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. 25 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), 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 (since October 1, 2024), LLC, a Delaware limited liability company, Equipment Transport, LLC, a Pennsylvania limited liability company (from October 1, 2024 to July 30, 2025), Gonzales Oilfield Truck & Equipment, LLC, a Delaware limited liability company, 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. Beginning in the third quarter of 2025, the Company revised its segment structure to better reflect the way management evaluates operating performance and allocates resources. As a result, the Company now reports three operating and reportable segments, transportation and logistics, terminaling and storage services, and supply and trading, compared with two segments reported in prior periods. The change primarily reflects the growth and increased operational significance of our supply and trading activities and enhances transparency into our operating performance. These segments work together to support the reliable movement of crude oil from production areas to key market hubs across the Permian Basin, Eagle Ford Basin, and mid-continent regions. Our transportation and logistics services include the trucking and pipeline transportation of crude oil and related hydrocarbon products. Trucking operations are based in the DJ Basin, the STACK play in Central Oklahoma, and the Permian and Eagle Ford Basins in Texas, where our crude-oil trucking fleet transports volumes from production sites to our terminaling, storage, and blending facilities. We also operate the 45-mile Omega Gathering Pipeline in Blaine County, Oklahoma, which connects to the Plains STACK Pipeline and provides direct access to the Cushing, Oklahoma storage hub. These assets offer flexible and scalable crude-oil movement solutions that support our terminaling and supply activities across multiple producing regions. Our terminaling and storage segment includes crude oil facilities in Colorado City, Texas, and Delhi, Louisiana, strategically located hubs at major pipeline intersections that support the receipt, handling, blending, storage, and distribution of crude oil and petroleum products. These terminals play a critical role in our midstream network and support our supply and trading activities. Our supply and trading segment enhances our commercial reach by purchasing, aggregating, marketing and reselling crude oil, condensate, natural gas liquids and related hydrocarbon products. Operating as a core component of our integrated midstream platform, the segment connects production, transportation, terminaling, and end-market delivery. The Company is also investing in future growth through the development of Remediation Processing Centers (“RPCs”), with our first facility under construction at the San Jacinto River & Rail Park in Harris County, Texas. Once operational, the RPC is expected to process oilfield solid wastes into economically valuable byproducts such as condensate, propane, and butane and will include an adjacent truck wash facility. The remediation segment will be reported separately and incorporated into operations upon commencement of commercial activity. 26 Overall, our business strategy is centered on building an integrated midstream and environmental services platform that supports operational efficiency, enhances market access for customers, and positions the Company for long-term growth. 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 was 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, however, no adjustment was required, and the consideration remained unchanged. Prior to consummating the Water Trucking Sale, we transferred certain assets and liabilities between companies and certain affiliates (namely James Ballengee and entities he controls) 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. Recent Developments As previously reported, on March 17, 2025, 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. Beginning in September 2025 and continuing through November 18, 2025, the Lender delivered multiple conversion notices pursuant to the terms of the Initial Note. In aggregate, the Lender converted $4.05 million of outstanding principal into approximately 34.5 million shares of the Company’s common stock at contractually discounted conversion prices. Each issuance was made without a Rule 144 restrictive legend based on legal opinions obtained by the Company and its transfer agent. In addition to the above issuances, on October 2, 2025 the Company issued the Lender 250,000 shares due as Commitment Shares under the Initial Note. 27 As previously reported, on July 9, 2025, the Company entered into a Forbearance and Amendment to Loan Agreement and Note with the Lender, which amended the terms of the Loan Agreement, Initial Note and RRA (the “ First Forbearance Agreement ”). Under the terms of the First Forbearance Agreement, the Lender agreed to loan us additional funds under a Second Junior Secured Promissory Note (the “ Second Note ”) and agreed to forbear any default under the Initial Note in exchange for certain consideration. The information regarding this transaction was filed in a Current Report on Form 8-K filed with the Commission on July 21, 2025. On October 8, 2025, the Company entered into a Second Forbearance and Amendment to Loan Agreement and Notes, which amended the terms of the Loan Agreement, Initial Note, the RRA, the Second Note and the First Forbearance Agreement (the “ Second Forbearance Agreement ”). Under the terms of the Second Forbearance Agreement: (i) the Lender agreed to loan us an additional amount up to $2,450,000, (ii) the Outstanding Principal Amount of the Initial Note was $2,259,319.89 and the Outstanding Principal Balance on the Second Note was $5,685,805.13 on the Forbearance Agreement Effective Date, (iii) the Lender provided notice of default to the under the Second Note, thereby accelerating all amounts due thereunder, (iv) the Lender agreed the Company was not in default of the Initial Note, Second Note or other Transaction Documents effective September 30, 2025 and to forbear declaring an Event of Default going forward and accelerating all amounts due under the Initial Note and the Second Note, subject to the Company complying with the terms of the Second Forbearance Agreement, (v) all amounts due under the Initial Note and the Second Note, with any accrued interest, will be due on or before November 30, 2025, (vi) interest under the Initial Note and Second Note will continue at the default interest rate of 19%, (vii) the conversion terms under the Initial Note and Second Note will remain on the Default Conversion Price under those instruments, and (viii) the Lender agreed to a standstill period until November 30, 2025, during which time the Lender will not declare an event of default or accelerate any payment obligations under the Initial Note or the Second Note, so long at the Company (a) pays interest at the Default Interest Rate on the Initial Note and the Second Note, (b) issues the Third Note to the Lender, and (c) pays in full all past due payments on the Initial Note and the Second Note on or before November 30, 2025. In connection with the Second Forbearance Agreement the Lender agreed to loan the Company up to an additional $2,450,000. On October 9, 2025, the Company entered and Lender into an Additional Junior Secured Convertible Note (the “ Third Note”) , under which the Company agreed to issue the Lender the Third Note in the principal amount of $1,620,000, with the Company receiving proceeds of $1,152,000 before subtracting $53,000 for legal fees and origination fees. The Company is obligated to repay the principal amount, plus any interest, in forty-two equal installment payments of $38,572. The Company received the first funds from the Third Note on October 9, 2025 with the remainder received on October 10, 2025. As additional consideration for the Second Forbearance Agreement and the Third Note, the Company agreed to issue the Lender 286,000 shares of its common stock for $286 (the “Commitment Shares”). As previously reported, on August 12, 2025, the Company issued a convertible promissory note to a non-affiliated accredited investor (the “Holder”), in the aggregate principal amount of $647,500 in connection with a Securities Purchase Agreement entered into by and between the Company and the Holder (the “SPA”). The Company received $550,000 in exchange for issuing the note. In connection with the issuance of the note, the Company agreed to issue the Holder 82,500 shares of its common stock as additional incentive to enter into the SPA and the note. The Company issued the shares with a restrictive legend on October 8, 2025. On October 16, 2025, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with institutional investors (the “Purchasers”), pursuant to which the Company agreed to issue and sell to the Purchasers in a registered direct offering (A) an aggregate of 8,417,645 shares (the “Shares”) of common stock, par value $0.001 per share (the “Common Stock”), of the Company, at an offering price of $0.2164 per share, and (B) 14,689,851 pre-funded warrants (the “Pre-Funded Warrants”) in lieu of shares of Common Stock, at an offering price of $0.2154 (such registered direct offering, the “Offering”) for aggregate gross proceeds of approximately $5 million, before deducting Offering expenses payable by the Company, including the Placement Agent’s commissions and fees. The Company intends to use the net proceeds from the Offering for working capital and general corporate purposes. The Offering closed on October 17, 2025. The Pre-Funded Warrants are immediately exercisable and may be exercised at a nominal consideration of $0.001 per share of Common Stock at any time until all of the Pre-Funded Warrants are exercised in full. 28 The Pre-Funded Warrants contain ownership limitations pursuant to which a holder does not have the right to exercise any portion of their warrants if it would result in the holder (together with its affiliates) beneficially owning more than 4.99% (or, upon election by the holder prior to the issuance of any warrants, 9.99%) of the Company’s outstanding Common Stock. In connection with the Offering, the Company also entered into a placement agency agreement (the “Placement Agency Agreement”) with D. Boral Capital LLC (the “Placement Agent”), pursuant to which the Company paid the Placement Agent (i) a cash fee equal to 7% of the aggregate gross proceeds of the Offering, (ii) one percent (1.0%) of the gross proceeds of the Offering for non-accountable expenses, and (iii) reimbursed the Placement Agent for certain expenses and legal fees. The Common Shares, the Pre-Funded Warrants and the shares of Common Stock underlying the Pre-Funded Warrants were offered pursuant to a “shelf” registration statement on Form S-3 (File No. 333-269178) that was declared effective by the Securities and Exchange Commission (the “Commission”) on February 10, 2023 and a prospectus supplement dated October 16, 2025, which was filed with the Commission pursuant to Rule 424(b) under the Securities Act of 1933, as amended. On October 22, 2025, Vivakor Supply & Trading, LLC (“VST”), a wholly-owned subsidiary of the Company, entered into a Physical Commodity Intermediation Agreement (the “Intermediation Agreement”) with a single non-affiliated wholesaler, pursuant to which VST the wholesaler will provide credit support, including but not limited to letters of credit, surety bonds, cash deposits, and/or guarantees to sellers of physical commodities as an intermediary of VST for commodity trading activities, with a total availability up to $40 million in combined credit support to be extended from time to time. On October 17, 2025, the Company entered into a Settlement Agreement (the “Samuelson Settlement Agreement”) with James Samuelson (“Samuelson”), in order to settle claims made by Samuelson that he was not paid for work performed for the Company, which claims formed the basis of a lawsuit entitled James Samuelson v. Vivakor, Inc., James Ballengee, et al. , Case No. 30-2025-01496877-CU-OE-CJC (Sup. Ct. Orange Cty., Cal.—July 14, 2025) (the “Samuelson Lawsuit”). Under the terms of the Samuelson Settlement Agreement the Company is obligated to pay Samuelson $100,000 on or before January 30, 2026, and issue Samuelson shares of its common stock as follows: (i) $400,000 worth of shares on October 24, 2025, (ii) $400,000 worth of stock on November 3, 2025, (iii) $400,000 worth of stock on November 13, 2025, and (iv) $350,000 worth of stock on November 24, 2025 (together, the “Samuleson Shares”). The Samuelson Shares will be issued unrestricted under the Company’s 2023 Equity Incentive Plan and registered on a Form S-8 Registration Statement and valued with an issuance price equal to a 20 percent discount of the average of the lowest 5 VWAPs over the prior 15 trading days prior to each issuance date. The sale of the Samuelson Shares by Samuelson is subject to a Leak-Out Agreement, under which Samuelson cannot, in any 24-hour period, sell the Samuelson Shares in an amount representing more than the greater of (i) the total aggregate daily net proceeds from the sale of shares equaling $25,000; (ii) 10% of the 90-day average trading volume; or (iii) 10% of any given days’ trading volume as reported by Bloomberg, LP on the applicable day. As a result of the Samuelson Settlement Agreement, all dates and deadlines related to the Samuelson Lawsuit have been taken off calendar by the Court, which will retain jurisdiction of the Samuelson Lawsuit through the final payment of the Samuelson Settlement Agreement consideration. On October 30, 2025, the Company entered into a second securities purchase agreement (the “Second Purchase Agreement”) the Purchasers, pursuant to which the Company agreed to issue and sell to the Purchasers in a registered direct offering (A) an aggregate of 10,600,000 shares (the “Second Offering Shares”) of Common Stock, of the Company, at an offering price of $0.18 per share, and (B) 3,566,666 pre-funded warrants (the “Second Pre-Funded Warrants”) in lieu of shares of Common Stock, at an offering price of $0.179 (such registered direct offering, the “Second Offering”) for aggregate gross proceeds of approximately $2.55 million, before deducting the Second Offering expenses payable by the Company, including the Placement Agent’s commissions and fees. The Company intends to use the net proceeds from the Second Offering for working capital and general corporate purposes. The Second Offering closed on October 31, 2025. The Second Pre-Funded Warrants are immediately exercisable and may be exercised at a nominal consideration of $0.001 per share of Common Stock at any time until all of the Second Pre-Funded Warrants are exercised in full. 29 The Second Pre-Funded Warrants contain ownership limitations pursuant to which a holder does not have the right to exercise any portion of their warrants if it would result in the holder (together with its affiliates) beneficially owning more than 4.99% (or, upon election by the holder prior to the issuance of any warrants, 9.99%) of the Company’s outstanding Common Stock. In connection with the Second Offering, the Company also entered into a placement agency agreement (the “Second Placement Agency Agreement”) with Placement Agent, pursuant to which the Company paid the Placement Agent (i) a cash fee equal to 7% of the aggregate gross proceeds of the Second Offering, (ii) one percent (1.0%) of the gross proceeds of the Second Offering for non-accountable expenses, and (iii) reimbursed the Placement Agent for certain expenses and legal fees. The Second Common Shares, the Second Pre-Funded Warrants and the shares of Common Stock underlying the Second Pre-Funded Warrants were offered pursuant to a “shelf” registration statement on Form S-3 (File No. 333-269178) that was declared effective by the Securities and Exchange Commission (the “Commission”) on February 10, 2023 and a prospectus supplement dated October 30, 2025, which was filed with the Commission pursuant to Rule 424(b) under the Securities Act of 1933, as amended. On November 5, 2025, the Company entered into a Settlement Agreement (the “Nelson Settlement Agreement”) with Tyler Nelson (“Nelson”), in order to settle claims made by Nelson that he was not paid for work performed for the Company, which claims formed the basis of a lawsuit entitled T yler Nelson v. Vivakor, Inc., et al ., Case No. 30-2025-01503021-CU-OE-CJC (Sup. Ct. Orange Cty., Cal.—Aug. 11, 2025) (the “Nelson Lawsuit”). Under the terms of the Nelson Settlement Agreement the Company is obligated to pay Nelson as full satisfaction of all alleged wage losses and alleged non-wage damages: (i) $250,000 on or before November 5, 2026, (ii) $100,000 within 30 days from the date of the Nelson Settlement Agreement, (iii) $100,000 within 60 days from the date of the Nelson Settlement Agreement, and (iv) $1,550,000 within 90 days from the date of the Nelson Settlement Agreement. The Company paid Nelson the initial $250,000 payment. Nelson was formerly the Company’s Chief Financial Officer and a Director. As a result of the Nelson Settlement Agreement, all dates and deadlines related to the Nelson Lawsuit have been taken off calendar by the Court, which will retain jurisdiction of the Nelson Lawsuit through the final payment of the Nelson Settlement Agreement consideration. On November 10, 2025, the Company entered into a Transition Agreement (the “Transition Agreement”) with Patrick Knapp (“Knapp”), the Company’s former Executive Vice President, General Counsel and Secretary, related to Knapp’s resignation from all positions he holds with the Company. Under the terms of the Transition Agreement the Company is obligated to pay Knapp as full satisfaction of all alleged wages owed, bonuses, severance, unpaid benefits, etc. and any alleged non-wage damages: (i) $50,000 on the date of the Transition Agreement, (ii) $50,000 on or before December 31, 2025, and (iii) $100,000 worth of the Company’s common stock within three (3) trading days from the date of the Transition Agreement, which shares will be priced per share based on the average closing price for the three (3) prior exchange-traded days. If requested by Knapp, the Company is obligated to issue Knapp additional shares of common stock until Knapp receives $100,000 from the sale of the common stock if he does not receive that amount from the sale of the initial shares. The shares will be issued unrestricted under the Company’s 2023 Equity Incentive Plan as registered on a Form S-8 Registration Statement. On November 10, 2025, Knapp resigned from this position as Secretary of the Company. As a result, the Board of Directors appointed Kimberly Hawley as the Company’s Secretary, effective November 10, 2025. Ms. Hawley is currently also the Company’s Executive Vice President and Chief Financial Officer. Reclassifications Certain reclassifications have been made to prior years’ amounts to conform to the 2025 presentation, including adjustments related to the purchase price allocation of accrued interest and principal note payable amounts to conform to the 2025 presentation. 30 Change in Segment Reporting Beginning in the third quarter of 2025, we revised our segment reporting structure to better reflect how the chief operating decision maker evaluates performance and allocates resources across the business. Historically, we reported two operating segments: crude oil transportation and terminaling and storage services. In August 2024, we launched supply and trading activities, and during the third quarter of 2025, management determined that these activities had expanded sufficiently in scope and scale to meet the criteria for a reportable operating segment under ASC 280. As a result, beginning with this quarterly period, we now report three operating segments: transportation and logistics, terminaling and storage services, and supply and trading. Revenue generated from supply and trading were previously reported under Terminaling and Storage in 2025 and Product Revenue in 2024. Concurrent with this change, we no longer report “Corporate and Other” as a separate category, as these activities do not represent an operating segment and are not separately reviewed by our chief operating decision maker. Corporate expenses, including executive and shared services personnel, stock-based compensation, professional fees, and other overhead costs, are now allocated to the operating segments or reflected in consolidated results, as appropriate. Our chief operating decision maker uses segment gross profit as the primary measure of performance for evaluating operating results and making decisions regarding the allocation of capital and resources. The change in segment structure aligns our external reporting with the manner in which management now views and manages the business following the expansion of our commercial and trading platform. The results discussed below reflect the updated segment structure for all current-period activity. Prior-period segment information has been recast, where applicable, to conform to the current presentation. The change in reportable segments did not impact the Company’s consolidated financial statements for prior periods other than reclassifications to conform prior period segment information to the current presentation. Results of Consolidated Operations for the three months ended September 30, 2025 and 2024 Revenue For the three months ended September 30, 2025 and 2024 we realized revenues of $16,981,385 and $15,916,423, respectively, representing an increase of $1,064,962 or 6.7%. The increase in revenue is primarily attributed to higher activity within our transportation and logistics and terminaling and storage services segments 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 September 30, 2025 and 2024, our cost of revenues consisted primarily of costs associated with selling the purchase and sale of crude oil and related hydrocarbon products as well as the operations from our newly acquired businesses in transportation and logistics and terminaling and storage services, which was acquired through our business combination which closed on October 1, 2024. For the three months ended September 30, 2025 and 2024, costs of revenue were $12,261,886 and $14,190,073, respectively, representing a decrease of $1,928,187 or 13.59%. The decrease in the cost of revenue is primarily attributed to the cost of goods sold for our transportation and logistics and terminaling and storage services segments 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 three months ended September 30, 2025 and 2024 we realized gross profit of $4,719,499 and $1,726,350, respectively, representing an increase of $2,993,149 or 173%. The gross profit increased in proportion to the revenue and costs of revenue related activity within our transportation and logistics and terminaling and storage services segments realized through the operations of our newly acquired Endeavor Entities’ businesses, which were acquired through our business combination, which closed on October 1, 2024. 31 Operating Expenses For the three months ended September 30, 2025 and 2024, we realized operating expenses of $13,750,500 and $3,684,987, which represents an increase of $10,065,513, or 273%. The increase was primarily driven by the inclusion of operating costs from the Endeavor Entities acquired on October 1, 2024, as well as a $5.0 million legal reserve recorded during the quarter for matters determined to be probable and reasonably estimable. Interest Expense and Loss on Conversion of Debt For the three months ended September 30, 2025 and 2024, we realized total interest expense of $14,439,961 and $641,244, which represents an increase of $13,798,717, or 2,152%. The increase was primarily driven by refinancing and forbearance arrangements entered into during the period, which resulted in the recognition of unamortized original issue discount and deferred financing cost write-offs, along with default-related fees. Interest expense also increased due to finance lease and debt obligations assumed in the acquisition of the Endeavor Entities on October 1, 2024, as well as the effects of the Maxus Capital Group forbearance agreement. In addition to higher interest expense, we recognized a loss on conversion of debt of $9,828,868 during the three months ended September 30, 2025, compared to $177,550 during the three months ended September 30, 2024. The loss resulted from (i) the conversion of $1.1 million of outstanding convertible debt into common stock at contractually discounted conversion prices significantly below market value, creating a non-cash charge for the excess fair value of shares issued, and (ii) the recognition of an estimated derivative liability associated with the remaining convertible notes due to the lender’s ability to convert the debt at discounted default-based conversion prices. This derivative liability is reflected within Other Liabilities on the condensed consolidated balance sheet and totaled $8,728,527 as of September 30, 2025. Unrealized Gain/Loss on Marketable Securities For the three months ended September 30, 2025 and 2024, we reported an unrealized loss of $170,674 and an unrealized gain of $826,377, which represents an increase of $977,051. Our marketable securities were considered to be traded on an active market and were accounted for at a fair value based on the quoted prices in the active markets resulting in aggregate unrealized gains or losses as noted above. Segment Operating Results for the three months ended September 30, 2025 and 2024 Operating Results of our Terminaling and Storage Segment : Terminaling and Storage Segment - For the three months ended September 30, 2025 2025 2024 Change ($) Change (%) Revenues $ - $ - $ - 100 % Revenues - related party 923,047 - 923,047 100 % Total revenues 923,047 - 923,047 100 % Cost of revenues 345,412 - 345,412 100 % Gross profit $ 577,635 $ - $ 577,635 100 % The Terminaling & Storage Segment generated $0.9 million of total revenues for the three months ended September 30, 2025, all of which was earned from related-party storage and throughput arrangements. This segment had no activity in the prior-year period, as it was acquired as part of the Endeavor Entities on October 1, 2024 . Cost of revenues totaled $0.3 million , resulting in gross profit of $0.6 million for the quarter. Revenue generated from Supply and Trading were previously reported under terminaling and storage in prior reporting periods in 2025 and product revenue in 2024. 32 Operating Results of our Transportation Logistics Segment : Transportation & Logistics - For the three months ended September 30, 2025 2025 2024 Change ($) Change (%) Revenues $ 4,743,919 $ - $ 4,743,919 100 % Revenues - related party 2,460,969 - 2,460,969 100 % Total revenues 7,204,888 - 7,204,888 100 % Cost of revenues 5,852,860 - 5,852,860 100 % Gross profit $ 1,352,027 $ - $ 1,352,027 100 % The Transportation & Logistics Segment generated $7.2 million in total revenues for the three months ended September 30, 2025, including $2.5 million of related-party revenue. This segment had no revenue in the prior-year period, as it was acquired as part of the Endeavor Entities on October 1, 2024. Cost of revenues totaled $5.9 million, resulting in gross profit of $1.35 million for the quarter. Revenue and gross profit reflect continued trucking and pipeline transportation activity across the Permian, Eagle Ford, DJ Basin, and STACK play following integration of the Endeavor operations. Operating Results of our Supply and Trading Segment : Supply & Trading Segment - For the three months ended September 30, 2025 2025 2024 Change ($) Change (%) Revenues $ 8,853,451 $ 4,775,771 $ 4,077,680 85 % Revenues - related party - 11,140,652 (11,140,652 ) -100 % Total revenues 8,853,451 15,916,423 (7,062,972 ) -44 % Cost of revenues 6,063,614 14,190,073 (8,126,459 ) -57 % Gross profit $ 2,789,837 $ 1,726,350 $ 1,063,487 62 % The Supply & Trading Segment generates revenue from the purchase, blending, and resale of crude oil and related hydrocarbon products. Revenues were $8.9 million for the three months ended September 30, 2025, compared to $15.9 million in 2024, a decrease of $7.1 million, or 44%, primarily due to lower sales volumes and the absence of related-party transactions that contributed to higher revenues in the prior year. Revenue generated from supply and trading were previously reported under terminaling and storage in 2025 and Product Revenue in 2024. Cost of revenues decreased 57%, from $14.2 million in 2024 to $6.1 million in 2025, largely reflecting the decrease of in total revenues for the same period. As a result, segment gross profit increased to $2.8 million for the three months ended September 30, 2025, compared to $1.7 million in 2024, an increase of $1.1 million, or 62%. Crude-oil sales values within this segment continue to be influenced by domestic benchmark pricing and quality differentials associated with blended crude streams, while profitability is driven primarily by blend economics, sourcing costs, and market demand for specific crude qualities. 33 Results of Consolidated Operations for the nine months ended September 30, 2025 and 2024 Revenue For the nine months ended September 30, 2025 and 2024 we realized revenues of $83,421,122 and $48,118,936, respectively, representing an increase of $35,302,186 or 221.79%. The increase in revenue is primarily attributed to higher activity within our transportation and logistics and terminaling and storage services segments 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 nine months ended September 30, 2025 and 2024, our cost of revenues consisted primarily of costs associated with selling the purchase and sale of crude oil and related hydrocarbon products as well as the operations from our newly acquired businesses in transportation and logistics and terminaling and storage services, which was acquired through our business combination which closed on October 1, 2024. For the nine months ended September 30, 2025 and 2024, the costs of revenue were $69,363,520 and $44,213,635, respectively, representing an increase of $25,149,885 or 177.24%. The increase in the cost of revenue is primarily attributed to the cost of goods sold for our transportation and logistics and terminaling and storage services segments 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 nine months ended September 30, 2025 and 2024 we realized gross profit of $14,057,602 and $3,905,301, respectively, representing an increase of $10,152,301 or 588.08%. The gross profit increased in proportion to the revenue and costs of revenue related activity within our transportation and logistics and terminaling and storage services segments realized through the operations of our newly acquired Endeavor Entities’ businesses, which were acquired through our business combination, which closed on October 1, 2024. Operating Expenses For the nine months ended September 30, 2025 and 2024, we realized operating expenses of $36,307,795 and $10,333,274, which represents an increase of $25,974,521, or 704.87%. The increase was primarily driven by the inclusion of operating costs from the Endeavor Entities acquired on October 1, 2024, as well as a $5.0 million legal reserve recorded during the quarter for matters determined to be probable and reasonably estimable. Interest Expense and Loss on Conversion of Debt For the nine months ended September 30, 2025 and 2024, we realized total interest expense of $20,007,869 and $1,565,231, which represents an increase of $18,442,638, or 2,876.07%. The increase was primarily driven by refinancing and forbearance arrangements entered into during the period, which resulted in the recognition of unamortized original issue discount and deferred financing cost write-offs, along with default-related fees. Interest expense also increased due to finance lease and debt obligations assumed in the acquisition of the Endeavor Entities on October 1, 2024, as well as the effects of the Maxus Capital Group forbearance agreement. In addition to higher interest expense, we recognized a loss on conversion of debt of $9,828,868 during the nine months ended September 30, 2025, compared to $0 on September 30, 2024. The loss reflects (i) the conversion of a portion of outstanding convertible debt into common stock at contractually discounted conversion prices significantly below market value, resulting in a non-cash charge for the excess fair value of shares issued, and (ii) the recognition of a derivative liability associated with the remaining convertible notes due to the lender’s ability to convert the debt at similarly discounted prices. This derivative liability is reflected within Other Liabilities on the condensed consolidated balance sheet and totaled $8,728,527 as of September 30, 2025. 34 Unrealized Gain/Loss on Marketable Securities For the nine months ended September 30, 2025 and 2024, we reported an unrealized loss of $249,080 and an unrealized gain of $743,739, which represents a decrease of $992,819, or 120.14%. Our marketable securities were considered to be traded on an active market and were accounted for at a fair value based on the quoted prices in the active markets resulting in aggregate unrealized gains or losses as noted above. Segment Operating Results for the nine months ended September 30, 2025 and 2024 Operating Results of our Terminaling and Storage Segment : Terminaling and Storage Segment - For the nine months ended Sept 30, 2025 2025 2024 Change ($) Change (%) Revenues $ - $ - $ - 100 % Revenues - related party 2,633,120 - 2,633,120 100 % Total revenues 2,633,120 - 2,633,120 100 % Cost of revenues 580,781 - - 100 % Gross profit $ 2,052,338 $ - $ 2,052,338 100 % For the nine months ended September 30, 2025, the Terminaling & Storage Segment generated $2.6 million of total revenues, all of which was earned under related-party terminaling and storage agreements. This segment had no activity in the prior-year period, as it was acquired in the business combination completed on October 1, 2024. Cost of revenues totaled $0.6 million, resulting in gross profit of $2.1 million for the period. Revenue generated from supply and trading were previously reported under terminaling and storage in 2025 and product revenue in 2024. Operating Results of our Transportation Logistics Segment : Transportation & Logistics - For the nine months ended September 30, 2025 2025 2024 Change ($) Change (%) Revenues $ 21,691,440 $ - $ 21,691,440 100 % Revenues - related party 8,939,637 - 8,939,637 100 % Total revenues 30,631,077 - 30,631,077 100 % Cost of revenues 20,648,037 - 20,648,037 100 % Gross profit $ 9,983,040 $ - $ 9,983,040 100 % The Transportation & Logistics Segment generated $30.6 million in total revenues for the nine months ended September 30, 2025, including $8.9 million of related-party revenue. This segment did not generate revenue in the prior-year period, as it was acquired as part of the Endeavor Entities on October 1, 2024. Cost of revenues totaled $20.6 million, resulting in gross profit of $10.0 million. Current-period results reflect the first full operating cycle under Company ownership, driven by crude-oil trucking operations in the Permian, Eagle Ford, DJ Basin, and STACK play, as well as activity on the Omega Gathering Pipeline. 35 Operating Results of our Supply and Trading Segment : Supply& Trading Segment - For the nine months ended Sept 30, 2025 2025 2024 Change ($) Change (%) Revenues $ 47,934,619 $ 30,999,451 $ 16,935,168 55 % Revenues - related party 2,222,307 17,119,485 (14,897,178 ) -87 % Total revenues 50,156,926 48,118,936 2,037,990 4 % Cost of revenues 48,134,702 44,213,635 3,921,067 9 % Gross profit $ 2,022,224 $ 3,905,301 $ (1,883,077 ) -48 % Revenues in the Supply & Trading Segment were $47.9 million for the nine months ended September 30, 2025, compared to $31.0 million in 2024, an increase of $16.9 million, or 55%, driven by higher third-party sales volumes and expanded commercial activity. Related-party revenues decreased from $17.1 million in the prior-year period to $2.2 million, a decline of $14.9 million, or 87%, due to the completion of prior-year related-party arrangements that did not recur in 2025. Revenue generated from supply and trading were previously reported under terminaling and storage in 2025 and product revenue in 2024. Cost of revenues increased 9%, from $44.2 million in 2024 to $48.1 million in 2025, reflecting higher crude-oil purchase volumes and changes in sourcing mix associated with increased third-party transactions, partially offset by the reduction in related-party purchases. Gross profit decreased to $2.0 million for the nine months ended September 30, 2025, compared to $3.9 million in 2024, a decline of $1.9 million, or 48%, primarily due to margin compression on blended crude-oil sales and shifts in market differentials during the period. Segment results continue to be influenced by domestic benchmark pricing and quality differentials associated with blended crude streams, while profitability is determined largely by sourcing economics, blend margins, and demand for specific hydrocarbon products. Cash Flows The following table sets forth the primary sources and uses of cash and cash equivalents for the nine months ended September 30, 2025 and 2024 as presented below: September 30, 2025 2024 Net cash provided by operating activities $ 4,311,676 $ 165,359 Net cash provided (used) in investing activities 1,697,441 (2,362,898 ) Net cash provided (used) by financing activities (8,494,343 ) 2,1440,404 Liquidity and Capital Resources We have historically suffered net losses and cumulative negative cash flows from operations, and as of September 30, 2025, we had an accumulated deficit of approximately $148.1 million. As of September 30, 2025 and December 31, 2024, we had a working capital deficit of approximately $62.3 million and $101.5 million, respectively. As of September 30, 2025, we had cash of approximately $1.2 million, of which $0.9 million is restricted cash. In addition, we have obligations to pay approximately $36.6 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. 36 As of September 30, 2025 and December 31, 2024, we had cash and cash equivalents of $1,191,766 and $3,676,992 which includes $892,124 and $3 million as restricted cash, respectively. For the nine months ended September 30, 2025 and 2024, our net cash provided by operating activities was mainly comprised of net effect of the consolidated net loss of $54,358,617 and $6,983,978, and our depreciation and amortization of $15,735,409 and $3,062,416. For the nine months ended September 30, 2025 and 2024, we realized stock-based compensation of $1,179,223 and $1,626,409 and stock-based compensation – consultant of $1,206,000 and $0 in lieu of using cash. We also experienced $15.9 million of non-cash interest charges, a $9.8 million loss on conversion of debt, and a $1.2 million loss on the disposition of assets. Working capital changes also contributed to operating cash flows, most notably a $16.3 million increase in accounts payable and accrued expenses, partially offset by increases in accounts receivable and prepaid expenses. In the prior-year period, the modest operating cash inflow largely reflected significantly lower non-cash charges and a smaller working capital impact. Net cash provided by investing activities was $1.7 million for the nine months ended September 30, 2025, driven primarily by $2.4 million of proceeds from the sale of property and equipment, partially offset by $0.7 million of divestiture-related cash returned. In contrast, for the nine months ended September 30, 2024, the Company used $2.4 million in investing activities related to equipment purchases for the remediation processing centers, wash plant facilities, and a pipeline extension. Net cash used in financing activities totaled $8.5 million for the nine months ended September 30, 2025. This reflected substantial payments on notes payable and finance lease obligations totaling $28.5 million, partially offset by $15.3 million of proceeds from third-party loans and $4.7 million of proceeds from related-party loans. For the nine months ended September 30, 2024, financing activities provided $2.1 million, driven by borrowings and proceeds from the sale of common stock. The Company did not capitalize any interest during the nine months ended September 30, 2025, compared to $1.0 million of capitalized interest during the same period in 2024. Although the Company had no firm contractual commitments for capital expenditures as of September 30, 2025, management anticipates approximately $1.5 million of additional expenditures related to the continued development of its 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 September 30, 2025 for finance lease liabilities are for certain land, property, plant, and equipment, which leases end in 2025. Finance lease obligations as of September 30, 2025 are as follows: 2025 $ 8,929,265 Total $ 8,929,265 37 Our contractual obligations as of September 30, 2025 for operating lease liabilities are for office warehouse space, land, and truck yards, which leases end in 2026, except for a land lease which ends in 2042. Contractual payments under operating lease obligations as of September 30, 2025 are as follows: 2025 116,390 2026 379,080 2027 261,441 2028 173,899 2029 177,855 Thereafter 2,562,277 Total undiscounted lease payments 3,670,942 Less: Imputed interest 1,799,014 Present value of lease payments $ 1,871,928 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. 38