Vivakor, Inc. (NASDAQ:VIVK), a small-cap company ($47.43M market value) specializing in refuse systems, disclosed the issuance of equity securities as part of a significant acquisition, according to a recent 8-K filing with the U.S. Securities and Exchange Commission.
The company's stock, currently trading at $1.40, has experienced a sharp 9% decline over the past week, according to InvestingPro data. The Dallas-based company, incorporated in Nevada, executed the unregistered sale of equity securities on Monday, related to its purchase of the Endeavor Entities, a group of companies involved in various aspects of the energy and transportation sectors.
The transaction, initially detailed in an 8-K filed on October 7, 2024, culminated with Vivakor acquiring Endeavor Crude, LLC, Equipment Transport, LLC, Meridian Equipment Leasing, LLC, and Silver Fuels Processing, LLC. The total purchase price for the Endeavor Entities amounted to $120 million, subject to post-closing adjustments.
This acquisition comes as Vivakor operates with significant debt obligations and weak gross profit margins of 7.5%, as revealed by InvestingPro analysis. Payment for the acquisition was structured in a combination of Vivakor common stock and Series A Preferred Stock.
On December 2, 2024, Vivakor issued approximately 6.7 million shares of its common stock to the sellers, Jorgan Development, LLC, and JBAH Holdings, LLC, entities controlled by James Ballengee, Vivakor's CEO and Board member. The issuance represented 19.99% of the outstanding common stock post-transaction, ensuring that the sellers' beneficial ownership did not surpass 49.99%. Additional shares were allocated to two non-related parties at the sellers' direction.
The equity issuance was exempt from registration under Section 4(a)(2) of the Securities Act, as the sellers are accredited investors with a deep understanding of the company's operations. This strategic move expands Vivakor's footprint in the energy and transportation market, although the final calculations for the purchase price are still pending.
Vivakor's business address is 5220 Spring Valley Road, Suite 500, Dallas, TX 75254, and the company can be contacted at (949) 281-2606. The information reported is based on the company's latest SEC filing. InvestingPro analysis indicates that while Vivakor's stock is currently trading slightly below its Fair Value, the company faces several financial challenges, including negative EBITDA of -$5.33M in the last twelve months.
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In other recent news, Vivakor, Inc. disclosed several significant developments.
The company has entered into a new executive employment agreement with its Vice President of Marketing. The agreement includes an annual base salary of $200,000, potential increases to $350,000, and up to $440,000 in annual incentive cash and equity compensation based on performance goals. The Vice President of Marketing will also receive a one-time signing grant of company common stock valued at $150,000.
In addition, Vivakor has delayed its planned merger with Empire Diversified Energy, Inc. to the first quarter of 2025 due to the recent acquisition of the Endeavor Entities. The merger will result in Empire becoming a wholly-owned subsidiary of Vivakor, with the issuance of 67,200,000 shares of Vivakor common stock as consideration.
Another noteworthy development is the appointment of Jeremy Gamboa as its Division President, Logistics, following the company's recent acquisitions in the midstream petroleum sector. Gamboa's appointment is part of the company's strategic expansion plans.
On the financial front, Vivakor has finalized the sale of 1,000,000 equity shares to E-Starts Money Co., resulting in a $500,000 capital injection. The company has also secured a $5 million equity line of credit from ClearThink Capital Partners (WA:CPAP), LLC, and sold 1.6 million common shares to investor James K. Granger.
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