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Business Combination
 12 Months Ended
Dec. 31, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]  
Business Combination

Note 4. Business Combination

 

On October 1, 2024, we acquired all of the issued and outstanding membership interests in 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. The purchase price is $116.3 million (the “Purchase Price”), after post-closing adjustments, including assumed debt and an earn-out adjustment, payable in a combination of our common stock, $0.001 par value per share (“Common Stock”) and shares of our Series A Preferred Stock $0.001 par value per share (“Preferred Stock”). The Preferred Stock has the payment of a cumulative six percent (6%) annual dividend per share payable quarterly in arrears in shares of Common Stock (so long as such issuances of Common Stock would not result in the Sellers beneficially owning great than 49.99% of the issued and outstanding Common Stock), and the Company having the right to convert the Preferred Stock at any time using the stated value of $1,000 per share of Preferred Stock and the conversion price of one dollar ($1) per share of Common Stock. The sellers are beneficially owned by James Ballengee, our chairman, chief executive officer and principal shareholder. To date we have issued the sellers 6,724,291 shares of our common stock and 107,789 shares of our Series A Preferred Stock.

 

For the acquisition of the Endeavor Entities, the following table summarizes the acquisition date fair value of consideration paid, identifiable assets acquired and liabilities assumed:

 

Schedule of recognized identified assets acquired and liabilities assumed        
Common stock   $ 10,422,651  
Series A preferred stock     105,897,817  
Fair value of total consideration paid   $ 116,320,468  
         
Net assets acquired and liabilities assumed        
         
Assets acquired in business combination        
Current assets   $ 16,269,087  
Operating lease right-of-use assets     4,470,405  
Property, plant and equipment, net (includes finance lease right of use assets, net)     87,706,385  
Other assets     1,205,887  
Contract-based intangible assets     31,304,400  
Total assets acquired   $ 140,956,163  
         
Liabilities assumed in business combination        
Current liabilities   $ 51,370,473
Long term liabilities     27,166,307
Total liabilities acquired   $ 78,536,780
         
Total net assets acquired   $ 62,419,383  
         
Goodwill   $ 53,901,085  

 

The value of goodwill represents the Endeavor Entities’ ability to generate profitable operations going forward. Management engaged a valuation expert who performed a valuation study to calculate the fair value of the acquired assets and goodwill. As of December 31, 2024 and 2023, goodwill was $68,885,853 and $14,984,768. The acquired contracts and customer relationships are amortized over their 10 year, 3 month remaining useful life.

 

Business combination related costs were expensed as incurred and consisted of various advisory, legal, accounting, valuation and other professional fees of $569,431 for the year ended December 31, 2024. These costs are included in general and administrative expense in our consolidated statement of operations.

 

From the date of acquisition on October 1, 2024 through December 31, 2024, $28,045,368 of sales in aggregate is attributed to the Endeavor Entities. The unaudited financial information in the table below summarizes the combined results of operations of the Company and the Endeavor Entities for the years ended December 31, 2024 and 2023, on a pro forma basis, as though the companies had been combined as of January 1, 2023. The pro forma earnings for the years ended December 31, 2024 and 2023, were adjusted to include intangible annual amortization expense on customer relationships acquired of $3,054,088, annual increased depreciation expense of $6,725,306 on the step up in appraised property, plant and equipment, respectively. Further adjustments were made for revaluation of the net effect of finance lease amortization and interest expense of $1,126,167 and $3,109,907 for the years ended December 31, 2024 and 2023, respectively. The $569,431 of acquisition-related expenses were excluded from the year ended December 31, 2024, and included in the year ended December 31, 2023, as if the acquisition occurred at January 1, 2023. The pro forma results reflect finance lease amortization expense increased of $2,436,636 and $5,261,373, and finance lease interest expense decrease of $815,408 and increase of $3.6,962, for the years ended December 31, 2024 and 2023, respectively, as well as the annual 6% Series A preferred shareholder dividend of $6,353,869, respectively. All such amounts have been reflected in the corresponding unaudited financial information in the table below. The unaudited pro forma financial information does not purport to be indicative of the Company’s combined results of operations which would actually have been obtained had the acquisition taken place on January 1, 2023, nor should it be taken as indicative of future consolidated results of operations.

 

                 
    (Unaudited)  
    Years ended
December 31,		  
    2024     2023  
Total net sales   $ 161,137,826     $ 112,460,941  
Loss from operations     (28,649,669 )     (16,233,117 )
Net loss (attributable to Vivakor, Inc.)   $ (35,571,659 )   $ (22,195,733 )
                 
Series A Preferred Stockholder Dividends   $ 6,353,869     $ 6,353,869  
Net loss to common shareholders   $ (41,925,528 )   $ (28,549,602 )
                 
Basic and diluted loss per share     (0.97 )     (1.03 )
Weighted average shares outstanding- Basic and diluted     43,046,770       27,627,405