OVERVIEW

Vivakor Inc. has two main operating business segments: (i) transportation logistics services and (ii) terminaling and storage facility products and services related to oil and gas production.

The transportation and facilities services primarily consist of trucking crude oil and produced water, as well as transportation and terminaling services of crude oil via the Omega Gathering Pipeline. Vivakor’s trucking services are centered in the Permian and Eagle Ford Basins, which are the most active regions for oil and natural gas exploration and development in the United States.

Vivakor’s terminaling and storage product and services primarily consist of two operational major crude oil terminaling facilities - one located in Colorado City, Texas and the other in Delhi, Louisiana. These facilities receive various grades of crude oil from customers and their operations are expected to give Vivakor’s marketing division a key competitive advantage in sales of resulting blends in critical markets.

In addition, Vivakor plans to perform remediation services utilizing its remediation processing centers (RPCs) in the future. The company is currently constructing a full-capacity RPC at the San Jacinto River & Rail Park in Texas, which is expected to be capable of processing oilfield solid wastes into economic byproducts. Vivakor also moved another full-capacity RPC to Kuwait, where it is in negotiations with the Kuwaiti Oil Company to potentially use the RPC to clean sands contaminated with oil.

RESULTS OF CONSOLIDATED OPERATIONS

Revenue

• For the years ended December 31, 2024 and 2023, Vivakor realized revenues of $89,811,240 and $59,321,752 respectively, representing an increase of 51.40%.
• The increase in revenue is primarily attributed to the sales of logistics and terminaling realized through the operations of Vivakor’s newly acquired Endeavor Entities’ businesses.

Cost of Revenue

• For the years ended December 31, 2024 and 2023, cost of revenues were $79,592,036 and $54,300,788 respectively, representing an increase of 46.58%.
• The increase in cost of revenue is primarily attributed to the cost of goods sold for Vivakor’s logistics and terminaling realized through the operations from the newly acquired Endeavor Entities’ businesses.

Gross Profit and Gross Margin

• For the years ended December 31, 2024 and 2023, Vivakor realized gross profit of $10,219,204 and $5,020,964 respectively, representing an increase of 103.53%.
• Vivakor’s gross margin will continue to be affected by factors such as market prices of oil products, volume produced by facilities, and ability to raise capital.

Operating Expenses

• Vivakor’s operating expenses increased by 183.76% to $32,214,497 in 2024, primarily due to the operations from the newly acquired Endeavor Entities’ businesses and impairment expenses of $8.6 million.
• The impairment expenses were mainly attributed to a $7 million impairment loss related to the Kuwait RPCs and a $1.5 million impairment loss on the exclusive nanosponge license agreement.

Loss from Operations

• Vivakor realized a loss from operations of $21,995,293 in 2024, compared to $6,331,660 in 2023, an increase of 247.39%.
• The increase in loss is attributed to the net effect of the operations from the newly acquired Endeavor Entities’ businesses and the impairment losses.

Interest Expense

• Interest expense increased by 19.67% to $4,816,692 in 2024, mainly due to the accrued interest on newly acquired debt from the Endeavor Entities acquisition.

Unrealized Gain/Loss on Marketable Securities

• Vivakor reported an unrealized gain of $165,275 in 2024, compared to an unrealized loss of $1,156,928 in 2023, an increase of 114.29%.
• The marketable securities were considered to be traded on an active market and accounted for at fair value.

Segment Operating Results

• The Terminaling and Storage segment saw a 19.84% increase in revenues, primarily due to increased related party volumes and revenues from the newly acquired Endeavor Entities.
• The Transportation Logistics segment was entirely acquired through the Endeavor Entities acquisition, with $18.8 million in revenues and $4.9 million in gross profit.
• The Corporate and Other segment saw a 150.72% increase in operating expenses, mainly due to increased impairment expenses, stock-based compensation, and merger/acquisition costs.

Liquidity and Capital Resources

• As of December 31, 2024, Vivakor had a working capital deficit of $101.5 million and an accumulated deficit of $99 million.
• The company has historically financed operations through debt and equity financing, but believes there is substantial doubt about its ability to continue as a going concern.
• Vivakor will need to raise additional capital through public/private debt, equity offerings, or other means to fund its growth and operations.

In summary, Vivakor’s financial performance in 2024 was significantly impacted by the acquisition of the Endeavor Entities, which added new revenue streams but also increased operating expenses and impairment losses. The company faces liquidity challenges and will need to secure additional financing to continue its operations and growth plans.