See accompanying notes to the consolidated financial statements.

~~F-10~~F-7

VERTEX ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER 30, 2021~~MARCH 31, 2022

(UNAUDITED)

NOTE 1. BASIS OF PRESENTATION AND NATURE OF OPERATIONS

The accompanying unaudited interim consolidated financial statements of Vertex Energy, Inc. (the "Company" or "Vertex Energy") have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC") and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, ~~2020,~~2021, contained in the Company's annual report, as filed with the SEC on Form 10-K on March ~~9, 2021~~11, 2022 (the "Form 10-K"). The December 31, ~~2020~~2021 balance sheet was derived from the audited financial statements of our ~~2020~~2021 Form 10-K. In the opinion of management all adjustments, consisting of normal recurring adjustments necessary for a fair presentation of financial position and the results of operations for the interim periods presented, have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosures contained in the audited consolidated financial statements for the most recent fiscal year ~~2020~~2021 as reported in Form 10-K have been omitted.

UMO Business ~~Sale~~

On June 29, 2021, Vertex Energy entered into an Asset Purchase Agreement (the “Sale Agreement”) with Vertex Energy Operating, LLC, Vertex’s wholly-owned subsidiary (“Vertex Operating”) and Vertex Refining LA, LLC (“Vertex LA”) (wholly-owned by Vertex Operating), Vertex Refining OH, LLC (“Vertex OH”) (wholly-owned by HPRM, LLC, of which ~~we own~~Vertex Energy owns a 35% interest), Cedar Marine Terminals, L.P. (“CMT”) (indirectly wholly-owned), and H & H Oil, L.P. (“H&H”) (indirectly wholly-owned)(collectively, the “Vertex Entities”, and together, Vertex, Vertex Operating and the Vertex Entities, the “Seller Parties”), as sellers, and Safety-Kleen Systems, Inc., as purchaser (“Safety-Kleen”).

Pursuant to the Sale Agreement, Safety-Kleen agreed to acquire the Company’s Marrero used oil refinery in Louisiana (currently owned by Vertex LA, which entity is indirectly wholly-owned); our Columbus, Ohio, Heartland used oil refinery in Ohio (currently owned by Vertex OH, of which we indirectly own a 35% interest and will acquire the remaining 65% interest prior to Closing); our H&H and Heartland used motor oil (“UMO”) collections business; our oil filters and absorbent materials recycling facility in East Texas; and the rights CMT holds to a lease on the Cedar Marine terminal in Baytown, Texas, including the sale of the operations conducted at the various properties subject to the Sale Agreement (discussed below), which primarily consist of (1) operating our Marrero, Louisiana and Columbus, Ohio re-refineries and the Cedar Marine terminal, and in connection therewith, acquiring used lubricating oils from commercial and retail establishments and re-refining such oils into processed oils and other products for the distribution, supply and sale to end-customers, (2) collecting and processing used motor oil, oil filters, and related automotive waste streams and (3) the provision of related products and support services (collectively, the “UMO Business” and the assets and operations associated therewith, the “Purchased Assets”).

During the third quarter of 2021, the Company classified the used motor oil (UMO) business (the "UMO ~~business~~Business") as held for sale based on management’s intention and ~~shareholders~~shareholders’ approval to sell this ~~business, which is expected to occur in the first half of 2022.~~business. The Company’s historical financial statements have been revised to present the operating results of the UMO business as discontinued operations. The results of operations of this business are presented as “Income (loss) from discontinued operations” in the statement of operations and the related cash flows of this business have been reclassified to discontinued operations for all periods presented. The assets and liabilities of the UMO business have been reclassified to “Assets held for sale” and “Liabilities held for sale”, respectively, in the consolidated balance sheet for all periods presented.

~~Novel Coronavirus (COVID-19)~~

In December 2019, a novel strain of coronavirus, which causes the infectious disease known as COVID-19, was reported in Wuhan, China. The World Health Organization declared COVID-19 a “Public Health Emergency of International Concern” onOn January ~~30, 2020 and a global pandemic on March 11, 2020. In March and April, many U.S. states and local jurisdictions began issuing ‘stay-at-home’ orders, which have mainly been terminated or expired as~~24, 2022, each of the ~~date of this report. Notwithstanding such ‘stay-at-home’ orders, our operations were for~~Company and its subsidiaries party to the ~~most part deemed~~Sale Agreement and Safety-Kleen entered into an ~~essential business under applicable governmental orders based on~~Asset Purchase Termination Agreement (the “Termination Agreement”) pursuant to which the ~~critical nature~~Sale Agreement was terminated. Pursuant to the terms of the ~~products we offer.~~

~~F-11~~

~~We sell products and services primarily in~~Termination Agreement, the ~~U.S. domestic oil and gas commodity markets. Throughout~~Company agreed to pay a termination fee to Safety-Kleen of $3,000,000. Immediately upon receipt of such termination fee, which the ~~first quarter of 2020,~~Company paid simultaneously with the industry experienced multiple factors which lowered both the demand for, and prices of, oil and gas. First, the COVID-19 pandemic lowered global demand for hydrocarbons, as social distancing and travel restrictions were implemented across the world. Second, the lifting of Organizationexecution of the ~~Petroleum Exporting Countries (OPEC)+ supply curtailments,~~Termination Agreement, the Sale Agreement was terminated and ~~the associated increase in production~~is of oil, drove the global supply of hydrocarbons higher through the first quarter of 2020. As a result of both dynamics, prices for hydrocarbons declined 67% from peak prices within the first quarter of 2020. While global gross domestic product (GDP) growth was impacted by COVID-19 during 2020no further force or effect, and ~~into the first, second and third quarters of 2021, we expect GDP~~with no further liability to ~~continue to be impacted globally for the remainder of 2021, as a result~~any party thereunder, other than certain confidentiality obligations of the ~~COVID-19 pandemic. As a result, we expect oil~~parties and ~~gas related markets will continue to experience significant volatility during~~ongoing liability for any willful or intentional breach of, or non-compliance with, the remainder of 2021. Our goal through this downturn has been to remain disciplined in allocating capital and to focus on liquidity and cash preservation. We are taking the necessary actions to right-size the business for expected activity levels.

As a result of the impact of the COVID-19 outbreak, some of our feedstock suppliers have permanently or temporarily closed their businesses, and/or have experienced a decreased demand for services. As a result of the above, and due to prior ‘stay-at-home’ and other social distancing orders, as well as the decline in U.S. travel caused by COVID-19, we saw a significant decline in the volume of feedstocks (specifically used oil) that we were able to collect during 2020, and therefore process through our facilities. A future prolonged economic slowdown, renewed periods of social quarantine (imposed by the government or otherwise), or another prolonged period of decreased travel due to COVID-19 or the responses thereto, similar to those experienced during 2020, will likely have a material negative adverse impact on our ability to produce products, and consequently our revenues and results of operations.

Sale Agreement.

The ~~full extent of~~Company is still exploring opportunities to sell the ~~impact of COVID-19 on our business~~UMO Business and ~~operations currently cannot be estimated and~~believes it will ~~depend on~~sell such assets within a number of factors including the scope and duration of the global pandemic, the efficacy of, and the willingness of the general public to obtain vaccines and boosters, further mutations of the virus, as well as the rate of transmission of new COVID-19 variants.

Currently we believe that we have sufficient cash on hand and will generate sufficient cash through operations to support our operations for the foreseeable future; however, we will continue to evaluate our business operations based on new information as it becomes available and will make changes that we consider necessary in light of any new developments regarding the pandemic.

year.

NOTE 2. SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the same such amounts shown in the consolidated statements of cash flows.

September 30, 2021 December 31, 2020
Cash and cash equivalents $ 12,112,577 $ 10,895,044
Restricted cash 100,125 100,125
Cash and cash equivalents and restricted cash as shown in the consolidated statements of cash flows $ 12,212,702 $ 10,995,169

F-8


	March 31, 2022		December 31, 2021
Cash and cash equivalents	$	24,050,252	$	36,129,941
Restricted cash	100,496,998		100,496,998
Cash and cash equivalents and restricted cash as shown in the consolidated statements of cash flows	$	124,547,250	$	136,626,939

The Company has placed ~~all the~~$100,125 of restricted cash in a money market account, to serve as collateral for payment of a credit ~~card.~~card, and $100,396,873 of restricted cash in an escrow account in connection with the issuance of the convertible notes, which has been released in conjunction with the purchase of the Mobile Refinery (defined below) on April 1, 2022.

Accounts Receivable

Accounts receivable represents amounts due from customers. Accounts receivable are recorded at invoiced amounts, net of reserves and allowances, do not bear interest and are not collateralized. The Company uses its best estimate to determine the required allowance for doubtful accounts based on a variety of factors, including the length of time receivables are past due, economic trends and conditions affecting its customer base, significant one-time events and historical write-off experience. Specific provisions are recorded for individual receivables when we become aware of a customer’s inability to meet its financial obligations. The Company reviews the adequacy of its reserves and allowances quarterly.

Receivable balances greater than 90 days past due are individually reviewed for collectability and if deemed uncollectible, are charged off against the allowance accounts after all means of collection have been exhausted and the potential for recovery is considered remote. The allowance was $986,412 and $999,683 at March 31, 2022 and December 31, 2021, respectively.

Inventory

Inventories of products consist of feedstocks, refined petroleum products and recovered ferrous and non-ferrous metals and are reported at the lower of cost or net realizable value. Cost is determined using the first-in, first-out (“FIFO”) method. The Company reviews its inventory commodities for impairment whenever events or circumstances indicate that the value may not be recoverable. The Company determined that no impairment existed during the three months ended March 31, 2022 and 2021.

Impairment of long-lived assets

~~F-12~~

The Company evaluates the carrying value and recoverability of its long-lived assets when circumstances warrant such ~~evaluation by applying the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) regarding long-lived assets. It requires that long-lived~~evaluation. Long-lived assets beare reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. The Company determined that no long-lived asset impairment existed during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenue and expenses. Actual results could differ from these estimates. Any effects on the business, financial position or results of operations from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known.

Reclassification of Prior Year Presentation

Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications had no effect on the reported results of operations.

Redeemable Noncontrolling Interests

As more fully described in “Note 14. Share Purchase and Subscription Agreements”, the Company is party to put/call option agreements with the holder of Vertex Refining Myrtle Grove LLC (“MG ~~SPV”~~SPV”) and HPRM LLC, a Delaware limited liability company (“Heartland ~~SPV”~~SPV”), which entities were formed as special purpose vehicles in connection with the transactions described in greater detail below, non-controlling interests. The put options permit MG ~~SPV’s~~SPV's and Heartland ~~SPV’s non-controlling~~SPV's non-

F-9

controlling interest holders, at any time on or after the earlier of (a) the fifth anniversary of the applicable closing date of such issuances and (ii) the occurrence of certain triggering events (an ~~“MG Redemption”~~“MG Redemption” and ~~“Heartland Redemption”~~"Heartland Redemption", as applicable) to require MG SPV and Heartland SPV to redeem the non-controlling interest from the holder of such interest. Per the agreements, the cash purchase price for such redeemed Class B Units (MG SPV) and Class A Units (Heartland SPV) is the greater of (y) the fair market value of such units (without discount for illiquidity, minority status or otherwise) as determined by a qualified third party agreed to in writing by a majority of the holders seeking an MG SPV Redemption and Heartland SPV Redemption and Vertex Operating, LLC, our wholly-owned subsidiary (“Vertex Operating”) (provided that Vertex Operating still owns Class A Units (as to MG SPV) or Class B Units (as to Heartland SPV) on such date, as applicable) and (z) the original per-unit price for such Class B Units/Class A Units plus any unpaid Class A/Class B preference. The preference is defined as the greater of (A) the aggregate unpaid “Class B/Class A Yield” (equal to an annual return of 22.5% per annum) and (B) an amount equal to fifty percent (50%) of the aggregate capital invested by the Class B/Class A Unit holders. The agreements also permit the Company to acquire the non-controlling interest from the holders thereof upon certain events. Applicable accounting guidance requires an equity instrument that is redeemable for cash or other assets to be classified outside of permanent equity if it is redeemable (a) at a fixed or determinable price on a fixed or determinable date, (b) at the option of the holder, or (c) upon the occurrence of an event that is not solely within the control of the issuer. Based on this guidance, the Company has classified the MG SPV and Heartland SPV non-controlling interests between the liabilities and equity sections of the accompanying ~~September 30, 2021 and December 31, 2020~~ consolidated balance sheets. If an equity instrument subject to the guidance is currently redeemable, the instrument is adjusted to its maximum redemption amount at the balance sheet date. If the equity instrument subject to the guidance is not currently redeemable but it is probable that the equity instrument will become redeemable (for example, when the redemption depends solely on the passage of time), the guidance permits either of the following measurement methods: (a) accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument using an appropriate methodology, or (b) recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The amount presented in temporary equity should be no less than the initial amount reported in temporary equity for the instrument. Because the MG SPV and Heartland SPV equity instruments will become redeemable solely based on the passage of time, the Company determined that it is probable that the MG SPV and Heartland SPV equity instruments will become redeemable. The Company has elected to apply the second of the two measurement options described above. An adjustment to the carrying amount of a non-controlling interest from the application of the above guidance does not impact net ~~income or~~ loss in the consolidated financial statements. Rather, such adjustments are treated as equity ~~transactions.~~

transactions and adjustment to net loss in determining net loss available to common stockholders for the purpose of calculating earnings per share.

Variable Interest Entities

~~F-13~~

The Company ~~accounts for the investments it makes in certain legal entities~~determines whether each business entity in which it has equity ~~investors do not have (1)~~interests, debt, or other investments constitutes a variable interest entity (“VIE”) based on consideration of the following criteria: (i) the entity lacks sufficient equity ~~at risk for the legal entity~~at-risk to finance its activities without additional subordinated financial support, ~~(2)~~or (ii) equity holders, as a group, ~~(the holders~~lack the characteristics of the equity investment at risk), either the power, through voting or similar rights, to direct the activities of the legal entity that most significantly impacts the entity’s economic performance, or (3) the obligation to absorb the expected losses of the legal entity or the right to receive expected residual returns of the legal entity. These certain legal entities are referred to as “variable interest entities” or “VIEs.”

~~The Company consolidates the results of any such entity in which it determines that it has~~ a controlling financial ~~interest. The Company has a “controlling financial interest” in such~~instrument.

If an entity ifis determined to be a VIE, the Company then determines whether to consolidate the entity as the primary beneficiary. The primary beneficiary has both (i) the power to direct the activities that most significantly ~~affect~~impact the VIE’s economic performance, and (ii) the obligation to absorb ~~the~~ losses of the VIE or the right to receive benefits from the VIE that could potentially be ~~potentially~~ significant to the ~~VIE. On a quarterly basis, the Company reassesses whether it has a controlling financial interest in any investments it has in these certain legal entities.~~entity.

Assets and Liabilities Held for Sale

The Company classifies disposal groups as held for sale in the period in which all of the following criteria are met: (1) management, having the authority to approve the action, commits to a plan to sell the disposal group; (2) the disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such disposal groups; (3) an active program to locate a buyer or buyers and other actions required to complete the plan to sell the disposal group have been initiated; (4) the sale of the disposal group is probable, and transfer of the disposal group is expected to qualify for recognition as a completed sale, within one year, except if events or circumstances beyond the Company’s control extend the period of time required to sell the disposal group beyond one year; (5) the disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (6) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

A disposal group that is classified as held for sale is initially measured at the lower of its carrying amount or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. No loss was recognized during the periods presented.

Subsequent changes in the fair value of a disposal group less any costs to sell are reported as an adjustment to the carrying amount of the disposal group, as long as the new carrying amount does not exceed the carrying amount of the asset at the time it was initially classified as held for sale. Upon determining that a disposal group meets the criteria to be classified as held for sale, the Company reports the assets and liabilities of the disposal group for all periods presented in the line items assets held for sale and liabilities held for sale, respectively, in the consolidated balance sheets.

Discontinued Operations

F-10

The results of operations of a component of the Company that can be clearly distinguished, operationally and for financial reporting purposes, that either has been disposed of or is classified as held for sale is reported in discontinued operations, if the disposal represents a strategic shift that has, or will have, a major effect on the Company’s operations and financial results.

Recently adopted accounting pronouncements

In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity to simplify the accounting for convertible debt and other equity-linked instruments. The new guidance simplifies the accounting for convertible instruments by eliminating the cash conversion and beneficial conversion feature models used to separately account for embedded conversion features as a component of equity. Instead, the entity will account for the convertible debt or convertible preferred stock securities as a single unit of account, unless the conversion feature requires bifurcation and recognition as derivatives. Additionally, the guidance requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of potential share settlement for instruments that may be settled in cash or shares. The Company adopted this new guidance as of January 1, 2022, under the modified retrospective method.

NOTE 3. CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES

At ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ and for each of the ~~nine~~three months then ended, the Company’s revenues and receivables were comprised of the following customer concentrations:

Nine Months Ended September 30, 2021 Nine Months Ended
September 30, 2020
% of
Revenues % of
Receivables % of
Revenues % of
Receivables
Customer 1 22% 17% 18% 16%
Customer 2 16% 13% 9% 11%
Customer 3 14% 11% 7% —%
Customer 4 13% 14% 15% —%

~~F-14~~


	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021
	% of Revenues	% of Receivables	% of Revenues	% of Receivables
Customer 1	22%	24%	23%	20%
Customer 2	19%	18%	15%	10%
Customer 3	12%	—%	12%	18%

For each of the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company’s segment revenues were comprised of the following customer concentrations:


		% of Revenue by Segment			% Revenue by Segment				% of Revenue by Segment			% Revenue by Segment
		Nine Months Ended September 30, 2021			Nine Months Ended September 30, 2020				Three Months Ended March 31, 2022			Three Months Ended March 31, 2021
		Black Oil	Refining	Recovery	Black Oil	Refining	Recovery		Black Oil	Refining	Recovery	Black Oil	Refining	Recovery
Customer 1	Customer 1	—%	27%	—%	—%	25%	—%	Customer 1	—%	26%	—%	—%	30%	—%
Customer 2	Customer 2	—%	20%	—%	—%	13%	—%	Customer 2	—%	22%	—%	—%	20%	—%
Customer 3	Customer 3	—%	—%	73%	—%	—%	28%	Customer 3	—%	13%	—%	—%	15%	—%
Customer 4		—%	16%	—%	—%	20%	—%

~~The following are new risk factors that supplement the risk factors included in the Form 10-K:~~

Our hedging activities may prevent us from benefiting fully from increases in oil prices and may expose us to other risks, including counterparty risk.

~~The Company utilizes~~We use derivative instruments to ~~manage its exposure to~~hedge the impact of fluctuations in ~~the underlying commodity~~oil and other prices on our results of ~~its inventory. The Company's management sets~~operations and implements hedging policies, including volumes, types of instruments and counterparties, to support oil prices at targeted levels and manage its exposure to fluctuating prices. The Company’s derivative instruments consist of swap and futures arrangements for oil. In a commodity swap agreement, if the agreed-upon published third-party index price (“index price”) is lower than the swap fixed price, the Company receives the difference between the index price and the swap fixed price. If the index price is higher than the swap fixed price, the Company pays the difference. For futures arrangements, the Company receives the difference positive or negative between an agreed-upon strike price and the market price.

cash flows. To the extent that we continue to engage in hedging activities to protect ourselves against commodity price declines, we may be prevented from fully realizing the benefits of increases in oil prices above the prices established by our hedging contracts. In addition, our hedging activities may expose us to the risk of financial loss in certain circumstances, including instances in which the counterparties to our hedging contracts fail to perform under the contracts. Finally, we are subject to risks associated with the adoption of derivatives legislation and regulations related to derivative contracts which if adopted, could have an adverse impact on our ability to hedge risks associated with our business. If regulations adopted in the future require that we post margin for our hedging activities or require our counterparties to hold margin or maintain capital levels, the cost of which could be passed through to us, or impose other requirements that are more burdensome than current regulations, hedging transactions in the future would become more expensive than we experienced in the past.

~~Risks Related to the Planned Sale Transaction~~

~~The announcement and pendency~~Completion of the ~~Sale, whether or not completed, may adversely affect the value~~acquisition of ~~our securities, UMO Business and our continuing operations.~~

The announcement and pendency of the Sale may adversely affect the trading price of our common stock and securities, our business or our relationships with clients, customers, suppliers and employees. Third parties may be unwilling to enter into material agreements with respect to the UMO Business or our continuing operations after the Sale of the UMO Business (the “Continuing Operations”). New or existing customers, suppliers and business partners may prefer to enter into agreements with our competitors who have not expressed an intention to sell their business because customers, suppliers and business partners may perceive that such new relationships are likely to be more stable. Additionally, employees working in the UMO Business or the Continuing Operations may become concerned about the future of the UMO Business or the Continuing Operations, as applicable, and lose focus or seek other employment. In addition, while the completion of the Sale is pending, we may be unable to attract and retain key personnel and our management’s focus and attention and employee resources may be diverted from operational matters.

~~The Sale Transaction will require significant management resources~~.

The implementation of the Sale Transaction will require significant time, attention, and resources of our senior management and others within the Company, potentially diverting their attention from the conduct of the Company’s business.

~~If we fail to complete the Sale, our business and financial performance may be adversely affected.~~

~~The completion of the Sale~~Heartland SPV is subject to certain conditions, and if these conditions are not satisfied or waived, the acquisition will not be completed.

The obligations of the parties to the Heartland Purchase Agreement is subject to satisfaction or waiver ~~of various conditions, including the approval of the Sale by our stockholders~~ ~~(which stockholder approval was obtained on September 28, 2021)~~ and the absence of a material adverse effect on the UMO Business, which may not be satisfied in a timely manner or at all. If the Sale is not completed, we may have difficulty recouping the costs incurred in connection with negotiating the Sale, preparing the Sale Agreement and the

proxy statement (and mailing) required in connection therewith. Our directors, executive officers and other employees will have expended extensive time and effort and will have experienced significant distractions from their work during the pendency of the Sale, and we will have incurred significant third-party transaction costs, in each case, without any commensurate benefit, which may have a material and adverse effect on our stock price and results of operations.

In addition, if the Sale is not completed, the Board of Directors, in discharging its fiduciary obligations to our stockholders, may evaluate other strategic options including, but not limited to, continuing to operate the UMO Business for the foreseeable future or an alternative sale transaction relating to the UMO Business or the Continuing Operations. An alternative sale transaction, if available, may yield lower consideration than the proposed Sale, be on less favorable terms and conditions than those contained in the Sale Agreement and involve significant delay. Any future sale of all or substantially all of the assets of the Company or other transactions may be subject to further stockholder approval.

Finally, if the Sale is not completed, the announcement of the termination of the Sale Agreement may adversely affect our relationships with customers, suppliers and employees, which could have a material adverse effect on our ability to effectively operate the UMO Business or the Continuing Operations, and we may be required to pay a Break-Fee of $3.0 million to Safety-Kleen under certain circumstances, each of which could have further adverse effects on our business, results of operations and the trading price of our common stock.

~~We will be subject to certain contractual restrictions while the Sale Transaction is pending~~.

The Sale Agreement restricts us from making certain acquisitions and divestitures, entering into certain contracts, and taking other specified actions until the earlier of the completion of the Sale Transaction or the termination of the Sale Agreement. These restrictions may prevent us from pursuing attractive business opportunities that may arise prior to the completion of the Sale Transaction and could have the effect of delaying or preventing other strategic transactions.

~~The Sale Agreement limits our ability to pursue alternatives to the Sale.~~

The Sale Agreement contains provisions that may make it more difficult for us to sell all, or a significant part, of the UMO Business to any party other than Safety-Kleen. These provisions include the prohibition on our ability to solicit competing proposals and the requirement that we pay Safety-Kleen a termination/break fee of approximately $3.0 million in certain cases, including if (i) (x) Safety-Kleen terminates the Sale Agreement in certain circumstances if it becomes apparent that any of such conditions will not be, fulfilled by December 31, 2021 (as such date may be extended by up to 90 days under certain circumstances) under certain circumstances, unless such failure shall be principally due to the failure of Safety-Kleen or (y) as a result of a breach by us of our non-solicitation requirements, whether such breach results from a determination by our Board of Directors that, in order to fulfill its fiduciary obligations, an acquisition proposal must be considered, or otherwise; or (ii) we refuse to consummate the transactions contemplated by the Sale Agreement under certain circumstances. These provisions could make it less advantageous for a third party that might have an interest in acquiring all of or a significant part of the UMO Business to consider or propose an alternative transaction, even if that party were prepared to pay consideration with a higher value than the consideration to be paid by Safety-Kleen.

The Sale Agreement may be terminated in accordance with its terms and the Sale Transaction may not be completed. We may owe a break-fee in connection with a termination of the Sale Agreement under certain circumstances.

~~The completion of the Sale Transaction is subject to the satisfaction or waiver~~(if permitted) of a number of conditions. ~~These~~The satisfaction of all of the required conditions could delay the completion of the transaction for a significant period of time or prevent it from occurring. Any delay in completing the acquisition could cause the Company not to realize some or all of the benefits that the Company expects to achieve if the acquisition is successfully completed within its expected time frame. Further, there can be no assurance that the conditions to the closing may not be fulfilled and, accordingly, the Sale Transaction may not be completed. In addition, if the Sale Transaction is not completed by December 31, 2021 (Sale Agreement Outside Date) unless such failure shall be principally due to the failure of Safety-Kleen to perform or comply with any of the ~~covenants, agreements or conditions thereof to~~acquisition will be performed or complied with by it prior to the closing; provided, however, that if, on the Sale Agreement Outside Date, all of the conditions to closing other than the conditions relating to certain required governmental approvals, and relating to stockholder approval, shall have been satisfied or waived ~~then either Safety-Kleen~~ or that the ~~Company has the right~~acquisition will be completed.

Significant costs are expected to extend the Sale Agreement Outside Date by up to an additional 90 calendar days, either we or Safety-Kleen may choose not to proceed with the Sale Transaction, and the parties can mutually decide to terminate the Sale Agreement at any time prior to the completion of the Sale Transaction, before or after the required stockholder approval is received (which stockholder approval from our stockholders was obtained at a special meeting of stockholders held on September 28, 2021). In addition, we and Safety-Kleen may elect to terminate the Sale Agreement in certain other circumstances. If the Sale Agreement is terminated, we may incur substantial feesbe incurred in connection with ~~termination~~the integration of the Sale Agreement (including, in certain circumstances, the payment of the Break-Fee and/or requirement to reimburse the expenses of Safety-Kleen) and will not recognize the anticipated benefits of the Sale Transaction.

~~Termination of the Sale Agreement could negatively impact us.~~

~~If the Sale Agreement is terminated in accordance with its terms~~Company and the ~~Sale Transaction is not completed, our ongoing~~Mobile Refinery into a single business, may be adversely affected by a variety of factors. Our business may be impacted by having foregone other strategic opportunities during the pendency of the Sale Transaction, the failure to obtain the anticipated benefits of completing the Sale Transaction, changes to existing business relationships caused by uncertainties pending the Sale Transaction, payment of certain costs relating to the Sale Transaction, and the attention, time, and resources of our senior managementincluding legal, accounting, financial advisory and other ~~employees devoted~~costs.

The Company has already and expects to continue to incur significant costs in connection with integrating the ~~Sale Transaction, diverting their attention from the conduct~~Mobile Refinery operations. These costs may include costs for:

• employee redeployment, relocation or severance;

• integration of ~~our business.~~ information systems; and

• reorganization or closures of facilities.

In addition, if the ~~Sale Agreement is terminated under certain circumstances, we may be required~~Company expects to ~~pay~~incur a number of non-recurring costs associated with combining the Break-Fee or reimburse certain expenses of Safety-Kleen (which is creditable toward the Break-Fee), depending on the circumstances surrounding the termination. We may also be negatively impacted if the Sale Agreement is terminated and the Board of Directors is unable to execute an alternative strategic transaction offering equivalent or more attractive benefits than the benefits to be provided in the Sale Transaction.

The parties to the Sale Agreement must obtain certain regulatory approvals in order to complete the Sale Transaction; if such approvals are not obtained or are obtained with conditions, the Sale Transaction may be prevented or delayed or the anticipated benefits of the Sale Transaction could be reduced.

Completion of the Sale Transaction is conditioned upon, among other things, the expiration or termination of the applicable waiting period under The Hart–Scott–Rodino Antitrust Improvements Act of 1976 (“HSR Act”). We are currently responding to inquiries received from the Federal Trade Commission (the “FTC”), which is not required to rule on the matter until the expiration of 30 days following submission of our responses which is not expected to occur before November 30, 2021, if then. At any time before or after the Sale Transaction is completed, any of the United States Department of Justice (DOJ), the United States Federal Trade Commission (FTC), or U.S. state attorneys general could take action under the antitrust laws in opposition to the Sale Transaction, including seeking to enjoin completion of the Sale Transaction or condition completion of the Sale Transaction upon the divestiture of assets held by us, Safety-Kleen or our or their respective subsidiaries or affiliates. Any such requirements or restrictions may prevent or delay completion of the Sale Transaction or may reduce the anticipated benefits of the Sale Transaction, which could also have a material adverse effect on us. Furthermore, the requirement to obtain HSR Act and/or FTC approval for the Sale could delay or prevent the Sale Transaction from being completed.

~~Risks Related to the Planned Acquisition~~operations of the Mobile Refinery,

which cannot be estimated accurately at this time. The Company has also incurred transaction fees and other costs related to the Mobile Refinery acquisition. Although we expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, may offset incremental transaction and transaction-related costs over time, this net benefit may not be achieved in the near term, or at all. There can be no assurance that the Company will be successful in these integration efforts.

Combining the Mobile Refinery and the Company may be more difficult, costly or time-consuming than expected and the Company may fail to realize the anticipated benefits of the acquisition of the Mobile Refinery, including expected financial and operating performance of the Company.

The success of the acquisition of the Mobile Refinery will depend, in part, on the Company’s ability to realize anticipated cost savings from combining the businesses of the Company and the Mobile Refinery. To realize the anticipated benefits and cost savings from the Mobile Refinery acquisition, the Company must successfully integrate and combine the business of the Mobile Refinery in a manner that permits those cost savings to be realized. If the Company is not able to successfully achieve this objective, the anticipated benefits of the Mobile Refinery may not be realized fully or at all or may take longer to realize than expected.

~~The Company and the Mobile Refinery have operated and, until the completion of the acquisition of the Mobile Refinery, must continue to operate independently.~~ It is possible that the integration process could result in the loss of key employees, the disruption of our ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with customers, suppliers and employees or to achieve the anticipated benefits and cost savings. Integration efforts may also divert management attention and resources. These integration matters could have an adverse effect on each of the

Company and the Mobile Refinery during this transition period and for an undetermined period after completion of the acquisition of the Mobile Refinery.

~~We will need to raise significant additional capital to complete the acquisition of the Mobile Refinery, a planned capital project, and to pay other expenses associated with the Mobile Refinery.~~

The initial base purchase price for the Mobile Refinery is $75.0 million, and together with related assets and other costs payable at closing, the total purchase price is expected to be approximately $86.7 million. The funds from the sale of the Convertible Notes will not be sufficient, on their own, to allow us to complete the acquisition of the Mobile Refinery, and we currently estimate that we will need approximately an additional $53.0 million to complete such acquisition (in addition to

amounts from the Convertible Note offering currently held in escrow which are anticipated to be used to pay the purchase price for the Mobile Refinery). In addition, we are also required to pay for the hydrocarbon inventory located at the Mobile Refinery, as valued at closing, and the purchase price is subject to other customary purchase price adjustments and reimbursement for certain capital expenditures. We also plan to undertake certain engineering services and the initial payments of purchase orders for long lead-time equipment associated with the Conversion in the approximate amount of $13.0 million. Upon completion of the acquisition of the Mobile Refinery and provided that our fundraising initiatives are successful, we plan to follow through with completion of the Conversion at an additional cost of approximately $72.0 million, for a total cost of the Conversion of approximately $85.0 million. We also anticipate the need for approximately $125.0 million of working capital in connection with the Mobile Refinery. We currently anticipate raising such additional required funding for the Mobile Acquisition and other items described above through the entry into a secured term loan in the amount of approximately $125.0 million and a secured working capital facility in the amount of approximately $125.0 million. However, we have not entered into any definitive agreements regarding such funding to date, and such funding may not be available on favorable terms, if at all. If debt financing is available and obtained, our interest expense may increase and we may be subject to the risk of default, depending on the terms of such financing. If equity financing is available and obtained it may result in our stockholders’ experiencing significant dilution. If such financing is unavailable, we may be unable to complete the acquisition of the Mobile Refinery and/or may be unable to complete the planned capital project.

We anticipate financing a portion of the acquisition of the Mobile Refinery by way of a secured term loan, and financing certain working capital and other amounts by way of a secured working capital facility, both of which are expected to be secured by a priority security interest in substantially all of our assets.

As described in the risk factor above, we currently anticipate raising required funding to complete the Mobile Acquisition, to complete a planned capital project thereon, and for working capital, through the entry into a secured term loan in the amount of approximately $125.0 million and a secured working capital facility in the amount of approximately $125.0 million. In the event that such funding is available to us, and we are able to borrow such planned funding, we anticipate our obligations under the debt facilities being secured by a priority security interest in substantially all of our assets, with the term loan being secured by a first priority security interest in the Mobile Refinery, assuming we are successful in closing the acquisition of such refinery, and the working capital facility being secured by a first priority security interest in our inventory and receivables. We further expect that substantially all of our subsidiaries would be required to guarantee our obligations under such loan facilities. As such, our creditors will likely have security interests over our assets and/or our subsidiaries which secure the repayment of such obligations, and in the event we default under such facilities, the lenders may be able to take control of our assets and operations, force a sale of our assets, force us to seek bankruptcy protection, or force us to curtail or abandon our current business plans and operations. If that were to happen, any investment in the Company (including, but not limited to any investment in our common stock) could become worthless.

~~Our failure to comply with the covenants in any documents governing future indebtedness could materially adversely affect our financial condition and liquidity.~~

In connection with our planned credit facilities discussed above, we anticipate being subject to certain affirmative and negative covenants and to be subject to financial covenants. A breach of any of these covenants, if uncured or unwaived, could lead to an event of default, which in some circumstances could give our creditors the right to demand that we accelerate repayment of amounts due and/or enforce their rights under the credit agreements. This would likely, in turn, trigger cross-acceleration or cross-default rights in other documents governing our indebtedness, including the Convertible Notes. Therefore, in the event of any such breach, we may need to seek covenant waivers or amendments from our creditors or seek alternative or additional sources of financing, and we may not be able to obtain any such waivers or amendments or alternative or additional financing on acceptable terms, if at all. In addition, any covenant breach or event of default could harm our credit rating and our ability to obtain additional financing on acceptable terms. The occurrence of any of these events could have a material adverse effect on our financial condition and liquidity and/or cause our lenders to pursue enforcement remedies available to them under their respective credit agreements which could ultimately result in foreclosure, which would have a material adverse effect on our operations and the value of our securities. As a result, we may be unable to pay amounts due on the Convertible Notes, including upon maturity, and the value of our common stock may decline in value or become worthless.

Regulatory and other approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on the Company following the Mobile Refinery acquisition.

Before the Mobile Refinery acquisition may be completed, applicable approvals may need to be obtained under certain laws and regulations and from various third parties. In deciding whether to grant regulatory clearances and approvals, the relevant governmental entities may consider, among other things, the effect of the Mobile Refinery acquisition on competition within their relevant jurisdiction. The terms and conditions of the approvals that are granted may impose requirements, limitations or costs or place restrictions on the conduct of the Company’s business. There can be no assurance that regulators

will not impose conditions, terms, obligations or restrictions and that such conditions, terms, obligations or restrictions will not have the effect of delaying completion of the Mobile Refinery acquisition or that obtaining the consent of such regulators or third parties will not result in additional material costs. In addition, any such conditions, terms, obligations or restrictions may result in the delay or abandonment of the Mobile Refinery acquisition.

~~Upon the closing of the Mobile Refinery acquisition,~~Moving forward, we plan to transition the majority of our business operations to those of the Mobile Refinery.

Following the closing of the Mobile Refinery acquisition, which closed on April 1, 2022, we anticipate that the more significant portion of our assets and operations will be related to such Mobile Refinery. Our change in business structure may not be successful. Additionally, our directors and officers may not be able to properly manage our new direction. If our new management fails to properly manage and direct our operations, we may be forced to scale back or abandon our planned operations, which may cause the value of our securities to decline or become worthless.

We depend on certain third-party pipelines for transportation of feedstocks and products, and if these pipelines become unavailable to us, our revenues and cash available for payment of our debt obligations could decline.

Our Mobile Refinery is interconnected to a pipeline that supplies a portion of its crude oil feedstock. Since we do not own or operate this pipeline, its continuing operation is not within our control. The unavailability of any third-party pipelines for the transportation of crude oil or finished products, because of acts of God, accidents, earthquakes or hurricanes, government regulation, terrorism or other third-party events, could lead to disputes or litigation with certain of our suppliers or a decline in our sales, net income and cash available for payments of our debt obligations.

We ~~will~~make capital expenditures in our facilities to maintain their reliability and efficiency. If we are unable to complete capital projects at their expected costs and/or in a timely manner, or if the market conditions assumed in our projected economics deteriorate, results of operations or cash flows could be ~~subject~~adversely affected.

Delays or cost increases related to ~~business uncertainties~~the engineering, procurement and ~~contractual restrictions while the Mobile Refinery acquisition is pending.~~

~~Uncertainty about the effect~~construction of ~~the Mobile Refinery acquisition on employees~~new facilities, or improvements and ~~partners may~~repairs to our existing facilities and equipment, could have ana material adverse effect on ~~us. These uncertainties may impair~~our business, financial condition, results of operations or our ability to ~~attract, retain~~make payments on our debt obligations. Such delays or cost increases may arise as a result of unpredictable factors in the marketplace, many of which are beyond our control, including:

• denial or delay in obtaining regulatory approvals and/or permits;

• changes in government regulations, including environmental and ~~motivate key personnel until~~safety regulations;

• unplanned increases in the ~~Mobile Refinery acquisition is completed,~~cost of equipment, materials or labor;

• disruptions in transportation of equipment and materials;

• severe adverse weather conditions, natural disasters or other events (such as equipment malfunctions, explosions, fires or spills) affecting our facilities, or those of our vendors and suppliers;

• shortages of sufficiently skilled labor, or labor disagreements resulting in unplanned work stoppages;

• market-related increases in a project’s debt or equity financing costs; and/or

• nonperformance or declarations of force majeure by, or disputes with, our vendors, suppliers, contractors or sub-contractors.

Equipment, even if properly maintained, may require significant capital expenditures and expenses to keep it operating at optimum efficiency.

Any one or more of these occurrences noted above could ~~cause partners and others that deal with~~have a significant impact on our business or subject us to ~~seek~~significant cost overruns. If we were unable to make up the delays or to recover the related costs, or if market conditions change, existing business relationships, cease doing business with us or cause potential new partners to delay doing business with us until the Mobile Refinery acquisition has been successfully completed or terminated. Retention of certain employees may be challenging during the pendency of the Mobile Refinery acquisition, as certain employees may experience uncertainty about their future roles or compensation structure. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the business, our business following the Mobile Refinery acquisition could be negatively impacted. In addition, the Mobile Refinery acquisition restricts us from making certain acquisitions and taking other specified actions until the Mobile Refinery acquisition is completed without certain consents and approvals. These restrictions may prevent us from pursuing attractive business opportunities that may arise prior to the completion of the Mobile Refinery acquisition.

~~The Mobile Refinery acquisition agreement may be terminated in accordance with its terms and the Mobile Refinery acquisition~~we may not ~~be completed.~~

~~The Mobile Refinery acquisition agreement is subject to several conditions that must be fulfilled in order to complete~~realize the ~~Mobile Refinery acquisition. These conditions to the closing~~anticipated benefits of ~~the Mobile Refinery acquisition may not be fulfilled~~our capital projects and accordingly, the Mobile Refinery acquisition may not be completed. In addition, the parties to the Mobile Refinery acquisition agreement can generally terminate such agreement if the transactions contemplated thereby do not close by May 26, 2022 (subject to certain extension rights), under certain other conditions if the terms of the Mobile Refinery acquisition agreement are breached,it could materially and ~~the parties can mutually decide to terminate the Mobile Refinery acquisition agreement at any time.~~

~~Litigation could prevent or delay the closing of the Mobile Refinery acquisition or otherwise negatively impact the business and operations of the Company.~~

The Company may incur costs in connection with the defense or settlement of any stockholder lawsuits filed in connection with the Mobile Refinery acquisition. Such litigation could have an adverse effect on theadversely affect our financial ~~condition and~~position, results of operations ~~of the Company~~or cash flows and, could prevent or delay the consummation of the Mobile Refinery acquisition. Such litigation, affecting the Mobile Refinery and/or the transaction, could delay or prevent the closing of the Mobile Refinery acquisition.

~~Termination of the Mobile Refinery acquisition agreement could negatively impact the Company.~~

~~In the event the Mobile Refinery acquisition agreement is terminated,~~as a result, our ~~business may have been adversely impacted by our failure~~ability to ~~pursue other beneficial opportunities due to the focus of management on the Mobile Refinery acquisition, and the market price~~make payments of our ~~common stock might decline~~debt obligations.

From time to the extent that the current market price reflects a market assumption that the Mobile Refinery acquisition will be completed. If the Mobile Refinery acquisition is terminated and our Board of Directors seeks another acquisition or business combination, our stockholders cannot be certain that we will be able to find a party willing to offer equivalent or more attractive consideration than the consideration provided for by the Mobile Refinery acquisition. Upon termination of the Mobile Refinery transaction under certain circumstances, we could lose the $10.0 million deposit that

~~we paid pursuant to the terms of the Mobile Refinery acquisition agreement (which was originally in the form of a note, which has been fully funded to date).~~

~~Completion of the acquisition of the Mobile Refinery is subject to certain conditions, and if these conditions are not satisfied or waived, the acquisition will not be completed.~~

The obligations of the parties to the Mobile Refinery acquisition agreement to complete such sale and purchase are subject to satisfaction or waiver (if permitted) of a number of conditions. The satisfaction of all of the required conditions could delay the completion of the transaction for a significant period of time, or prevent it from occurring. Any delay in completing the acquisition could cause the Company not to realize some or all of the benefits that the Company expects to achieve if the acquisition is successfully completed within its expected time frame. Further, there can be no assurance that the conditions to the closing of the acquisition will be satisfied or waived or that the acquisition will be completed.

~~Failure to complete the Mobile Refinery acquisition could negatively impact our stock price and future business and financial results.~~

~~If the Mobile Refinery acquisition is not completed, our ongoing business may be adversely affected and we would be subject to a number of risks, including the following:~~

•we will not realize the benefits expected from the Mobile Refinery acquisition, including a potentially enhanced competitive and financial position, expansion of assets and therefore opportunities, and will instead be subject to all the risks we currently face as an independent company;

•we may ~~experience negative reactions from the financial markets and our partners and employees;~~

•~~the Mobile Refinery acquisition places certain restrictions on the conduct~~seek to divest portions of our business, ~~prior~~which could materially affect our results of operations and result in disruption to ~~the completion~~other parts of the Mobile Refinery acquisition or the termination of the Mobile Refinery acquisition. Such restrictions, the waiver of which is subject to the consent of the counterparties to such agreement, may prevent us from making certain acquisitions, taking certain other specified actions or otherwise pursuing business opportunities during the pendency of the Mobile Refinery acquisition; and

•matters relating to the Mobile Refinery acquisition (including integration planning) may require substantial commitments of time and resources by our management, which would otherwise have been devoted to other opportunities that may have been beneficial to us.

Significant costs are expected to be incurred in connection with the consummation of the Mobile Refinery acquisition and integration of the Company and the Mobile Refinery into a single business, including legal, accounting, financial advisory and other costs.

~~If the Mobile Refinery acquisition is consummated, the Company is expected to incur significant costs in connection with integrating the Mobile Refinery operations. These costs may include costs for:~~

• ~~employee redeployment, relocation or severance;~~

•~~integration of information systems; and~~

• ~~reorganization or closures of facilities.~~

In addition, the Company expects to incur a number of non-recurring costs associated with combining the operations of the Mobile Refinery, which cannot be estimated accurately at this time. The Company will also incur transaction fees and other costs related to the Mobile Refinery acquisition. Additional unanticipated costs may be incurred in the integration of the Mobile Refinery. Upon completion of the Mobile Acquisition, and provided that our fundraising initiatives are successful, we plan to complete the Conversion for an additional cost of approximately $72.0 million, which will be the continuation of engineering services and initial payments of purchase orders for long lead-time equipment associated with the Conversion in the amount of approximately $13.0 million that we plan to initiate prior to closing the Mobile Acquisition. Although we expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, may offset incremental transaction and transaction-related costs over time, this net benefit may not be achieved in the near term, or at all. There can be no assurance that the Company will be successful in these integration efforts.

business.

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We ~~plan~~may dispose of portions of our current business or assets (including, but not limited to ~~use a portion of the approximately $33.5 million of funds~~our UM Business, which we ~~received immediately upon the sale~~are actively seeking to divest), based on a variety of ~~the Convertible Notes for engineering services~~factors and ~~for the initial payments~~strategic considerations, consistent with our strategy of ~~purchase orders for long lead-time equipment associated with the Conversion.~~

The approximately $33.5 million of net funds from the offering of the Convertible Notes which were not placed in the escrow account will be available for use by us immediately. We plan to use approximately $13.0 million of these funds for engineering servicespreserving liquidity and for the initial payments of purchase orders for long lead-time equipment associated with the Conversion. These expenses will be paid in anticipation of the closing of the Mobile Acquisition, and in the event that the Mobile Acquisition does not close in the future, we do not believe we will be able to recoup such expenses, which we anticipate will likely be written off in their entirety. As such, in the event the Mobile Acquisition does not close, the use of such proceeds in advance of such closing could have a material adverse effect on us, our operating results and our ability to redeem the Convertible Notes from time to time.

~~Risks Related to the Convertible Notes~~

~~Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from~~streamlining our business to ~~pay~~better focus on the advancement of our ~~substantial debt.~~

~~Our ability~~core business. We expect that any potential divestitures of assets will also provide us with cash to reinvest in our business and repay indebtedness. These dispositions, together with any other future dispositions we make, ~~scheduled payments~~may involve risks and uncertainties, including disruption to other parts of our business, potential loss of employees, customers or revenue, exposure to unanticipated liabilities or result in ongoing obligations and liabilities to us following any such divestiture. In addition, any such divestitures may not yield the targeted improvements in our business. Any of the principal of, to pay interest on or to refinance our indebtedness, including the Convertible Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

~~We owe a significant amount of money under the Convertible Notes which~~foregoing could adversely affect our financial ~~flexibility~~condition and results of operations or cash flows and, as a result, our ~~competitive position~~ability to make payments of our debt obligations.

Risks Relating to a Pending Acquisition

We need to raise significant additional capital to complete the planned acquisition of assets and operations from Tensile-Vertex, and in the event we fail to complete such transactions, our interests in Heartland SPV may be liquidated.

On February 25, 2022, Vertex Splitter entered into a Purchase and Sale Agreement with Tensile-Vertex and Tensile-Heartland. Tensile-Heartland holds 65% of Heartland SPV, and Tensile-Vertex holds 100% of Tensile-Heartland.

Pursuant to the Heartland Purchase Agreement, the Company, through Vertex Splitter, agreed to acquire 100% of the outstanding securities of Tensile-Heartland, the result of which will be that Vertex Splitter will own 100% of Heartland SPV.

Pursuant to the Heartland Purchase Agreement, the purchase price payable by Vertex Splitter to Vertex-Tensile, for 100% of Tensile-Heartland is $35 million (the “Base Amount”), plus an amount accrued and accruing from and after May 31, 2021, on the Base Amount on a daily basis at the rate of 22.5% per annum compounded on the last day of each calendar quarter plus an amount equal to any and all cash and cash equivalents of Tensile-Heartland, as of the closing date, which we currently anticipate will total an aggregate of approximately $44 million. The purchase contemplated by the Heartland Purchase Agreement is required to take place on June 30, 2022, or earlier as mutually agreed by the parties, subject to customary conditions to closing. The Heartland Purchase Agreement includes customary representations of the parties, requires the parties to bear their own fees and expenses, except that each party is required to pay the fees and expenses of the other party upon termination of the agreement in certain situations; includes customary indemnification obligations; and includes mutual releases of the parties, effective upon closing. The Heartland Purchase Agreement may be terminated prior to closing, by the mutual consent of the parties; by Vertex Splitter if Vertex-Tensile has failed to consummate the agreement, or breached a covenant, representation or warranty set forth in the agreement, that prevents such closing, and such breach is not cured, if capable of being cured, within 30 days after notice thereof; by Vertex-Tensile if Vertex Splitter has failed to consummate the agreement, or breached a covenant, representation or warranty set forth in the agreement, that prevents such closing, and such breach is not cured, if capable of being cured, within 30 days after notice thereof; or by either party if there is a final, non-appealable judgment preventing the closing.

Pursuant to a Side Letter, in the event that (i) the closing of the transactions contemplated by the Myrtle Grove Purchase Agreement did not occur on or prior to March 31, 2022 (which transaction was completed on April 1, 2022, and which failure to ~~comply with~~close by March 31, 2022, was waived by Vertex-Tensile), and/or (ii) the ~~terms~~closing of the ~~Indenture could~~transactions contemplated by the Heartland Purchase Agreement does not occur on or prior to June 30, 2022, then, in addition to any of the rights of Tensile-Vertex under the Heartland Purchase Agreement: (a) the Vertex Parties will use their best efforts to cause the closings under the Heartland Purchase Agreement to occur, including without limitation by raising debt financing, selling equity in a private or public transaction, selling assets and/or otherwise doing all things necessary or appropriate to raise the funds necessary to make the payments required to be made by Vertex Splitter Corporation ("Vertex Splitter") under the Heartland Purchase Agreement, in each case on commercially reasonable terms and conditions, subject to certain exceptions; (b) upon the written election of Tensile-Vertex, the Vertex Parties will and will cause their affiliates to consent to the distribution or other payment of any and all cash and cash equivalents of Heartland SPV (including any proceeds from the repayment of that certain $7,000,000 promissory note, issued by Vertex Operating to Heartland SPV on July 1, 2021, as amended to date and any direct and indirect subsidiaries to Tensile-Vertex, with such distribution or other payment to be structured as specified by Tensile-Vertex so as to be tax efficient for Tensile-Vertex; and (c) Tensile-Vertex may, with written notice, cause Heartland SPV to initiate a process intended to result in a sale of Heartland SPV, with Tensile-Vertex being entitled, upon the ~~Convertible Notes being declared in default.~~

~~We have a significant~~consummation of such sale, of the greater of (i) 65% of the total net equity proceeds of such sale, and (ii) the amount ~~of outstanding indebtedness. As~~due to Tensile-Vertex under the Heartland Purchase Agreement as of the date of ~~this filing, we owed approximately $155.0 million under~~ the ~~Convertible Notes.~~ ~~Despite our current debt levels, we and our subsidiaries may be able to incur substantial additional debt in the future, subject to the restrictions contained in our debt instruments, some~~consummation of ~~which may be secured debt.~~

~~Our substantial indebtedness could have important consequences and significant effects on our business. For example, it could:~~

~~•increase our vulnerability to adverse changes in general economic, industry and competitive conditions;~~

•require us to dedicate a substantial portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;

~~•restrict us from taking advantage of business opportunities;~~

~~•make it more difficult to satisfy our financial obligations;~~

~~•place us at a competitive disadvantage compared to our competitors that have less debt obligations; and~~

•limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy or other general corporate purposes on satisfactory terms or at all.

The indenture governing our Senior Notes imposes certain restrictions on us and requires us to maintain compliance with specified covenants. Our ability to comply with these covenants may be affected by events beyond our control. A failure to comply with the covenants and other provisions of our outstanding debt could result in events of default under such ~~instruments, which could permit acceleration of all of our debt and borrowings. Any required repayment of our debt as a result~~

~~of a fundamental change or other acceleration would lower our current cash on hand such that we would not have those funds available for use in our business.~~

sale.

We ~~may~~will need to raise significant additional ~~funding in~~capital to close the ~~future to repay or refinance~~acquisition contemplated by the ~~Convertible Notes and as such may need to seek additional debt or equity financing. Such additional financing~~Heartland Purchase Agreement, which funding may not be available on favorable terms, if at all. If we raise such funding through the sale of debt, ~~financing is available and obtained, our interest expense may increase and~~ we may be subject to the risk of default, depending on the terms of such financing. If equity financing is available and obtained it may result in our shareholders experiencing significant dilution. If such financing is unavailable, we may be forced to curtail our operations, which may cause the value of our securities to decline in value and/or become worthless.

~~Our ability to service our indebtedness will depend on our ability to generate cash in the future.~~

Our ability to make payments on our indebtedness (including our Convertible Notes) will depend on our ability to generate cash in the future. Our ability to generate cash is subject to general economic and market conditions and financial, competitive, legislative, regulatory and other factors that are beyond our control. Our business may not generate sufficient cash to fund our working capital requirements, capital expenditure, debt service and other liquidity needs, which could result in our inability to comply with financial and other covenants contained in our debt agreements, our being unable to repay or pay interest on our indebtedness, and our inability to fund our other liquidity needs. If we are unable to service our debt obligations, fund our other liquidity needs and maintain compliance with our financial and other covenants, we could be forced to curtail our operations, our creditors could accelerate our indebtedness and exercise other remedies and we could be required to ~~pursue one~~pay significant interest or ~~more alternative strategies,~~other amounts on such ~~as selling assets~~ debt, and/or ~~refinancing or restructuring our indebtedness. However, such alternatives may not be feasible or adequate.~~

We may not have enough available funds or the ability to raise the funds necessary to pay the special mandatory redemption price on the Convertible Notes upon a special mandatory redemption, to repurchase the Convertible Notes for cash upon a fundamental change or to settle conversions of the Convertible Notes in cash, and our future indebtedness may contain limitations on our ability to pay cash upon conversion or repurchase of the Convertible Notes.

If the Mobile Acquisition is not consummated on or prior to April 1, 2022, if we have not certified to the escrow agent of the escrow pursuant to which 75% of the net proceeds from our November 2021 Convertible Note offering (approximately $100 million) are being held, pending all conditions precedent to our obligations to consummate the Mobile Acquisition being satisfied, or if we notify the Trustee and the escrow agent in writing that the Refinery Purchase Agreement has been terminated, the Convertible Notes will be subject to special mandatory redemption at a special mandatory redemption price equal to 100% of the aggregate accreted principal amount thereof, plus accrued and unpaid interest to, but excluding, the special mandatory redemption date, plus accrued and unpaid interest to, and including, the date that is nine months after the special mandatory redemption date.

Further, holders of the Convertible Notes will have the right to require us to repurchase all or a portion of their Convertible Notes upon the occurrence of a fundamental change at a fundamental change repurchase price equal to 100% of the accreted principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.

~~In addition, unless and until~~material covenants. If we obtain stockholder approval to issue more than 12,650,514 shares of our common stock, which is 19.99% of our common stock outstanding on October 26, 2021, upon conversion of the Convertible Notes in accordance with the listing standards of The Nasdaq Capital Market, we will be required to elect “cash settlement” for all conversions of the Convertible Notes and we will not be permitted to issue shares of common stock upon conversion until we obtain such stockholder approval. After we obtain such stockholder approval, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the Convertible Notes being converted.

Moreover, we will be required to repay the Convertible Notes in cash at their maturity unless earlier repurchased, redeemed or converted. However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of Convertible Notes surrendered therefor or Convertible Notes are being redeemed or converted. In addition, our ability to repurchase the Convertible Notes or to pay cash upon redemptions of the Convertible Notes may be limited by agreements we enter into governing our future indebtedness, which may limit our ability to repurchase the Convertible Notes or to pay cash upon redemptions or conversions of the Convertible Notes. Finally, our ability to repurchase the Convertible Notes or to pay cash upon redemptions or conversions of the Convertible Notes may be limited by law or by regulatory authority. Our failure to repurchase Convertible Notes at a time when the repurchase is required by the indenture or to pay any cash payable upon redemption or on future conversions of the Convertible Notes, as required by the indenture, would constitute a default under the indenture. A default under the indenture or the occurrence of a fundamental change itself could also lead to a default under agreements governing our future indebtedness. Moreover, the occurrence of a fundamental change under the indenture governing the Convertible Notes could constitute an event of default under any agreements

4238

~~governing our future indebtedness. If~~raise such funding through the ~~repayment~~sale of equity, it may create significant dilution to existing shareholders. In the ~~related indebtedness were~~event we fail to close the transactions contemplated by the Heartland Purchase Agreement within the required timeline, Heartland SPV or its assets may be ~~accelerated after any applicable notice or grace periods,~~liquidated, which would mean we ~~may~~would not have ~~sufficient funds to repay~~rights or ownership of such assets, and the ~~indebtedness~~sales price of Heartland SPV and/or its assets may be depressed at the time of sale, each of which may have a material adverse effect on our assets, operations or prospects.

Legal, Environmental, Governmental and ~~repurchase the Convertible Notes or make cash payments upon conversions thereof.~~

Regulatory Risks

We may ~~not have sufficient funds available to pay amounts owed on~~incur significant environmental remediation costs and liabilities in the ~~Convertible Notes,~~operation of our refineries, facilities, terminals and ~~such funding may not be available on favorable terms, if at all. Our failure to pay the amounts due under the Convertible Notes, when due, would constitute a default under the Convertible Notes~~related facilities.

The operation of our refineries, facilities, terminals, and ~~may force~~related facilities subject us to ~~sell certain assets, curtail~~the risk of incurring significant environmental remediation costs and liabilities due to our ~~business plan,~~handling of petroleum hydrocarbons and other products, because of air emissions and water discharges related to our operations and activities, and as a result of historical operations and waste disposal practices at our facilities or ~~seek bankruptcy protection.~~in connection with our activities, some of which may have been conducted by prior owners or operators. We could incur significant remedial costs in the cleanup of any petroleum hydrocarbons or wastes or hazardous substances or wastes that may have been released on, under or from the properties owned or operated by us.

~~Unless~~Some environmental laws may impose joint and ~~until~~several, strict liability for releases of petroleum hydrocarbons and wastes or hazardous substances or wastes, which means in some situations, we ~~obtain stockholder approval~~could be exposed to ~~issue more than 12,650,514 shares~~liability as a result of our ~~common stock upon conversion~~conduct that was lawful at the time it occurred or the conduct of, or conditions caused by, prior operators or other third parties. Private parties, including the ~~Convertible Notes in accordance~~owners of properties adjacent to our operations and facilities where our petroleum hydrocarbons or wastes or hazardous substances or wastes are taken for reclamation or disposal, may also have the right to pursue legal actions to enforce compliance as well as to seek damages for non-compliance with ~~the listing standards of The Nasdaq Capital Market, we will be required to elect “cash settlement”~~environmental laws and regulations or for ~~all conversions of the Convertible Notes.~~

Unless and until we obtain stockholder approval to issue more than 12,650,514 shares of our common stock upon conversion of the Convertible Notes in accordance with the listing standards of The Nasdaq Capital Market, we will be required to elect “cash settlement” for all conversions of the Convertible Notes and will not be permitted to issue shares of common stock upon conversion until we obtain such stockholder approval (the “Stockholder Approval Date”).personal injury or property damage. We may not be able to ~~receive~~recover some or any of these costs from insurance or other sources of indemnity. To the extent that the costs associated with meeting any or all of these requirements are significant and not adequately secured or indemnified for, there could be a material adverse effect on our business, financial condition and results of operations or cash flows and, as result, our ability to make payments of our debt obligations.

The nature of our operations exposes us, and the communities in which we work, to a wide range of health, safety, security and environment risks.

The health, safety, security and environment (HSSE) risks to which we and the communities in which we work are potentially exposed cover a wide spectrum, given the wide geographical area and diversity of our operations. These risks include the effects of natural disasters (including weather events), earthquakes, social unrest, pandemic diseases, criminal actions by external parties, and safety lapses. If a major risk materializes, such ~~stockholder approval~~as an explosion or hydrocarbon leak or spill, this could result in injuries, loss of life, environmental harm, disruption of business activities, loss or suspension of permits, loss of our licenses to operate. Accordingly, this could have a material adverse effect on our earnings, cash flows and financial condition. Our operations are subject to extensive HSSE regulatory requirements that often change and are likely to become more stringent over time. We could incur significant extra costs in the future because of the need to comply with such requirements. We could also incur significant extra costs due to violations of or liabilities under laws and regulations that involve elements such as fines, penalties, clean-up costs and third-party claims. If HSSE risks materialize, they could have a material adverse effect on our earnings, cash flows and financial condition.

Risks Related to Our Securities

Our outstanding options and convertible securities may ~~not be able~~adversely affect the trading price of our common stock.

As of the date of the filing, we had (i) outstanding stock options to ~~deliver~~purchase an aggregate of 4,135,168 shares of common stock upon conversion of the Convertible Notes during the term of the Convertible Notes. As discussed above and below, we may not have the cash or the ability to raise funds necessary to make such cash payments and any such payment, if made, could adversely affect our liquidity.

~~The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect our financial condition and liquidity.~~

In the event the conditional conversion feature of the Convertible Notes is triggered, and that we have obtained stockholder approval for the issuance of shares in excess of the applicable share threshold discussed above, holders of Convertible Notes will be entitled to convert the Convertible Notes at any time during specified periods at their option.

~~Specifically, the Convertible Notes bear interest~~ at a ~~rate~~weighted average exercise price of ~~6.25%~~$1.74 per ~~year, payable semiannually in arrears~~share; (ii) outstanding warrants to purchase 2,750,000 shares of common stock at an exercise price of $4.50; (iii) 380,560 outstanding shares of Series A Convertible Preferred Stock (which convert on ~~April 1~~a one-for-one basis (subject to adjustments for stock splits and ~~October 1 of each year, beginning on April 1, 2022. The Convertible Notes are convertible~~recapitalizations) into common stock); and (iv) outstanding Convertible Senior Notes which may be converted into a maximum of 36,214,960 shares of common stock, ~~(following~~based on the ~~Stockholder Approval Date) at an~~ initial maximum conversion rate of ~~169.9235~~233.6449 shares of the Company’s common stock per $1,000 principal amount of ~~Convertible~~ Notes, ~~(equivalent~~which is subject to ~~an initial conversion price of approximately $5.89 per share). Prior to July 1, 2027,~~customary and other adjustments described in the ~~Convertible Notes will be convertible at~~Indenture. For the ~~option~~life of the options and warrants, the holders ofhave the ~~Convertible Notes only upon~~opportunity to profit from a rise in the satisfaction of certain conditions and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election, provided that until such time as the Company's stockholders have approved the issuance of more than 19.99%market price of our common stock ~~issuable~~without assuming the risk of ownership. The issuance of shares upon the exercise of outstanding securities will also dilute the ownership interests of our existing stockholders.

The availability of these shares for public resale, as well as any actual resales of these shares, could adversely affect the trading price of our common stock. We cannot predict the size of future issuances of our common stock pursuant to the exercise of outstanding options or warrants or conversion of other securities, or the ~~Convertible Notes in accordance with the rules~~effect, if any, that future issuances and sales of The Nasdaq Capital Market, the Company is required to elect “cash settlement” for all conversions of the Convertible Notes. The Company will also be required to increase the conversion rate for holders who convert their Convertible Notes in connection with a fundamental change and certain other corporate events or convert their Convertible Notes called for optional redemption (or deemed called for optional redemption) following delivery by the Company of a notice of redemption, in either case, in certain circumstances.

~~If one or more holders elect to convert their Convertible Notes, unless we elect to satisfy our conversion obligation by delivering solely~~ shares of our common stock ~~(other than paying cash in lieu of delivering any fractional share)(to~~may have on the ~~extent the Stockholder Approval Date has occurred), we would be required to settle a portion or all~~market price of our ~~conversion obligation through the payment~~common stock. Sales or distributions of cash, which could adversely affect our liquidity. Further, even if holders do not elect to convert their Convertible Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Convertible Notes, as a current rather than long-term liability, which would result in a material reductionsubstantial amounts of our ~~net working capital.~~

~~Additionally, the issuance of~~ common stock ~~upon conversion~~(including shares issued in connection with an acquisition), or the perception that such sales could occur, may cause the market price of ~~the Convertible Notes will result in immediate and substantial dilution~~our common stock to ~~the interests of other stockholders.~~ decline.

In addition, the common stock issuable upon exercise/conversion of ~~the Convertible Notes~~outstanding convertible securities may represent overhang that may also adversely affect the market price of our common stock. Overhang occurs when there is a greater supply of a company’s stock in the market than there is demand for that stock. When this happens the price of ~~the company’s~~our stock will decrease, and any additional shares which ~~shareholders~~stockholders attempt to sell in the market will only further decrease the share price. The Convertible Notes may in the future be convertible into shares of our common stock at a discount to market, which would provide the holders with the ability to sell their common stock at or below market and still make a profit. If the share volume of our common stock cannot absorb ~~the discounted~~ shares sold by holders of our outstanding convertible securities, then the value of our common stock will likely decrease.

The Warrants have certain anti-dilutive rights, put and call rights upon the occurrence of a fundamental transaction, and include a limitation on the number of shares of common stock which may be issued upon exercise thereof without shareholder approval.

The Warrants have a five-year term and a $4.50 per share exercise price, and include weighted average anti-dilutive rights in the event any shares of common stock or other equity or equity equivalent securities payable in common stock are granted, issued or sold (or the Company enters into any agreement to grant, issue or sell), or in accordance with the terms of the Warrant Agreement, are deemed to have granted, issued or sold, in each case, at a price less than the exercise price, which automatically decreases the exercise price of the Warrants upon the occurrence of such event, as described in greater detail in the Warrant Agreement, and increases the number of shares of common stock issuable upon exercise of the Warrants, such that the aggregate exercise price of all Warrants remains the same before and after any such dilutive event. Such anti-dilution rights, if triggered, could result in a significant decrease in the exercise price of the Warrants combined with a significant increase in the number of shares of common stock issuable upon exercise thereof, which could result in significant dilution to existing shareholders.

Upon the occurrence of a fundamental transaction (as described in the Warrant Agreement) the Warrant Agreement (a) provides each holder a put right and (b) provides the Company with a call right in respect of the Warrants. Upon the exercise of a put right by the holder or a call right by the Company, the Company is obligated to repurchase the Warrants for the Black Scholes Value of the Warrants repurchased, as calculated in the Warrant Agreement. Such Black Scholes value may be significant and the requirement to pay such amount may prohibit us from completing a transaction which would otherwise be accretive to shareholders or make such transaction more costly.

Additionally, until or unless the Company receives shareholder approval under applicable Nasdaq listing rules for the issuance of more than 19.9% of the Company’s outstanding shares of common stock on the date the Warrant Agreement was entered into (i.e., more than 12,828,681 shares of common stock)(the “Share Cap”), the Company may not issue more shares of common stock upon exercise of the Warrants than totals the Share Cap, and is required to pay the Lenders cash, based on the fair market value of any shares required to be issued upon exercise of the Warrants (as calculated in the Warrant Agreement), which would exceed the Share Cap. In the event the anti-dilutive rights of the Warrants result in more than 12,828,681 shares of common stock being issuable upon exercise of the Warrants, we could be required to pay cash to the holders of the Warrants in the amount equal to such excess shares, which could have a significant adverse effect on our available funds and liquidity.

The Warrants also include cashless exercise rights. As a result, we may not receive any cash upon the exercise of the Warrants.

We face significant penalties and damages in the event we do not timely file or obtain effectiveness of a registration statement registering the resale of the shares of common stock issuable upon exercise of the Warrants, or such registration statement is not available for the sale of such shares.

In connection with the grant of the Warrants, the Company and the holders of such Warrants entered into a Registration Rights Agreement dated April 1, 2022 (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Company agreed to file a registration statement (the “Initial Registration Statement”) with the Securities and Exchange Commission (the “SEC” or the “Commission”) as soon as reasonably practicable and in no event later than June 15, 2022, for purposes of registering the resale of the shares of common stock issuable upon exercise of the Warrants. The Company also agreed to use commercially reasonable efforts to cause the SEC to declare the Registration Statement effective as soon as practicable and no later than 45 days following the filing of the Initial Registration Statement; provided, that such date

4340

~~The accounting method for reflecting~~is extended until 120 days after the ~~Convertible Notes on our balance sheet, accruing interest expense for~~filing date if the ~~Convertible Notes and reflecting~~Initial Registration Statement is reviewed by the ~~underlying shares of our common stock in our reported diluted earnings per share may adversely affect our reported earnings and financial condition.~~

~~In August 2020, the Financial Accounting Standards Board (“FASB”) published an Accounting Standards Update, which we refer to as ASU 2020-06, which simplifies certain~~staff of the ~~accounting standards that apply~~Commission. The Registration Rights Agreement also provides the holders of the Warrants certain piggyback and demand registration rights (including pursuant to ~~convertible notes. ASU 2020-06 will~~an underwritten offering, in the event the gross proceeds from such underwritten offering are expected to exceed $35 million).

If, subject to certain limited exceptions described in the Registration Rights Agreement, (i) the Initial Registration Statement required to be ~~effective for SEC-reporting entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. However, early adoption~~filed pursuant to the Registration Rights Agreement is ~~permitted in certain circumstances for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. In accordance with ASU 2020-06, we expect that~~not filed on or prior to the ~~Convertible Notes will be reflected as a liability on our balance sheets,~~required filing deadline (or without complying with the ~~initial carrying amount equal to the principal amount~~terms of the ~~Convertible Notes, net of issuance costs. The issuance costs will be treated as~~Registration Rights Agreement), (ii) a ~~debt discount~~registration statement registering for ~~accounting purposes, which will be amortized into interest expense over the term~~resale all of the ~~Convertible Notes. As a result of this amortization,~~registrable securities is not declared effective by the ~~interest expense that we expect to recognize for~~Commission by the ~~Convertible Notes for accounting purposes will be greater than~~required effectiveness deadline, or (iii) during the ~~cash interest payments we will pay~~period commencing on the ~~Convertible Notes, which will result in lower reported income.~~

~~In addition, we expect that~~effective date of the Initial Registration Statement and ending on the earlier of the date when there are no registrable securities or the third anniversary of the effective date of the Initial Registration Statement, a registration statement is not continuously effective to allow the sale of the shares underlying the ~~Convertible Notes will~~Warrants, for more than 10 consecutive calendar days or more than an aggregate of 15 calendar days (which need not be ~~reflected~~consecutive) during any 12-month period, then, in ~~our diluted earnings per share using~~addition to any other rights such holder of Warrants may have under the ~~“if converted” method,~~Registration Rights Agreement or applicable law, (x) on the first such applicable default date, the Company is required to pay to such holder of a Warrant an amount in ~~accordance with ASU 2020-06. Under that method, if~~cash, as partial liquidated damages and not as a penalty, equal to 1.0% of the ~~conversion~~fair market value (such fair market value calculated as required under the Registration Rights Agreement) of the registrable securities held by such holder (the “1% Penalty”), and (y) on each monthly anniversary of such default date until all applicable defaults have been cured, shall pay the 1% Penalty, subject to a maximum penalty of 10% of the fair market value of the ~~Convertible Notes exceeds their principal amount for a reporting period, then we will calculate our diluted earnings per share assuming that all~~registrable securities held by each applicable holder of Warrants (such fair market value calculated as required under the Registration Rights Agreement).

The Company has agreed, among other things, to indemnify the holders of the ~~Convertible Notes were converted at~~Warrants and their affiliates with respect to certain liabilities and to pay all fees and expenses incident to the ~~beginning of~~Company’s obligations under the ~~reporting period and that~~Registration Rights Agreement.

In the event the Initial Registration Statement is not timely filed or declared effective within the required time limits set forth above, or such registration statement is subsequently suspended or terminated, or we ~~issued shares of our common stock~~otherwise fail to settle the excess. However, if reflecting the Convertible Notes in diluted earnings per share in this manner is anti-dilutive, or if the conversion value of the Convertible Notes does not exceed their principal amount for a reporting period, then the shares underlying the Convertible Notes will not be reflected in our diluted earnings per share. The application of the if-converted method may reduce our reported diluted earnings per share, and accounting standards may changemeet certain requirements set forth in the ~~future in a manner that may adversely affect our diluted earnings per share.~~

~~We have not reached a final determination regarding the accounting treatment for the Convertible Notes, and the description above is preliminary. Accordingly,~~Registration Rights Agreement, we ~~may account for the Convertible Notes in a manner that is significantly different than described above.~~

~~In addition, so long as we are~~could be required to settle conversions of Convertible Notes entirely in cash, the conversion option that is part of the Convertible Notes may be accounted for as a derivative pursuant to accounting standards relating to derivative instruments and hedging activities. Under such standards, for each financial statement period after issuance of the Convertible Notes, if “cash settlement” applies, a gain (or loss) would be reported in our consolidated statement of operations to the extent the valuation of the conversion option changes from the previous period,pay significant penalties which ~~could result in significant volatility in our results of operations. This~~ could adversely affect our ~~reported or future financial results, the market price of our common stock~~cash flow and cause the value of ~~the Convertible Notes. Furthermore, this could also make it harder~~our securities to ~~compare period to period financial results, as a result of potentially significant non-cash gains or losses relating to such accounting.~~

~~The conversion rate for Convertible Notes converted~~decline in ~~connection with a make-whole fundamental change or a notice of redemption for an optional redemption may be increased.~~

If a make-whole fundamental change occurs prior to the maturity date of the Convertible Notes or upon the issuance of a notice of redemption for an optional redemption, we will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such make-whole fundamental change or elects to convert its Convertible Notes called (or deemed called) for optional redemption during the related redemption period, by a number of additional shares of our common stock. The increase in the conversion rate will be determined based on the date on which the specified corporate transaction becomes effective or the date of the notice and the price paid (or deemed to be paid) per share of our common stock in such transaction or the date of the redemption notice. Provided however, in no event will the conversion rate per $1,000 principal amount of Convertible Notes as a result of this adjustment exceed 233.6449 shares of common stock.

In addition, unless and until we obtain stockholder approval to issue more than 12,650,514 shares of our common stock upon conversion of the Convertible Notes in accordance with the listing standards of The Nasdaq Capital Market, we will be required to elect “cash settlement” for all conversions of the Convertible Notes and we will not be permitted to issue shares of common stock upon conversion until we obtain such stockholder approval.

Our obligation to increase the conversion rate for Convertible Notes converted in connection with a make-whole fundamental change or Convertible Notes called for optional redemption that are converted during the related redemption period could be considered a penalty, in which case the enforceability thereof would be subject to general principles of reasonableness and equitable remedies.value.

~~The fundamental change repurchase feature of the Convertible Notes could delay or prevent an otherwise beneficial attempt to take over our company, or discourage a potential acquirer of us.~~

The Convertible Notes include certain repurchase rights of the holders which are triggered upon a fundamental change as discussed herein. A takeover of our company would trigger an option of the holders of the Convertible Notes to require us to repurchase the Convertible Notes. This may have the effect of delaying or preventing a takeover of our company that would otherwise be beneficial to shareholders or discouraging a potential acquirer of us.

4541

Item 2. Recent Sales of Unregistered Securities

There have been no sales of unregistered securities during the quarter ended ~~September 30, 2021~~March 31, 2022 and from the period from ~~October~~January 1, ~~2021~~2022, to the filing date of this report, which have not previously been disclosed in ~~the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, or~~ a Current Report on Form 8-K, except as set forth below:

In ~~July 2021,~~January 2022, a holder of Series A Convertible Preferred Stock of the Company converted ~~6,001~~1,451 shares of the Company’s Series A Convertible Preferred Stock into ~~6,001~~1,451 shares of common stock, pursuant to the terms of such Series A Convertible Preferred Stock.

In February 2022, a holder of Series A Convertible Preferred Stock of the Company converted 2,995 shares of the Company’s Series A Convertible Preferred Stock into 2,995 shares of common stock, pursuant to the terms of such Series A Convertible Preferred Stock.

In March 2022, a holder of Series A Convertible Preferred Stock of the Company converted 595 shares of the Company’s Series A Convertible Preferred Stock into 595 shares of common stock, pursuant to the terms of such Series A Convertible Preferred Stock.

We claim an exemption from registration provided by Section 3(a)(9) of the Securities Act for such issuance, as the securities were exchanged by us with our existing security holder in a transaction where no commission or other remuneration was paid or given directly or indirectly for soliciting such exchange.

In August 2021, a holder of warrants exercised warrants to purchase 32,052 shares of our common stock with an exercise price of $1.53 per share, paying the aggregate exercise price of $49,040, and was issued 32,052 shares of common stock in connection therewith. We claim an exemption from registration pursuant to Section 4(a)(2) of the Securities Act, for the above issuance in connection with the exercise. The resale of shares of common stock issuable upon exercise of the warrant was registered under the Securities Act.

In August 2021, two holders of warrants exercised warrants to purchase an aggregate of 120,194 shares of our common stock with an exercise price of $1.53 per share, paying the aggregate exercise price of $183,897, and was issued an aggregate of 120,194 shares of common stock in connection therewith. We claim an exemption from registration pursuant to Section 4(a)(2) of the Securities Act, for the above issuances in connection with the exercises. The resale of shares of common stock issuable upon exercise of the warrants were registered under the Securities Act .

In September 2021, a holder of warrants exercised warrants to purchase 1,126,111 shares of our common stock with an exercise price of $1.53 per share, paying the aggregate exercise price of $1,722,950, and was issued 1,126,111 shares of common stock in connection therewith. We claim an exemption from registration pursuant to Section 4(a)(2) of the Securities Act, for the above issuance in connection with the exercise. The resale of shares of common stock issuable upon exercise of the warrant was registered under the Securities Act.

In September 2021, certain other holders of warrants exercised warrants to purchase an aggregate of 281,535 shares of our common stock with an exercise price of $1.53 per share, paying the aggregate exercise price of $430,749, and were issued an aggregate of 281,535 shares of common stock in connection therewith. We claim an exemption from registration pursuant to Section 4(a)(2) of the Securities Act, for the above issuances in connection with the exercises. The resale of shares of common stock issuable upon exercise of the warrants were registered under the Securities Act .

In September 2021, a holder of warrants exercised warrants to purchase 280,449 shares of our common stock with an exercise price of $1.53 per share, paying the aggregate exercise price of $429,087, and was issued 280,449 shares of common stock in connection therewith. We claim an exemption from registration pursuant to Section 4(a)(2) of the Securities Act, for the above issuance in connection with the exercise. The resale of shares of common stock issuable upon exercise of the warrant was registered under the Securities Act.

As a result of the issuances described above, and certain other transactions which occurred during the period as previously reported, there are 385,601 outstanding shares of Series A Convertible Preferred Stock issued and outstanding as of the date of this Report, and the maximum number of shares of common stock which may be issued, if such shares were converted in full, totals 385,601 shares of common stock.

Use of Proceeds from Sale of Registered Securities

None.

~~Issuer~~ Purchases of Equity Securities by the Issuer and Affiliate Purchasers

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information.

None.

4742

Item 6. Exhibits

4843

Incorporated by Reference
Exhibit Number Description of Exhibit Filed or Furnished Herewith Form Exhibit Filing Date/Period End Date File No.
2.1+£
Sale and Purchase Agreement dated May 26, 2021, by and between Vertex Operating Company LLC and Equilon Enterprises LLC d/b/a Shell Oil Products US and/or Shell Chemical LP and/or Shell Oil Company
8-K 2.1 5/27/2021 001-11476
2.2+£
Asset Purchase Agreement among Vertex Energy, Inc., Vertex Energy Operating, LLC, Vertex Refining LA, LLC, Vertex Refining OH, LLC, Cedar Marine Terminals, L.P., H & H Oil, L.P., and Safety-Kleen Systems, Inc. dated as of June 29, 2021
8-K 2.1 6/29/2021 001-11476
3.1
First Amendment to Vertex Refining Myrtle Grove LLC Limited Liability Company Agreement dated July 1, 2021
8-K 3.1 7/2/2021 001-11476
4.1
Indenture, dated as of November 1, 2021, by and between Vertex Energy, Inc. and U.S. Bank National Association, as Trustee.
8-K 4.1 11/2/2021 001-11476
4.2
Form of Global Note, representing Vertex Energy, Inc.’s 6.25% Convertible Senior Notes due 2027 (included as Exhibit A to the Indenture incorporated by reference as Exhibit 4.1).
8-K 4.2 11/2/2021 001-11476
10.1+
Swapkit Purchase Agreement entered into between Vertex Energy Operating, LLC and Equilon Enterprises LLC d/b/a Shell Oil Products US, dated May 26, 2021
8-K 10.2 5/27/2021 001-11476
10.2
$7,000,000 Promissory Note provided by Vertex Energy Operating, LLC to HPRM LLC
8-K 10.1 7/2/2021 001-11476
10.3
First Amendment to $7,000,000 Promissory Note dated and effective October 11, 2021 by and between Vertex Energy Operating, LLC and HPRM LLC
8-K 10.2 10/14/2021 001-11476
10.4
Seventh Amendment to Credit Agreement dated May 26, 2021, by and between Vertex Energy, Inc., Vertex Energy Operating, LLC, Encina Business Credit, LLC, as agent, and the lenders party thereto
8-K 10.4 7/2/2021 001-11476
10.5
Seventh Amendment to ABL Credit Agreement dated May 26, 2021, by and between Vertex Energy, Inc., Vertex Energy Operating, LLC, Encina Business Credit, LLC, as agent, and the lenders party thereto
8-K 10.5 7/2/2021 001-11476
10.6
Eighth Amendment to Credit Agreement dated July 1, 2021, by and between Vertex Energy, Inc., Vertex Operating, LLC, Encina Business Credit, LLC as agent, and the lenders party thereto
8-K 10.6 7/2/2021 001-11476
31.1
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act*
X
31.2
Certification of Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act*
X
32.1
Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act**
X



Incorporated by Reference
Exhibit Number	Description of Exhibit	Filed or Furnished Herewith	Form	Exhibit	Filing Date/Period End Date	File No.

2.1+£	Sale and Purchase Agreement dated May 26, 2021, by and between Vertex Operating Company LLC and Equilon Enterprises LLC d/b/a Shell Oil Products US and/or Shell Chemical LP and/or Shell Oil Company		8-K	2.1	5/27/2021	001-11476
2.2	Assignment and Assumption of Contract effective April 1, 2022, between Vertex Energy Operating LLC and Vertex Refining Alabama LLC		8-K	2.2	4/7/2022	001-11476
3.1	First Amendment to Vertex Refining Myrtle Grove LLC Limited Liability Company Agreement dated July 1, 2021		8-K	3.1	7/2/2021	001-11476
4.1	Indenture, dated as of November 1, 2021, by and between Vertex Energy, Inc. and U.S. Bank National Association, as Trustee.		8-K	4.1	11/2/2021	001-11476
4.2	Form of Global Note, representing Vertex Energy, Inc.’s 6.25% Convertible Senior Notes due 2027 (included as Exhibit A to the Indenture incorporated by reference as Exhibit 4.1).		8-K	4.2	11/2/2021	001-11476
4.3	Warrant Agreement dated April 1, 2022, by and among Vertex Energy, Inc. and Continental Stock Transfer & Trust Company, as warrant agent		8-K	4.1	4/7/2022	001-11476
10.1#	Swapkit Purchase Agreement entered into between Vertex Energy Operating, LLC and Equilon Enterprises LLC d/b/a Shell Oil Products US, dated May 26, 2021		8-K	10.2	5/27/2021	001-11476
10.2	$7,000,000 Promissory Note provided by Vertex Energy Operating, LLC to HPRM LLC		8-K	10.1	7/2/2021	001-11476
10.3	First Amendment to $7,000,000 Promissory Note dated and effective October 11, 2021 by and between Vertex Energy Operating, LLC and HPRM LLC		8-K	10.2	10/14/2021	001-11476
10.4	Asset Purchase Termination Agreement among Vertex Energy, Inc., Vertex Energy Operating, LLC, Vertex Refining LA, LLC, Vertex Refining OH, LLC, Cedar Marine Terminals, L.P., H & H Oil, L.P., Vertex Recovery, L.P., and Safety-Kleen Systems, Inc. dated as of January 24, 2022		8-K	10.1	1/25/2022	001-11476
10.5£#	Master Offtake Agreement between Vertex Refining Alabama LLC and Idemitsu Apollo Renewable Corp. dated February 4, 2022, and executed February 14, 2022		8-K	10.2	1/25/2022	001-11476
10.6	Form of Continuing Guaranty between Idemitsu Apollo Renewable Corp. and Idemitsu Kosan Co., Ltd.		8-K	10.1	2/17/2022	001-11476
10.7	Commitment Letter, dated as of February 17, 2022, by and among certain funds and accounts managed or advised by each of BlackRock Financial Management, Inc., Whitebox Advisors LLC and Highbridge Capital Management, LLC, Chambers Energy Capital IV, LP, CrowdOut Credit Opportunities Fund LLC , CrowdOut Warehouse LLC, Vertex Energy, Inc. and Vertex Refining Alabama LLC		8-K	10.1	2/22/2022	001-11476
10.8	P urchase and Sale Agreement dated February 25, 2022, by and between Tensile-Vertex Holdings, LLC, Tensile-Heartland Acquisition Corporation and Vertex Splitter Corporation		8-K	10.1	3/3/2022	001-11476
10.9	Purchase and Sale Agreement dated February 25, 2022, by and between Tensile-Vertex Holdings, LLC, Tensile-Myrtle Grove Acquisition Corporation and Vertex Splitter Corporation		8-K	10.2	3/3/2022	001-11476

4944

32.2
Certification of Principal Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act**
X
99.1
Glossary of Selected Terms
10-K 99.1 12/31/2012 001-11476
101* Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q X
101.INS* Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. X
101.SCH* Inline XBRL Taxonomy Extension Schema Document X
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document X
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document X
104* Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set X


10.10	Side Letter Re Purchase and Sale Agreements, dated February 25, 2022, by and between Tensile-Vertex Holdings LLC, Vertex Splitter Corporation and Vertex Energy, Inc.	8-K	10.3	3/3/2022	001-11476
10.11	Second Amendment to $7,000,000 Promissory Note dated and effective February 25, 2022 by and between Vertex Energy Operating, LLC and HPRM LLC	8-K	10.4	3/3/2022	001-11476
10.12#	Escrow Agreement, dated as of March 2, 2022, by and among Vertex Energy, Inc., Vertex Refining Alabama LLC, certain funds and accounts managed or advised by each of BlackRock Financial Management, Inc., Whitebox Advisors LLC and Highbridge Capital Management, LLC, Chambers Energy Capital IV, LP, CrowdOut Credit Opportunities Fund LLC , CrowdOut Capital LLC, and Cantor Fitzgerald Securities	8-K	10.5	3/3/2022	001-11476
10.13	Exchange Agreement dated March 24, 2022, by and between Vertex Energy, Inc. and Tensile Capital Partners Master Fund LP	8-K	10.1	3/25/2022	001-11476
10.14	Loan and Security Agreement dated April 1, 2022, by and among Vertex Refining Alabama LLC, as borrower, Vertex Energy, Inc., as parent and as a guarantor, certain direct and indirect subsidiaries of Vertex Energy, Inc., as guarantors, the lenders party thereto, and Cantor Fitzgerald Securities, as administrative agent and collateral agent for the lenders	8-K	10.1	4/7/2022	001-11476
10.15	Intellectual Property Security Agreement dated April 1, 2022, by and between Vertex Energy Operating, LLC, as grantor and Cantor Fitzgerald Securities, as administrative and collateral agent for the lenders	8-K	10.2	4/7/2022	001-11476
10.16	Collateral Pledge Agreement dated April 1, 2022, by and among Vertex Energy Inc., Vertex Refining Alabama LLC, each of Vertex Energy, Inc.’s direct and indirect subsidiaries party thereto and Cantor Fitzgerald Securities, as collateral agent for the lenders	8-K	10.3	4/7/2022	001-11476
10.17	Supply and Offtake Agreement dated April 1, 2022, by and between Macquarie Energy North America Trading Inc. and Vertex Refining Alabama LLC	8-K	10.4	4/7/2022	001-11476
10.18	Intercreditor Agreement dated April 1, 2022, among Cantor Fitzgerald Securities, as the term loan agent, Macquarie Energy North America Trading Inc., as the intermediation facility secured party, Vertex Refining Alabama LLC, and the other grantors party thereto	8-K	10.5	4/7/2022	001-11476
10.19	Guaranty between Vertex Energy, Inc. and Macquarie Energy North America Trading Inc., dated April 1, 2022	8-K	10.6	4/7/2022	001-11476
10.20	Pledge and Security Agreement dated April 1, 2022, between Vertex Alabama Refining LLC, and Macquarie Energy North America Trading Inc.	8-K	10.7	4/7/2022	001-11476
10.21	Registration Rights Agreement dated April 1, 2022, between Vertex Energy, Inc. and each of the holders of the Lender Warrants	8-K	10.8	4/7/2022	001-11476
10.22	Inventory Sales Agreement dated April 1, 2022, by and between Vertex Refining Alabama LLC and Macquarie Energy North America Trading Inc.	8-K	10.11	4/7/2022	001-11476
10.23#£	Crude Oil & Hydrocarbon Feedstock Supply Agreement dated April 1, 2022, by and between Vertex Refining LLC and Shell Trading (US) Company	8-K	10.12	4/26/2022	001-11476
10.24	Storage & Services Agreement dated April 1, 2022, by and between Vertex Refining Alabama LLC and Macquarie Energy North America Trading Inc.	8-K	10.13	4/26/2022	001-11476

10.25£

ULSD/Gasoline Offtake Agreement dated April 1, 2022, by and between Vertex Refining Alabama LLC and Equilon Enterprises LLC, dba Shell Oil Products US

8-K

10.14

4/26/2022

001-11476

31.1

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act*

31.2

Certification of Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act*

32.1

Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act**

32.2

Certification of Principal Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act**

101*

Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q

101.INS*

Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*

Inline XBRL Taxonomy Extension Schema Document

101.CAL*

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*

Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set

* Filed herewith.

** Furnished herewith.

*** Indicates management contract or compensatory plan or arrangement.

+# Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished supplementally to the Securities and Exchange Commission upon request; provided, however that Vertex Energy, Inc. may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedule or exhibit so furnished.

£ Certain confidential portions of this Exhibit were omitted by means of marking such portions with brackets (“[****]”) because the identified confidential portions (i) are not material and (ii) the Company customarily and actually treats that information as private or confidential.

5046

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.


			VERTEX ENERGY, INC.

Date: ~~November 8, 2021~~May 9, 2022			By: /s/ Benjamin P. Cowart
			Benjamin P. Cowart
			Chief Executive Officer
			(Principal Executive Officer)


Date: ~~November 8, 2021~~May 9, 2022			By: /s/ Chris Carlson
			Chris Carlson
			Chief Financial Officer
			(Principal Financial/Accounting Officer)

5147


Nevada			94-3439569
(State or other jurisdiction of			(I.R.S. Employer Identification No.)
incorporation or organization)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 Par Value Per Share	VTNR	The NASDAQ Stock Market LLC
		(Nasdaq Capital Market)


		Page
Cautionary Statement Regarding Forward-Looking Information
	PART I
Item 1.	Financial Statements

	Consolidated Balance Sheets (unaudited)	F-1

	Consolidated Statements of Operations (unaudited)	F-3

	Consolidated Statements of Equity (unaudited)	F-5

	Consolidated Statements of Cash Flows (unaudited)	F-86

	Notes to Consolidated Financial Statements (unaudited)	F-118

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3028

Item 4.	Controls and Procedures	3129


	PART II
Item 1.	Legal Proceedings	3230

Item 1A.	Risk Factors	3331

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4642

Item 3.	Defaults Upon Senior Securities	4742

Item 4.	Mine Safety Disclosures	4742

Item 5.	Other Information	4742

Item 6.	Exhibits	4843


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	12,112,577	$	10,895,044	Cash and cash equivalents	$	24,050,252	$	36,129,941
Restricted cash	Restricted cash	100,125		100,125		Restricted cash	100,496,998		100,496,998
Accounts receivable, net	Accounts receivable, net	5,796,484		4,858,847		Accounts receivable, net	5,957,642		5,296,867

Inventory	Inventory	2,402,126		1,458,288		Inventory	13,052,840		3,735,878

Derivative commodity asset						Derivative commodity asset	363,590		95,980
Prepaid expenses and other current assets	Prepaid expenses and other current assets	5,062,889		1,942,137		Prepaid expenses and other current assets	6,719,497		4,279,732
Assets held for sale, current	Assets held for sale, current	87,670,167		10,530,947		Assets held for sale, current	90,474,740		84,116,152
Total current assets	Total current assets	113,144,368		29,785,388		Total current assets	241,115,559		234,151,548

Noncurrent assets

Fixed assets, at cost	Fixed assets, at cost	16,508,660		15,495,562		Fixed assets, at cost	13,773,860		13,811,835
Less accumulated depreciation	Less accumulated depreciation	(1,926,886)		(1,573,025)		Less accumulated depreciation	(2,113,315)		(2,045,241)
Fixed assets, net	Fixed assets, net	14,581,774		13,922,537		Fixed assets, net	11,660,545		11,766,594
Finance lease right-of-use assets		14,842		18,100

Operating lease right-of use assets	Operating lease right-of use assets	4,850,112		4,734,497		Operating lease right-of use assets	4,891,254		5,011,454
Intangible assets, net	Intangible assets, net	385,798		466,546		Intangible assets, net	331,965		358,881

Other assets	Other assets	11,708,732		1,008,733		Other assets	22,498,249		14,771,642
Assets held for sale, noncurrent		—		72,164,157

TOTAL ASSETS	TOTAL ASSETS	$	144,685,626	$	122,099,958	TOTAL ASSETS	$	280,497,572	$	266,060,119

LIABILITIES, TEMPORARY EQUITY, AND EQUITY	LIABILITIES, TEMPORARY EQUITY, AND EQUITY					LIABILITIES, TEMPORARY EQUITY, AND EQUITY
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	5,673,876	$	2,419,543	Accounts payable	$	12,023,382	$	4,216,275
Accrued expenses	Accrued expenses	2,185,282		980,233		Accrued expenses	2,864,643		3,617,902
Dividends payable		—		606,550
Liabilities held for sale, current		38,765,716		14,342,808

Finance lease liability-current	Finance lease liability-current	346,322		122,702		Finance lease liability-current	263,065		302,166
Operating lease liability-current	Operating lease liability-current	872,694		783,747		Operating lease liability-current	959,573		959,573
Current portion of long-term debt, net of unamortized finance costs		14,398,267		4,367,169
Revolving note		—		133,446
Derivative commodity liability		155,929		94,214
Current portion of long-term debt						Current portion of long-term debt	1,047,081		2,413,295

Liabilities held for sale, current						Liabilities held for sale, current	41,696,760		37,644,312
Total current liabilities	Total current liabilities	62,398,086		23,850,412		Total current liabilities	58,854,504		49,153,523
Long-term liabilities
Long-term debt, net of unamortized finance costs		124,124		7,981,496
Finance lease liability-long-term		—		315,513

Long-term debt						Long-term debt	104,777		114,480

Convertible senior unsecured note 2027, net						Convertible senior unsecured note 2027, net	65,786,685		64,015,929
Operating lease liability-long-term	Operating lease liability-long-term	3,977,418		3,950,750		Operating lease liability-long-term	3,931,681		4,051,881

Liabilities held for sale, noncurrent		—		24,380,440

Derivative warrant liability	Derivative warrant liability	1,072,620		330,412		Derivative warrant liability	—		75,210,525
Total liabilities	Total liabilities	67,572,248		60,809,023		Total liabilities	128,677,647		192,546,338

COMMITMENTS AND CONTINGENCIES (Note 3)	COMMITMENTS AND CONTINGENCIES (Note 3)	—		—		COMMITMENTS AND CONTINGENCIES (Note 3)	—		—

TEMPORARY EQUITY


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Series B Convertible Preferred Stock, $0.001 par value per share; 10,000,000 shares designated, 4,102,690 and 4,102,690 shares issued and 0 and 4,102,690 shares outstanding at September 30, 2021 and December 31, 2020, respectively with a liquidation preference of $— and $12,718,339 at September 30, 2021 and December 31, 2020, respectively.		—		12,718,339
TEMPORARY EQUITY						TEMPORARY EQUITY

Series B1 Convertible Preferred Stock, $0.001 par value per share; 17,000,000 shares designated, 7,399,649 and 7,399,649 shares issued and 0 and 7,399,649 shares outstanding at September 30, 2021 and December 31, 2020, respectively with a liquidation preference of $— and $11,543,452 at September 30, 2021 and December 31, 2020, respectively.		—		11,036,173

Redeemable non-controlling interest	Redeemable non-controlling interest	39,771,408		31,611,674		Redeemable non-controlling interest	47,636,617		43,446,684
Total temporary equity	Total temporary equity	39,771,408		55,366,186		Total temporary equity	47,636,617		43,446,684
EQUITY	EQUITY					EQUITY
50,000,000 of total Preferred shares authorized:	50,000,000 of total Preferred shares authorized:					50,000,000 of total Preferred shares authorized:
Series A Convertible Preferred Stock, $0.001 par value; 5,000,000 shares designated, 385,601 and 419,859 shares issued and outstanding at September 30, 2021 and December 31, 2020, with a liquidation preference of $574,545 and $625,590 at September 30, 2021 and December 31, 2020.		386		420
Series A Convertible Preferred Stock, $0.001 par value; 5,000,000 shares designated, 380,560 and 385,601 shares issued and outstanding at March 31, 2022 and December 31, 2021, with a liquidation preference of $567,034 and $574,545 at March 31, 2022 and December 31, 2021.						Series A Convertible Preferred Stock, $0.001 par value; 5,000,000 shares designated, 380,560 and 385,601 shares issued and outstanding at March 31, 2022 and December 31, 2021, with a liquidation preference of $567,034 and $574,545 at March 31, 2022 and December 31, 2021.	381		386

Series C Convertible Preferred Stock, $0.001 par value; 44,000 shares designated, no shares issued or outstanding.		—		—
Series C Convertible Preferred Stock, $0.001 par value; 44,000 shares designated, zero shares issued or outstanding.						Series C Convertible Preferred Stock, $0.001 par value; 44,000 shares designated, zero shares issued or outstanding.	—		—

Common stock, $0.001 par value per share; 750,000,000 shares authorized; 63,003,766 and 45,554,841 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively.		63,004		45,555
Common stock, $0.001 par value per share; 750,000,000 shares authorized; 64,465,734 and 63,287,965 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively.						Common stock, $0.001 par value per share; 750,000,000 shares authorized; 64,465,734 and 63,287,965 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively.	64,466		63,288
Additional paid-in capital	Additional paid-in capital	136,905,764		94,569,674		Additional paid-in capital	217,734,093		138,620,254
Accumulated deficit	Accumulated deficit	(101,475,299)		(90,008,778)		Accumulated deficit	(115,582,890)		(110,614,035)
Total Vertex Energy, Inc. stockholders' equity		35,493,855		4,606,871
Total Vertex Energy, Inc. shareholders' equity						Total Vertex Energy, Inc. shareholders' equity	102,216,050		28,069,893
Non-controlling interest	Non-controlling interest	1,848,115		1,317,878		Non-controlling interest	1,967,258		1,997,204
Total equity	Total equity	37,341,970		5,924,749		Total equity	104,183,308		30,067,097
TOTAL LIABILITIES, TEMPORARY EQUITY, AND EQUITY	TOTAL LIABILITIES, TEMPORARY EQUITY, AND EQUITY	$	144,685,626	$	122,099,958	TOTAL LIABILITIES, TEMPORARY EQUITY, AND EQUITY	$	280,497,572	$	266,060,119


		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
Revenues	Revenues	$	28,974,471	$	16,249,312	$	84,823,476	$	30,460,606		Revenues	$	40,216,796	$	25,045,243
Cost of revenues (exclusive of depreciation and amortization shown separately below)	Cost of revenues (exclusive of depreciation and amortization shown separately below)	28,061,498		15,324,914		79,319,678		28,598,874			Cost of revenues (exclusive of depreciation and amortization shown separately below)	38,565,484		22,808,703
Depreciation and amortization attributable to costs of revenues	Depreciation and amortization attributable to costs of revenues	126,795		115,562		358,905		327,672			Depreciation and amortization attributable to costs of revenues	114,053		112,497
Gross profit	Gross profit	786,178		808,836		5,144,893		1,534,060			Gross profit	1,537,259		2,124,043

Operating expenses:	Operating expenses:										Operating expenses:
Selling, general and administrative expenses	Selling, general and administrative expenses	4,944,719		1,832,067		12,111,951		6,044,050			Selling, general and administrative expenses	8,782,395		2,858,062
Depreciation and amortization attributable to operating expenses	Depreciation and amortization attributable to operating expenses	26,916		28,002		80,748		48,118			Depreciation and amortization attributable to operating expenses	26,916		26,916

Total operating expenses	Total operating expenses	4,971,635		1,860,069		12,192,699		6,092,168			Total operating expenses	8,809,311		2,884,978

Loss from operations	Loss from operations	(4,185,457)		(1,051,233)		(7,047,806)		(4,558,108)			Loss from operations	(7,272,052)		(760,935)

Other income (expense):	Other income (expense):										Other income (expense):

Other income	Other income	—		—		4,222,000		—			Other income	414,972		—
Loss on sale of assets		(3,351)		(136,434)		(1,927)		(124,090)
Gain (loss) on change in value of derivative warrant liability		11,907,413		256,587		(11,380,122)		1,844,369
Gain on sale of assets											Gain on sale of assets	57,402		1,424
Loss on change in value of derivative warrant liability											Loss on change in value of derivative warrant liability	(3,578,947)		(1,780,203)

Interest expense	Interest expense	(352,587)		(97,157)		(603,398)		(291,933)			Interest expense	(4,229,884)		(112,142)
Total other income (expense)		11,551,475		22,996		(7,763,447)		1,428,346
Income (loss) from continuing operations before income tax		7,366,018		(1,028,237)		(14,811,253)		(3,129,762)
Total other expense											Total other expense	(7,336,457)		(1,890,921)
Loss from continuing operations before income tax											Loss from continuing operations before income tax	(14,608,509)		(2,651,856)
Income tax benefit (expense)	Income tax benefit (expense)	—		—		—		—			Income tax benefit (expense)	—		—
Income (loss) from continuing operations		7,366,018		(1,028,237)		(14,811,253)		(3,129,762)
Income (loss) from discontinued operations, net of tax		3,278,498		(926,933)		12,464,445		(5,323,630)
Loss from continuing operations											Loss from continuing operations	(14,608,509)		(2,651,856)
Income from discontinued operations, net of tax											Income from discontinued operations, net of tax	13,799,642		5,617,194
Net income (loss)	Net income (loss)	10,644,516		(1,955,170)		(2,346,808)		(8,453,392)			Net income (loss)	(808,867)		2,965,338
Net income (loss) attributable to non-controlling interest and redeemable non-controlling interest from continuing operations	Net income (loss) attributable to non-controlling interest and redeemable non-controlling interest from continuing operations	(115,131)		136,334		510,618		155,322			Net income (loss) attributable to non-controlling interest and redeemable non-controlling interest from continuing operations	(68,164)		382,666
Net income (loss) attributable to non-controlling interest and redeemable non-controlling interest from discontinued operations		2,400,141		343,881		7,183,268		35,449
Net income attributable to non-controlling interest and redeemable non-controlling interest from discontinued operations											Net income attributable to non-controlling interest and redeemable non-controlling interest from discontinued operations	3,806,753		1,608,303
Net income (loss) attributable to Vertex Energy, Inc.	Net income (loss) attributable to Vertex Energy, Inc.	8,359,506		(2,435,385)		(10,040,694)		(8,644,163)			Net income (loss) attributable to Vertex Energy, Inc.	(4,547,456)		974,369

Accretion of redeemable noncontrolling interest to redemption value from continued operations	Accretion of redeemable noncontrolling interest to redemption value from continued operations	(414,690)		(1,287,559)		(1,176,683)		(13,635,797)			Accretion of redeemable noncontrolling interest to redemption value from continued operations	(421,399)		(373,748)
Accretion of discount on Series B and B1 Preferred Stock	Accretion of discount on Series B and B1 Preferred Stock	—		(29,157)		(507,282)		(1,500,395)			Accretion of discount on Series B and B1 Preferred Stock	—		(223,727)
Dividends on Series B and B1 Preferred Stock	Dividends on Series B and B1 Preferred Stock	—		(591,777)		258,138		(1,296,493)			Dividends on Series B and B1 Preferred Stock	—		258,138

Net income (loss) available to shareholders from continuing operations		7,066,459		(3,073,064)		(16,747,698)		(19,717,769)
Net income (loss) available to shareholders from discontinued operations, net of tax		878,357		(1,270,814)		5,281,177		(5,359,079)
Net loss available to shareholders from continuing operations											Net loss available to shareholders from continuing operations	(14,961,744)		(3,373,859)
Net income available to shareholders from discontinued operations, net of tax											Net income available to shareholders from discontinued operations, net of tax	9,992,889		4,008,891
Net income (loss) available to common shareholders	Net income (loss) available to common shareholders	$	7,944,816	$	(4,343,878)	$	(11,466,521)	$	(25,076,848)		Net income (loss) available to common shareholders	$	(4,968,855)	$	635,032


Basic income (loss) per common share	Basic income (loss) per common share									Basic income (loss) per common share
Continuing operations	Continuing operations	$	0.12	$	(0.07)	$	(0.31)	$	(0.43)	Continuing operations	$	(0.24)	$	(0.07)
Discontinued operations, net of tax	Discontinued operations, net of tax	$	0.01	$	(0.03)	$	0.10	$	(0.12)	Discontinued operations, net of tax	$	0.16	$	0.08
Basic income (loss) per common share	Basic income (loss) per common share	$	0.13	$	(0.10)	$	(0.21)	$	(0.55)	Basic income (loss) per common share	$	(0.08)	$	0.01

Diluted income (loss) per common share	Diluted income (loss) per common share									Diluted income (loss) per common share
Continuing operations	Continuing operations	$	0.11	$	(0.07)	$	(0.31)	$	(0.43)	Continuing operations	$	(0.24)	$	(0.07)
Discontinued operations, net of tax	Discontinued operations, net of tax	$	0.01	$	(0.03)	$	0.10	$	(0.12)	Discontinued operations, net of tax	$	0.16	$	0.08
Diluted income (loss) per common share	Diluted income (loss) per common share	$	0.12	$	(0.10)	$	(0.21)	$	(0.55)	Diluted income (loss) per common share	$	(0.08)	$	0.01

Shares used in computing earnings per share	Shares used in computing earnings per share									Shares used in computing earnings per share
Basic	Basic	61,348,508		45,554,841		53,963,617		45,494,235		Basic	63,372,005		47,709,450
Diluted	Diluted	64,605,326		45,554,841		53,963,617		45,494,235		Diluted	63,372,005		49,006,195


Nine Months Ended September 30, 2021
	Common Stock			Series A Preferred			Series C Preferred
	Shares	$0.001 Par		Shares	$0.001 Par		Shares	$0.001 Par		Additional Paid-In Capital		Retained Earnings		Non-controlling Interest		Total Equity
Balance on January 1, 2021	45,554,841	$	45,555	419,859	$	420	—	$	—	$	94,569,674	$	(90,008,778)	$	1,317,878	$	5,924,749
Exercise of options	22,992	23		—	—		—	—		(23)		—		—		—
Exercise of B1 warrants	1,079,753	1,080		—	—		—	—		2,756,877		—		—		2,757,957
Exchanges of Series B Preferred stock to common	2,359,494	2,359		—	—		—	—		4,114,570		630,321		—		4,747,250
Share based compensation expense	—	—		—	—		—	—		150,514		—		—		150,514

Conversion of Series B Preferred stock to common	638,224	638		—	—		—	—		1,977,856		—		—		1,978,494
Conversion of Series B1 Preferred stock to common	2,087,195	2,087		—	—		—	—		3,253,937		—		—		3,256,024
Dividends on Series B and B1	—	—		—	—		—	—		—		(372,183)		—		(372,183)
Accretion of discount on Series B and B1	—	—		—	—		—	—		—		(223,727)		—		(223,727)
Accretion of redeemable non-controlling interest to redemption value	—	—		—	—		—	—		—		(373,748)		—		(373,748)
Net income	—	—		—	—		—	—		—		974,369		1,990,969		2,965,338
Less: amount attributable to redeemable non-controlling interest	—	—		—	—		—	—		—		—		(1,542,402)		(1,542,402)
Balance on March 31, 2021	51,742,499	$	51,742	419,859	$	420	—	$	—	$	106,823,405	$	(89,373,746)	$	1,766,445	$	19,268,266
Exercise of options to common	505,376	505		—	—		—	—		229,007		—		—		229,512
Exercise of options to common- unissued	—	—		—	—		—	—		474,866		—		—		474,866
Leverage Lubricants contribution	—	—		—	—		—	—		—		—		(13,491)		(13,491)
Exercise of B1 warrants	156,792	157		—	—		—	—		1,634,409		—		—		1,634,566
Exercise of B1 warrants-unissued	—	—		—	—		—	—		1,185,831		—		—		1,185,831
Share based compensation expense	—	—		—	—		—	—		205,039		—		—		205,039
Conversion of Series A Preferred stock to common	28,257	28		(28,257)	(28)		—	—		—		—		—		—
Conversion of Series B Preferred stock to common	1,841,406	1,842		—	—		—	—		5,706,517		—		—		5,708,359
Conversion of Series B Preferred stock to common-unissued	—	—		—	—		—	—		759,983		—		—		759,983


Conversion of Series B1 Preferred stock to common	5,634,889	5,635		—	—		—		—		8,784,782		—		—		8,790,417

Accretion of discount on Series B and B1	—	—		—	—		—		—		—		(283,555)		—		(283,555)

Accretion of redeemable non-controlling interest to redemption value	—	—		—	—		—		—		—		(388,245)		—		(388,245)
Net loss	—	—		—	—		—		—		—		(19,374,569)		3,417,907		(15,956,662)
Less: amount attributable to redeemable non-controlling interest	—	—		—	—		—		—		—		—		(3,111,743)		(3,111,743)
Balance on June 30, 2021	59,909,219	$	59,909	391,602	$	392	—		$	—	$	125,803,839	$	(109,420,115)	$	2,059,118	$	18,503,143
Exercise of options to common	1,267,472	1,268		—	—						1,481,119		—		—		1,482,387
Exercise of options to common- unissued	—	—		—	—		—		—		2,925		—		—		2,925
Exercise of B1 warrants	1,575,918	1,576		—	—		—		—		9,361,053		—		—		9,362,629
Conversion of Series B Preferred stock to common	245,156	245		—	—		—		—		(245)		—		—		—
Conversion of Series A Preferred stock to common	6,001	6		(6,001)	(6)		—		—		—		—		—		—
Leverage Lubricants contribution	—	—		—	—		—		—		—		—		2,260		2,260
Distribution from VRM LA	—	—		—	—		—		—		—		—		(169,368)		(169,368)
Share based compensation expense	—	—		—	—		—		—		257,073		—		—		257,073



Accretion of redeemable non-controlling interest to redemption value	—	—		—	—		—		—		—		(414,690)		—		(414,690)


Net loss	—	—		—	—		—		—				8,359,506		2,285,010		10,644,516
Less: amount attributable to redeemable non-controlling interest	—	—		—	—		—		—		—		—		$	(2,328,905)	$	(2,328,905)
Balance on September 30, 2021	63,003,766	$	63,004	385,601	$	386	$	—	$	—	$	136,905,764	$	(101,475,299)	$	1,848,115	$	37,341,970


Conversion of Series B1 Preferred stock to common	2,159,278	2,159		—	—		—	—		3,366,315		—		—		3,368,474
Dividends on Series B and B1	—	—		—	—		—	—		—		(344,499)		—		(344,499)
Accretion of discount on Series B and B1	—	—		—	—		—	—		—		(932,003)		—		(932,003)
Accretion of redeemable non-controlling interest to redemption value	—	—		—	—		—	—		—		(10,966,349)		—		(10,966,349)
Net income	—	—		—	—		—	—		—		2,788,860		(398,609)		2,390,251
Less: amount attributable to redeemable non-controlling interest	—	—		—	—		—	—		—		—		517,877		517,877
Balance on March 31, 2020	45,554,841	$	45,555	419,859	$	420	—	$	—	$	94,076,832	$	(68,700,505)	$	896,641	$	26,318,943

Share based compensation expense	—	—		—	—		—	—		156,539		—		—		156,539



Dividends on Series B and B1	—	—		—	—		—	—		—		(360,217)		—		(360,217)
Accretion of discount on Series B and B1	—	—		—	—		—	—		—		(539,235)		—		(539,235)
Accretion of redeemable non-controlling interest to redemption value	—	—		—	—		—	—		—		(1,381,889)		—		(1,381,889)
Net income (loss)												(8,997,638)		109,165		(8,888,473)
Less: amount attributable to redeemable non-controlling interest	—	—		—	—		—	—		—		—		(127,044)		(127,044)
Balance on June 30, 2020	45,554,841	$	45,555	419,859	$	420	—	$	—	$	94,233,371	$	(79,979,484)	$	878,762	$	15,178,624

Share based compensation expense	—	—		—	—		—	—		171,149		—		—		171,149

Accretion of redeemable non-controlling interest to redemption value	—	—		—	—		—	—		—		(1,287,559)		—		(1,287,559)

Dividends on Series B and B1	—	—		—	—		—	—		—		(591,777)				(591,777)
Accretion of discount on Series B and B1	—	—		—	—		—	—		—		(29,157)				(29,157)
Net income	—	—		—	—		—	—		—		(2,435,385)		480,215		(1,955,170)
Less: amount attributable to redeemable non-controlling interest	—	—		—	—		—	—		—		—		(306,251)		(306,251)
Balance on September 30, 2020	45,554,841	$	45,555	419,859	$	420	—	$	—	$	94,404,520	$	(84,323,362)	$	1,052,726	$	11,179,859


		Nine Months Ended					Three Months Ended
		September 30, 2021		September 30, 2020			March 31, 2022		March 31, 2021
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net income (loss) before adjustment for non-controlling interest		$	(2,346,808)	$	(8,453,392)
Income (loss) from discontinued operations, net of tax		12,464,445		(5,323,630)
Income (loss) from continuing operations		(14,811,253)		(3,129,762)
Adjustments to reconcile net loss from continuing operations to cash used in operating activities, net of acquisitions
Net income (loss)						Net income (loss)	$	(808,867)	$	2,965,338
Income from discontinued operations, net of tax						Income from discontinued operations, net of tax	13,799,642		5,617,194
Loss from continuing operations						Loss from continuing operations	(14,608,509)		(2,651,856)
Adjustments to reconcile net loss from continuing operations to cash provided by (used in) operating activities, net of acquisitions						Adjustments to reconcile net loss from continuing operations to cash provided by (used in) operating activities, net of acquisitions
Stock based compensation expense	Stock based compensation expense	612,626		490,958		Stock based compensation expense	249,940		150,514
Depreciation and amortization	Depreciation and amortization	439,653		375,790		Depreciation and amortization	140,969		139,413

Gain on forgiveness of debt		(4,222,000)		—
Loss on sale of assets		1,927		124,090

Gain on sale of assets						Gain on sale of assets	(57,402)		(1,424)

Bad debt expense		629,791		(9,875)
Increase (decrease) in fair value of derivative warrant liability		11,380,122		(1,844,369)
Reduction of allowance for bad debt						Reduction of allowance for bad debt	(13,272)		—
Increase in fair value of derivative warrant liability						Increase in fair value of derivative warrant liability	3,578,947		1,780,203
Loss (gain) on commodity derivative contracts	Loss (gain) on commodity derivative contracts	2,204,606		(4,489,355)		Loss (gain) on commodity derivative contracts	(257,516)		721,531
Net cash settlements on commodity derivatives	Net cash settlements on commodity derivatives	(1,998,707)		5,484,734		Net cash settlements on commodity derivatives	640		(1,306,344)
Amortization of debt discount and deferred costs	Amortization of debt discount and deferred costs	37,500		47,826		Amortization of debt discount and deferred costs	1,770,756		—
Changes in operating assets and liabilities, net of effect of acquisition
Changes in operating assets and liabilities						Changes in operating assets and liabilities
Accounts receivable and other receivables	Accounts receivable and other receivables	(1,513,058)		206,352		Accounts receivable and other receivables	(647,503)		564,925

Inventory	Inventory	(911,980)		1,008,343		Inventory	(9,316,962)		107,718
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(3,232,253)		(1,186,023)		Prepaid expenses and other current assets	(697,848)		670,125
Accounts payable	Accounts payable	3,184,965		1,729,129		Accounts payable	7,807,105		814,872
Accrued expenses	Accrued expenses	1,203,283		(1,207,230)		Accrued expenses	(753,259)		(121,174)
Other assets	Other assets	(699,999)		(581,534)		Other assets	(1,300,000)		—
Net cash used by operating activities		(7,694,777)		(2,980,926)
Net cash provided by (used in) operating activities from continuing operations						Net cash provided by (used in) operating activities from continuing operations	(14,103,914)		868,503
Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Acquisition of business, net of cash		2,058		(1,822,690)

Internally developed software		—		(49,229)

Purchase of fixed assets	Purchase of fixed assets	(1,060,039)		(642,186)		Purchase of fixed assets	(53,936)		(464,039)

Deposit for Refinery Purchase		(10,000,000)		—
Investment in Mobile Refinery assets						Investment in Mobile Refinery assets	(6,426,607)		—

Proceeds from sale of fixed assets	Proceeds from sale of fixed assets	74,991		36,465		Proceeds from sale of fixed assets	131,689		1,600
Net cash used in investing activities		(10,982,990)		(2,477,640)
Net cash used in investing activities from continuing operations						Net cash used in investing activities from continuing operations	(6,348,854)		(462,439)
Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Payments on finance leases	Payments on finance leases	(91,893)		(93,438)		Payments on finance leases	(39,101)		(67,382)
Proceeds from exercise of options and warrants to common stock	Proceeds from exercise of options and warrants to common stock	6,492,759		—		Proceeds from exercise of options and warrants to common stock	75,600		1,652,022
Distributions to noncontrolling interest		(169,368)		—
Contributions received from noncontrolling interest and redeemable noncontrolling interest		2,260		21,000,000

Line of credit (payments) proceeds, net	Line of credit (payments) proceeds, net	(166,129)		—		Line of credit (payments) proceeds, net	—		(133,446)

Proceeds from note payable (includes proceeds from PPP note)		10,078,115		7,992,346

Payments on note payable	Payments on note payable	(3,778,589)		(12,601,976)		Payments on note payable	(1,375,917)		(1,036,581)
Net cash provided by financing activities		12,367,155		16,296,932
Net cash provided by (used in) financing activities from continuing operations						Net cash provided by (used in) financing activities from continuing operations	(1,339,418)		414,613

Discontinued operations:						Discontinued operations:
Net cash provided by operating activities						Net cash provided by operating activities	10,114,115		1,320,593
Net cash used in investing activities						Net cash used in investing activities	(342,573)		(554,940)
Net cash used in financing activities						Net cash used in financing activities	(59,045)		(54,670)
Net cash provided by discontinued operations						Net cash provided by discontinued operations	9,712,497		710,983

Net change in cash, cash equivalents and restricted cash						Net change in cash, cash equivalents and restricted cash	(12,079,689)		1,531,660
Cash, cash equivalents, and restricted cash at beginning of the period						Cash, cash equivalents, and restricted cash at beginning of the period	136,626,939		10,995,169
Cash, cash equivalents, and restricted cash at end of period						Cash, cash equivalents, and restricted cash at end of period	$	124,547,250	$	12,526,829


SUPPLEMENTAL INFORMATION	SUPPLEMENTAL INFORMATION					SUPPLEMENTAL INFORMATION
Cash paid for interest	Cash paid for interest	$	843,523	$	812,887	Cash paid for interest	$	21,294	$	236,677
Cash paid for taxes	Cash paid for taxes	$	—	$	—	Cash paid for taxes	$	—	$	—
NON-CASH INVESTING AND FINANCING TRANSACTIONS	NON-CASH INVESTING AND FINANCING TRANSACTIONS					NON-CASH INVESTING AND FINANCING TRANSACTIONS
Exchanges of Series B Preferred Stock into common stock		$	4,747,250	$	—
Equity component of the convertible note issuance						Equity component of the convertible note issuance	$	78,789,472	$	—
Conversion of Series A Preferred Stock into common stock	Conversion of Series A Preferred Stock into common stock	$	34	$	—	Conversion of Series A Preferred Stock into common stock	$	5	$	—
Conversion of Series B Preferred Stock into common stock	Conversion of Series B Preferred Stock into common stock	$	8,446,836	$	—	Conversion of Series B Preferred Stock into common stock	$	—	$	1,978,494
Conversion of Series B1 Preferred Stock into common stock	Conversion of Series B1 Preferred Stock into common stock	$	12,046,441	$	3,368,474	Conversion of Series B1 Preferred Stock into common stock	$	—	$	3,256,024
Exchanges of Series B Preferred Stock into common stock						Exchanges of Series B Preferred Stock into common stock	$	—	$	4,397,236
Accretion of discount on Series B and B1 Preferred Stock	Accretion of discount on Series B and B1 Preferred Stock	$	507,282	$	1,500,395	Accretion of discount on Series B and B1 Preferred Stock	$	—	$	223,727
Dividends-in-kind accrued on Series B and B1 Preferred Stock	Dividends-in-kind accrued on Series B and B1 Preferred Stock	$	(258,138)	$	1,296,493	Dividends-in-kind accrued on Series B and B1 Preferred Stock	$	—	$	(258,138)
Option exercised		$	650	$	—
Equipment acquired under finance leases		$	—	$	1,017,638
Initial adjustment of carrying amount redeemable noncontrolling interests		$	—	$	9,091,068
Cashless warrant exercise						Cashless warrant exercise	$	1,113	$	—

Accretion of redeemable noncontrolling interest to redemption value	Accretion of redeemable noncontrolling interest to redemption value	$	1,176,683	$	13,635,797	Accretion of redeemable noncontrolling interest to redemption value	$	421,399	$	373,748


	September 30, 2021		December 31, 2020
Cash and cash equivalents	$	12,112,577	$	10,895,044
Restricted cash	100,125		100,125
Cash and cash equivalents and restricted cash as shown in the consolidated statements of cash flows	$	12,212,702	$	10,995,169


	Nine Months Ended September 30, 2021		Nine Months Ended September 30, 2020
	% of Revenues	% of Receivables	% of Revenues	% of Receivables
Customer 1	22%	17%	18%	16%
Customer 2	16%	13%	9%	11%
Customer 3	14%	11%	7%	—%

Customer 4	13%	14%	15%	—%


		Three Months Ended September 30, 2021									Three Months Ended March 31, 2022
		Black Oil		Refining & Marketing		Recovery		Total			Black Oil		Refining & Marketing		Recovery		Total
Primary Geographical Markets	Primary Geographical Markets									Primary Geographical Markets

Southern United States	Southern United States	$	446,676	$	24,572,390	$	3,955,405	$	28,974,471	Southern United States	$	1,550,287	$	34,718,918	$	3,947,591	$	40,216,796
Sources of Revenue	Sources of Revenue									Sources of Revenue

Pygas	Pygas	$	—	$	3,736,534	$	—	$	3,736,534	Pygas	$	—	$	4,690,268	$	—	$	4,690,268
Industrial fuel	Industrial fuel	—		417,096		—		417,096		Industrial fuel	—		572,281		—		572,281
Distillates	Distillates	—		20,418,760		—		20,418,760		Distillates	—		29,456,369		—		29,456,369
Oil collection services	Oil collection services	158,676		—		0		158,676		Oil collection services	213,536		—		0		213,536
Metals	Metals	—		—		3,669,411		3,669,411		Metals	—		—		3,414,286		3,414,286
Other re-refinery products	Other re-refinery products	—		—		285,994		285,994		Other re-refinery products	—		—		533,305		533,305
VGO/Marine fuel sales	VGO/Marine fuel sales	288,000		—		—		288,000		VGO/Marine fuel sales	1,336,751		—		—		1,336,751
Total revenues	Total revenues	$	446,676	$	24,572,390	$	3,955,405	$	28,974,471	Total revenues	$	1,550,287	$	34,718,918	$	3,947,591	$	40,216,796


Creditor	Loan Type	Origination Date	Maturity Date	Loan Amount		Balance on March 31, 2022		Balance on December 31, 2021






John Deere Note	Note	May 27, 2020	June 24, 2024	$	152,643	$	84,537	$	94,005
AVT Equipment Lease-HH	Finance Lease	May 22, 2020	May 22, 2023	$	551,609	263,065		302,166
SBA Loan	SBA Loan	July 18, 2020	July 18, 2050	$	58,700	58,700		58,700


Various institutions	Insurance premiums financed	Various	< 1 year	$	5,604,748	1,008,621		2,375,071
Total						$	1,414,923	$	2,829,942


Creditor	Year 1		Year 2		Year 3		Year 4		Year 5		Thereafter



John Deere Note	$	38,460	$	39,414	$	6,663	$	—	$	—	$	—
AVT Equipment Lease-HH	263,065		—		—		—		—		—



SBA Loan	—		1,266		1,315		1,365		1,417		53,337

Various institutions	1,008,621		—		—		—		—		—
Totals	$	1,310,146	$	40,680	$	7,978	$	1,365	$	1,417	$	53,337


	Three Months Ended September 30, 2020
	Black Oil		Refining & Marketing		Recovery		Total
Primary Geographical Markets


Southern United States	$	288,000	$	13,501,751	$	2,459,561	$	16,249,312
Sources of Revenue

Pygas	$	—	$	1,184,434	$	—	$	1,184,434
Industrial fuel	—		82,644		—		82,644
Distillates	—		12,234,673		—		12,234,673

Metals	—		—		2,459,561		2,459,561

VGO/Marine fuel sales	288,000		—		—		288,000
Total revenues	$	288,000	$	13,501,751	$	2,459,561	$	16,249,312


	March 31, 2022
Principal Amounts	$	155,000,000
Unamortized discount and issuance costs	(89,213,315)
Net Carrying Amount	$	65,786,685


Interest payable	Year 1		Year 2		Year 3		Year 4		Year 5		Thereafter




Interest payable	$	9,687,500	$	9,714,041	$	9,687,500	$	9,687,500	$	9,687,500	$	4,857,021










	2021		2020
Balance at beginning of period	$	12,718,339	$	11,006,406
Less: conversions of shares to common	(8,446,837)		—
Less: exchanges of shares to common	(4,747,250)		—
Plus: discount accretion	—		854,364

Plus: dividends in kind	475,748		547,349

Balance at end of period	$	—	$	12,408,119









	March 31, 2021
Balance at beginning of period	$	12,718,339
Less: conversions of shares to common	(1,978,494)
Less: exchanges of shares to common	(4,747,250)


Plus: dividends in kind	317,970

Balance at end of period	$	6,310,565


Level Three Roll-Forward
	March 31, 2021



Balance at beginning of period	$	330,412
Value of warrants exercised	(1,105,935)
Change in valuation of warrants	1,780,203
Balance at end of period	$	1,004,680


THREE MONTHS ENDED SEPTEMBER 30, 2020
	Black Oil		Refining & Marketing		Recovery		Total
Revenues:

Pygas	$	—	$	1,184,434	$	—	$	1,184,434
Industrial fuel	—		82,644		—		82,644
Distillates (1)	—		12,234,673		—		12,234,673
Oil collection services	—		—		—		—
Metals (2)	—		—		2,459,561		2,459,561
Other re-refinery products (3)	—		—		—		—
VGO/Marine fuel sales	288,000		—		—		288,000
Total revenues	288,000		13,501,751		2,459,561		16,249,312
Cost of revenues (exclusive of depreciation and amortization shown separately below)	189,947		13,217,757		1,917,210		15,324,914
Depreciation and amortization attributable to costs of revenues	3,985		31,829		79,748		115,562
Gross profit	94,068		252,165		462,603		808,836
Selling, general and administrative expenses	987,424		696,611		148,032		1,832,067
Depreciation and amortization attributable to operating expenses	26,916		1,086		—		28,002
Income (loss) from operations	$	(920,272)	$	(445,532)	$	314,571	$	(1,051,233)


As of September 30, 2021
As of March 31, 2022								As of March 31, 2022
Contract Type	Contract Type	Contract Period	Weighted Average Strike Price (Barrels)		Remaining Volume (Barrels)	Fair Value		Contract Type	Contract Period	Weighted Average Strike Price (Barrels)		Remaining Volume (Barrels)	Fair Value

Options								Options	Mar 2022 - May 2022	$	4.83	20,000	$	230,200
Futures	Futures	Sep. 2021- Oct. 2021	$	98.22	35,000	$	(155,929)	Futures	Mar 2022 - Jun 2022	$	28.27	136,000	$	133,390


As of December 31, 2021
Contract Type	Contract Period	Weighted Average Strike Price (Barrels)		Remaining Volume (Barrels)	Fair Value

Options	Dec. 2021-Mar. 2022	$	3.18	18,000	$	136,440
Futures	Dec. 2021-Mar. 2022	$	31.59	20,000	$	71,000
Futures	Dec. 2021-Mar. 2022	$	32.48	50,000	$	(111,460)


Balance Sheet Classification	Balance Sheet Classification	Contract Type	2021		2020		Balance Sheet Classification	Contract Type	2022		2021

								Crude oil options	$	230,200	$	136,440
								Crude oil futures	$	133,390	$	(40,460)

Derivative commodity liability		Futures	$	(155,929)	$	(94,214)
Derivative commodity asset							Derivative commodity asset		$	363,590	$	95,980


Remaining lease term and discount rate:	~~September 30, 2021~~March 31, 2022
Weighted average remaining lease terms (years)
Lease facilities	~~5.20~~1.87
Lease equipment	~~0.60~~3.08
Lease plant	~~11.50~~10.00

Weighted average discount rate
Lease facilities	~~9.05~~8.00	%
Lease equipment	8.00	%
Lease plant	9.37	%


		September 30, 2021		September 30, 2020			March 31, 2022		March 31, 2021
Beginning balance	Beginning balance	$	5,472,841	$	4,396,894	Beginning balance	$	6,812,080	$	5,472,841

Net loss attributable to redeemable non-controlling interest	Net loss attributable to redeemable non-controlling interest	(200,218)		(120,031)		Net loss attributable to redeemable non-controlling interest	(38,219)		(65,901)
Change in ownership		—		71,171

Accretion of non-controlling interest to redemption value	Accretion of non-controlling interest to redemption value	1,176,683		833,354		Accretion of non-controlling interest to redemption value	421,399		373,748
Ending balance	Ending balance	$	6,449,306	$	5,181,388	Ending balance	$	7,195,260	$	5,780,688


	Black Oil(1)	Refining and Marketing(2)	Recovery(3)
Base oil	X		X
Pygas		X
Industrial fuel	X	X
Distillates		X
Oil collection services	X
Metals			X
Other re-refinery products	X		X
VGO/Marine fuel sales	X


		Three Months Ended September 30,				$ Change - Favorable (Unfavorable)		% Change - Favorable (Unfavorable)			Three Months Ended March 31,				$ Change - Favorable (Unfavorable)		% Change - Favorable (Unfavorable)
		2021		2020							2022		2021
Revenues	Revenues	$	28,974,471	$	16,249,312	$	12,725,159	78	%	Revenues	$	40,216,796	$	25,045,243	$	15,171,553	61	%
Cost of revenues (exclusive of depreciation and amortization shown separately below)	Cost of revenues (exclusive of depreciation and amortization shown separately below)	28,061,498		15,324,914		(12,736,584)		(83)	%	Cost of revenues (exclusive of depreciation and amortization shown separately below)	38,565,484		22,808,703		(15,756,781)		(69)	%
Depreciation and amortization attributable to costs of revenues	Depreciation and amortization attributable to costs of revenues	126,795		115,562		(11,233)		(10)	%	Depreciation and amortization attributable to costs of revenues	114,053		112,497		(1,556)		(1)	%
Gross profit	Gross profit	786,178		808,836		(22,658)		(3)	%	Gross profit	1,537,259		2,124,043		(586,784)		(28)	%

Operating expenses:	Operating expenses:									Operating expenses:
Selling, general and administrative expenses	Selling, general and administrative expenses	4,944,719		1,832,067		(3,112,652)		(170)	%	Selling, general and administrative expenses	8,782,395		2,858,062		(5,924,333)		(207)	%
Depreciation and amortization attributable to operating expenses	Depreciation and amortization attributable to operating expenses	26,916		28,002		1,086		4	%	Depreciation and amortization attributable to operating expenses	26,916		26,916		—		—	%

Total operating expenses	Total operating expenses	4,971,635		1,860,069		(3,111,566)		(167)	%	Total operating expenses	8,809,311		2,884,978		(5,924,333)		(205)	%

Loss from operations	Loss from operations	(4,185,457)		(1,051,233)		(3,134,224)		(298)	%	Loss from operations	(7,272,052)		(760,935)		(6,511,117)		(856)	%

Other income (expense):	Other income (expense):									Other income (expense):

Loss on asset sales		(3,351)		(136,434)		133,083		98	%
Gain on change in value of derivative liability		11,907,413		256,587		11,650,826		4,541	%
Other income										Other income	414,972		—		414,972		100	%
Gain on asset sales										Gain on asset sales	57,402		1,424		55,978		3,931	%
Loss on change in value of derivative warrant liability										Loss on change in value of derivative warrant liability	(3,578,947)		(1,780,203)		(1,798,744)		(101)	%

Interest expense	Interest expense	(352,587)		(97,157)		(255,430)		(263)	%	Interest expense	(4,229,884)		(112,142)		(4,117,742)		(3,672)	%
Total other expense	Total other expense	11,551,475		22,996		11,528,479		50,133	%	Total other expense	(7,336,457)		(1,890,921)		(5,445,536)		(288)	%

Income (loss) before income tax		7,366,018		(1,028,237)		8,394,255		816	%
Loss from continuing operation before income tax										Loss from continuing operation before income tax	(14,608,509)		(2,651,856)		(11,956,653)		(451)	%

Income tax benefit (expense)	Income tax benefit (expense)	—		—		—		—	%	Income tax benefit (expense)	—		—		—		—	%

Net income (loss) from continuing operations		7,366,018		(1,028,237)		8,394,255		816	%
Income (loss) from discontinued operations, net of tax (see Note 15)		3,278,498		(926,933)		4,205,431		454	%
Net income attributable to non-controlling interest and redeemable non-controlling interest from continuing operations		(115,131)		136,334		(251,465)		(184)	%
Loss from continuing operations										Loss from continuing operations	(14,608,509)		(2,651,856)		(11,956,653)		(451)	%
Income from discontinued operations, net of tax										Income from discontinued operations, net of tax	13,799,642		5,617,194		8,182,448		146	%
Net income (loss) attributable to non-controlling interest and redeemable non-controlling interest from continuing operations										Net income (loss) attributable to non-controlling interest and redeemable non-controlling interest from continuing operations	(68,164)		382,666		(450,830)		(118)	%
Net income attributable to non-controlling interest and redeemable non-controlling from discontinued operations	Net income attributable to non-controlling interest and redeemable non-controlling from discontinued operations	2,400,141		343,881		2,056,260		598	%	Net income attributable to non-controlling interest and redeemable non-controlling from discontinued operations	3,806,753		1,608,303		2,198,450		137	%
Net income (loss) attributable to Vertex Energy, Inc.	Net income (loss) attributable to Vertex Energy, Inc.	$	8,359,506	$	(2,435,385)	$	10,794,891	443	%	Net income (loss) attributable to Vertex Energy, Inc.	$	(4,547,456)	$	974,369	$	(5,521,825)	(567)	%


		Three Months Ended September 30,				$ Change - Favorable (Unfavorable)		% Change - Favorable (Unfavorable)			Three Months Ended March 31,				$ Change - Favorable (Unfavorable)		% Change - Favorable (Unfavorable)
Black Oil Segment	Black Oil Segment	2021		2020						Black Oil Segment	2022		2021
Revenues	Revenues	$	446,676	$	288,000	$	158,676	55	%	Revenues	$	1,550,287	$	122,986	$	1,427,301	1,161	%
Cost of revenues (exclusive of depreciation and amortization shown separately below)	Cost of revenues (exclusive of depreciation and amortization shown separately below)	402,989		189,947		(213,042)		(112)	%	Cost of revenues (exclusive of depreciation and amortization shown separately below)	1,649,972		280,378		(1,369,594)		(488)	%
Depreciation and amortization attributable to costs of revenues	Depreciation and amortization attributable to costs of revenues	18,420		3,985		(14,435)		(362)	%	Depreciation and amortization attributable to costs of revenues	16,411		20,382		3,971		19	%

Gross profit (loss)		25,267		94,068		(68,801)		(73)	%
Gross loss										Gross loss	(116,096)		(177,774)		61,678		35	%
Selling general and administrative expense	Selling general and administrative expense	3,675,190		987,424		(2,687,766)		(272)	%	Selling general and administrative expense	7,411,220		1,942,399		(5,468,821)		(282)	%
Depreciation and amortization attributable to operating expenses	Depreciation and amortization attributable to operating expenses	26,916		26,916		—		—	%	Depreciation and amortization attributable to operating expenses	26,916		26,916		—		—	%

Income (loss) from operations		$	(3,676,839)	$	(920,272)	$	(2,756,567)	(300)	%
Loss from operations										Loss from operations	$	(7,554,232)	$	(2,147,089)	$	(5,407,143)	(252)	%

Refining and Marketing Segment	Refining and Marketing Segment									Refining and Marketing Segment
Revenues	Revenues	$	24,572,390	$	13,501,751	$	11,070,639	82	%	Revenues	$	34,718,918	$	19,273,952	$	15,444,966	80	%
Cost of revenues (exclusive of depreciation and amortization shown separately below)	Cost of revenues (exclusive of depreciation and amortization shown separately below)	23,897,263		13,217,757		(10,679,506)		(81)	%	Cost of revenues (exclusive of depreciation and amortization shown separately below)	33,086,160		17,949,695		(15,136,465)		(84)	%
Depreciation and amortization attributable to costs of revenues	Depreciation and amortization attributable to costs of revenues	29,844		31,829		1,985		6	%	Depreciation and amortization attributable to costs of revenues	23,370		31,876		8,506		27	%
Gross profit	Gross profit	645,283		252,165		393,118		156	%	Gross profit	1,609,388		1,292,381		317,007		25	%
Selling general and administrative expense	Selling general and administrative expense	1,034,024		696,611		(337,413)		(48)	%	Selling general and administrative expense	1,124,336		759,409		(364,927)		(48)	%
Depreciation and amortization attributable to operating expenses	Depreciation and amortization attributable to operating expenses	—		1,086		1,086		100	%	Depreciation and amortization attributable to operating expenses	—		—		—		—	%
Income (loss) from operations		$	(388,741)	$	(445,532)	$	56,791	13	%
Income from operations										Income from operations	$	485,052	$	532,972	$	(47,920)	(9)	%

Recovery Segment	Recovery Segment									Recovery Segment
Revenues	Revenues	$	3,955,405	$	2,459,561	$	1,495,844	61	%	Revenues	$	3,947,591	$	5,648,305	$	(1,700,714)	(30)	%
Cost of revenues (exclusive of depreciation and amortization shown separately below)	Cost of revenues (exclusive of depreciation and amortization shown separately below)	3,761,246		1,917,210		(1,844,036)		(96)	%	Cost of revenues (exclusive of depreciation and amortization shown separately below)	3,829,352		4,578,630		749,278		16	%
Depreciation and amortization attributable to costs of revenues	Depreciation and amortization attributable to costs of revenues	78,531		79,748		1,217		2	%	Depreciation and amortization attributable to costs of revenues	74,272		60,239		(14,033)		(23)	%
Gross profit (loss)		115,628		462,603		(346,975)		(75)	%
Gross profit										Gross profit	43,967		1,009,436		(965,469)		(96)	%
Selling general and administrative expense	Selling general and administrative expense	235,505		148,032		(87,473)		(59)	%	Selling general and administrative expense	246,839		156,254		(90,585)		(58)	%
Depreciation and amortization attributable to operating expenses	Depreciation and amortization attributable to operating expenses	—		—		—		—	%	Depreciation and amortization attributable to operating expenses	—		—		—		—	%
Loss from operations		$	(119,877)	$	314,571	$	(434,448)	(138)	%
Income (loss) from operations										Income (loss) from operations	$	(202,872)	$	853,182	$	(1,056,054)	(124)	%