 (100 )% Loss before provision for income taxes (152,040 ) (215,448 ) 63,408 (29 ) % Consolidated net loss (152,040 ) (215,448 ) 63,408 (29 )% Less: Net loss attributable to noncontrolling interests - - - - Net loss attributable to Vivakor, Inc. $ (152,040 ) $ (215,448 ) $ 63,408 (29 ) % 26 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 $17,087,318 for the three months ended June 30, 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 $17,045,502 for the three months ended June 30, 2025, and decreased volumes sold through our Silver Fuels Delhi facility as we continue to renegotiate our agreements with Exxon Mobile Corporation, who purchased the Denbury, Inc. facility that is attached to our pipeline facility and purchases our product from the Silver Fuels Delhi facility. Operating Results of our Transportation Logistics Segment : 2025 2024 Change ($) Change (%) Revenues $ 7,601,942 $ - $ 7,601,942 100 % Revenues- related party 2,854,331 - 2,854,331 100 % Total revenues 10,456,273 - 10,456,273 100 % Cost of revenues 7,363,645 - 7,363,645 100 % Gross profit 3,092,628 - 3,092,628 100 % Operating expenses: - - - - General and administrative 1,520,438 - 1,520,438 100 % Amortization and depreciation 5,389,294 - 5,389,294 100 % Total operating expenses 6,909,732 - 6,909,732 100 % Loss from operations (3,817,104 ) - (3,817,104 ) 100 % - - Other income (expense): - - Unrealized gain (loss) on marketable securities - - - - Loss on disposition of asset 378,000 - 378,000 100 % Gain deconsolidation of subsidiary - - - - Interest income 15,522 - 15,522 100 % Interest expense (4,188,919 ) - (4,188,919 ) 100 % Interest expense- related parties - - - - Other income 12,540 - 12,540 100 % Total other income (expense) (3,782,857 ) - (3,782,857 ) 100 % Loss before provision for income taxes (7,599,961 ) - (7,599,961 ) 100 % Consolidated net loss (7,599,961 ) - (7,599,961 ) 100 % Less: Net loss attributable to noncontrolling interests - - - - Net loss attributable to Vivakor, Inc. $ (7,599,961 ) $ - $ (7,599,961 ) 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. 27 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 (%) Revenues $ - $ - $ - - Revenues- related party - - - - Total revenues - - - - Cost of revenues - - - - Gross profit - - - - Operating expenses: - - - - General and administrative 2,321,344 2,868,582 (547,238 ) (19 )% Amortization and depreciation 486,259 (59,919 ) 546,178 (912 )% Total operating expenses 2,807,603 2,808,663 (1,060 ) 0 % Loss from operations (2,807,5603 ) (2,808,663 ) 1,060 0 % - - Other income (expense): - - Unrealized gain (loss) on marketable securities (1,731,160 ) 20 (1,731,180 ) (8,655,900 )% Loss on disposition of asset - (177,550 ) 177,550 (355,100 ) Gain deconsolidation of subsidiary - 177,550 (177,550 ) (100 )% Interest income 2,306 2,306 - - Interest expense (194,791 ) (242,762 ) 47,971 (20 )% Interest expense- related parties (53,121 ) - (53,121 ) 100 % Other income - 30,000 (30,000 ) (100 )% Total other income (expense) (1,976,766 ) (210,436 ) (1,766,330 ) 840 % Loss before provision for income taxes (4,784,369 ) (3,019,099 ) (1,765,270 ) 58 % Consolidated net loss (4,784,369 ) (3,019,099 ) (1,765,270 ) 59 % Less: Net loss attributable to noncontrolling interests (20,240 ) 20,240 (100 )% Net loss attributable to Vivakor, Inc. $ (4,784,369 ) $ (2,998,859 ) $ (1,785,510 ) 60 % 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. 28 Results of Consolidated Operations for the Six Months Ended June 30, 2025 and 2024 Revenue For the six months ended June 30, 2025 and 2024 we realized revenues of $66,439,737 and $32,202,513, respectively, representing an increase of $34,237,224 or 106.3%. 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 six months ended June 30, 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 six months ended June 30, 2025 and 2024, costs of revenue were $57,101,634 and $30,023,562, respectively, representing an increase of $27,078,072 or 90.19%. 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 For the six months ended June 30, 2025 and 2024 we realized gross profit of $9,338,103 and $2,178,951, respectively, representing an increase of $7,159,152 or 328.56%. 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 six months ended June 30, 2025 and 2024, we realized operating expenses of $22,557,295 and $6,648,287, which represents an increase of $15,909,008, or 239.3%. 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 six months ended June 30, 2025 and 2024, we realized total interest expense of $5,567,908 and $923,987, which represents an increase of $4,643,921, or 502.6%. The increase was primarily due to debt instruments entered into during the second quarter of 2025, along with the net effect of accrued interest on debt and finance leases assumed in connection with the acquisition of the Endeavor Entities on October 1, 2024. Unrealized Gain/Loss on Marketable Securities For the six months ended June 30, 2025 and 2024, we reported an unrealized loss of $78,406 and $82,618, which represents a decrease of $4,22, or 5.10%. Our marketable securities were considered to be traded on an active market and were accounted for at a fair value based on the quoted prices in the active markets resulting in aggregate unrealized gains or losses as noted above. 29 Segment Operating Results for the Six Months Ended June 30, 2025 and 2024 Operating Results of our Terminaling and Storage Segment : 2025 2024 Change ($) Change (%) Revenues $ 35,222,983 $ 26,223,680 $ 8,999,303 34 % Revenues- related party 7,284,226 5,978,833 1,305,393 22 % Total revenues 42,507,209 32,202,513 10,304,696 32 % Cost of revenues 39,971,144 30,023,562 9,947,582 33 % Gross profit 2,536,065 2,178,951 357,114 16 % Operating expenses: General and administrative 878,376 273,692 604,684 221 % Amortization and depreciation 1,840,223 1,790,848 49,374 3 % Total operating expenses 2,718,599 2,064,540 654,058 32 % Gain (loss) from operations (182,534 ) 114,411 (296,944 ) (260 ) % Other income (expense): Unrealized gain (loss) on marketable securities - - - - Loss on disposition of asset - - - - Gain deconsolidation of subsidiary - - - - Interest income - - - - Interest expense - (362,186 ) 362,186 (100 )% Interest expense- related parties - - - - Other income - - - - Total other income (expense) - (362,186 ) 362,186 (100 ) % Loss before provision for income taxes (182,534 ) (247,775 ) 65,241 (26 )% Consolidated net loss (182,534 ) (247,775 ) 65,241 (26 ) % Less: Net loss attributable to noncontrolling interests - - - - Net loss attributable to Vivakor, Inc. $ (182,534 ) $ (247,775 ) $ 65,241 (26 )% 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 $30,357,128 for the six months ended June 30, 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. 30 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 $30,288,928 for the six months ended June 30, 2025, and decreased volumes sold through our Silver Fuels Delhi facility as we continue to renegotiate our agreements with Exxon Mobile Corporation, who purchased the Denbury, Inc. facility that is attached to our pipeline facility and purchases our product from the Silver Fuels Delhi facility. Operating Results of our Transportation Logistics Segment : 2025 2024 Change ($) Change (%) Revenues $ 18,563,956 $ - $ 18,563,956 100 % Revenues- related party 5,368,572 - 5,368,572 100 % Total revenues 23,932,528 - 23,932,528 100 % Cost of revenues 17,130,490 - 17,130,490 100 % Gross profit 6,802,038 - 6,802,038 100 % Operating expenses: - - - General and administrative 3,876,322 - 3,876,322 100 % Amortization and depreciation 9,963,366 - 9,963,366 100 % Total operating expenses 13,839,688 - 13,839,688 100 % Loss from operations (7,037,650 ) - (7,037,650 ) 100 % Other income (expense): Unrealized gain (loss) on marketable securities - - - - Loss on disposition of asset (1,219,913 ) - (1,219,913 ) 100 % Gain deconsolidation of subsidiary - - - - Interest income 38,697 - 38,697 100 % Interest expense (5,128,348 ) - (5,128,348 ) 100 % Interest expense- related parties - - - - Other income 25,080 - 25,080 100 % Total other income (expense) (6,284,484 ) - (6,284,484 ) 100 % Loss before provision for income taxes (13,322,134 ) - (13,322,134 ) 100 % Consolidated net loss (13,322,134 ) - (13,322,134 ) 100 % Less: Net loss attributable to noncontrolling interests - - - - Net loss attributable to Vivakor, Inc. $ (13,322,134 ) $ - $ (13,322,134 ) 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. 31 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 (%) Revenues $ - $ - $ - - Revenues- related party - - - - Total revenues - - - - Cost of revenues - - - - Gross profit - - - - Operating expenses: - - - General and administrative 5,100,045 4,311,634 788,411 18 % Amortization and depreciation 898,963 206,625 692,338 335 % Total operating expenses 5,999,008 4,518,259 1,480,749 33 % Loss from operations (5,999,008 ) (4,518,259 ) (1,480,749 ) 33 % Other income (expense): Unrealized gain (loss) on marketable securities (78,406 ) (82,618 ) 4,212 (5 )% Loss on disposition of asset - - - - Gain deconsolidation of subsidiary - 177,550 (177,550 ) (100 )% Interest income 4,613 4,613 - - Interest expense (439,560 ) (561,801 ) 122,241 (22 )% Interest expense- related parties (53,121 ) - (53,121 ) 100 % Other income - 84,000 (84,000 ) (100 )% Total other income (expense) (566,474 ) (378,256 ) (188,218 ) 50 % Loss before provision for income taxes (6,565,482 ) (4,896,515 ) (1,670,869 ) 34 % Consolidated net loss (6,567,482 ) (4,896,515 ) (1,668,967 ) 34 % Less: Net loss attributable to noncontrolling interests (6,518 ) (48,548 ) 42,030 (87 )% Net loss attributable to Vivakor, Inc. $ (6,558,964 ) $ (4,848,767 ) $ (1,710,197 ) 35 % 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. 32 Cash Flows The following table sets forth the primary sources and uses of cash and cash equivalents for the six months ended June 30, 2025 and 2024 as presented below: June 30, 2025 2024 Net cash (used) in operating activities $ (6,980,336 ) $ (825,314 ) Net cash provided (used) in investing activities 1,860,000 (2,176,798 ) Net cash provided (used) by financing activities 5,108,500 2,352,775 Liquidity and Capital Resources We have historically suffered net losses and cumulative negative cash flows from operations, and as of June 30, 2025, we had an accumulated deficit of approximately $112.1 million. As of June 30, 2025 and December 31, 2024, we had a working capital deficit of approximately $105.8 million and $101.5 million, respectively. As of June 30, 2025, we had cash of approximately $3.7 million, of which $3.2 million is restricted cash. In addition, we have obligations to pay approximately $74 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 June 30, 2025 and December 31, 2024, we had cash and cash equivalents of $3,665,156 and $3,676,992 which includes $3.2 million and $3 million as restricted cash, respectively. For the six months ended June 30, 2025 and 2024, our net cash used in operating activities was mainly comprised of net effect of the consolidated net loss of $20,070,150 and $5,243,781, and our depreciation and amortization of $12,702,552 and $1,997,473. For the six months ended June 30, 2025 and 2024, we realized stock-based compensation of $690,350 and $1,138,052 in lieu of using cash. We also experienced an increase in accounts receivable of $17,309,724 and $845,872, an increase in prepaid expenses of $1,583,825 and $105,509, and an increase in accounts payable and accrued expenses of $14,297,080 and $2,331,635. For the six months ended June 30, 2025, our net cash from investing activities of $1,860,000 was attributed to proceeds from the sale of property and equipment. For the six months ended June 30, 2024, our net cash used in investing activities was $2,176,798 attributed to our purchase of equipment related to the manufacturing of our RPC, wash plant facilities, and a White Claw Colorado City site extension on our pipeline. Our net cash provided by our financing activities was mainly attributed to the net effect of the following events: For the six months ended June 30, 2025 and 2024, we received proceeds of $10,396,612 and $3,132,959 related to the issuance of notes and other loans to third parties, and proceeds of $1,911,432 and $635,150 related to the issuance of notes and other loans from related parties. For the six months ended June 30, 2025 and 2024, we paid notes payable and lease liabilities of $4,812,898 and $477,610 to third parties, and paid notes payable and lease liabilities of $1,164,601 and $700,478 to related parties. Capitalized interest on construction in process was none and $656,492 for the six months ended June 30, 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. 33 Contractual Obligations Our contractual obligations as of June 30, 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 June 30, 2025 are as follows: 2025 $ 3,626,851 2026 4,554,101 Total $ 8,180,952 Our contractual obligations as of June 30, 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. Contractual payments under operating lease obligations as of June 30, 2025 are as follows: Remaining 2025 $ 1,318,150 2026 $ 1,246,055 2027 $ 261,441 2028 $ 173,899 2029 $ 177,855 Thereafter $ 2,562,277 Total $ 5,739,677 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. 34 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.