SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-K





x
                  ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the fiscal year ended - December 31,
2008





Commission
file number 000-53535




VIVAKOR,
INC.


(Exact
name of registrant as specified in its charter)





NEVADA
                    26-2178141(State
      or other jurisdiction of incorporation or organization)
                    (I.R.S.
      Employer Identification
No.)





2590
Holiday Road, Suite 100


Coralville,
IA  52241


(Address
of principal executive offices, including zip code.)





(319)
625-2172


(telephone
numbr, including area code)







Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.




Yes o  No x




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act:




Yes o  No x




Indicate
by check mark whether the registrant(1) has filed all reports required by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 day.  Yes o  No x




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulations S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. o




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 if the Exchange Act.




Large
      Accelerated filer
            
            o
            Accelerated
      filer                                oNon-accelerated
      filer
            
            o
            Smaller
      reporting
      company             x(Do
      not check if a smaller reporting company)







Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).o
Yes   x No




State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity, as of June 30,
2009:  $1,951,414




Documents
incorporated by reference – none.


















TABLE
OF CONTENTS










PagePART
      IItem
      1.
                        Business
                        2Item
      1A.
                        Risk
      Factors
                        9Item
      1B.
                        Unresolved
      Staff Comments
                        16Item
      2.
                        Properties
                        16Item
      3.
                        Legal
      Proceedings
                        17Item
      4.
                        Submission
      of Matters to a Vote of Security Holders
                        17PART
      IIItem
      5.
                        Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
                        17Item
      7.
                        Management’s  Discussion
      and Analysis of Financial Condition and Results of
    Operations
                        19Item
      8.
                        Financial
      Statements and Supplementary Data
                        24Item
      9.
                        Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
                        24Item
      9A.
                        Controls
      and Procedures
                        24Item
      9B.
                        Other
      Information
                        25PART
      IIIItem
      10.
                        Directors,
      Executive Officers and Corporate Governance
                        25Item
      11.
                        Executive
      Compensation
                        27Item
      12.
                        Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder  Matters
                        28Item
      13.
                        Certain
      Relationships and Related Transactions, and Director
      Independence
                        29Item
      14.
                        Principal
      Accountant Fees and Services
                        30PART
      IVItem
      15.
                        Exhibits
      and Financial Statement Schedules
                        31Signatures
                        33Financial
      Statements
                        F-1








i





In this
Annual Report on Form 10-K, unless the context requires otherwise, the terms
“Vivakor,” the “Company,” “we,” “us” and “our” refer to Vivakor Inc. and its
subsidiary.








CAUTION
REGARDING FORWARD-LOOKING STATEMENTS





This
Annual Report on Form 10-K contains certain forward-looking statements within
the meaning of Section 27A of  the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934 (the “Exchange Act”) and we intend
that such forward-looking statements be subject to the safe harbors created
thereby. These forward-looking statements, which may be identified by words
including “anticipates,” “believes,” “intends,” “estimates,” “expects,”
“forecasts”, “plans,”, “ projects”, and similar expressions include, but are not
limited to, statements regarding (i) future plans, objectives, strategies,
expenditures, results and objectives of future operations and research, (ii)
proposed new products, services, developments or industry rankings; (iii) future
revenue, economic conditions or performance;  (iv) potential
collaborative arrangements  and (v) the need for and availability of
additional financing.





The
forward-looking statements included herein are based on current expectations
that involve a number of risks and uncertainties. These forward-looking
statements are based on assumptions regarding our business and technology, which
involve judgments with respect to, among other things, future scientific,
economic and competitive conditions, and future business decisions, all of which
are difficult or impossible to predict accurately and many of which are beyond
our control.   Accordingly, undue reliance should not be placed
on forward looking statements as they only represent the Company’s views as of
the date the statements were made.  Although we believe that the
assumptions underlying the forward-looking statements are reasonable, the
Company cannot guarantee future results, levels of activity, performance or
achievements and actual results may differ materially from those set forth in
the forward-looking statements. In light of the significant uncertainties
inherent in the forward-looking information included herein, the inclusion of
such information should not be regarded as representation by us or any other
person that our objectives or plans will be achieved. We do not intend to and
specifically decline any obligation to update any forward-looking statements or
to publicly announce the results of any revisions to any statements to reflect
new information or future events or developments.





AVAILABILITY
OF SEC FILINGS





We file
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K and proxy and information statements and amendments to reports filed or
furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of
1934, as amended. The public may read and copy these materials at the Securities
and Exchange Commission's ("SEC") Public Reference Room at 100 F Street, NE,
Washington, D.C. 20549. The public may obtain information on the operation of
the public reference room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains a website (http://www.sec.gov)
that contains reports, proxy and information statements and other information
regarding the Company and other companies that file materials with the SEC
electronically.




We also
make our annual and quarterly reports available free of charge through our
website at www.vivakor.com as
soon as practicable after such material is electronically filed with the SEC.
Our offices are located at 2590 Holiday Road, Suite 100, Coralville, Iowa 52241
and our telephone number is (319) 625-2172.









1





PART
I





Item
1.  Business





General




Vivakor,
Inc. is a transdisciplinary research company that develops products in the
fields of molecular medicine, electro-optics, biological handling and natural
and formulary compounds.  We also provide contract research services
for third parties.  We had no employees or significant operations from our
inception through March 15, 2008.   On October 20, 2008, we
effectively acquired the assets (patents and technology related to medical
record bar coding and magnetic resonance imaging (MRI) systems) of
HealthAmerica, Inc. by acquiring approximately 84% of HealthAmerica’s
outstanding shares.  HealthAmerica has had no significant operations,
within the last four years.




Our
business model is to be a research hub focused on areas that have both an
identified scientific need and a substantial market opportunity.  This
approach is intended to provide the necessary environment of transdisciplinary
collaboration and cross-pollination to advance research. Our company mission is
to advance distinct ideas to improve the quality of life for individual
patients, researchers, clinicians and consumers.  We believe that the
development of substantive technologies and cures for complex human conditions,
illnesses and diseases require a sophisticated approach with contribution from
many areas of scientific expertise typically requiring a lengthier trajectory to
market.    Our research is anchored by our relationship with
collaborative partners and product-specific commercialization
strategies.  From the commencement of product conception through
development, we target specific commercialization strategies and expect to have
collaborative partners or licensing arrangements in place for each of our
products before completion.  We expect this model to provide several
advantages to our shareholders, including a more efficient research and
development process and a quicker time to market after completion of
development.  We have commenced developing numerous products and
currently have   one pending utility patent and one active
provisional patent.  In October, 2008, we also acquired a patented MRI
software technology that we currently intend to develop.   We
intend to commercialize such products, after completion of development and any
required regulatory approvals, primarily through one of three
methods:  a sale of the technology, licensing of the product to a
manufacturer or distributor or, in some cases, by manufacturing, marketing and
directly selling the products ourselves.





Product
Research Divisions




Our research efforts have been divided
into four primary areas of medical and biotechnological
development.  These are:




1.  Molecular
Medicine. This division centers on the development of biologically
relevant molecules, tests and methods and their application in the practice of
medicine.




Vivakor
is translating systems biology (genomics, proteomics, metabalomics, etc.)
insights of the molecular and cellular basis of disease into commercializable
theranostic (diagnostic/therapeutic) products. Vivakor scientists are
participants in the discovery and development of new drugs and the early
diagnosis of disease states. For example, Vivakor is investigating SNPs (single
nucleotide polymorphisms or single point mutations) that give rise to differing
response to drugs and supplements or that are linked to human disease
conditions. Vivakor is especially focused on conditions and reactions affecting
human skin.




This
division is developing the following types of products:




●
              laser
      poration (a unique method of gene
delivery);




●
              microtine
      dermprint allergy testing;




●
              SNP
      detection (customer-specific genetic markers);
  and




●
              synthetic
      peptide therapies and synthetic cellular
    immortalization.




The
central aim of the molecular medicine division is cancer detection and wound
healing, which we anticipate will lead to the development of customized
treatments.  Our research in stem cell biology and nuclear
reprogramming is a critical element in this research.




2.Electro-Optics.    This
division focuses on the development of biomedical and related consumer products
that that incorporate optical and electronic engineering.  We are
actively designing, building and testing several new electro-optic devices to
reach previously un-served or underserved areas of the biomedical device
market.  Products being developed in this area
include:


2





●
            VivaSight-
      a digital photorefractor that is intended to modernize child vision
      screening




●
              a
      label free multiplexed clinical biomolecular sensor (CBS) for the
      detection and diagnosis of complex human conditions (cancer, infectious
      diseases, cardiovascular disease, metabolic disorders, auto immune and
      inflammatory diseases)




●
              multi-spectral
      imaging devices to examine burn degree and cutaneous melanoma
      and




●
              spectroscopic
      devices to track wound healing and ear
  infection.




With the
recent acquisition of HealthAmerica’s SLICESTM technology, we are adapting and
upgrading this technology to produce enhanced MRI images which we expect will
improve MRI resolution while providing additional data such as blood flow
velocity in imaged tissues. See Products and Development Status
below.  Approval has been granted from Western Institutional Review
Board (20080731) to conduct human validation studies of our VivaSight technology
on children.  This study is currently being conducted at The
University of Iowa Hospitals and Clinics.





3.Biological
Handling. Vivakor is developing commercial products for cryogengenic
preservation, storage and shipping of biological materials.  We are
exploring new techniques to improve methods and products employed for cryogenic
preservation, storage and handling.  Our research in this area is
leading to the development of products such as:




●
              improved
      cryovials (USPTO Utility Patent #
12423998);




●
              cryogenic
      devices for temperature maintenance and sample
  transport);




●
              a
      cryogenic biopsy device (Cryopsy);
and




●
              improved
      modular cryogenic freezer
designs.




4.Natural and
Formulary Products.    This division is
particularly focused on the investigation, validation and adaptation of medical
herbalism or botanical medicine.  We are investigating the healing
properties of botanicals and developing supplements and pharmaceutical (both
over-the-counter and prescription) products that harness the power of these
natural sources.  For example, our scientists are researching certain
botanical extracts for their properties in ameliorating the symptoms of the
common cold.  This division has conducted a human participant study
approved by Western Institutional Review Board 20071809. Products currently
being developed in this area include:




●
              fruit
      and vegetable extract for the protection of digestive
    system




●
              fresh
      fruit and vegetable extract for antioxidant supplements (USPTO Provisional
      Patent #61093311); and




●
              jam
      and jelly formula to contain both antioxidant supplements as well as bone
      & cartilage supplements for healthy joints (USPTO Provisional Patent
      #61093311)




Contract
Research Services




We also
perform contract research and development in molecular biology and devices
engineering. This includes contracts to perform several studies to investigate
and validate topical product claims.  For example, we have developed a
novel TOPICAL permeability test that measures breathability of topical
products.  This test is used to assess cosmetic and cosmeceutical
claims of breathability or oxygen permeability.  Contract services in
the areas of mechanical engineering, electrical engineering, optical layout, and
programming for instrument control and digital image analysis are also
offered.




3





Development
Phases and Milestones




Our
pathway for development of products follows one of two routes to
commercialization.  First is a short-term path in which products for
which an expedited regulatory oversight is available are rapidly pushed to the
prototype and alpha testing phase.  These projects represent rapidly
commercializable technologies and products that will have the potential to
generate revenue quickly.  Second is a long-term path in which more
involved and complex projects are developed.  These products typically
require substantial regulatory oversight or approval.  We anticipate
that cash flow generated by the short-term projects will help to fund the
long-term projects.  These longer incubating projects
characteristically represent breakthrough technologies with more risk but higher
revenue potential.  See “Risk Factors”.




The
following table outlines the general phases of development and milestones for
each of our product candidates.




VIVAKOR
R&D Product Pipeline Steps & Phases




L
                                                                  I
                                                                  C
                                                                  E
                                                                  N
                                                                  S
                                                                  I
                                                                  N
                                                                  G
                                                                  
                                                                  P
                                                                  A
                                                                  R
                                                                  T
                                                                  N
                                                                  E
                                                                  R
                                                                  S
                                                                  
                                                                  C
                                                                  H
                                                                  O
                                                                  S
                                                                  E
                                                                  N
                                                                Phase
      0
                                                                Step
      1
                                                                Targeted
      Brainstorming/Idea GenerationStep
      2
                                                                Analysis
      & Protection of Intellectual PropertyStep
      3
                                                                Idea
      SelectionPhase
      I
                                                                Step
      4
                                                                Apply
      for Public Monies and GrantsStep
      5
                                                                IP
      Protection ReviewStep
      6
                                                                Technology
      Proof-of-conceptStep
      7
                                                                Prototype
      Design & BuildStep
      8
                                                                Laboratory
      (in vitro) Prototype TestingPhase
      II
                                                                Step
      9
                                                                IP
      Protection ReviewStep
      10
                                                                Regulatory
      Documentation and Filing (IRB, IDE, 510K, FDA)Step
      11
                                                                Trial
      Product Validation using in vivo
      ModelStep
      12
                                                                Small
      Scale Trial Product Validation using Human CohortStep
      13
                                                                Statistical
      Review & Consumer Feedback on Trial ProductStep
      14
                                                                Small
      Scale Alpha-Test & Evaluation of Test ProductPhase
      III
                                                                Step
      15
                                                                Field
      Beta-Test & Evaluation of Test ProductStep
      16
                                                                IP
      Protection ReviewStep
      17
                                                                Design
      for Production & ManufactureStep
      18
                                                                Pre-Manufacturing
      Model ProductStep
      19
                                                                Manufacture
      Tooling & AssemblyStep
      20
                                                                Manufactured
      Product Specification VerificationStep
      21
                                                                Product
      for
Sale





Products




Clinical
Biomolecular Sensor (CBS) Technology.  Our CBS technology
design is based on the ability to enable clinicians and scientists to detect
many biological molecules (DNA, RNA, protein) simultaneously and in parallel.
Important applications of this technology are found in the research, diagnosis,
and treatment of numerous molecular conditions (cancer, infectious disease,
autoimmune disorders, heart disease, etc.).  Common applications in
cancer related fields include the identification of biomarkers that may be
indicative of a particular cancer diagnosis or prognosis.  Biomarkers
identified by antibody (Ab) arrays can also be used as surrogate markers of drug
response. There is much knowledge to be gained using Ab arrays for the molecular
profiling of tumors as a diagnostic tool. The use of complex molecular profiling
in the clinic may lead to more comprehensive, accurate and contextualized
results than tests based on the assay of a single protein. Our CBS are expected
to be fast, convenient, and sensitive enough for clinical use at the bedside or
within the immediate clinical point-of-care. CBS results are generated in
seconds, rather than after hours of processing in the laboratory. Sensor chips
can be designed to be disposable and reusable options will also be
explored.  We are
currently attempting to establish joint-development partnerships to continue the
evolution of this technology which is in Phase I of the development
process.




4




SLICESTM.Our acquisition
of HealthAmerica’s SLICESTM technology will provide a technology platform for
optimization and adaptation by our scientists.  This patented
technology has received FDA 510(k) clearance  and it is intended
that this technology will enhance the resolution of images resulting from
MRI.  The underlying algorithm may be useful in the determination of
blood flow velocity measures in imaged tissues.  Such information
would be valuable in accessing areas of blood flow constriction from plaques or
other hematologic deposits.  This information could help physicians
better diagnose, predict and assess stroke and related diseases involving blood
flow obstruction.  This technology is currently in phase
II of the development process and our scientists are attempting to streamline
and adapt this algorithm and accompanying software to meet current MRI standards
and practices.  See “Risk Factors”.





VivaSight
(Digital PhotoRefractor or DPR).We have developed a device
that we expect will modernize screening of pre-verbal and pre-literate children
for ocular disorders.  This type of screening is increasingly required
by state governments prior to enrollment in the public school
system.  Our scientists are collaborating with physicians and
clinicians at University of Iowa Hospitals & Clinics Department of
Ophthalmology & Visual Sciences to develop a clinic-ready
device.




Data from
the National Eye Institute (NEI) states that 2.3 million children have
undiagnosed eye disorders that can lead to blindness if left
untreated.  Amblyopia, commonly known as “lazy eye”, is the leading
cause of monocular vision loss in the 20 to 70+ age range.  It causes
more vision loss than diabetic retinopathy, glaucoma, macular degeneration, and
cataracts. Amblyopia occurs when the optical powers of the two eyes are
different and the brain favors the visual signal from one eye, functionally
ignoring the vision in the amblyopic eye. According to the NEI, an estimated
300,000 to 750,000 children between the ages of three to five suffer from
amblyopia.  Visual acuity develops principally during the pre-school
years, from birth to about five years old, as a child’s visual experience molds
its genetic blueprint into its adult visual sensory system. If treatment is not
initiated during the visual maturation period, the prognosis for normal visual
development is poor.  Amblyopia can be reversed and cured if it is
detected and treated during the critical visual development period.
Unfortunately, less than 21% of preschool children receive some form of vision
screening each year. Even those who are screened are often improperly screened
by a general health practitioner, pediatrician or screening volunteer due to
inadequate experience and lack of equipment or techniques for an assiduous exam.
Some children receive proper eye exams once they start school; unfortunately by
then it may be too late to effectively treat amblyopia.




Our DPR
has been designed with ongoing end-user input to produce a device that will
readily penetrate and gain wide acceptance in the vision screening
market.  Most importantly our DPR offers all screening programs a low
cost device with a high sensitivity and specificity. This device will streamline
the screening process by the following: 1) Eliminate recurring cost of Polaroid
film, 2) Instantaneously image a subject across two meridians of strabismus and
refractive error,  3) Detect improper subject fixation, 4) Digitize
and automate the interpretation process, 5) Quantify the image interpretation
and adjust the referral criteria based upon screening demographics to achieve
predetermined levels of sensitivity and specificity, and 6) Give an instant
refer/do not refer response to the screener.  This device is currently in clinical
testing and is in Phase II of the development process.  On May 5,
2009, the National Institute of Health through the National Eye Institute
awarded us a Phase I Small Business Innovation Research Award grant in the
amount of $112,912 to conduct research related to the development of the our DPR
and the detection of amblyogenic risk factors.




VivaThermic
CryoVial Technology. We are actively developing
the technologies required for the cryopreservation of diverse biological samples
with improved recovery of viable cells post-cryopreservation. Emphasis has been
placed on strategies to eliminate the variations and time delays experienced in
the current biopsy and tissue preservation procedure by integrating a cryogenic
freezing capacity into the biopsy device.




5






Critical
advancements in biological sample preservation are evolving. We have developed
specialized cryovials that accommodate an improved method of cryopreservation of
cells, blood, and other bio-materials. When cryopreserving biological materials,
the rate of cooling is the main factor affecting the cell viability. Material
choice and design features of cryovials are critical parameters affecting the
cooling rate. Existing cryovials do not allow for rapid freezing. They are
usually manufactured from conventional polypropylene which is a poor thermally
conductive material. In addition, they offer no special design features to
enhance heat transfer.




Our
cryovials benefit from better designs, a unique cap feature and improved use of
materials resulting in better performance during the freezing and thawing
process. The target markets for our cryovials include clinical laboratories,
hospitals, fertility clinics, veterinarians, agribusiness, animal breeding and
research laboratories.  Sales of this product commenced in
the first quarter of 2009.




Cryopsy
Device.   Our Cryopsy
will freeze the tissue specimens to cryogenic temperature below minus 132°C
immediately after tumor excision and then transfer the tissue specimens directly
to the specimen holder embedded in the freezing chamber. As such, the tissue
specimens will be frozen to minus 132° C or below within 1 min after excision.
Cryopsy will ensure very minimal time delays so that no significant biochemical
alternation occurs in tissues. By freezing the specimens to minus132°C or below,
Cryopsy will also stop not only any enzymatic reaction but also all signaling
degradation. In this way, Cryopsy will preserve proteins, RNA, and DNA in tissue
specimens and provide accurate and repeatable information about signal
transduction pathways, molecular drug targets and biomarkers. Moreover, the
practice of biopsy will be standardized. Variations in sample size, cooling
rate, temperature and time intervals will be minimized and all of the parameters
will be held constant over time. Furthermore, Cryopsy will be a user-friendly
and hand-held device such that the collection, handling and storage of tissue
samples can be done by the physician in the clinic.  This product is in Phase I of the
development process.




VivaBlend(USPTO Provisional Patent#61093311). Our proprietary balanced blend of
more than 18 different sources of  phytochemical extracts from
antioxidant rich bioactive fruits and vegetables tested by the USDA that can be
added to many consumer foods, drinks and nutraceuticals as a convenient daily
source of important antioxidants and other critical bioactive
phytochemicals.  Sales of this product commenced in
the second quarter of 2009.




RejuviCeuticals
(USPTO Provisional Patent #61093311). These are a family of nutraceutical
products containing our VivaBlend in combination with other supplements and
vitamins for use by people with specific conditions or disease
states.  The delivery method of these RejuviCeuticals include foods
such as: jams, drinks, chips, etc.  This product is in Phase II of the
development process.




VivaGastroProtect.This
is a proprietary brand of dietary supplements to be used for the protection of
the digestive system as well as for the prevention of infection and associated
gastric ulcers.  This natural extract derived from fruits and
vegetables will be delivered in a convenient way to take the
supplement.  This
product is in Phase I of the development process.




CryoKeeper/Carrier
A device designed for the storage and transport of specimens maintaining
temperatures at or below -130°C for up to one hour in a room temperature
environment.  This
product is in Phase II of the development process




VivaPlate
Composite multi-well microplate for rapid temperature response.  This product is in Phase I of the
development process.




VivaCycler  Individually
controlled high throughput heating and cooling device.  This product is in Phase I of the
development process.




VivAuris.  This
is a stand-alone device able to detect possible ear infection and transmit
results of an improving or diminishing condition.  This unit is a
hand-held unit, easy to use and affordable.  This product is in Phase II of the
development process.


6







VivaGlobin
It is known that the degree of skin redness can be indicative of several skin
conditions.  This device enables a researcher or clinician to measure
and track skin redness for anemia and cutaneous hemoglobin
detection.  This
product is in Phase II of the development process.





MyDermMy-Derm is a cosmetics color customization system for formulating and
dispensing color specific cosmetics.  After considering the estimated cost
to produce this product and current market conditions, we have discontinued the
development of this product.




VivaCrop
Vivakor is currently developing a vegetation health monitor.  This product is in Phase I of the
development process.




VivaSwabBuccal swabs are routinely used to collect DNA or cellular material from
the inner cheek.  Vivakor was developing a proprietary swab concept
that is biodegradable and biomimetic.  Due to the costs required to
identify, and  current scientific feasibility to create,  an
adequate non-allergenic material with the required physical properties to
complete development, we have discontinued the development of this
product.




Suppliers





We expect
to buy materials for our products from a multitude of suppliers, and do not
expect to be dependent on any one supplier or group of suppliers. The raw
materials used in our products will generally include chemicals, plastics,
vitamins, fruits/vegetables, electronic and optical components and biologics,
and packaging. We expect that these raw materials will be generally readily
available at competitive, stable prices from a number of suppliers. Certain raw
materials will be produced under our specifications.  These materials
may be limited by supply and may be subject to delays in production and delivery
which could delay or interfere with our ability to produce and deliver
products.  We intend to closely monitor these materials to maintain
adequate supplies.





Seasonality





We do not
expect our business to experience seasonality in sales or revenue. However, our
products or contract research services may be sold primarily to, or our revenue
derived from, researchers, universities, government laboratories and private
foundations whose funding is dependent upon grants from government agencies. To
the extent that our customers experience increases, decreases or delays in
funding arrangements, and to the extent that any of our customers’ activities
are slowed, such as during vacation periods or due to delays in the approval of
governmental budgets, we may experience fluctuations in sales volumes throughout
the year or delays from one period to the next in the recognition of
sales.




Competition





We face
competition from medical product and biotechnology companies, as well as from
universities and non-profit research organizations.   Many
emerging medical and biotechnology product companies have corporate partnership
arrangements with large, established companies to support the research,
development, and commercialization of products that may be competitive with our
products. Many of our existing or potential competitors have substantially
greater financial, research and development, regulatory, marketing, and
production resources than we have. Other companies may develop and introduce
products and processes competitive with or superior to those of
ours.  See “Risk Factors”.




For our
products, an important factor in competition is the timing of market
introduction of our products or those of our competitors’ products. Accordingly,
the relative speed with which we can develop products, complete the regulatory
clearance processes and supply commercial quantities of the products to the
market is an important competitive factor. We expect that competition among
products cleared for marketing will be based on, among other things, product
efficacy, safety, reliability, availability, price, and patent
position.




7





Patents
and Proprietary Rights




We regard
the establishment of a strong intellectual property position in our technology
as an integral part of the development process. We will attempt to protect our
proprietary technologies through patents and intellectual property positions in
the United States as well as major foreign markets.  We currently have
one pending utility patent and one active provisional patent.  In
October, 2008, we also acquired a patented MRI software technology that we
currently intend to develop.   Provisional patents are not
reviewed by the USPTO and do not result in the issuance of patents. Due to
a lack of funds, we allowed 13 of our previously filed provisional patent
applications to expire. We must file regular patent applications in order
to obtain any long-term proprietary rights in our inventions and
technology.  Where possible, we plan to file new provisional patent
applications in the future when we have adequate funding to do so; however, we
cannot guarantee that we will have sufficient resources to file patent
applications on all of our proprietary inventions, or that if filed, such patent
applications will actually result in the issuance of patents.  See
“Risk Factors”.




Even if
we were awarded patents, the patent position of biotechnology and medical device
firms, including our company, generally is highly uncertain and may involve
complex legal and factual questions. Potential competitors may have filed
applications, or may have been issued patents, or may obtain additional patents
and proprietary rights relating to products or processes in the same area of
technology as that used by our company. The scope and validity of these patents
and applications, the extent to which we may be required to obtain licenses
thereunder or under other proprietary rights, and the cost and availability of
licenses are uncertain. We cannot assure you that our patent applications will
result in additional patents being issued or that any of our patents will afford
protection against competitors with similar technology; nor can we assure you
that any of our patents will not be designed around by others or that others
will not obtain patents that we would need to license or design
around.




We also
rely upon unpatented trade secrets. We cannot assure you that others will not
independently develop substantially equivalent proprietary information and
techniques, or otherwise gain access to our trade secrets, or disclose such
technology, or that we can meaningfully protect our rights to our unpatented
trade secrets.




We
require our employees, consultants, advisers, and suppliers to execute a
confidentiality agreement upon the commencement of an employment, consulting or
manufacturing relationship with us. The agreement provides that all confidential
information developed by or made known to the individual during the course of
the relationship will be kept confidential and not disclosed to third parties
except in specified circumstances. In the case of employees, the agreements
provide that all inventions conceived by the individual will be the exclusive
property of our company. We cannot assure you, however, that these agreements
will provide meaningful protection for our trade secrets in the event of an
unauthorized use or disclosure of such information.  See “Risk
Factors”.




Government
Regulation




Most
aspects of our business and product candidates are subject to some degree of
government regulation. As a developer of medical and biotechnology products, we
are subject to extensive regulation by, among other governmental entities the
FDA.  In addition prior to any sales of our product candidates we will
be required to comply with the rules and regulations of state, local and foreign
regulatory bodies in jurisdictions in which we desire to sell our products.
These regulations govern the introduction of new products, the observance of
certain standards with respect to the manufacture, safety, efficacy and labeling
of such products, the maintenance of certain records, the tracking of such
products and other matters.




Failure
to comply with applicable federal, state, local or foreign laws or regulations
could subject us to enforcement action, including product seizures, recalls,
withdrawal of marketing clearances, and civil and criminal penalties, any one or
more of which could have a material adverse effect on our business. We believe
that we are in substantial compliance with such governmental regulations.
However, federal, state, local and foreign laws and regulations regarding the
manufacture and sale of medical devices are subject to future changes. We cannot
assure you that such changes will not have a material adverse effect on our
company.




8






For some of our product candidates, and
in some countries, government regulation is significant and, in general, there
is a trend toward more stringent regulation. In recent years, the FDA and
certain foreign regulatory bodies have pursued a more rigorous enforcement
program to ensure that regulated businesses like ours comply with applicable
laws and regulations. We devote significant time, effort and expense addressing
the extensive governmental regulatory requirements applicable to our business.
To date, we have not received any notifications or warning letters from the FDA
or any other regulatory bodies of alleged deficiencies in our compliance with
the relevant requirements, nor have we recalled or issued safety alerts on any
of our products. However, we cannot assure you that a warning letter, recall or
safety alert, if it occurred, would not have a material adverse effect on our
company.




Research
and Development





During
the year ended December 31, 2008, we incurred $443,107 in costs related to
research and development activities.  No research and development
costs were incurred prior to 2008.  The Company expects to continue
ongoing research and development activities for the foreseeable future and
expenses for the year ended December 31, 2009 are expected to increase from 2008
as we expand our research and development efforts.  We face a number
of risks in moving our technology through research, development and
commercialization. Through December 31, 2008, we had no revenues from commercial
product sales, have never been profitable on an annual basis and have incurred
net losses of $1,048,960.  We do not anticipate profitability in the
short term and will continue to require external funding, either from key
corporate partnerships and licenses of our technology or from the private or
public equity markets, debt from banking arrangements or some combination of
these financing vehicles.  See “Risk Factors”.





Employees





As of
December 31, 2008, we had four full-time employees and two part-time employees,
of which three full-time employees are engaged in research and development and
one (the Chief Executive Officer) is engaged in both research and development
and executive management. Our Chairman and our Chief Financial Officer worked
for us on a part-time basis during 2008 will continue on this basis into
2009.  Provided that we obtain adequate financing and expand our
research and operating activities, the percentage of time they devote to the
Company is expected to increase and it is planned that these will become
full-time positions in 2009.  We estimate that the successful
implementation of our growth plan would require between  six and ten
additional employees by the end of fiscal year 2009. We also plan to continue to
retain and utilize the services of outside consultants as the need
arises.  None of our employees are represented by any collective
bargaining unit.





Item
1A.  Risk Factors





Risks
Relating to the Early Stage of our Company





Our
independent registered public accounting firm has expressed substantial doubt
about our ability to continue as a going concern and, if we are unable to
continue our business, our shares may have little or no value.




In its
audit opinion issued in connection with our balance sheets as of
December 31, 2008 and 2007 and our statements of operations,
stockholders’/member’s equity (deficit) and cash flows for the years then ended,
our independent registered public accounting firm has expressed substantial
doubt about our ability to continue as a going concern given our lack of working
capital. The accompanying financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities and commitments in the normal course of
business. The financial statements do not include any adjustments relating
to the recoverability and classification of recorded asset amounts or amounts of
liabilities that might be necessary should we be unable to continue in
existence.  Our ability to become a profitable operating company is
dependent upon obtaining financing adequate to fulfill our research and market
introduction activities, and achieving a level of revenues adequate to support
our cost structure. We intend to obtain capital primarily through issuances of
debt or equity or entering into collaborative arrangements with corporate
partners. There can be no assurance that we will be successful in completing
additional financing or collaboration transactions or, if financing is
available, that it can be obtained on commercially reasonable terms.  The
doubts raised relating to our ability to continue as a going concern may make
our shares an unattractive investment for potential investors.  These
factors, among others, may make it difficult to raise the necessary amount of
capital.


9







We
are at a very early operational stage and our success is subject to the
substantial risks inherent in the establishment of a new business
venture.




The
implementation of our business strategy is in a very early stage. We are in the
process of developing numerous product candidates but none have proven to be
commercially successful. Our business and operations should be considered to be
in a very early stage and subject to all of the risks inherent in the
establishment of a new business venture. Accordingly, our intended business and
operations may not prove to be successful in the near future, if at all. Any
future success that we might enjoy will depend upon many factors, several of
which may be beyond our control, or which cannot be predicted at this time, and
which could have a material adverse effect upon our financial condition,
business prospects and operations and the value of an investment in our
company.




We
have a very limited operating history and our business plan is unproven and may
not be successful.




Our
company was formed in November 2006 but we began operations in earnest in March
2008 when one of our officers and some of our key employees commenced
employment.  Since March 2008, our primary activities have been
research and development, the identification of collaborative partners,
intellectual property protection such as patent applications and capital raising
activities.  We have not licensed or sold any substantial amount of
products commercially and do not have any definitive agreements to do
so.  We have not proven that our business model will allow us to
identify and develop commercially feasible products.




We
have suffered operating losses since inception and we may not be able to achieve
profitability.




We had an
accumulated deficit of $1,048,960 as of December 31, 2008 and we
expect to continue to incur significant research and development expenses in the
foreseeable future related to the completion of development and
commercialization of our products. As a result, we are sustaining substantial
operating and net losses, and it is possible that we will never be able to
sustain or develop the revenue levels necessary to attain
profitability.




We
may have difficulty raising additional capital, which could deprive us of
necessary resources.




We expect
to continue to devote significant capital resources to fund research and
development. In order to support the initiatives envisioned in our business
plan, we will need to raise additional funds through the sale of assets, public
or private debt or equity financing, collaborative relationships or other
arrangements. Our ability to raise additional financing depends on many factors
beyond our control, including the state of capital markets, the market price of
our common stock and the development or prospects for development of competitive
technology by others. Because our common stock is not listed on a major stock
market, many investors may not be willing or allowed to purchase it or may
demand steep discounts. Sufficient additional financing may not be available to
us or may be available only on terms that would result in further dilution to
the current owners of our common stock.




We expect
to raise additional capital during 2009 but we do not have any firm commitments
for funding.  If we are unsuccessful in raising additional capital, or
the terms of raising such capital are unacceptable, we may have to modify our
business plan and/or significantly curtail our planned activities and other
operations.




Failure
to effectively manage our growth could place strains on our managerial,
operational and financial resources and could adversely affect our business and
operating results.




Our
growth has placed, and is expected to continue to place, a strain on our
managerial, operational and financial resources. Further, if our subsidiary’s
business grows, we will be required to manage multiple relationships. Any
further growth by us or our subsidiary, or an increase in the number of our
strategic relationships will increase this strain on our managerial, operational
and financial resources. This strain may inhibit our ability to achieve the
rapid execution necessary to implement our business plan, and could have a
material adverse effect upon our financial condition, business prospects and
operations and the value of an investment in our company.




10





Risks
Relating to Our Research and Development Business




There
are substantial inherent risks in attempting to commercialize new technological
applications, and, as a result, we may not be able to successfully develop
products or technology for commercial use.




Our
company conducts research and development of products in numerous technological
and medical fields. Our research scientists are working on developing technology
in various stages. However, commercial feasibility and acceptance of such
product candidates are unknown. Scientific research and development requires
significant amounts of capital and takes an extremely long time to reach
commercial viability, if at all. To date, our research and development projects
have not produced commercially viable applications, and may never do so. During
the research and development process, we may experience technological barriers
that we may be unable to overcome. Because of these uncertainties, it is
possible that none of our product candidates will be successfully developed. If
we are unable to successfully develop products or technology for commercial use,
we will be unable to generate revenue or build a sustainable or profitable
business.




We
will need to achieve commercial acceptance of our applications to generate
revenues and achieve profitability.




Even if
our research and development yields technologically feasible applications, we
may not successfully develop commercial products, and even if we do, we may not
do so on a timely basis. If our research efforts are successful on the
technology side, it could take at least several years before this technology
will be commercially viable. During this period, superior competitive
technologies may be introduced or customer needs may change, which will diminish
or extinguish the commercial uses for our applications. We cannot predict when
significant commercial market acceptance for our products will develop, if at
all, and we cannot reliably estimate the projected size of any such potential
market. If markets fail to accept our products, we may not be able to generate
revenues from the commercial application of our technologies. Our revenue growth
and achievement of profitability will depend substantially on our ability to
introduce new products that are accepted by customers. If we are unable to
cost-effectively achieve acceptance of our technology by customers, or if the
associated products do not achieve wide market acceptance, our business will be
materially and adversely affected.




We
will need to establish additional relationships with collaborative and
development partners to fully develop and market our products.





We do not
possess all of the resources necessary to develop and commercialize products on
a mass scale that may result from our technologies. Unless we expand our product
development capacity and enhance our internal marketing, we will need to make
appropriate arrangements with collaborative partners to develop and
commercialize current and future products.





Collaborations
may allow us to:





●
                generate
      cash flow and revenue;





●
              offset
      some of the costs associated with our internal research and development,
      preclinical testing, clinical trials and
  manufacturing;





●
              seek
      and obtain regulatory approvals faster than we could on our own;
      and





●
              successfully
      commercialize product
candidates.





If we do
not find appropriate partners, our ability to develop and commercialize products
could be adversely affected. Even if we are able to find collaborative partners,
the overall success of the development and commercialization of product
candidates in those programs will depend largely on the efforts of other parties
and is beyond our control. In addition, in the event we pursue our
commercialization strategy through collaboration, there are a variety of
attendant technical, business and legal risks, including:




11





●
              a
      development partner would likely gain access to our proprietary
      information, potentially enabling the partner to develop products without
      us or design around our intellectual
property;




●
              we
      may not be able to control the amount and timing of resources that our
      collaborators may be willing or able to devote to the development or
      commercialization of our product candidates or to their marketing and
      distribution; and




●
              disputes
      may arise between us and our collaborators that result in the delay or
      termination of the research, development or commercialization of our
      product candidates or that result in costly litigation or arbitration that
      diverts our management’s
resources.




The
occurrence of any of the above risks could impair our ability to generate
revenues and harm our business and financial condition.




Clinical
trials for our certain product candidates may be lengthy and expensive and their
outcome is uncertain.




Certain
of our product candidates will be subject to regulatory approval from the United
States Food and Drug Administration (“FDA”) or other governmental regulatory
agencies including the United States Department of Agriculture (“USDA”). Before
obtaining regulatory approval for the commercial sale of such product
candidates, we must demonstrate through preclinical testing and clinical trials
that such product candidates are safe and effective for use in humans.
Conducting clinical trials is a time consuming, expensive and uncertain process
and may take years to complete. Historically, the results from preclinical
testing and early clinical trials have often not been predictive of results
obtained in later clinical trials. Frequently, drugs or products that have shown
promising results in preclinical or early clinical trials subsequently fail to
establish sufficient safety and efficacy data necessary to obtain regulatory
approval. At any time during the clinical trials, we, the participating
institutions or FDA might delay or halt any clinical trials for our product
candidates for various reasons, including:





●
              ineffectiveness
      of the product candidate;





●
              discovery
      of unacceptable toxicities or side
effects;





●
              development
      of disease resistance or other physiological
  factors;





●
              delays
      in patient enrollment; or





●
              other
      reasons that are internal to the businesses of our potential collaborative
      partners, which reasons they may not share with
  us.





The
results of the clinical trials may fail to demonstrate the safety or
effectiveness of our product candidates to the extent necessary to obtain
regulatory approval or such that commercialization of our product candidates is
worthwhile. Any failure or substantial delay in successfully completing clinical
trials and obtaining regulatory approval for our product candidates could
severely harm our business.




We
expect to rely on third parties to manufacture our product candidates and our
business will suffer if they do not perform.




We do not
expect to manufacture many of our products and will engage third party
contractors to provide manufacturing services.  If our contractors do
not operate in accordance with regulatory requirements and quality standards,
our business will suffer. We expect to use or rely on components and services
that are provided by sole source suppliers. The qualification of additional or
replacement vendors is time consuming and costly. If a sole source supplier has
significant problems supplying our products, our sales and revenues will be hurt
until we find a new source of supply.







12










We expect to rely
on third parties for the worldwide marketing and distribution of our product
candidates, who may not be successful in selling our
products.




We
currently do not have adequate resources to market and distribute any products
worldwide and expect to engage third party marketing and distribution companies
to perform these tasks. While we believe that distribution partners will be
available, we cannot assure you that the distribution partners, if any, will
succeed in marketing our products on a global basis. We may not be able to
maintain satisfactory arrangements with our marketing and distribution partners,
who may not devote adequate resources to selling our products. If this happens,
we may not be able to successfully market our products, which would decrease or
eliminate our ability to generate revenues.




We
may not be successful at marketing and selling HealthAmerica’s technology or
products.




We
effectively acquired the assets of our subsidiary, HealthAmerica, on October 20,
2008. HealthAmerica owns patents and technology related to medical record bar
coding and magnetic resonance imaging (MRI) and systems employing its technology
have been previously commercially sold and operated.  HealthAmerica’s
technology was developed years ago and no significant operations and no
commercial sales have occurred within the last four years.  As a
result, the HealthAmerica technology may be outdated by recent technology
developments.  As of the date of this Annual Report on Form 10-K we
have not devoted any substantial effort or resources to the development of
HealthAmerica’s products or technology.   We may not be able to
market and sell the HealthAmerica technology or products and any financial or
research efforts we exert to develop, commercialize or promote such products may
not result in revenue or earnings.  On an annual basis we will
evaluate whether there is any impairment of the acquired HealthAmerica assets
and, if so, future impairment charges may need to be recorded.





We
may lose out to larger and better-established competitors.




The
medical device and biotechnology industries are intensely competitive. Most of
our competitors have significantly greater financial, technical, manufacturing,
marketing and distribution resources as well as greater experience in the
medical device industry than we have. The particular medical conditions,
illnesses or diseases our product lines are intended to address can also be
addressed by other medical devices, procedures or drugs. Many of these
alternatives are widely accepted by physicians and have a long history of use.
Physicians may use our competitors’ products and/or our products may not be
competitive with other technologies. If these things happen, our sales and
revenues will decline. In addition, our current and potential competitors may
establish cooperative relationships with large medical equipment companies to
gain access to greater research and development or marketing resources.
Competition may result in price reductions, reduced gross margins and loss of
market share.




Our
products may be displaced by newer technology.




The
medical device and biotechnology industries are undergoing rapid and significant
technological change. Third parties may succeed in developing or marketing
technologies and products that are more effective than those developed or
marketed by us, or that would make our technology and products obsolete or
non-competitive. Additionally, researchers could develop new surgical procedures
and medications that replace or reduce the importance of the procedures that use
our products. Accordingly, our success will depend, in part, on our ability to
respond quickly to medical and technological changes through the development and
introduction of new products. We may not have the resources to do this. If our
product candidates become obsolete and our efforts to develop new products do
not result in any commercially successful products, our sales and revenues will
decline.




We
may not have sufficient legal protection against infringement or loss of our
intellectual property, and we may lose rights to our licensed intellectual
property if diligence requirements are not met.




Our
success depends, in part, on our ability to secure and maintain patent
protection, to preserve our trade secrets, and to operate without infringing on
the patents of third parties. While we intend to protect our proprietary
positions by filing United States and foreign patent applications for our
important inventions and improvements, domestic and foreign patent offices may
not issue these patents.




13





We have
filed a number of provisional patents with respect to our product
candidates.  Provisional patents are not reviewed by the USPTO and
will not result in the issuance of a patent, unless a regular patent application
is filed within one year after the filing of the provisional patent
application.  Generally, our provisional patent applications do not
contain all of the detailed design and other information required by a regular
patent application.  As a result, it may be uncertain whether the
description of the invention in a provisional patent meets the “best mode and
enablement” requirements for issuance of a patent. Failure to adequately
describe the invention may result in the loss of certain claims.   We
intended to file regular patent applications with respect to each of our product
candidates during the one-year period of the provisional
patents.  However, due to a lack of capital, we have been unable to
complete and file patent applications.  As a result, we may have lost
or may lose the right to certain claims.  If we do not have the funds
or resources to prepare, file and maintain patent applications on any additional
or new inventions, we could lose proprietary rights to our
technology.




Even if
we file patent applications and patents are issued, third parties may challenge,
invalidate, or circumvent our patents or patent applications in the future.
Competitors, many of which have significantly more resources than we have and
have made substantial investments in competing technologies, may apply for and
obtain patents that will prevent, limit, or interfere with our ability to make,
use, or sell our products either in the United States or abroad.




In the
United States, patent applications are secret until patents are issued, and in
foreign countries, patent applications are secret for a time after filing.
Publications of discoveries tend to significantly lag the actual discoveries and
the filing of related patent applications. Third parties may have already filed
applications for patents for products or processes that will make our products
obsolete or will limit our patents or invalidate our patent
applications.




We
typically require our employees, consultants, advisers and suppliers to execute
confidentiality and assignment of invention agreements in connection with their
employment, consulting, advisory, or supply relationships with us. They may
breach these agreements and we may not obtain an adequate remedy for breach.
Further, third parties may gain access to our trade secrets or independently
develop or acquire the same or equivalent information.




We could be damaged by product
liability claims.




Our
products are intended to be used in various clinical or surgical procedures. If
one of our products malfunctions or a physician or patient misuses it and injury
results to a patient or operator, the injured party could assert a product
liability claim against our company. We currently do not have product liability
insurance and may not be able to obtain such insurance at a rate that is
acceptable to us or at all. Furthermore, even if we can obtain insurance,
insurance may not be sufficient to cover all of the liabilities resulting from a
product liability claim, and we might not have sufficient funds available to pay
any claims over the limits of our insurance. Because personal injury claims
based on product liability in a medical setting may be very large, an
underinsured or an uninsured claim could financially damage our
company.




Our
common stock is not listed or trading on any exchange and shareholders may not
be able to resell their shares.




Currently
our shares of common stock are not listed on any exchange or automated quotation
system.  A public market for our shares may never
develop.  There can be no assurance that purchaser of our shares will
be able to resell their shares at their original purchase price, if at
all.






14


Our
common stock is expected to be traded over the counter, which may deprive
stockholders of the full value of their shares.




We
anticipate that our common stock will be quoted via the OTC Electronic Bulletin
Board. If successfully listed on the OTC Electronic Bulletin, our common stock
is expected to have fewer market makers, lower trading volumes and larger
spreads between bid and asked prices than securities listed on an exchange such
as the New York Stock Exchange or the NASDAQ Stock Market. These factors may
result in higher price volatility and less market liquidity for the common
stock.




A
low market price would severely limit the potential market for our common
stock.




Our
common stock is expected to trade at a price substantially below $5.00 per
share, subjecting trading in the stock to certain SEC rules requiring additional
disclosures by broker-dealers. These rules generally apply to any non-NASDAQ
equity security that has a market price share of less than $5.00 per share,
subject to certain exceptions (a “penny stock”). Such rules require the
delivery, prior to any penny stock transaction, of a disclosure schedule
explaining the penny stock market and the risks associated therewith and impose
various sales practice requirements on broker-dealers who sell penny stocks to
persons other than established customers and institutional or wealthy investors.
For these types of transactions, the broker-dealer must make a special
suitability determination for the purchaser and have received the purchaser’s
written consent to the transaction prior to the sale. The broker-dealer also
must disclose the commissions payable to the broker-dealer, current bid and
offer quotations for the penny stock and, if the broker-dealer is the sole
market maker, the broker-dealer must disclose this fact and the broker-dealer’s
presumed control over the market. Such information must be provided to the
customer orally or in writing before or with the written confirmation of trade
sent to the customer. Monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. The additional burdens imposed upon
broker-dealers by such requirements could discourage broker-dealers from
effecting transactions in our common stock.




FINRA
sales practice requirements may also limit a stockholders ability to buy and
sell our stock.




In
addition to the penny stock rules promulgated by the SEC, which are discussed in
the immediately preceding risk factor, FINRA rules require that in recommending
an investment to a customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer. Prior to
recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information
about the customer’s financial status, tax status, investment objectives and
other information. Under interpretations of these rules, FINRA believes that
there is a high probability that speculative low priced securities will not be
suitable for at least some customers. FINRA requirements make it more difficult
for broker-dealers to recommend that their customers buy our common stock, which
may limit the ability to buy and sell our stock and have an adverse effect on
the market value for our shares.




An
investor’s ability to trade our common stock may be limited by trading
volume.




A
consistently active trading market for our common stock may not occur on the
OTCBB. A limited trading volume may prevent our shareholders from selling shares
at such times or in such amounts as they may otherwise desire.





Our
company has a concentration of stock ownership and control, which may have the
effect of delaying, preventing, or deterring a change of control.





Our
common stock ownership is highly concentrated. Through its ownership of shares
of our common stock, two shareholders, Tannin J. Fuja, our President, and NFG,
Inc., beneficially own 77.9% of our total outstanding shares of common
stock.  As a result of the concentrated ownership of the stock, these
two stockholders, acting together, will be able to control all matters requiring
stockholder approval, including the election of directors and approval of
mergers and other significant corporate transactions. This concentration of
ownership may have the effect of delaying, preventing or deterring a change in
control of our company. It could also deprive our stockholders of an opportunity
to receive a premium for their shares as part of a sale of our company and it
may affect the market price of our common stock.






15





We have not voluntarily implemented
various corporate governance measures, in the absence of which, shareholders may
have more limited protections against interested director transactions,
conflicts of interest and similar matters.




Recent
federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in
the adoption of various corporate governance measures designed to promote the
integrity of the corporate management and the securities markets. Some of these
measures have been adopted in response to legal requirements. Others have been
adopted by companies in response to the requirements of national securities
exchanges, such as the NYSE or The NASDAQ Stock Market, on which their
securities are listed. Among the corporate governance measures that are required
under the rules of national securities exchanges and NASDAQ are those that
address board of directors’ independence, audit committee oversight and the
adoption of a code of ethics. While our Board of Directors has adopted a Code of
Ethics and Business Conduct, we have not yet adopted any of these other
corporate governance measures and, since our securities are not listed on a
national securities exchange or NASDAQ, we are not required to do so. It is
possible that if we were to adopt some or all of these corporate governance
measures, shareholders would benefit from somewhat greater assurances that
internal corporate decisions were being made by disinterested directors and that
policies had been implemented to define responsible conduct. For example, in the
absence of audit, nominating and compensation committees comprised of at least a
majority of independent directors, decisions concerning matters such as
compensation packages to our senior officers and recommendations for director
nominees may be made by a majority of directors who have an interest in the
outcome of the matters being decided. Prospective investors should bear in mind
our current lack of corporate governance measures in formulating their
investment decisions.





Our
board of directors has the authority to issue shares of “blank check” preferred
stock, which may make an acquisition of our company by another company more
difficult.




We have
adopted and may in the future adopt certain measures that may have the effect of
delaying, deferring or preventing a takeover or other change in control of our
company that a holder of our common stock might consider in its best interest.
Specifically, our board of directors, without further action by our
stockholders, currently has the authority to issue up to 10,000,000 shares of
preferred stock and to fix the rights (including voting rights), preferences and
privileges of these shares (“blank check” preferred). Such preferred stock may
have rights, including economic rights, senior to our common stock. As a result,
the issuance of the preferred stock could have a material adverse effect on the
price of our common stock and could make it more difficult for a third party to
acquire a majority of our outstanding common stock.




Because
we will not pay dividends in the foreseeable future, stockholders will only
benefit from owning common stock if it appreciates.




We have
never paid dividends on our common stock and we do not intend to do so in the
foreseeable future. We intend to retain any future earnings to finance our
growth. Accordingly, any potential investor who anticipates the need for current
dividends from his investment should not purchase our common stock.




Item
1B. Unresolved Staff Comments





None.





Item
2. Properties





We
currently lease approximately 2,960 square feet of office space at 2590 Holiday
Road, Suite 100, Coralville, Iowa, as our principal offices. The current lease
term is from August 1, 2008 and ending on July 31, 2010, at a monthly base rent
of approximately $3,700 throughout the term. We believe these facilities are in
good condition, but that we may need to expand our leased space as our research and developmentefforts
increase or in the event we decide to manufacture and market any of our product
candidates.





16





Item
3. Legal Proceedings





As of the date of this report, the
Company is not party to any legal proceedings.


Item
4. Submission of Matters to a Vote of Security Holders





On
October 28, 2008, a majority of the shareholders of the company, acting by
written consent, adopted the 2008 Stock Incentive Plan and reserved 7,500,000
shares for issuance thereunder. No other matters were submitted to shareholders
during the fourth quarter of 2008.





PART
II





Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities





Market
Information




Through
the date of this Annual Report on Form 10-K, our common shares have not been
listed on any exchange and there is no established public trading market for our
common stock.  On November 25, 2008, we filed with the SEC, a
registration statement on form S-1 to register and sell in a self-directed
offering 15,000,000 shares of newly issued common stock at an offering price of
$0.23 per share for proceeds of up to $3,450,000.   The
Registration also registered 5,133,000 of the Company’s outstanding shares of
common stock on behalf of selling stockholders, for which the Company will not
receive any of the proceeds from sales of these shares.  The
Registration Statement on Form S-1 was filed with the SEC on November 25, 2008
and declared effective on December 22, 2008.  A creditor of the
Company purchased 434,783 shares in exchange for a $100,000 reduction of the
Company’s existing indebtedness payable to such creditor and, as of March 3,
2009, the Company received stock subscriptions for 14,300,000 newly issued
shares of common stock at an offering price of $0.23 per share and closed the
offering.  The consideration received from the subscription agreements
was in the form of notes receivable with maturity dates 90 days after the note
dates.  The notes were secured by the subscribed shares and such
shares would not be released to the subscribers until payment was received by
the Company.  As of March 31, 2009, the Company had not received any
of the purchase price for the shares and, as a result, on April 2, 2009,
the Company cancelled and terminated each of the subscription agreements, with
the consent of the subscribers; terminated its public offering; and deregistered
the 14,300,000 unsold shares.  The Company will not offer or sell any
additional shares of common stock pursuant to that registration
statement.  The 5,133,000 shares of common stock that were registered
for resale by existing shareholders continue to be registered for resale and
were not subject to the de-registration. As of the date of this Annual Report on
Form 10-K we were awaiting approval from the Financial Industry Regulatory
Authority (“FINRA”) to list our shares of common stock on the Over-the Counter
Electronic Bulletin Board.  There can be no assurance that a public
trading market will develop at the time the trading of our stock commences or
that it will be sustained in the future.  Without an active public trading
market, our investors may not be able to liquidate their investment without
considerable delay, if at all.  If a market does develop, the price for our
securities may be highly volatile and may bear no relationship to our actual
financial condition or results of operations.  Risk factors we discuss in
this Annual Report on Form 10-K, including the many risks associated with an
investment in us, may have a significant impact on the market price of our
common stock.  Also, because of the relatively low price of our common
stock, many brokerage firms may not effect transactions in the common
stock.





Upon
clearance from FINRA, we intend to apply to have our common stock quoted on the
OTC Bulletin Board.  No trading symbol has yet been assigned.





Holders
of Common Stock




As of
June 30, 2009, there were 70 stockholders of record of our common
stock.   Our shares are not currently quoted on any
exchange.






17





Dividends
and Stock Repurchases





We have
never paid cash dividends on our common stock and do not anticipate paying such
dividends in the foreseeable future. The payment of dividends, if any, will be
determined by the Board of Directors in light of conditions then existing,
including our financial condition and requirements, future prospects,
restrictions in financing agreements, business conditions and other factors
deemed relevant by the Board of Directors.





Purchases
of Equity Securities





During
the fiscal year ended December 31, 2008, we did not repurchase any of our
securities.





Securities
Authorized for Issuance Under Equity Compensation Plans





Effective
as of October 23, 2008, our Board of Directors and a majority of our
shareholders approved our 2008 Stock Incentive Plan (the “2008 Plan”). The
purpose of the 2008 Plan is to retain current, and attract new, employees,
directors, consultants and advisors that have experience and ability, along with
encouraging a sense of proprietorship and interest in our company’s development
and financial success. The Board of Directors believes that option grants and
other forms of equity participation are an increasingly important means of
retaining and compensating employees, directors, advisors and consultants. The
2008 Plan authorizes us to issue up to 7,500,000 shares of our common stock
which represented slightly less than 15% of our outstanding shares at the time
the 2008 Plan was adopted. The 2008 Plan allows us to grant tax-qualified
incentive stock options, non-qualified stock options and restrictive stock
awards to employees, directors and consultants of our
company.  Through June 30, 2009, no options or awards have been
granted under the plan.








Plan
      Category
              Number
      of securities to
                be
      issued upon exercise
                of
      outstanding options,
                warrants
      and rights
              Weighted-average
                exercise
      price of
                outstanding
      options,
                warrants
      and rights
              Number
      of securities
                remaining
      available for
                future
      issuance under
                equity
      compensation
                plans
      (excluding
                securities
      reflected in
                column
      (a))(a)
              (b)
              (c)Equity
      compensation plans
                approved
      by security holders
              -
              -
              7,500,000Equity
      compensation plans not approved by security holders
              -
              -Total
              -
              -
              7,500,000








Sales
of Unregistered Securities





In
connection with the Company’s conversion from a limited liability company to a
corporation on April 30, 2008, the Company issued 44,862,500 unregistered shares
of common stock to the founding member and the founding member forgave the
$18,500 liability it was owed at December 31, 2007. The Company also issued
291,000 shares to certain employees, based on their respective percentage
interests held prior to conversion. These shares were issued without
registration under the Securities Act in reliance upon the exemption set forth
in Section 4(2) of the Securities Act.





18




Between
April 2008 and October 2008, we issued 133,000 shares of common stock to five
accredited investors for an aggregate gross purchase price of $66,500. Each
investor executed a subscription agreement attesting that he/she/it qualified as
an "accredited investor" within the meaning of Rule 501(a) of Regulation D under
the Securities Act, and had such knowledge and experience in financial and
business matters that they were capable of evaluating the merits and risks of
the investment.  The securities, which were taken for investment purposes
and were subject to appropriate transfer restrictions and restrictive legend,
were issued without registration under the Securities Act in reliance upon the
exemption set forth in Section 4(2) of the Securities Act or Regulation D. 
These shares were subsequently registered in the registration described above
that we filed on November 25, 2008.


.


On
October 20, 2008, we issued 5,000,000 unregistered shares of our common stock
under the Securities Act in reliance upon the exemption set forth in Section
4(2)of the Securities Act or Regulation D, along with a promissory note in the
principal amount of $1,500,000 to shareholders of HealthAmerica, Inc., a Nevada
corporation (HealthAmerica), in exchange for 25,000,000 shares of HealthAmerica
common stock,  representing approximately 84% of the outstanding
shares of capital stock of HealthAmerica.  These shares were
subsequently registered in the registration described above that we filed on
November 25, 2008.





Item
7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations





The following discussion should be
read in conjunction with our consolidated financial statements and other
financial information appearing elsewhere in this Annual Report on
Form 10-K. In addition to historical information, the following discussion
and other parts of this Annual Report contain forward-looking information that
involves risks and uncertainties.





Plan
of Operation





The
Company plans on becoming a significant transdisciplinary
biomedical/biotechnology company involved in the discovery, development and
commercialization of a broad range of medical devices and pharmaceuticals to
improve human health.





We intend
to develop, manufacture and sell directly or indirectly through collaborative
partners, the following types of products:






PRODUCT
                R&D
      PHASE
                DESCRIPTIONVivaThermic
      Vials
                Phase
      III
                Centrifugable
      and autoclavable vials for cryopreservationCryoKeeper/Carrier
                Phase
      II
                Device
      for the storage & transport of specimens at cryogenic
      temperaturesVivaplate
                Phase
      I
                Composite
      multi-well microplate for rapid temperature responseVivaCycler
                Phase
      I
                Individually
      controlled high throughput heating and cooling deviceVivaSight
                Phase
      II
                Digital
      PhotoRefractor for children's vision screeningVivAuris
                Phase
      II
                Device
      for middle ear redness detectionVivaGlobin
                Phase
      II
                Device
      for anemia and Cutaneous hemoglobin detectionCryopsy
                Phase
      I
                Device
      for cryogenic biopsy collection of visceral lesionsVivaBlend
                Phase
      III
                Fresh
      fruits & vegetables extract for antioxidant
  supplementsRejuviJam
                Phase
      II
                Jam
      & Jelly with antioxidants and bone & cartilage
      supplementsVivaGastroProtect
                Phase
      I
                Fruits
      and vegetables extract for the protection of digestive
    systemMyDerm
                Abandoned
                System
      & Method for formulating/dispensing color-specific
      cosmeticsVivaSwab
                Abandoned
                Biodegradable
      swab for sample collectionVivaCrop
                Phase
      I
                Vegetation
      health monitorClinical
      Biomolecular Sensor
                Phase
      I
                In
      vitro diagnostic device used at the point of careSLICES
                Phase
      II
                MRI
      enhancement software





19








We also
plan to continue to provide contract research and development services in
molecular biology, device engineering and other areas.  We commenced
providing contract research and development services in the first quarter of
2008.





Going
Concern




Our
registered independent accounting firm expressed substantial doubt as to our
ability to continue as a going concern in its report on the accompanying
financial statements for the year ended December 31, 2008 based on the fact that
we do not have adequate working capital to finance our day-to-day
operations.  Our continued existence depends upon the success of our
efforts to raise additional capital necessary to meet our obligations as they
come due and to obtain sufficient capital to execute our business plan. We
intend to obtain capital primarily through issuances of debt or equity or
entering into collaborative arrangements with corporate partners. There can be
no assurance that we will be successful in completing additional financing or
collaboration transactions or, if financing is available, that it can be
obtained on commercially reasonable terms.  If we are not able to
obtain the additional financing on a timely basis, we may be required to further
scale down or perhaps even cease the operation of our business. The issuance of
additional equity securities by us could result in a significant dilution in the
equity interests of our current stockholders.  Obtaining commercial
loans, assuming those loans would be available, will increase our liabilities
and future cash commitments.  Our financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.





Liquidity
and Capital Resources





At
December 31, 2008, we have $145,669 in cash and cash equivalents and our current
liabilities consisted of $136,920 in accounts payable, $298,496 in accrued wages
payable to our two officers and the Executive Chairman, $343,331 in loans
and advances payable to related parties, a $150,222 grant payable and a
$1,481,648 note payable.  The $150,522 grant payable would be
payable upon the occurrence of certain events, including the completion of an
Initial Public Offering.  The $1,481,648 note payable was incurred in
connection with the acquisition of HealthAmerica and requires payments in
$25,000 monthly increments plus, every 90 days, the Company is required to make
additional note payments equal to 10% of the gross proceeds received from any
sales of equity or debt securities and, to date, we have been unable to pay all
of the required scheduled payments under the agreement.





For the
year ended December 31, 2008, net cash provided by operating activities was
$26,859 and included our $1,028,460 net loss for the year, adjusted for
depreciation and amortization charges of $138,259, non-cash stock compensation
charges of $339,102, interest added to note payable balances of $18,226,
amortization of the discount on a note with the beneficial conversion feature of
$18,761 and changes in operating assets and liabilities offset by the minority
interest in the net loss of our consolidated subsidiary of $3,328. Net cash
provided by operating activities was zero during the year ended
December 31, 2007 and included our $20,500 net loss for the year offset by
changes in operating assets and liabilities.




Net cash
used in investing activities was $43,431 for the year ended December 31,
2008, and resulted from purchases of fixed assets of approximately $39,731 and a
long-term deposit of $3,700. No cash was provided by investing activities during
2007.


20





For the
year ended December 31, 2008, net cash provided by financing activities
totaled $162,241 reflecting proceeds from a $150,000 grant and $58,195 net
proceeds from sales of common stock, offset by the payment of
$15,954  in deferred offering costs and $30,000 on a note payable. No
cash was provided by financing activities during 2007.





The
Company commenced a capital formation activity to submit a Registration
Statement on Form S-1 to the SEC to register and sell in a self-directed
offering 15,000,000 shares of newly issued common stock at an offering price of
$0.23 per share for proceeds of up to $3,450,000.   The
Registration also registered 5,133,000 of the Company’s outstanding shares of
common stock for resale on behalf of selling stockholders, for which the Company
will not receive any of the proceeds from sales of these shares.  The
Registration Statement on Form S-1 was filed with the SEC on November 25, 2008
and declared effective on December 22, 2008.  On March 3, 2009, the
Company announced that it had sold 14,734,783 shares of common stock and
de-registered 265,217 shares of common stock. Of the shares sold, the holder of
the $1,481,648 note payable described above purchased 434,783 shares in exchange
for a $100,000 reduction of the debt. The Company had received subscription
agreements to purchase the remaining 14,300,000 shares, but, as of April 2,
2009, had not received any of the purchase price for such shares and cancelled
and terminated each of the subscription agreements, with the consent of the
subscribers.  The Company then terminated the public offering and
deregistered all unsold shares, aggregating 14,300,000 shares. The Company will
not offer or sell any additional shares of common stock pursuant to this
registration statement.  The 5,133,000 shares of common stock that
were registered for resale by existing shareholders continue to be registered
for resale and were not subject to the de-registration; however, the Company
will not receive any of the proceeds of such sales.





We do not
have sufficient cash on hand to fund our administrative and other operating
expenses or our proposed research and development and sales and marketing
programs for the next twelve months.  In the first quarter of 2009; we
entered into distribution agreements with distributors in India and Japan for
the sale of our cryovials and we commenced taking cryovial orders; however,
until we have sufficient cash to prepare marketing materials and purchase
product samples, we do not expect significant revenues from product
sales.  In order to meet our obligations as they come due and to fund
the development and marketing of our or products, we will require significant
new funding to pay for these expenses. We might do so through loans from current
stockholders, public or private equity or debt offerings, grants or strategic
arrangements with third parties.  There can be no assurance that
additional capital will be available to us. We currently have no agreements,
arrangements or understandings with any person to obtain funds through bank
loans, lines of credit or any other sources.





We have
no material commitments or contractual purchase obligations for the next twelve
months other than the monthly rental payments of $3,700 on the facilities lease
that expires July 10, 2010.




Critical
Accounting Policies




Our
financial statements and accompanying notes have been prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis. The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods.




We
regularly evaluate the accounting policies and estimates that we use to prepare
our financial statements. In general, management's estimates are based on
historical experience, on information from third party professionals, and on
various other assumptions that are believed to be reasonable under the facts and
circumstances. Actual results could differ from those estimates made by
management.





Principles
of Consolidation





The
accompanying consolidated financial statements include the accounts of Vivakor,
Inc. and is majority owned subsidiary, HealthAmerica, Inc. (“HealthAmerica”), a
Nevada corporation.  On October 20, 2008, the Company effectively
acquired HealthAmerica’s assets by acquiring approximately 84% of its
outstanding shares; accordingly, HealthAmerica’s financial position as of
December 31, 2008 and results of operations from October 20, 2008 to
December 31, 2008 were consolidated with the Company’s financial,
statements.   All intercompany transactions have been eliminated
in consolidation.





21





Impairment
of Long-Lived Assets




Long-lived
assets, which primarily consist of equipment, furniture, leasehold improvements
and patents, are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of the assets to the future net cash flows
expected to be generated by such assets. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets. The Company
did not recognize any impairment loss for long-lived assets during the years
ended December 31, 2008 and 2007.




Revenue
Recognition




The
Company recognizes revenue when all four of the following criteria are met:
(i) persuasive evidence that an arrangement exists; (ii) delivery of
the products and/or services has occurred; (iii) the fees earned can be
readily determined; and (iv) collectability of the fees is reasonably
assured. The Company recognizes revenue from research contracts as services are
performed under the agreements.








Research
and Development Costs




All
research and development costs, including all related salaries, clinical trial
expenses, regulatory expenses, facility costs and costs to obtain, maintain and
protect patents are charged to expense when incurred.





In June
2007, the FASB ratified Emerging Issue Task Force ("EITF") No. 07-3, "Accounting for Nonrefundable Advance
Payments for Goods or Services to Be Used in Future Research and Development
Activities" ("EITF 07-3"). The EITF concluded that nonrefundable
advance payments for goods or services to be received in the future for use in
research and development activities should be deferred and capitalized. The
capitalized amounts should be expensed as the related goods are delivered or the
services are performed. If an entity's expectations change such that it does not
expect it will need the goods to be delivered or the services to be rendered,
capitalized nonrefundable advance payments should be charged to expense in the
period such determination is made. The Company did not have any nonrefundable
advance payments capitalized at December 31, 2008. The Company adopted
EITF 07-3 on January 1, 2008. The adoption of EITF 07-3 did not
have a material impact on the Company's results of operations, financial
position or cash flows.





The above
listing is not intended to be a comprehensive list of all of our accounting
policies. See our audited financial statements and notes thereto which begin on
page F-1 of this Annual Report on Form 10-K, which contain accounting policies
and other disclosures required by accounting principles generally accepted in
the U.S.





New Accounting
Pronouncements




In June
2006, the FASB issued Interpretation No. 48, or FIN 48, Accounting for Uncertainty in Income
Taxes — an Interpretation of FAS 109. FIN 48 provides
clarification for the financial statement measurement and recognition of tax
positions that are taken or expected to be taken in a tax return. The Company
adopted FIN 48 effective January 1, 2007. The adoption had no impact on the
financial statements for the year ended December 31, 2007.


22




In
December 2007, the FASB issued SFAS No. 141R, "Business Combinations"
("SFAS 141R"), a replacement of SFAS No. 141, "Business Combinations."
SFAS 141R applies to all transactions and other events in which an entity
obtains control over one or more other businesses. The statement changes the
principles and requirements for how the acquirer of a business recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed, and any noncontrolling interest in the acquiree. The
statement also provides guidance for recognizing and measuring goodwill acquired
in the business combination and determines what information to disclose to
enable users of the financial statements to evaluate the nature and financial
effects of the business combination. This statement is effective prospectively,
except for certain retrospective adjustments to deferred tax balances, for
fiscal years beginning after December 15, 2008. The Company is currently
evaluating the potential impact, if any, of the adoption of FAS 141R on the
Company’s financial statements.




The
Company adopted the required provisions of SFAS No. 157, Fair Value Measurements
(SFAS No. 157) at the beginning of fiscal year 2008, resulting in no impact to
the Company’s consolidated financial statements. SFAS No. 157 establishes a
framework for measuring fair value, clarifies the definition of fair value and
expands disclosures about fair-value measurements. In general, SFAS No. 157
applies to fair value measurements that are already required or permitted by
other accounting standards and is expected to increase the consistency of those
measurements. SFAS No. 157, as issued, was effective for fiscal years beginning
after November 15, 2007. In February 2008, the FASB issued FASB Staff Position
(FSP) SFAS No. 157-2, Effective Date of FASB Statement No. 157 (FSP SFAS No.
157-2) which deferred the effective date of SFAS No. 157 for one year for
certain nonfinancial assets and nonfinancial liabilities. The Company adopted
the remaining provisions of SFAS No. 157 at the beginning of fiscal year 2009,
which did not result in a material impact to the Company’s financial
statements




In December 2007, the FASB issued SFAS
No. 160, "Noncontrolling
Interests in Consolidated Financial Statements: an amendment of Accounting
Research Bulletin No. 51" ("SFAS 160"). SFAS 160
establishes new accounting and reporting standards for noncontrolling interests
(formally referred to as "minority interests") in a subsidiary and for the
deconsolidation of a subsidiary. Specifically, the statement requires the
recognition of a noncontrolling interest as equity in the consolidated financial
statements and separate from the parent's equity. The amount of net income
attributable to a noncontrolling interest will be included in consolidated net
income on the face of the income statement. SFAS 160 clarifies that changes
in a parent's ownership interest in a subsidiary that do not result in
deconsolidation are equity transactions if the parent retains its controlling
financial interest. In addition, SFAS 160 requires that a parent recognize
a gain or loss in net income when a subsidiary is deconsolidated. Such gains or
losses will be measured using the fair value of the noncontrolling equity
investment on the deconsolidation date. SFAS 160 also includes expanded
disclosure requirements regarding the interests of the parent and its
noncontrolling interest. SFAS 160 is effective for fiscal years and interim
periods within those fiscal years, beginning on or after December 15, 2008,
with early adoption prohibited. The Company does not believe the adoption of
SFAS 160 will have a material impact on its results of operations,
financial position or cash flows.




In March
2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities—an amendment of FASB Statement
No. 133" ("SFAS 161"). SFAS 161 requires enhanced
disclosures about an entity's derivative and hedging activities. SFAS 161
is intended to enhance the current disclosure framework in SFAS No. 133,
"Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"), and requires
additional information about how and why derivative instruments are being used,
how derivative instruments and related hedged items are accounted for under
SFAS 133 and its related interpretations, and how derivative instruments
and related hedged items affect the Company's financial position, financial
performance and cash flow. This statement is effective for financial statements
issued for fiscal years and interim periods beginning after November 15,
2008. The Company does not believe the adoption of SFAS 161 will have a
material impact on its results of operations, financial position or cash
flows.




In May 2008, the FASB issued SFAS
No. 162, "The Hierarchy
of Generally Accepted Accounting Principles" ("SFAS 162").
SFAS 162 identifies the sources of accounting principles and the framework
for selecting the principles to be used in the preparation of financial
statements of nongovernmental entities that are presented in conformity with
Generally Accepted Accounting Principles ("GAAP") in the United States. This
statement is effective 60 days following the SEC's approval of The Public
Company Accounting Oversight Board's related amendments to remove the GAAP
hierarchy from auditing standards. The Company does not believe the adoption of
SFAS 162 will have a material impact on its results of operations,
financial position or cash flows.


23


Results
of Operations





During
the year ended December 31, 2008, our company commenced providing research and
development services and internal research and development activities. 
Research revenues totaled $194,700 during 2008.  For the year ended
December 31, 2008, the cost of research services provided totaled $122,321 and
research and development expenses, which consisted primarily of payroll and
related expenses, patent cost amortization and lab supplies, totaled
$443,107.  General and administrative expenses during this period
totaled $328,251 and consisted primarily of payroll, and office
expenses. Interest expense totaled $36,987 during the year ended December
31, 2008.





We also
incurred noncash compensation expense of $339,102 primarily as a result of our
acquisition of approximately 84% of the outstanding stock of HealthAmerica on
October 20, 2008. The compensation expense arose because HealthAmerica was
partially owned by one of our directors and one of our
officers.   The HealthAmerica transaction also resulted in $123,656 in patent
cost amortization expense, which is included in research and development
expense, the related deferred tax benefit of $43,280 and a $3,328 minority
interest in HelathAmerica’s loss for the period.





We did
not generate any revenue from November 1, 2006 (inception) to December 31, 2007.
 For the year ended December 31, 2007 our expenses were $20,500.
 Expenses consisted of consulting fees and reimbursements payable to the
founding member/stockholder and administrative expenses.   As a
result, we have reported a net loss of $20,500 for the year ended December 31,
2007, which was also our total net loss from inception on November 1, 2006
through December 31, 2007.





Off-Balance
Sheet Arrangements




We do not
have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to investors.




Item
8. Financial Statements and Supplementary Data





See Item
15.





Item
9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure





The
Company has not had any disagreements with its independent auditors with respect
to accounting practices, procedures or financial disclosure.





Item
9A Controls and Procedures





The
Company's Chief Executive Officer, Chief Financial Officer and Chairman have
established and are currently maintaining disclosure controls and procedures for
the Company.  The disclosure controls and procedures have been designed to
provide reasonable assurance that the information required to be disclosed by
the Company in reports that it files under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
rules and forms of the SEC and to ensure that information required to be
disclosed by the Company is accumulated and communicated to the Company's
management as appropriate to allow timely decisions regarding required
disclosure.


24





Our
limited financial resources, not our disclosure controls and procedures, have
caused us to delay the timing of the audit of our annual financial statements,
which resulted in our inability to file this Annual Report on Form 10-K on a
timely basis.





The Chief
Executive Officer, Chief Financial Officer and Chairman conducted a review and
evaluation of the effectiveness of the Company's disclosure controls and
procedures and have concluded, based on their evaluation as of the end of the
period covered by this Report, that our disclosure controls and procedures are
effective to provide reasonable assurance that information required to be
disclosed in the reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the Commission’s rules and forms and to ensure that the information required
to be disclosed by the Company is accumulated and communicated to management,
including our Chief Executive Officer our Chief Financial Officer and our
Chairman, to allow timely decisions regarding required disclosure.





There has
been no change in our internal control over financial reporting during the
fourth quarter ended December 31, 2008 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.





Our Chief
Executive Officer and our Chief Financial Officer do not expect that our
disclosure controls or internal controls will prevent all error and all fraud.
Although our disclosure controls and procedures were designed to provide
reasonable assurance of achieving their objectives and our principal executive
and financial officer have determined that our disclosure controls and
procedures are effective at doing so, a control system, no matter how well
conceived and operated, can provide only reasonable, not absolute assurance that
the objectives of the system are met. Further, the design of a control system
must reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any,
within the Company have been detected.  Individual persons perform
multiple tasks which normally would be allocated to separate persons and
therefore extra diligence must be exercised during the period these tasks are
combined.  These inherent limitations include the realities that
judgments in decision-making can be faulty, and that breakdowns can occur
because of simple error or mistake. Additionally, controls can be circumvented
if there exists in an individual a desire to do so. There can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions.  It is also recognized Vivakor has not
designated an audit committee and no member of the board of directors has been
designated or qualifies as a financial expert. The Company plans to address
these concerns at the earliest possible reasonable opportunity.





Item
9B. Other Information





None.


PART
III





Item
10. Directors, Executive Officers and Corporate Governance Directors,
Executive Officers, Promoters and Control Persons




Directors




Matthew Nicosia, age 35, has
served as a director of our Company since November, 2006.  From 2000
to 2007, prior to joining the Company as Executive Chairman of the Board, Mr.
Nicosia was the founder and Chief Executive Officer and served as a director of
Dermacia, Inc. While founding Dermacia, Inc., in 2002, Mr. Nicosia, co-founded
Quantum Sphere, Inc. and served as a director until 2004.  Mr. Nicosia
also currently sits on the Board of Directors and is a principal of Integrity,
Equity, and is a director of several private companies. Mr. Nicosia received his
Bachelor of Arts degree from Brigham Young University and an MBA degree from
Pepperdine University.  Mr. Nicosia had been an executive officer and
director of Dermacia, Inc., a private medical cosmetic company.  In
2008 Dermacia became insolvent and was subject to foreclosure proceedings by its
principal creditor.





25





Dr. Tannin Fuja, PhD, age 32, has served as a
director and as Chief Executive Officer of our Company since March, 2008. Prior
to joining our company, from 2004 to 2006, Dr. Fuja headed the Molecular and
Cell Biology Research Group at the National Center for Voice and Speech, and was
a Member of the Scientific Advisory Board for Dermacia, Inc. and served as an
adjunct assistant professor in the Department of Speech Pathology and Audiology
at the University of Iowa. From 2004 through the present, Dr. Fuja is a Member
of the University of Iowa Center on Aging.  From 2005, through the
present, Dr. Fuja serves as a Member of the Holden Comprehensive Cancer
Center.  From 2006 through the present, Dr. Fuja serves as an Adjunct
Professor in the Department of Anatomy and Cell Biology at Carver College of
Medicine, University of Iowa. Dr. Fuja received his Bachelors of Science degree
from Brigham Young University, a certificate in Human Subject Research Ethics
from the University of Washington (Seattle) and his Doctorate in Biological
Sciences in the Department of Developmental and Cell Biology from the University
of California, Irvine.







Executive
Officers




Name
                    
                    Age
                    
                    PositionMatthew
      Nicosia
                    
                    35
                    
                    Executive
      Chairman of the BoardDr.
      Tannin Fuja, PhD
                    
                    33
                    
                    Chief
      Executive Officer, President, Chief ScientistEd
      Corrente
                    
                    47
                    
                    Chief
      Financial
Officer





Ed Corrente, age 47, is a
Certified Public Accountant and has been a consultant to our Company, acting as
CFO since March 2008 and became an employee of
our company, serving as the Chief Financial Officer since September,
2008, working on a part-time basis.  Prior to joining our company,
from October, 2007 to September 2008, Mr. Corrente was employed
as the Chief Financial Officer of Dermacia, Inc., a private medical cosmetic
company that was insolvent and was subject to foreclosure proceedings by its
principal creditor. From October 2006 to September 2007 he was a consultant
to Dermacia.  Between December 2000 and April 2007, Mr.
Corrente was the Chief Financial Officer and Vice President of Finance for
Thuris Corporation and Accenx Technologies, Inc.  He was
previously with Ernst and Young for approximately 16 years, working in
its Toronto, Canada and Orange County, California offices.  Mr.
Corrente is a member of the American Institute of Certified Public Accountants
and the California Society of CPA’s.  Mr. Corrente obtained
his Bachelors degree at the University of Toronto,
Canada.




Key
Employees




Dr. YingYing Zhou,
PhD, has served as our
Cryobiology Program Manager since April, 2008.  Prior to that time,
from 2001 to 2007, Dr. Zhou worked for HNI Corporation, where she served as
Senior Scientist. From 1996 to 2001 Dr. Zhou was a Graduate Student Researcher
for the University of California, Berkley.  Dr. Zhou has over ten
years of research experience, five of which have been in research and
development, product testing, protocol, and manufacturing process
design.  Dr. Zhou received her Bachelor’s and Master’s Degree in
Mechanical engineering from Tsinghua University in China and received her
Doctorate in Mechanical engineering from the University of California,
Berkley.




Family Relationships.There
are no family relationships among the directors and executive officers of the
company.


26





Compliance
with Section 16(a) of the Securities Exchange Act of 1934




Section 16(a)
of the Securities Exchange Act of 1934 requires the Company’s directors and
executive officers and persons who own more than ten percent of a registered
class of the Company’s equity securities to file with the Securities and
Exchange Commission (the “SEC”) initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and ten-percent stockholders are required by SEC regulations
to furnish the Company with copies of all Section 16(a) forms they file. To
the Company’s knowledge, based solely on the review of copies of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended December 31, 2008, all of the
Company’s officers, directors and ten-percent stockholders complied with all
applicable Section 16(a) filing requirements.





Code
of Ethics




We have
adopted a code of business conduct and ethics that applies to our directors,
officers and all employees. The code of business conduct and ethics is posted on
our website at www.vivakor.com. The code of business conduct and ethics may be
also obtained free of charge by writing to Vivakor, Inc., Attn: Chief Executive
Officer, 2590 Holiday Road, Suite 100, Coralville, Iowa 52241.





Item
11. Executive Compensation





The
following summary compensation table sets forth information concerning
compensation for services rendered in all capacities during our past two fiscal
years awarded to, earned by or paid to each of the following individuals. Salary
and other compensation for these officers and employees are set by the Board of
Directors, except for employee compensation which is set by officers of the
Company.





Executive
Compensation




Summary
Compensation Table.  The following summary compensation table
sets forth certain information concerning compensation for services rendered in
all capacities during our past two fiscal years awarded to, earned by or paid to
our Chief Executive Officer and our other two highest paid executive officers
during the last fiscal year (the Named Executives) for the last two fiscal
years.





(1)Name
      and Principal Position
                
                Year
                
                Salary
                
                Bonus
                
                Option
                  Awards
                
                All
      Other
                  Compensation
                
                Total
                  CompensationDr.
      Tannin Fuja, PhD
                
                
                2008
                
                
                $
                205,863
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                205,863Chief
      Executive Officer
                
                
                2007
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -President,
      Chief ScientistMatt
      Nicosia (2)
                
                
                2008
                
                
                $
                93,000
                
                
                $
                -
                
                
                $
                -
                
                
                $
                245,272
                
                
                $
                338,272Exec.
      Chairman of the Board
                
                
                2007
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Ed
      Corrente (2)
                
                
                2008
                
                
                $
                69,063
                
                
                $
                -
                
                
                $
                -
                
                
                $
                93,735
                
                
                $
                162,798Chief
      Financial Officer
                
                
                2007
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -





(1)
            An
      officer and director purchased HealthAmerica shares at price per share
      that was lower than the price per share paid by Vivakor for the
      HealthAmerica shares it purchased.  These amounts include the
      difference between the price per share paid by the executives and the
      price per share paid by Vivakor multiplied by the number of shares
      purchased by the executives. The difference is recorded as a noncash stock
      compensation expense in the accompanying financial statements for the year
      ended December 31, 2008.  In connection with Vivakor’s
      acquisition of approximately 84% of HealthAmerica’s outstanding common
      stock, the shareholders of HealthAmerica received Vivakor common shares.
      These amounts also include the value of the Vivakor shares received by
      these executives as part of the HealthAmerica
  transaction.


(2)
            Worked
      on a part-time basis and entire salary earned in 2008 has been accrued and
      is unpaid.


27




Compensation of
Other Named Executives.   None of our Named Executive
Officers are currently employed under employment agreements.




Outstanding
Equity Awards at Fiscal Year End.  There were no outstanding
equity awards as of December 31, 2008.





2008 Stock
Incentive Plan.On October 23, 2008, our Board of Directors
unanimously approved our 2008 Stock Incentive Plan (the “2008 Plan”). The
purpose of the 2008 Plan is to retain current, and attract new, employees,
directors, consultants and advisors that have experience and ability, along with
encouraging a sense of proprietorship and interest in the Company’s development
and financial success. The Board of Directors believes that option grants and
other forms of equity participation are an increasingly important means of
retaining and compensating employees, directors, advisors and consultants. The
2008 Plan authorizes us to issue up to 7,500,000 shares of our common stock
which represented slightly less than 15% of our outstanding shares at the time
the 2008 Plan was adopted. The 2008 Plan allows us to grant tax-qualified
incentive stock options, non-qualified stock options and restrictive stock
awards to employees, directors and consultants of our
company.   As of December 31, 2008, no options or awards had been
granted under the 2008 Plan.




Compensation of
Non-Employee Directors.  We currently have no non-employee
directors and no compensation was paid to non-employee directors in the fiscal
year ended December 31, 2008.  We intend during 2009 to identify
qualified candidates to serve on the Board of Directors and to develop a
compensation package to offer to members of the Board of Directors and its
Committees.





Audit,
Compensation and Nominating Committees




As noted
above, we intend to apply for listing our common stock on the OTC Electronic
Bulletin Board, which does not require companies to maintain audit, compensation
or nominating committees. Considering the fact that we are an early stage
company, we do not maintain standing audit, compensation or nominating
committees. The functions typically associated with these committees are
performed by the entire Board of Directors which currently consists of two
members, none of whom is considered independent.





Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters




Beneficial
Ownership of Common Stock




The
following table sets forth, to the knowledge of the Company, certain information
regarding the beneficial ownership of the Company’s Common Stock as of June 30,
2009, by (i) each person known by the Company to be the beneficial owner of
more than 5% of the outstanding Common Stock, (ii) each of the Company’s
directors, (iii) each of the named executive officers in the Summary
Compensation Table and (iv) all of the Company’s executive officers and
directors as a group. Except as indicated in the footnotes to this table, the
Company believes that the persons named in this table have sole voting and
investment power with respect to the shares of Common Stock
indicated.




Directors,
                Officers
      and 5%
                Stockholders
      (1)
            
            Shares
              Beneficially
              Owned
      (2)
            
            
            Percent
      of
              Common Stock
              Beneficially Owned (2)Matt
      Nicosia
            
            785,000
            (3)
            
            1.6Tannin
      Fuja
            
            16,975,000
            
            
            33.5Ed
      Corrente
            
            775,000
            (4)
            
            1.5NFG,
      Inc.
            
            22,480,219
            (5)
            
            44.4All
      executive officers and directors as a group (3 persons)
            
            18,535,000
            
            
            36.6





28







(1)
            Except
      as otherwise indicated, the address of such beneficial owner is at the
      Company’s principal executive offices, 2590 Holiday Road, Suite 100,
      Coralville, IA 52241.




(2)
            Applicable
      percentage of ownership at June 30, 2009 is based upon 50,660,660 shares
      of Common Stock outstanding. Beneficial ownership is determined in
      accordance with the rules of the Securities and Exchange Commission and
      includes voting and investment power with respect to shares shown as
      beneficially owned. Shares of Common Stock subject to options or warrants
      currently exercisable or exercisable within 60 days of June 30, 2009 are
      deemed outstanding for computing the shares and percentage ownership of
      the person holding such options or warrants, but are not deemed
      outstanding for computing the percentage ownership of any other person or
      entity.




(3)
            Beneficial
      ownership of these shares is shared and held by the Nicosia Family
      Trust.




(4)
            Beneficial
      ownership of these shares is shared and held by the Corrente Family
      Trust.(5)
            The
      address of this beneficial owner is 3941 South Bristol Street, Suite D,
      #540  Santa Ana, CA 92704





Item
13. Certain Relationships and Related Transactions, and Director
Independence





It
is our practice and policy to comply with all applicable laws, rules and
regulations regarding related-person transactions, including the Sarbanes-Oxley
Act of 2002. A related person is an executive officer, director or more than 5%
stockholder of Vivakor, including any immediate family members, and any entity
owned or controlled by such persons. Our Board of Directors (excluding any
interested director) is charged with reviewing and approving all related-person
transactions, and a special committee of our Board of Directors is established
to negotiate the terms of such transactions. In considering related-person
transactions, our Board of Directors takes into account all relevant available
facts and circumstances.





Loans
and Advances from Affiliates




During 2008, an officer/shareholder
personally paid Company expenditures (primarily including lab and office
equipment and supplies) aggregating $20,648.  The officer/shareholder
has not been reimbursed and the balance payable is noninterest
bearing.





Through
December 31, 2008, NFG advanced or paid Company expenditures (primarily
including payroll, legal fees, lab and office equipment and supplies)
aggregating $228,877. NFG has not been repaid any amounts and the balance due is
noninterest bearing.





On June
30, 2008, the Company purchased office and lab furniture and equipment from a
stockholder at a total cost of $87,450. The stockholder financed the equipment
with a note agreement that that is secured by the assets purchased. The note
bears interest at 14% per annum and was due on December 31,
2008.  Interest expense during the year ended December 31, 2008
totaled $6,356 and was added to the note balance. The note was not paid on
December 31, 2008 and is continuing on a month to month basis.  The
note contained a contingent beneficial conversion feature that was triggered on
December 31, 2008 when the Company was unable to repay the balance
due.  The conversion feature gives the note holder the option to be
repaid with common stock with piggyback registration rights if the Company is
unable to repay the balance due upon maturity. The number of shares to be issued
in this case would be equal to the outstanding principal plus accrued and unpaid
interest divided by 80% of the average stock price 30 days prior to the maturity
date.  Since the contingency was resolved during the year, the $18,761
fair value of the beneficial conversion feature was recognized as interest
expense during the year ended December 31, 2008.Our Board of
Directors believes that the loan was on terms that are fair and reasonable to
our company and no less favorable than those that would be available from an
unaffiliated third party in an arms’-length transaction.





Revenues





Approximately
99% of our revenue in 2008 was from a company in which one of our directors and
one of our officers were officers and shareholders of.


29










Acquisition
of HealthAmerica




On
October 20, 2008, we effectively acquired the assets (patents and technology
related to medical record bar coding and magnetic resonance imaging (MRI)
systems) of HealthAmerica, Inc., a company that has had no significant
operations within the last four years, by acquiring 25,000,000 shares of its
common stock in exchange for (i) a promissory note in the principal amount of
$1,500,000 bearing interest at 4% per annum and (ii) 5,000,000 shares of our
common stock.  Certain officers, directors and affiliates of our
company, directly or indirectly, were shareholders of HealthAmerica and received
shares of our common stock in exchange for their HealthAmerica
shares.  Affiliates of our company owned or controlled, directly or
indirectly 1,085,000 shares of HealthAmerica common stock, representing
approximately 21.7% of HealthAmerica’s outstanding shares prior to
acquisition.




Director
Independence




Our Board
of Directors has adopted the definition of “independence” as described under the
Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) Section 301, Rule 10A-3 under the
Securities Exchange Act of 1934 (the Exchange Act) and NASDAQ Rules 4200 and
4350. Our Board of Directors has determined that none of its members meet the
independence requirements.





Item
14. Principal Accountant Fees and Services





The firm
of McGladrey & Pullen, LLP currently serves as the Company’s independent
auditors. The Board of Directors of the Company, in its discretion, may direct
the appointment of different public accountants at any time during the year, if
the Board believes that a change would be in the best interests of the
stockholders. The Board of Directors has considered the audit fees, audit
related fees, tax fees and other fees paid to the Company's accountants, as
disclosed below, and had determined that the payment of such fees is compatible
with maintaining the independence of the accountants.








Year
      ended
                    December
      31,
                    2008
                  
                  
                  Year
      ended
                    December
      31,
                    2007Audit
      fees
                  
                  $
                  25,000
                  
                  
                  $
                  6,457Audit-related
      fees
                  
                  
                  39,943
                  
                  
                  
                  -Tax
      fees
                  
                  
                  -
                  
                  
                  
                  -All
      other fees
                  
                  
                  -
                  
                  
                  
                  -Totals
                  
                  $
                  64,943
                  
                  
                  $
                  6,457








Audit
Fees


Audit
fees for the years ended December 31, 2008 and 2007 consist of the aggregate
fees billed for the audit of the Company’s annual financial statements for the
years ended December 31, 2008 and 2007.





Audit-Related
Fees


Audit
–related fees for the year ended December 31, 2008 consist of fees related to
Company’s registration statement filed on form S-1.





Tax
Fees


No
professional services were rendered by McGladrey & Pullen, LLP for tax
compliance, tax advice or tax planning for the years ended December 31, 2008 and
2007.





All
Other Fees


No other
professional services were rendered by McGladrey & Pullen, LLP for the years
ended December 31, 2008 and 2007.


30




PART
IV





Item
15. Exhibits and Financial Statement Schedules





(a)
            List
      of documents filed as part of this
report:




(1)
            Financial
      Statements




Reference
is made to the Index to Financial Statements on page F-1, where these documents
are listed.




(2)
            Financial
      Statement Schedules




The
financial statement schedules have been omitted because the required information
is not   applicable, or not present in amounts sufficient to
require submission of the schedules, or because the information is included in
the financial statements or notes thereto.




(3)
            Exhibits




See (b)
below.





(b)
            Exhibits





Exhibit
                  Number
                
                Exhibit
      Description3.1
                
                Articles
      of Incorporation of Vivakor, Inc. dated April 30,
2008.*3.1.1
                
                Amendment
      to Articles of Incorporation of Vivakor, Inc. dated September 5,
      2008.*3.1.2
                
                Articles
      of Conversion from limited liability company to corporation dated April
      30, 2008.*3.1.3
                
                Limited
      liability company Articles of Organization of Genecular Holdings, LLC
      dated November 1, 2006.*3.2
                
                Bylaws
      dated April 30, 2008.*10.1
                
                2008
      Incentive Plan.*10.2
                
                Form
      of Stock Option Agreement under the Vivakor, Inc. 2008 Incentive
      Plan.*10.3
                
                Form
      of Restricted Stock Award and Agreement under the Vivakor, Inc. 2008
      Incentive Plan.*10.4
                
                Acquisition
      Agreement and Plan of Acquisition, dated as of September 8,
      2008.*10.5
                
                Secured
      Nonrecourse Promissory Note, dated September 18, 2008.*10.6
                
                Pledge
      and Security Agreement, dated as of September 30,
2008.*10.7
                
                Subscription
      Agreement.*11.1
                
                Statement
      re Computation of Per Share
Earnings


31





12.1
                    
                    Statement
      re computation of ratios14.1
                    
                    Vivakor,
      Inc. Code of Ethics.*21.1
                    
                    Subsidiaries
      of the registrant.31.1
                    
                    Certification
      of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
      promulgated under the Securities and Exchange Act of 1934, as
      amended.31.2
                    
                    Certification
      of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
      promulgated under the Securities and Exchange Act of 1934, as
      amended.32.1
                    
                    Certifications
      of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002.





*
Previously filed as Exhibits to the Registration Statement on Form S-1 (file no.
333-155686)







32







SIGNATURES





In
accordance with Section 13(a) or 15(d) of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereto duly
authorized.










Vivakor,
      Inc.Dated:
      July 8, 2009
                By:/s/
      Tannin,
      FujaTannin
      Fuja, PhDPresident
      and Chief Executive OfficerDated:
      July 8, 2009
                By:
      /s/ Ed
      CorrenteEd
      CorrenteChief
      Financial Officer








Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
duly signed below by the following persons on behalf of the registrant and in
the capacities and dates indicated.







Signatures
                
                Title
                
                Date/s/ Matt
      Nicosia
                
                Chairman
      of the Board
                
                July
      8, 2009Matt
      Nicosia/s/ Tannin
      Fuja
                
                Director
                
                July
      8, 2009Tannin
      Fuja, PhD







33













VIVAKOR,
INC.




Index
to Consolidated Financial Statements




Consolidated
      Financial Statements of Vivakor, Inc.Report
      of Independent Registered Public Accounting Firm
              F-2Consolidated
      Balance Sheets as of December 31, 2008 and 2007
              F-3Consolidated  Statements
      of Operations for the Years Ended December 31, 2008 and
    2007
              F-4Consolidated  Statements
      of Stockholders’/Member’s Equity (Deficit) for the Years ended
      December  31, 2008 and 2007
              F-5Consolidated  Statements
      of Cash Flows for the Years Ended December 31, 2008 and
    2007
              F-6Notes
      to the Consolidated  Financial Statements
              F-7























F-1




REPORT
OF INDEPENDENT REGISTERED


PUBLIC
ACCOUNTING FIRM






To the
Board of Directors


Vivakor,
Inc.


Coralville,
Iowa




We have
audited the accompanying balance sheets of Vivakor, Inc. as of December 31, 2008
and 2007, and the related statements of operations, statement of stockholders’
/member’s equity (deficit) and cash flows for the years then
ended.  These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audits.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company’s ability to become a profitable operating company is
dependent upon obtaining financing adequate to fulfill its research and market
introduction activities, and achieving a level of revenues adequate to support
the Company’s cost structure. This raises substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 2 to the financial statements. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Vivakor, Inc. as of December 31,
2008 and 2007, and the results of its operations and its cash flows for the
years then ended, in conformity U.S. generally accepted accounting
principles.






/s/
McGladrey & Pullen, LLP





Cedar
Rapids, Iowa


July 8,
2009










F-2




Vivakor,
      Inc.
                Consolidated
      Balance Sheets





December
      31,2008
                                
                                
                                2007AssetsCurrent
      asset-cash and cash equivalents
                                $
                                145,669
                                
                                
                                $
                                -Deferred
      offering costs
                                
                                111,316
                                
                                
                                
                                -Deposit
                                
                                3,700
                                
                                
                                
                                -Property
      and equipment, net
                                
                                112,578
                                
                                
                                
                                -Patents,
      net
                                
                                3,586,036
                                
                                
                                
                                -$
                                3,959,299
                                
                                
                                $
                                -Liabilities
      and Stockholders' / Member’s Equity (Deficit)Current
      liabilitiesAccounts
      payable
                                $
                                136,920
                                
                                
                                $
                                2,000Accrued
      wages
                                
                                298,496
                                
                                
                                
                                -Loans
      and advances from related parties
                                
                                343,331
                                
                                
                                
                                18,500Grant
      payable
                                
                                150,222
                                
                                
                                
                                -Note
      payable
                                
                                1,481,648
                                
                                
                                
                                -Total
      current liabilities
                                
                                2,410,617
                                
                                
                                
                                20,500Deferred
      income taxes
                                
                                1,255,112
                                
                                
                                
                                -Minority
      interest
                                
                                96,979
                                
                                
                                
                                -Commitments
      (Note 9)Stockholders'/member's  equity
      (deficit):Preferred
      stock, $.001 par value; 10,000,000 sharesin
      2008 and none in 2007 authorized; none issued and
      outstanding
                                
                                -
                                
                                
                                
                                -Common
      stock, $.001 par value; 242,500,000 sharesin
      2008 and none in 2007 authorized; 50,225,877 shares in 2008and
      none in 2007, issued and outstanding
                                
                                50,226
                                
                                
                                
                                -Additional
      paid-in capital
                                
                                1,195,325
                                
                                
                                
                                -Retained
      deficit
                                
                                (1,048,960
                                )
                                
                                
                                (20,500
                                )Total
      stockholders'/member's equity (deficit)
                                
                                196,591
                                
                                
                                
                                (20,500
                                )$
                                3,959,299
                                
                                
                                $
                                -




See
accompanying notes.


F-3













Vivakor,
      Inc.
              Consolidated
      Statements of Operations





Year
      Ended
                          December
      31,2008
                        
                        
                        2007Research
      Revenue
                        
                        $
                        194,700
                        
                        
                        $
                        -Operating
      ExpensesCost
      of research services
                        
                        
                        122,321
                        
                        
                        
                        -Research
      and development
                        
                        
                        443,107
                        
                        
                        
                        -Noncash
      stock compensation
                        
                        
                        339,102
                        
                        
                        
                        -General
      and administrative
                        
                        
                        328,251
                        
                        
                        
                        20,500Total
      operating expenses
                        
                        
                        1,232,781
                        
                        
                        
                        20,500Loss
      from operations
                        
                        
                        (1,038,081
                        )
                        
                        
                        (20,500)Interest
      expense
                        
                        
                        36,987
                        
                        
                        
                        -Loss
      before income tax and minority interest
                        
                        
                        (1,075,068
                        )
                        
                        
                        (20,500)Minority
      interest in net loss of consolidated subsidiary
                        
                        
                        (3,328
                        )
                        
                        
                        -Benefit
      for income taxes
                        
                        
                        (43,280
                        )
                        
                        
                        -Net
      loss
                        
                        $
                        (1,028,460
                        )
                        
                        $
                        (20,500)Loss
      per share:Basic
      and diluted
                        
                        $
                        (0.02
                        )
                        
                        
                        n/aWeighted
      average shares - Basic and diluted
                        
                        
                        46,102,508
                        
                        
                        
                        n/a




See
accompanying notes.


F-4




Vivakor,
      Inc.
              Consolidated
      Statements of Stockholders’ / Member’s Equity (Deficit)








Preferred
      Stock
                  
                  
                  Common
      Stock
                  
                  
                  Additional
                    Paid-In
                  
                  
                  Member’s
      (Deficit) / Retained Earnings
                  
                  
                  Total
      Shareholders’/ Members EquityShares
                  
                  
                  Amount
                  
                  
                  Shares
                  
                  
                  Amount
                  
                  
                  Capital
                  
                  
                  (Deficit)
                  
                  
                  (Deficit)Member’s
      equity balance December 31, 2006
                  
                  
                  –
                  
                  
                  $
                  –
                  
                  
                  
                  –
                  
                  
                  $
                  –
                  
                  
                  $
                  –
                  
                  
                  $
                  –
                  
                  
                  $
                  –Net
      loss
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  (20,500
                  )
                  
                  
                  (20,500
                  )Member’s
      equity balance  December 31, 2007
                  
                  
                  –
                  
                  
                  $
                  –
                  
                  
                  
                  –
                  
                  
                  $
                  –
                  
                  
                  $
                  –
                  
                  
                  $
                  (20,500
                  )
                  
                  $
                  (20,500
                  )Membership
      interests issued to employees
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  120
                  
                  
                  
                  120Issuance
      of  common stock in exchange for membership interests upon
      conversion of Company from LLC to Corporation
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  45,153,500
                  
                  
                  
                  18,620
                  
                  
                  
                  –
                  
                  
                  
                  (120
                  )
                  
                  
                  18,500Issuance
      of common shares
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  133,000
                  
                  
                  
                  74
                  
                  
                  
                  58,121
                  
                  
                  
                  –
                  
                  
                  
                  58,195Reclassification
      for 2.425 to 1 stock split
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  26,593
                  
                  
                  
                  (26,593
                  )
                  
                  
                  –
                  
                  
                  
                  –Employee
      forfeiture of unvested shares
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  (60,623
                  )
                  
                  
                  (61
                  )
                  
                  
                  36
                  
                  
                  
                  –
                  
                  
                  
                  (25
                  )Shares
      issued in acquisition
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  5,000,000
                  
                  
                  
                  5,000
                  
                  
                  
                  1,145,000
                  
                  
                  
                  –
                  
                  
                  
                  1,150,000Discount
      on note with beneficial conversion feature
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  18,761
                  
                  
                  
                  –
                  
                  
                  
                  18,761Net
      loss
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  (1,028,460
                  )
                  
                  
                  (1,028,460
                  )Stockholders’
      equity balances December 31, 2008
                  
                  
                  –
                  
                  
                  $
                  –
                  
                  
                  
                  50,225,877
                  
                  
                  $
                  50,226
                  
                  
                  $
                  1,195,325
                  
                  
                  $
                  (1,048,960
                  )
                  
                  $
                  196,591











See
accompanying notes.


F-5





Vivakor,
      Inc.
                        Consolidated
      Statements of Cash FlowsYear
      Ended
                        December
      31,2008
                      
                      
                      2007Operating
      ActivitiesNet
      loss
                      
                      $
                      (1,028,460
                      )
                      
                      $
                      (20,500
                      )Depreciation
      and amortization
                      
                      
                      138,259
                      
                      
                      
                      -Stock
      compensation expense
                      
                      
                      339,102
                      
                      
                      
                      -Interest
      added to notes payable
                      
                      
                      18,226
                      
                      
                      
                      -Amortization
      of discount on note with conversion feature
                      
                      
                      18,761
                      
                      
                      
                      -Minority
      interest in net loss of consolidated subsidiary
                      
                      
                      (3,328
                      )
                      
                      
                      -Deferred
      income taxes
                      
                      
                      (43,280
                      )
                      
                      
                      -Adjustments
      to reconcile net loss to net cash providedby
      operating activities:Changes
      in operating assets and liabilities:Accounts
      payable
                      
                      
                      39,558
                      
                      
                      
                      2,000Accrued
      wages
                      
                      
                      298,496
                      
                      
                      
                      -Loans
      and advances from related parties
                      
                      
                      249,525
                      
                      
                      
                      18,500Net
      cash provided by operating activities
                      
                      
                      26,859
                      
                      
                      
                      -Investing  activitiesLong-term
      deposit
                      
                      
                      (3,700
                      )
                      
                      
                      -Purchases
      of furniture, equipment and leasehold improvements
                      
                      
                      (39,731
                      )
                      
                      
                      -Net
      cash used in investing activities
                      
                      
                      (43,431
                      )
                      
                      
                      -Financing
      activitiesPayment
      of deferred offering costs
                      
                      
                      (15,954
                      )
                      
                      
                      -Payments
      on note payable
                      
                      
                      (30,000
                      )
                      
                      
                      -Proceeds
      from grant
                      
                      
                      150,000
                      
                      
                      
                      -Net
      proceeds from sale of common stock
                      
                      
                      58,195
                      
                      
                      
                      -Net
      cash provided by financing activities
                      
                      
                      162,241
                      
                      
                      
                      -Net
      increase in cash and cash equivalents
                      
                      
                      145,669
                      
                      
                      
                      -Cash
      and cash equivalents- beginning of year
                      
                      
                      -
                      
                      
                      
                      -Cash
      and cash equivalents- end of year
                      
                      $
                      145,669
                      
                      
                      $
                      -Supplemental
      Disclosure of Cash Flow Information:Interest
      paid
                      
                      $
                      5,000
                      
                      
                      $
                      -Noncash
      transactions:Note
      issued to shareholder for purchase of furniture and
    equipment
                      
                      $
                      87,450
                      
                      
                      $
                      -Unpaid
      deferred offering costs
                      
                      $
                      95,362
                      
                      
                      $
                      -Issuance
      of note payable  to acquire HealthAmerica shares and
      patents
                      
                      $
                      1,500,000
                      
                      
                      $
                      -Issuance
      of shares to acquire HealthAmerica shares and patents
                      
                      $
                      1,150,000
                      
                      
                      $
                      -Gross
      up of acquired patents for deferred income taxes
                      
                      $
                      1,298,392
                      
                      
                      $
                      -Issuance
      of shares to founder as payment of amount due
                      
                      $
                      18,500
                      
                      
                      $
                      -





See
accompanying notes.







F-6








Vivakor,
Inc.


Notes
to Consolidated Statements


For
the Years ended December 31, 2008 and 2007










1.    
Organization and Business




Vivakor,
Inc. (the “Company”) is a Nevada corporation based in Coralville, Iowa and is a
trans-disciplinary biomedical company involved in the discovery, development and
commercialization of a broad range of medical devices and pharmaceuticals to
improve human health. The Company also performs contract research and
development in molecular biology and devices engineering. The Company was
originally organized as Genecular Holdings LLC, a Nevada limited liability
company on November 1, 2006.  On April 30, 2008, the limited liability
company was converted into a Nevada corporation and changed its name to Vivakor,
Inc.





The
Company commenced a capital formation activity to submit a Registration
Statement on Form S-1 to the SEC to register and sell in a self-directed
offering 15,000,000 shares of newly issued common stock at an offering price of
$0.23 per share for proceeds of up to $3,450,000.   The
Registration also registered 5,133,000 of the Company’s outstanding shares of
common stock on behalf of selling stockholders, for which the Company will not
receive any of the proceeds from sales of these shares.  The
Registration Statement on Form S-1 was filed with the SEC on November 25, 2008
and declared effective on December 22, 2008.  A creditor of the
Company purchased 434,783 shares in exchange for a $100,000 reduction of the
Company’s existing indebtedness payable to such creditor (Note 8) and, as of
March 3, 2009, the Company received stock subscriptions for 14,300,000 newly
issued shares of common stock at an offering price of $0.23 per share and closed
the offering.  The consideration received from the subscription
agreements was in the form of notes receivable with maturity dates 90 days after
the note dates.  The notes were secured by the subscribed shares and
such shares would not be released to the subscribers until payment was received
by the Company.  As of March 31, 2009, the Company had not received
any of the purchase price for the shares and, as a result, on April 2,
2009, the Company cancelled and terminated each of the subscription agreements,
with the consent of the subscribers; terminated its public offering; and
deregistered the 14,300,000 unsold shares.




As of the
second quarter 2008, the Company reached operating stage. Therefore, these
financial statements have been prepared as an operating stage company rather
than a development stage company.





2.    
Summary of Significant Accounting Policies





Principles
of Consolidation





The
accompanying consolidated financial statements include the accounts of Vivakor,
Inc. and is majority owned subsidiary, HealthAmerica, Inc. (“HealthAmerica”), a
Nevada corporation.  On October 20, 2008, the Company effectively
acquired HealthAmerica’s assets by purchasing approximately 84% of its
outstanding shares; accordingly, HealthAmerica’s financial position as of
December 31, 2008 and its results of operations from October 20, 2008 to
December 31, 2008 were consolidated with the Company’s financial,
statements. See Note 3 for additional information related to this acquisition.
All intercompany transactions have been eliminated in
consolidation.





F-7


Vivakor,
Inc.


Notes
to Consolidated Statements (Continued)







2.    
Summary of Significant Accounting Policies (Continued)





Basis
of Presentation and Management’s Plan





The
consolidated financial statements have been prepared assuming that the Company
will continue as a going concern. This basis of accounting contemplates the
recovery of the Company’s assets and the satisfaction of its liabilities in the
normal course of business. Sinceinception, the Company
has been engaged in obtaining financing, recruiting personnel, establishing
office facilities and research and development activities.  During the
second quarter of 2008, the Company commenced providing research services and,
during the fourth quarter of 2008, the Company commenced a capital formation
activity that was terminated in April 2009 with no cash proceeds being received
by the Company (Note 10).





The
Company does not have sufficient cash on hand to fund its administrative and
other operating expenses or its proposed research and development and sales and
marketing programs for the next twelve months. The Company’s ability to become a
profitable operating company is dependent upon obtaining financing adequate to
fulfill its research and market introduction activities, and achieving a level
of revenues adequate to support the Company’s cost structure. Management intends
to finance the Company’s operations from loans from current stockholders, future
public and private debt and equity offerings, proceeds from research and
development services provided to others or from strategic arrangements with
third parties.  However, there can be no assurance that additional
capital will be available, which may affect the Company’s abilityto continue as a going
concern. The Company currently has no agreements, arrangements or understandings
with any person to obtain funds through bank loans, lines of credit or any other
sources. The accompanying financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result from the
possible inability of the Company to continue as a going concern.





Stock
Split





The Board
of Directors authorized a 2.425 for 1 stock split in the form of a stock
dividend for shareholders of record on September 5, 2008. All share and per
share data presented in the accompanying consolidated financial statements and
throughout these notes have been retroactively restated to reflect this stock
split.  Par value of the stock remains at $0.001, accordingly, a
$26,593 reclassification was made from additional-paid-in-capital to common
stock for the shares issued as a result of this stock split.





Use
of Estimates




The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. Actual results could differ from
those estimates.





Cash
and Cash Equivalents





The
Company considers all highly liquid short-term investments with maturities of
less than three months when acquired to be cash equivalents.


F-8




Vivakor,
Inc.


Notes
to Consolidated Statements (Continued)





2.    
Summary of Significant Accounting Policies (Continued)




Concentration
of Credit Risk and Off-Balance Sheet Risk




The
Company has no material concentrations of credit risk, nor is it a party to any
financial instruments with material off-balance sheet risk. Financial
instruments that potentially subject the Company to concentration of credit risk
consist primarily of cash and cash equivalents. The Company places its cash and
cash equivalents with major United States financial institutions.




One
customer, that is a related party, accounted for approximately 99% of revenue in
2008.





Deferred
Offering Costs




The
Company defers as an asset the direct incremental costs of raising capital until
such time as the offering is completed. At the time of the completion of the
offering, the costs are charged against the capital raised. Should the offering
be terminated, deferred offering costs are charged to operations during the
period in which the offering is terminated. These costs were expensed in the
first quarter of 2009 as a result of the termination of the offering that was in
process of December 31, 2008 (Note 10).





Fair
Value of Financial Instruments





The
carrying amounts reflected in the consolidated balance sheets for cash and cash
equivalents, accounts payable, accrued wages, loans, advances, notes and grants
payable all approximate their fair values due to their short-term
maturities.




Property
and Equipment




Property
and equipment are recorded at cost and depreciated on a straight-line basis over
the lesser of their estimated useful lives, ranging from three to seven years,
or the life of the lease, as appropriate.





Patent
Costs





Cost to
acquire patents are capitalized and amortized over their estimated useful lives
of five years. Expenditures related to obtaining, maintaining and protecting
patents are charged to expense when incurred, and are included in research and
development expense.





Impairment
of Long-Lived Assets




Long-lived
assets, which primarily consist of equipment, furniture, leasehold improvements
and patents, are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of the assets to the future net cash flows
expected to be generated by such assets. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets. The Company
did not recognize any impairment loss for long-lived assets during the years
ended December 31, 2008 and 2007.


F-9


Vivakor,
Inc.


Notes
to Consolidated Statements (Continued)








2.    
Summary of Significant Accounting Policies (Continued)





Revenue
Recognition




The
Company recognizes revenue when all four of the following criteria are met:
(i) persuasive evidence that an arrangement exists; (ii) delivery of
the products and/or services has occurred; (iii) the fees earned can be
readily determined; and (iv) collectability of the fees is reasonably
assured. The Company recognizes revenue from research contracts as services are
performed under the agreements.





Research
and Development Costs




All
research and development costs, including all related salaries, clinical trial
expenses, regulatory expenses, facility costs and costs to obtain, maintain and
protect patents are charged to expense when incurred.





In June
2007, the FASB ratified Emerging Issue Task Force ("EITF") No. 07-3, "Accounting for Nonrefundable Advance
Payments for Goods or Services to Be Used in Future Research and Development
Activities" ("EITF 07-3"). The EITF concluded that nonrefundable
advance payments for goods or services to be received in the future for use in
research and development activities should be deferred and capitalized. The
capitalized amounts should be expensed as the related goods are delivered or the
services are performed. If an entity's expectations change such that it does not
expect it will need the goods to be delivered or the services to be rendered,
capitalized nonrefundable advance payments should be charged to expense in the
period such determination is made. The Company did not have any nonrefundable
advance payments capitalized at December 31, 2008. The Company adopted
EITF 07-3 on January 1, 2008. The adoption of EITF 07-3 did not
have a material impact on the Company's results of operations, financial
position or cash flows.




Net
Loss Per Share




Basic net
loss per share is calculated by dividing the net loss by the weighted-average
number of common shares outstanding for the period, without consideration for
common stock equivalents. Diluted net loss per common share is computed by
dividing the net loss by the weighted-average number of common share equivalents
outstanding for the period determined using the treasury-stock method if their
effect is dilutive.




Income
Taxes




The
Company uses the liability method of accounting for income taxes as required by
SFAS No. 109, Accounting for Income Taxes.
Under this method, deferred tax assets and liabilities are determined based on
the difference between the financial reporting and the tax reporting basis of
assets and liabilities and are measured using the enacted tax rates and laws
that are expected to be in effect when the differences are expected to reverse.
The Company provides a valuation allowance against net deferred tax assets
unless, based upon the available evidence, it is more likely than not that the
deferred tax assets will be realized.





Through
April 29, 2008, the Company was a limited liability company and its taxable loss
was allocable to the members in accordance with their respective percentage
ownership interests; accordingly, there is no tax provision and no deferred tax
assets or liabilities in 2007.




F-10





Vivakor,
Inc.


Notes
to Consolidated Statements (Continued)









2.    
Summary of Significant Accounting Policies (Continued)




Stock
Options




The
Company follows the provisions of SFAS No. 123R, "Share-Based Payment"
("SFAS 123R"). This statement requires the Company to measure the cost of
employee services in exchange for an award of equity instruments based on the
grant-date fair value of the award and to recognize cost over the requisite
service period. Under the modified prospective transition method, the Company
has not adjusted its financial statements for periods prior to the date of
adoption for the change in accounting. However, the Company will recognize
compensation expense for (1) all share-based payments granted after the
effective date and (2) all awards granted to employees prior to the
effective date that remain unvested on the effective date. The Company
recognizes compensation expense on fixed awards with pro rata vesting on a
straight-line basis over the vesting period of such awards.




Segment
and Geographic Information




The
Financial Accounting Standards Board issued SFAS No. 131, “Disclosures about
Segments of an Enterprise and Related Information” effective in 1998. SFAS No.
131 requires enterprises to report financial information and descriptive
information about reportable operating segments. It also establishes standards
for related disclosures about products and services, geographic areas and major
customers. The Company evaluated SFAS No. 131 and determined that the Company
operates in only one segment.




New
Accounting Pronouncements




In
December 2007, the FASB issued SFAS No. 141R, "Business Combinations"
("SFAS 141R"), a replacement of SFAS No. 141, "Business Combinations."
SFAS 141R applies to all transactions and other events in which an entity
obtains control over one or more other businesses. The statement changes the
principles and requirements for how the acquirer of a business recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed, and any noncontrolling interest in the acquiree. The
statement also provides guidance for recognizing and measuring goodwill acquired
in the business combination and determines what information to disclose to
enable users of the financial statements to evaluate the nature and financial
effects of the business combination. This statement is effective prospectively,
except for certain retrospective adjustments to deferred tax balances, for
fiscal years beginning after December 15, 2008. The Company is currently
evaluating the potential impact, if any, of the adoption of FAS 141R on the
Company’s financial statements.




The
Company adopted the required provisions of SFAS No. 157, Fair Value Measurements
(SFAS No. 157) at the beginning of fiscal year 2008, resulting in no impact to
the Company’s consolidated financial statements. SFAS No. 157 establishes a
framework for measuring fair value, clarifies the definition of fair value and
expands disclosures about fair-value measurements. In general, SFAS No. 157
applies to fair value measurements that are already required or permitted by
other accounting standards and is expected to increase the consistency of those
measurements. SFAS No. 157, as issued, was effective for fiscal years beginning
after November 15, 2007. In February 2008, the FASB issued FASB Staff Position
(FSP) SFAS No. 157-2, Effective Date of FASB Statement No. 157 (FSP SFAS No.
157-2) which deferred the effective date of SFAS No. 157 for one year for
certain nonfinancial assets and nonfinancial liabilities. The Company adopted
the remaining provisions of SFAS No. 157 at the beginning of fiscal year 2009,
which did not result in a material impact to the Company’s financial
statements.




F-11


Vivakor,
Inc.


Notes
to Consolidated Statements (Continued)









2.    
Summary of Significant Accounting Policies (Continued)




New
Accounting Pronouncements (Continued)




In June
2006, the FASB issued Interpretation No. 48, or FIN 48, Accounting for Uncertainty in Income
Taxes — an Interpretation of FAS 109. FIN 48 provides
clarification for the financial statement measurement and recognition of tax
positions that are taken or expected to be taken in a tax return. The Company
adopted FIN 48 effective January 1, 2007. The adoption had no impact on the
financial statements for the years ended December 31, 2008 and
2007.




In
December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements: an amendment of Accounting Research Bulletin
No. 51" ("SFAS 160"). SFAS 160 establishes new accounting
and reporting standards for noncontrolling interests (formally referred to as
"minority interests") in a subsidiary and for the deconsolidation of a
subsidiary. Specifically, the statement requires the recognition of a
noncontrolling interest as equity in the consolidated financial statements and
separate from the parent's equity. The amount of net income attributable to a
noncontrolling interest will be included in consolidated net income on the face
of the income statement. SFAS 160 clarifies that changes in a parent's
ownership interest in a subsidiary that do not result in deconsolidation are
equity transactions if the parent retains its controlling financial interest. In
addition, SFAS 160 requires that a parent recognize a gain or loss in net
income when a subsidiary is deconsolidated. Such gains or losses will be
measured using the fair value of the noncontrolling equity investment on the
deconsolidation date. SFAS 160 also includes expanded disclosure
requirements regarding the interests of the parent and its noncontrolling
interest. SFAS 160 is effective for fiscal years and interim periods within
those fiscal years, beginning on or after December 15, 2008, with early
adoption prohibited. The Company does not believe the adoption of SFAS 160
will have a material impact on its results of operations, financial position or
cash flows.




In March
2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities—an amendment of FASB Statement
No. 133" ("SFAS 161"). SFAS 161 requires enhanced
disclosures about an entity's derivative and hedging activities. SFAS 161
is intended to enhance the current disclosure framework in SFAS No. 133,
"Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"), and requires
additional information about how and why derivative instruments are being used,
how derivative instruments and related hedged items are accounted for under
SFAS 133 and its related interpretations, and how derivative instruments
and related hedged items affect the Company's financial position, financial
performance and cash flow. This statement is effective for financial statements
issued for fiscal years and interim periods beginning after November 15,
2008. The Company does not believe the adoption of SFAS 161 will have a
material impact on its results of operations, financial position or cash
flows.




In
May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" ("SFAS 162"). SFAS 162 identifies the
sources of accounting principles and the framework for selecting the principles
to be used in the preparation of financial statements of nongovernmental
entities that are presented in conformity with Generally Accepted Accounting
Principles ("GAAP") in the United States. This statement is effective
60 days following the SEC's approval of The Public Company Accounting
Oversight Board's related amendments to remove the GAAP hierarchy from auditing
standards. The Company does not believe the adoption of SFAS 162 will have
a material impact on its results of operations, financial position or cash
flows.




F-12




Vivakor,
Inc.


Notes
to Consolidated Statements (Continued)









3.
Acquisition





On
October 20, 2008, the Company effectively acquired the assets of HealthAmerica,
Inc., a Nevada corporation (“HealthAmerica”) by acquiring approximately 84% of
HealthAmerica’s outstanding common shares.   HealthAmerica has a
patented and FDA approved MRI technology that the Company plans to develop and
commercialize. Once completed, the MRI technology is expected to enhance the
results obtained from older MRI systems and is expected to be sold as an upgrade
to these older systems.  HealthAmerica also has a patented medical
Bar-coding technology that the Company acquired but has no immediate plans to
develop. The acquisition was accounted for as an asset purchase because
HealthAmerica was an inactive company with no operations, customers, employees,
liabilities or assets, other than the MRI and bar-coding
technologies.





In the
transaction, the Company acquired 25,000,000 shares of HealthAmerica common
stock in exchange for 5,000,000 shares of Vivakor’s common stock, valued at
$1,150,000, which was distributed pro-rata to all HealthAmerica shareholders,
plus a $1,500,000 secured nonrecourse promissory note to an entity controlled by
the majority shareholder (Note 8).  Prior to the acquisition, an
officer and director of Vivakor had an aggregate 21.7% interest
in   HealthAmerica’s outstanding shares and, after the
acquisition, they held an aggregate of 3.6% interest in HealthAmerica’s
outstanding shares. The portion of the asset purchase attributed to the original
shareholders was recorded at historical costs with the remaining value of
$339,007, related to the interests acquired by the officer and director,
recorded at fair value with a related charge to compensation expense in
2008.





The total
purchase price was allocated as follows:





Patent
                  
                  $
                  3,709,692Deferred
      tax liability
                  
                  
                  (1,298,392
                  )Total
                  
                  $
                  2,411,300













4.    
Property and Equipment




Property
and equipment consists of the following at December 31:




2008
                            
                            
                            2007Office
      furniture and equipment
                            
                            $
                            50,425
                            
                            
                            $
                            -Computer
      equipment and software
                            
                            
                            29,346
                            
                            
                            
                            -Laboratory
      and manufacturing equipment
                            
                            
                            44,910
                            
                            
                            
                            -Leasehold
      improvements
                            
                            
                            2,500
                            
                            
                            
                            -Total
      property and equipment
                            
                            
                            127,181
                            
                            
                            
                            -Less:
      accumulated depreciation
                            
                            
                            (14,603
                            )
                            
                            
                            -Net
      property and equipment
                            
                            $
                            112,578
                            
                            
                            $
                            -





Depreciation
expense was $14,035 and amortization expense for leasehold improvements was $568
in 2008.  There was no depreciation or amortization expense in
2007.




F-13





Vivakor,
Inc.


Notes
to Consolidated Statements (Continued)








5.       Patents




Patents
consist of the following at December 31:




2008
                                            
                                            2007Patents
                                            $
                                            3,709,692
                                            
                                            
                                            
                                            -Accumulated
      amortization
                                            
                                            (123,656
                                            )
                                            
                                            
                                            -Net
      patents
                                            $
                                            3,586,036
                                            
                                            
                                            $
                                            -





Amortization
expense was $123,656 in 2008.  There was no amortization expense in
2007.  Amortization expense for each of the next four years is
estimated to be $741,938 with the remaining $618,284 to be amortized in year
five.





6.    
Loans and Advances From Related Parties and Other Related Party
Transactions





Loans and
advances from related parties consist of the following at December
31:




2008
                                        
                                        2007Advances
      payable to officer
                                        $
                                        20,648
                                        
                                        
                                        $
                                        -Advances
      payable to stockholder/member
                                        
                                        228,877
                                        
                                        
                                        
                                        18,500Note
      payable to stockholder
                                        
                                        93,806
                                        
                                        
                                        
                                        -$
                                        343,331
                                        
                                        
                                        $
                                        18,500








Advances
payable to officer are noninterest bearing and represent Company expenditures
(primarily lab and office equipment and supplies) that were paid for directly by
the officer on behalf of the Company for which the officer has not been
reimbursed.





Advances
payable to stockholder/member is noninterest bearing and represents cash
advances directly to the Company as well as Company expenditures (primarily
payroll, legal fees, lab and office equipment and supplies) that were paid for
directly by the stockholder/member on behalf of the Company for which the
stockholder/member  has not been reimbursed.





On June
30, 2008, the Company purchased office and lab furniture and equipment from a
stockholder at a total cost of $87,450. The stockholder financed the equipment
with a note agreement that that is secured by the assets purchased. The note
bears interest at 14% per annum and was due on December 31,
2008.  Interest expense during the year ended December 31, 2008
totaled $6,356 and was added to the note balance. The note was not paid on
December 31, 2008 and is continuing on a month to month basis.  The
note contained a contingent beneficial conversion feature that was triggered on
December 31, 2008 when the Company was unable to repay the balance
due.  The conversion feature gives the note holder the option to be
repaid with common stock with piggyback registration rights if the Company is
unable to repay the balance due upon maturity. The number of shares to be issued
in this case would be equal to the outstanding principal plus accrued and unpaid
interest divided by 80% of the average stock price 30 days prior to the maturity
date.  Since the contingency was resolved during the year, the $18,761
fair value of the beneficial conversion feature was recognized as interest
expense during the year ended December 31, 2008.





Approximately
99% of the Company’s revenue in 2008 was from a company in which one of the
Company’s directors and one of the Company’s officers were officers and
shareholders of.


F-14
  Vivakor,
Inc.


Notes
to Consolidated Statements (Continued)





7.    
Grant Payable





In
December, 2008, the Company received from the Iowa Department of Economic
Development a $150,000 Demonstration Fund Grant to assist in the development and
commercialization of its CryoVial, CryoKeeper and CryoCarrier products. In the
event certain events occur, including issuing an Initial Public Offering, moving
out of the state of Iowa or selling 51% of the company’s assets or stock, then
the Company would be required to repay the grant proceeds received in a lump sum
plus interest at a rate of 6%.  Due to the filing of the Company’s
Registration on Form S-1, which was declared effective in December 2008, the
Company recorded the grant received as a current liability in the accompanying
consolidated balance sheet.





8.    
Note Payable





The note
payable was incurred in connection with the acquisition of 84% of
HealthAmerica’s outstanding shares on October 20, 2008 (Note 3), is non-recourse
and is secured by the acquired HealthAmerica shares and all of HealthAmerica’s
assets.  The note bears interest at 4% per annum and requires the
Company to make monthly payments of $25,000.  In addition, every 90
days, the Company is required to make additional note payments equal to 10% of
the gross proceeds received from any sales of equity or debt securities, or any
sale or licensing of products or technology until all outstanding principal and
interest are repaid.  As of December 31, 2008, the Company had not
made all of the required monthly payments under the
agreement.   On February 15, 2009, the note holder purchased
434,783 of the Company’s common shares in exchange for a $100,000 reduction of
the note (Note10).  The Company remained in arrears subsequent to year
end through June 30, 2009; however, no action has been taken by the note holder,
which is an entity controlled by one of the Company’s
shareholders.  This shareholder received his shares in the Company as
part of the HealthAmerica acquisition transaction.





9.    
Commitments





On July
10, 2008, the Company entered into a lease for approximately 3,000 square feet
of office and lab space. The lease commenced on August 1, 2008 and required the
Company make a one-time $2,500 payment for tenant improvements, which was
capitalized by the Company, and monthly lease payments of $3,700 through July
10, 2010.  Rent expense totaled $18,500 in 2008.  There was
no rent expense in 2007.  Future payments under the lease total
$70,300, including $44,400 in 2009 and $25,900 in 2010.





10.    
Equity Transactions





In March
2008, the Company hired six employees, a number of which were granted membership
interests aggregating less than 1%. The aggregate of these membership interests
was valued at $120, which was recorded as noncash stock compensation
expense.




In
connection with the Company’s conversion from a limited liability company to a
corporation on April 30, 2008, the Company issued 44,862,500 shares of common
stock to the founding member and issued 291,000 shares to certain employees,
based on their respective limited liability company percentage interests prior
to conversion.




Between
April 30, 2008 and September 30, 2008, the Company issued 133,000 shares of
common stock at $0.50 per share for aggregate net proceeds of
$58,195.





F-15






Vivakor,
Inc.


Notes
to Consolidated Statements (Continued)





10.     Equity
Transactions(continued)





The
Company commenced a capital formation activity to submit a Registration
Statement on Form S-1 to the SEC to register and sell in a self-directed
offering 15,000,000 shares of newly issued common stock at an offering price of
$0.23 per share for proceeds of up to $3,450,000.   The
Registration also registered 5,133,000 of the Company’s outstanding shares of
common stock on behalf of selling stockholders, for which the Company will not
receive any of the proceeds from sales of these shares.  The
Registration Statement on Form S-1 was filed with the SEC on November 25, 2008
and declared effective on December 22, 2008.  A creditor of the
Company purchased 434,783 shares in exchange for a $100,000 reduction of the
Company’s existing indebtedness payable to such creditor (Note 8) and, as of
March 3, 2009, the Company received stock subscriptions for 14,300,000 newly
issued shares of common stock at an offering price of $0.23 per share and closed
the offering.  The consideration received from the subscription
agreements was in the form of notes receivable with maturity dates 90 days after
the note dates.  The notes were secured by the subscribed shares and
such shares would not be released to the subscribers until payment was received
by the Company.  As of March 31, 2009, the Company had not received
any of the purchase price for the shares and, as a result, on April 2,
2009, the Company cancelled and terminated each of the subscription agreements,
with the consent of the subscribers; terminated its public offering; and
deregistered the 14,300,000 unsold shares.   The Company incurred
$111,316 of deferred offering costs related to this capital formation
activity.  The deferred offering costs were expensed upon the
termination of the offering in 2009.





11.    
Income Taxes




The
provision for income taxes consists of the following at December 31,
2008:




Current
                          
                          $
                          -Deferred
                          
                          
                          (43,280
                          )Benefit
      for income taxes
                          
                          $
                          (43,280
                          )







The
Company’s effective tax rate is different from the federal statutory rate of 35%
due primarily to the valuation allowance recorded on deferred tax
assets.









Deferred
tax assets consist of the following at December 31, 2008:




Net
      operating loss carryforwards
                              
                              $
                              87,000Accrued
      payroll
                              
                              
                              104,000Non-cash
      stock-based compensation
                              
                              
                              119,000Net
      deferred tax assets
                              
                              
                              310,000Valuation
      allowance for deferred tax assets
                              
                              
                              (310,000
                              )Total
      deferred tax assets
                              
                              $
                              -







A
valuation allowance of $310,000 has been recognized to offset the net deferred
tax assets as realization of such assets is uncertain.





The $1,255,112 deferred tax liability
at December 31, 2008 consists of the difference in book and tax carrying value
of the acquired HealthAmerica patents.





F-16




Vivakor,
Inc.


Notes
to Consolidated Statements (Continued)





11.    
Income Taxes (continued)




At
December 31, 2008, the Company had net operating loss carryforwards of
approximately $248,000 available to offset future regular taxable income. These
net operating loss carryforwards expire through 2028.





During
2007, the Company was a limited liability company and all income taxes flowed
through to its members; accordingly, there is no tax provision and no deferred
tax assets or liabilities in 2007.




The
Company is subject to taxation in the United States and various state
jurisdictions. The Company’s tax years for 2006 and forward are subject to
examination by the United States and state tax authorities.





12.    
Stock Options





On
October 23, 2008, the Board of Directors approved the Vivakor 2008 Incentive
Plan (the “2008 Plan”).  The 2008 Plan authorizes the issuance of up
to 7,500,000 shares of common stock.  The 2008 Plan allows for the
grant of tax-qualified incentive stock options, non-qualified stock options and
restrictive stock and other stock-based awards to employees, directors and
consultants of the Company.   As of December 31, 2008, no options
or awards had been granted under the 2008 Plan.





13.    
Benefit Plan




The
Company adopted a defined contribution 401(k) plan (the “Plan”) covering
substantially all employees that meet certain age and service requirements.
Employees may contribute up to 80% of their compensation per year (subject to a
maximum limit by federal law). The Plan allows for employer matching; however,
no employer matching or other contributions have been made.





14.    Subsequent
Events





On May 5,
2009, the National Institute of Health through the National Eye Institute
awarded the Company a Phase I Small Business Innovation Research Award grant
from the in the amount of $112,912 to conduct research related to the
development of the Company’s digital photorefractor and the detection of
amblyogenic risk factors.












F-17