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Accounts Payable and Accrued Expenses

12 Months Ended

Dec. 31, 2023

Note 14. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following:


	December 31,
	2023		2022
Accounts payable	$	5,226,071	$	910,002
Office access deposits		-		235
Unearned revenue		9,107,297		20,936
Accrued interest (various notes and loans payable)		178,999		349,497
Accrued interest (working interest royalty programs)		1,396,528		1,437,711
Accrued tax penalties and interest		669,747		524,286
Accounts payable and accrued expenses	$	16,578,642	$	3,242,667


	December 31,
	2023		2022
Accounts payable- related parties	$	1,933,817	$	4,112,300
Accrued interest (notes payable)- related parties		-		30,678
Accounts payable and accrued expenses- related parties	$	1,933,817	$	4,142,978
Accrued compensation	$	1,968,063	$	1,302,890

As of December 31, 2023 and 2022, our accounts payable are primarily made up of trade payable for the purchase of crude oil. Trade accounts payables in the amount of $1,933,817 and $4,000,681 is with a vendor who our CEO is a beneficiary of. As of December 31, 2023 and 2022, accounts payable related to services rendered of $178,325 and $37,685, which are not trade payables, are with a vendor who our CEO is a beneficiary of. As of December 31, 2023 and 2022, none and $43,934 of accounts payable related to services rendered, which are not trade payables, are with a vendor where our Chief Financial Officer sits on the board of the directors and is an officer.

As of December 31, 2021, the Company accrued $225,000 for a milestone payment to be paid to TBT Group, Inc. (of which an independent Vivakor Board member is a 7% shareholder) related to our worldwide, exclusive license agreement for the license of piezo electric and energy harvesting technologies for creating self-powered sensors for making smart roadways. This milestone payment was paid in March 2022. In 2023 we agreed with TBT Group, Inc. to cancel the license agreement and both parties agreed to fully release and discharge any and all known and unknown claims they may have against the other party, with neither party owing the other party any money and TBT retaining the ownership of the piezo electric and energy harvesting technology that was the subject of the license agreement.

In March 2023, the Compensation Committee reviewed the Company’s 2022 results, including, but not limited to, the progress of the Company’s historic business and certain acquisitions completed by the Company, and approved discretionary bonuses, which have been accrued as of December 31, 2023, for the Chief Financial Officer, and an acquisition consultant, in the amounts of $505,467 (included in accrued compensation) and $421,222 (included in accounts payable), respectively. In November 2023, our CEO came to beneficially own approximately 41.86% of our outstanding Common Stock, and is able to significantly influence all matters requiring approval by our stockholders, including the election of directors and the approval of mergers or other business combination transactions. Due to this change in ownership, certain change of control provisions in the Company’s agreements were triggered, including within the Chief Financial Officer’s employment agreement, with the related the executive bonus of $700,000 accrued in 2023. As of December 31, 2023, accrued compensation to current employees includes $90,236 in accrued vacation pay due to our Chief Executive Officer, which may be payable in cash or stock if unused, and $1,419,818 due to our Chief Financial Officer, with $58,558 in accrued sick and vacation pay that may be payable in cash if unused, and the remainder paid in cash.

On May 23, 2023, our subsidiary White Claw Colorado City, LLC (“WCCC”), supplemented an existing Master Agreement (the “Master Agreement”) with Maxus Capital Group, LLC (“Maxus”), under a four-year agreement, which Maxus agreed to finance the build-out of our new facility located on the land leased by our subsidiary, VivaVentures Remediation Corp., in Houston, Texas. Maxus funded approximately $2.2 million to finance the build-out of the Houston location in the form of a finance lease for the wash plant, and we will lease the wash plant facility financed by Maxus under WCCC’s supplement to the Master Agreement. Under the terms of the lease, we expect our lease payments to Maxus under the supplement to be approximately $57,962 per month over four years, with an early buyout option or option at the end of the base term to purchase the wash plant for the then fair market value. We anticipate that the lease will commence in the second quarter of 2024, at which time the final amount funded, and lease payments will be determined. Because we were involved in the construction of the wash plant and were responsible for paying a portion of the construction costs, we evaluated the control criteria in ‘build to suit’ lease accounting guidance under GAAP ASC 842 (Leases) where the Company was deemed, for accounting purposes, to have control of the wash plant during the construction period. Accordingly, the Company recorded project construction costs incurred during the construction period for the wash plant incurred by the landlord as a construction-in-process asset and a related financing obligation on our consolidated balance sheets. The total $3.3 million of project construction costs (which includes $2.2 million of costs funded by Maxus and $1.1 million of costs incurred by Vivakor, Inc.) have been capitalized and recorded to construction-in-process within ‘Property and equipment, net’. The $2.2 million of construction costs funded by Maxus have been recorded as a component of ‘Accounts payable and accrued expenses.

In accordance with ASC 810, as of October 1, 2023, we deconsolidated Viva Wealth Fund I, LLC (VWFI), recognizing a gain on deconsolidation of $438,099 (Note 3 Principles of Consolidation). After deconsolidating VWFI, approximately $9,107,297 of unearned revenue (which was previously eliminated upon consolidation) is reported in our current liabilities and relates to our 2020 agreement to manufacture RPCs for VWFI. VWFI has currently funded the manufacturing of one double capacity RPC, which is expected to be completed and sold to VWFI in 2024 through a sale lease back agreement, at which time we will record a ROU asset and lease liability, and the unearned revenue will be alleviated.