UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K/A10-K

(Amendment No. 1)

 

(Mark One)

 

     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended: December 31, 20212023 

or

 

     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Transition Period from _______ to ___________

 

Commission File Number:001-32508

 

cei-10kimg3.jpgcei_10kimg1.jpg

 

CAMBER ENERGY, INC.

(Exact name of registrant as specified in its charter)

 

Nevada

 

20-2660243

(State of other jurisdiction of

(I.R.S. Employer

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

15915 Katy Freeway,12 Greenway Plaza, Suite 450,1100, Houston, Texas

 

7709477046

(Address of principal executive offices)

 

(Zip code)

 

Registrant’s telephone number, including area code: (210) 998-4035(281) 404-4387

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value

CEI

NYSE American

 

Securities registered pursuant to Section 12(g) of the Act: None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐     No ☒

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐     No ☒

 

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

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes      No

 

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

 

Large accelerated filer

Accelerated filer

Non-accelerated filerFiler

Smaller reporting company

Emerging growth

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

 

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that require a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

 

As of June 30, 20212023 (the date of the registrant’s most recently completed second fiscal quarter, prior to its determination to change its fiscal year end)quarter), the aggregate market value of the shares of the registrant’s common equity held by non-affiliates was approximately $22,500,000$16,984,502 using the June 30, 20212023 closing price of the registrant’s common stock of $0.45/share.$0.64 per share on such date. Shares of the registrant’s common stock held by each executive officer and director and by each person who beneficially owns 10 percent or more of the registrant’s outstanding common stock have been excluded in that such persons may be deemed to be “affiliates” of the registrant for purposes of the above calculation. This determination of affiliate status is not a conclusive determination for other purposes.

 

There were 414,290,116148,940,299 shares of the registrant’s common stock outstanding as of May 16, 2022.March 20, 2024.

 

Documents incorporated by reference: None.

 

 

Explanatory Note

This Amendment No. 1 on Form 10-K/A amends the registrant’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission by the registrant on May 20, 2022. This Amendment is filed to include the XBRL Interactive Data File exhibits required by Item 601(b)(101) of Regulation S-K, and minor clerical errors with no impact on the financial statements. No other items are being amended except as described in this Explanatory Note and this Amendment does not reflect any events occurring after the filing of the original Annual Report on Form 10-K for the year ended December 31, 2021.

 

 

TABLE OF CONTENTS

 

 

 

Page

 

Glossary of Oil and Gas Terms

3

Cautionary Note Regarding Forward-Looking Statements

 

53

 

Where You Can Find More Information

 

74

 

General Information

 

74

 

 

PART I

ITEM 1.

Business

 

8

General

9

Industry Segments

18

Competition

18

Regulation

19

Insurance Matters

19

Other Matters

195

 

ITEM 1A.

Risk Factors

 

2213

ITEM 1C

Cybersecurity

33

 

ITEM 2.

Properties

 

4334

 

ITEM 3.

Legal Proceedings

 

4536

 

ITEM 4.

Mine Safety Disclosures

 

4636

 

 

PART II

ITEM 5.

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

 

4737

 

ITEM 6.

Selected Financial Data

 

5343

 

ITEM 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

5343

 

ITEM 7A.

Quantitative and Qualitative Disclosures About Market Risk

 

6053

 

ITEM 8.

Financial Statements and Supplementary Data

 

6154

 

ITEM 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

6257

 

ITEM 9A.

Controls and Procedures

 

6257

 

ITEM 9B.

Other Information

 

6358

 

 

PART III

ITEM 10.

Directors, Executive Officers and Corporation Governance

 

6459

 

ITEM 11.

Executive Compensation

 

7166

 

ITEM 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

7368

 

ITEM 13.

Certain Relationships and Related Transactions, and Director Independence

 

7469

 

ITEM 14.

Principal Accounting Fees and Services

 

7570

 

 

 

PART IV

 

ITEM 15.

Exhibits, Financial Statement Schedules

 

7671

 

ITEM 16.

Form 10–K Summary

 

7671

 

SIGNATURES

 

7772

 

 
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GLOSSARY OF OIL AND NATURAL GAS TERMS

The following are abbreviations and definitions of certain terms used in this Report, which are commonly used in the oil and natural industry.

AFEor Authorization for Expenditures. A document that lays out proposed expenses for a particular project and authorizes an individual or group to spend a certain amount of money for that project.

ARO. Asset retirement obligation, a legal obligation associated with the retirement of an asset, which in the Company’s case is generally associated with the pugging of oil wells. 

Bbl. One stock tank barrel, or 42 U.S. gallons liquid volume, used in this Annual Report in reference to crude oil or other liquid hydrocarbons.

Bcf. An abbreviation for billion cubic feet. Unit used to measure large quantities of gas, approximately equal to 1 trillion Btu.

Boe. Barrels of oil equivalent, determined using the ratio of one Bbl of crude oil, condensate or natural gas liquids, to six Mcf of natural gas.

Boepd. Barrels of oil equivalent per day.

Bopd. Barrels of oil per day.

Btuor British thermal unit. The quantity of heat required to raise the temperature of one pound of water by one degree Fahrenheit.

Completion. The operations required to establish production of oil or natural gas from a wellbore, usually involving perforations, stimulation and/or installation of permanent equipment in the well or, in the case of a dry hole, the reporting of abandonment to the appropriate agency.

Condensate. Liquid hydrocarbons associated with the production of a primarily natural gas reserve.

Development well. A well drilled into a proved oil or natural gas reservoir to the depth of a stratigraphic horizon known to be productive.

Exploratory well. A well drilled to find and produce oil or natural gas reserves not classified as proved, to find a new reservoir in a field previously found to be productive of oil or natural gas in another reservoir or to extend a known reservoir.

Field. An area consisting of a single reservoir or multiple reservoirs all grouped on or related to the same individual geological structural feature and/or stratigraphic condition.

Gross acresor gross wells. The total acres or wells in which a working interest is owned.

Horizontal drillingor well. A drilling operation in which a portion of the well is drilled horizontally within a productive or potentially productive formation. This operation typically yields a horizontal well that has the ability to produce higher volumes than a vertical well drilled in the same formation. A horizontal well is designed to replace multiple vertical wells, resulting in lower capital expenditures for draining like acreage and limiting surface disruption.

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Liquids. Liquids, or natural gas liquids, are marketable liquid products including ethane, propane, butane and pentane resulting from the further processing of liquefiable hydrocarbons separated from raw natural gas by a natural gas processing facility.

LOEor Lease operating expenses. The costs of maintaining and operating property and equipment on a producing oil and gas lease.

MBbl. One thousand barrels of crude oil or other liquid hydrocarbons.

MMBbl/d. One thousand barrels of crude oil or other liquid hydrocarbons per day.

Mcf. One thousand cubic feet of natural gas.

Mcfgpd. Thousands of cubic feet of natural gas per day.

MMcf. One million cubic feet of natural gas.

MMBtu. One million British thermal units.

Net acresor net wells. The sum of the fractional working interest owned in gross acres or wells.

Net revenue interest. The interest that defines the percentage of revenue that an owner of a well receives from the sale of oil, natural gas and/or natural gas liquids that are produced from the well.

NGL. Natural gas liquids.

NYMEX. New York Mercantile Exchange.

Permeability. A reference to the ability of oil and/or natural gas to flow through a reservoir.

Play. A set of known or postulated oil and/or natural gas accumulations sharing similar geologic, geographic and temporal properties, such as source rock, migration pathways, timing, trapping mechanism and hydrocarbon type.

Possible reserves. Additional reserves that are less certain to be recognized than probable reserves.

Probable reserves. Additional reserves that are less certain to be recognized than proved reserves but which, in sum with proved reserves, are as likely as not to be recovered.

Producing well, production wellor productive well. A well that is found to be capable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of the well’s production exceed production-related expenses and taxes.

Properties. Natural gas and oil wells, production and related equipment and facilities and natural gas, oil or other mineral fee, leasehold and related interests.

Prospect. A specific geographic area which, based on supporting geological, geophysical or other data and also preliminary economic analysis using reasonably anticipated prices and costs, is considered to have potential for the discovery of commercial hydrocarbons.

Proved developed reserves. Proved reserves that can be expected to be recovered through existing wells and facilities and by existing operating methods.

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Table of Contents

Proved reserves. Reserves of oil and natural gas that have been proved to a high degree of certainty by analysis of the producing history of a reservoir and/or by volumetric analysis of adequate geological and engineering data.

Proved undeveloped reservesor PUDs. Proved reserves that are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion.

Reservoir. A porous and permeable underground formation containing a natural accumulation of producible oil and/or natural gas that is confined by impermeable rock or water barriers and is individual and separate from other reservoirs.

Royalty interest. An interest in an oil and natural gas lease that gives the owner of the interest the right to receive a portion of the production from the leased acreage (or of the proceeds of the sale thereof), but generally does not require the owner to pay any portion of the costs of drilling or operating the wells on the leased acreage. Royalties may be either landowner’s royalties, which are reserved by the owner of the leased acreage at the time the lease is granted, or overriding royalties, which are usually reserved by an owner of the leasehold in connection with a transfer to a subsequent owner.

Shut in. To shut in a well is to close off the well so that it stops producing.

Trend. A region of oil and/or natural gas production, the geographic limits of which have not been fully defined, having geological characteristics that have been ascertained through supporting geological, geophysical or other data to contain the potential for oil and/or natural gas reserves in a particular formation or series of formations.

Unconventional resourceplay. A set of known or postulated oil and or natural gas resources or reserves warranting further exploration which are extracted from (a) low- permeability sandstone and shale formations and (b) coalbed methane. These plays require the application of advanced technology to extract the oil and natural gas resources.

Undeveloped acreage. Lease acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil and natural gas, regardless of whether such acreage contains proved reserves. Undeveloped acreage is usually considered to be all acreage that is not allocated or assignable to productive wells.

Unproved and unevaluated properties. Refers to properties where no drilling or other actions have been undertaken that permit such property to be classified as proved.

Vertical well. A hole drilled vertically into the earth from which oil, natural gas or water flows are pumped.

Wellbore. The hole made by a well.

WTIor West Texas Intermediate. A grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

Working interest. The operating interest that gives the owner the right to drill, produce and conduct operating activities on the property and receive a share of production.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Report on Form 10-K (this “Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally located in the material set forth under the headings “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Business”, and “Properties” but may be found in other locations as well. These forward-looking statements are subject to risks and uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. You should not unduly rely on these statements. Factors, risks, and uncertainties that could cause actual results to differ materially from those in the forward-looking statements include, among others:

 

 

·

theThe availability of funding and the terms of such funding;

 

 

 

 

·

ourOur ability to integrate and realize the benefits from future acquisitions that we may complete and the costs of such integrations;

 

 

 

 

·

our ability to timely collect amounts owed to us under unsecured notes payable;

·

significantSignificant dilution caused by the conversion of Series C Preferred Stock into common stock, as well as downward pressure on our stock price as a result of the sale of such common shares;

 

 

·

ourOur growth strategies;

 

 

 

 

·

anticipatedAnticipated trends in our business;

 

 

 

 

·

ourOur ability to repay outstanding loans and satisfy our outstanding liabilities;

 

 

 

 

·

our liquidityMarket conditions in the oil and ability to finance our exploration, acquisition and development strategies;gas industry;

 

 

 

 

·

market conditions in the oil and gas and pipeline services industries;

·

theThe timing, cost and procedure for future acquisitions;

 

 

 

 

·

theThe impact of government regulation;

 

 

 

 

·

estimatesEstimates regarding future net revenues from oil and natural gas reserves and the present value thereof;

 

 

 

 

·

legalLegal proceedings and/or the outcome of and/or negative perceptions associated therewith;

 

 

 

 

·

plannedPlanned capital expenditures (including the amount and nature thereof);

 

 

 

 

·

increases in oil and gas production;

·

changes in the market price of oil and gas;

·

changes in the number of drilling rigs available;

·

the number of wells we anticipate drilling in the future;

·

estimates, plans and projections relating to acquired properties;

·

the number of potential drilling locations;

·

ourOur ability to maintain our NYSE listing;

 

 

 

 

·

theThe voting and conversion rights of our preferred stock;

 

 

 

 

·

the effects of global pandemics, such as COVID-19 on our operations, properties, the market for oil and gas and the demand for oil and gas; and

·

ourOur financial position, business strategy and other plans and objectives for future operations.

 

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We identify forward-looking statements by use of terms such as “may,” “will,” “expect,” “anticipate,” “estimate,” “hope,” “plan,” “believe,” “predict,” “envision,” “intend,” “continue,” “potential,” “should,” “confident,” “could” and similar words and expressions, although some forward-looking statements may be expressed differently. You should be aware that our actual results could differ materially from those contained in the forward-looking statements. You should carefully consider carefully the statements under the “Risk Factors” section of this Report and other sections of this Report which describe factors that could cause our actual results to differ from those set forth in the forward-looking statements, including those described above.

 

Forward-looking statements speak only as of the date of this Report or the date of any document incorporated by reference in this Report. Except to the extent required by applicable law or regulation, we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date of this Report or to reflect the occurrence of unanticipated events.

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Where You Can Find Other Information

 

We file annual, quarterly, and current reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). Our SEC filings are available to the public over the Internet at the SEC’s website at www.sec.gov and are available for download, free of charge, soon after such reports are filed with or furnished to the SEC, on the “Investors,” “SEC Filings” page of our website at www.camber.energy. Information on our website is not part of this Report, and we do not desire to incorporate by reference such information herein. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC like us. Copies of documents filed by us with the SEC are also available from us without charge, upon oral or written request to our Secretary, who can be contacted at the address and telephone number set forth on the cover page of this Report. In addition, you can access our proxy statements, our Code of Business Conduct and Ethics, Nominating and Corporate Governance Committee Charter, Audit Committee Charter, and Compensation Committee Charter on our website http://www.camber.energy, at “Investors” – “SEC Filings” – “All SEC Filings” and “Governance” - “Policies”.

 

General Information

 

The following discussion and analysis provide information which management believes is relevant for an assessment and understanding of the results of operations and financial condition of the Company. Expectations of future financial condition and results of operations are based upon current business plans and may change. The discussion should be read in conjunction with the audited financial statements and notes thereto.

 

In this Report, we may rely on and refer to information regarding our industry which comes from market research reports, analyst reports and other publicly available information. Although we believe that this information is reliable, we cannot guarantee the accuracy and completeness of this information, and we have not independently verified any of it.

 

Unless the context requires otherwise, references to the “Company,” “we,” “us,” “our,” “Camber,” “Camber Energy” and “Camber Energy, Inc.” refer specifically to Camber Energy, Inc., and our consolidated subsidiaries:and: its wholly owned subsidiaries Viking Energy Group, Inc. (“Viking”), Camber Permian LLC, CE Operating LLC an Oklahoma limited liability company which is wholly-owned, and C ECE Operating LLC; the wholly owned subsidiaries of Viking (Mid-Con Petroleum, LLC, Mid-Con Drilling, LLC, Mid-Con Development, LLC, and Petrodome Energy, LLC.), and; the majority owned subsidiaries of Viking (Simson-Maxwell Ltd., Viking Ozone Technology, LLC, a Texas limited liability company which is wholly-owned (“CE”).

Certain abbreviationsViking Protection Systems, LLC, and oil and gas industry terms used throughout this Annual Report are described and defined in greater detail above under “Glossary of Oil and Natural Gas Terms” on page 1 of this Report, and readers are encouraged to review that section.Viking Sentinel Technology, LLC).

 

In addition, unless the context otherwise requires and for the purposes of this Report only:

 

 

·

Exchange Act” refers to the Securities Exchange Act of 1934, as amended;

 

 

 

 

·

SEC” or the “Commission” refers to the United States Securities and Exchange Commission; and

 

 

 

 

·

Securities Act” refers to the Securities Act of 1933, as amended.

 

 
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PART I

 

ITEM 1. BUSINESS.

 

Our website addressCamber Energy, Inc. (“Camber”, the “Company”, “we”, “us” or “our”) is http://www.camber.energy.a growth-oriented diversified energy company. Through our majority-owned subsidiaries we provide custom energy and power solutions to commercial and industrial clients in North America, and have a majority interest in: (i) an entity with intellectual property rights to a fully developed, patented, proprietary Medical and Bio-Hazard Waste Treatment system using Ozone Technology; and (ii) entities with the intellectual property rights to fully developed, patented and patent pending, proprietary Electric Transmission and Distribution Open Conductor Detection Systems. Also, we hold a license to a patented clean energy and carbon-capture system with exclusivity in Canada and for multiple locations in the United States. Various of our other subsidiaries own interests in oil properties in the United States. The information on, Company is also exploring other renewable energy-related opportunities and/or that may be accessed through, our website is not incorporated by reference into this Report and should not be consideredtechnologies, which are currently generating revenue, or have a partreasonable prospect of this Report.generating revenue within a reasonable period of time.

 

Change in Fiscal Year End Custom Energy and Power Solutions:

Simson-Maxwell Acquisition

 

On February 4,August 6, 2021, the Board of DirectorsViking acquired approximately 60.5% of the Company approved changingissued and outstanding shares of Simson-Maxwell Ltd. (“Simson-Maxwell”), a Canadian federal corporation, for $7,958,159 in cash. Simson-Maxwell manufactures and supplies power generation products, services and custom energy solutions. Simson-Maxwell provides commercial and industrial clients with efficient, flexible, environmentally responsible and clean-tech energy systems involving a wide variety of products, including CHP (combined heat and power), tier 4 final diesel and natural gas industrial engines, solar, wind and storage. Simson-Maxwell also designs and assembles a complete line of electrical control equipment including switch gear, synchronization and paralleling gear, distribution, Bi-Fuel and complete power generation production controls. Operating for over 80 years, Simson-Maxwell’s seven branches assist with servicing a large number of existing maintenance arrangements and meeting the energy and power-solution demands of the Company’s fiscal yearother customers.

Clean Energy and Carbon-Capture System:

In August 2021, Viking entered into a license agreement with ESG Clean Energy, LLC (“ESG”), to utilize ESG’s patent rights and know-how related to stationary electric power generation and heat and carbon dioxide capture (the “ESG Clean Energy System”). The intellectual property licensed by Viking includes certain patents and/or patent applications, including: (i) U.S. Patent No.: 10,774,733, File date: October 24, 2018, Issue date: September 15, 2020, Titled: “Bottoming Cycle Power System”; (ii)  U.S. Patent No.: 17/661,382, Issue date:  August 8, 2023, Titled:  ‘Systems and Methods Associated With Bottoming Cycle Power Systems for Generating Power, Capturing Carbon Dioxide and Producing Products’; (iii)  U.S. Patent No.: 11624307, Issue date:  April 22, 2023, Titled: ‘Systems and Methods Associated With Bottoming Cycle Power Systems for Generating Power and Capturing Carbon Dioxide (iv) European (validated in the United Kingdom, France and Germany) Patent No.:  EP3728891, Issue date: April 12, 2023, Titled: “Bottoming Cycle Power System”; (v) U.S. Patent Application No.: 17/224,200, File date: April 7, 2021, Titled: “Bottoming Cycle Power System” (which was subsequently approved by the U.S. Patent & Trademark Office in March, 2022 (No. 11,286,832); (vi) U.S. Patent Application No.: 17/358,197, File date: June 25, 2021, Titled: “Bottoming Cycle Power System”; (vii) U.S. Patent Application No.: 17/448,943, File date: September 27, 2021, Titled: “Systems and Methods Associated With Bottoming Cycle Power Systems for Generating Power and Capturing Carbon Dioxide”; and (viii) U.S. Patent Application No.: 17/448,938, File date: September 27, 2021, Titled: “Systems and Methods Associated With Bottoming Cycle Power Systems for Generating Power, Capturing Carbon Dioxide and Producing Products.

The ESG Clean Energy System is designed to, among other things, generate clean electricity from internal combustion engines and utilize waste heat to capture approximately 100% of the carbon dioxide (CO2) emitted from the engine without loss of efficiency, and in a manner to facilitate the production of certain commodities. Patent No. 11,286,832, for example, covers the invention of an “exhaust-gas-to-exhaust-gas heat exchanger” that efficiently cools – and then reheats – exhaust from a fiscal year ending on March 31 of each year toprimary power generator so greater energy output can be achieved by a fiscal year ending on December 31 of each year. As a resultsecondary power source with safe ventilation. Another key aspect of this change, all 2020 datapatent is for the nine-month transition period from April 1, 2020,development of a carbon dioxide capture system that utilizes the waste heat of the carbon dioxide pump to December 31, 2020. The Company’s fiscal year 2021 commenced on January 1, 2021.

Late Filingsheat and Restatements

On October 31, 2020,regenerate the Company received a comment letter from the SEC (“SEC Comment Letter”) with respectadsorber that enables carbon dioxide to Amendment No. 2 to the Registration Statement on Form S-4 filed on October 14, 2020. Among other things, the SEC Comment Letter questioned the Company’s historical accounting treatment regarding the sale of our Series C Redeemable Convertible Preferred Stock (the “Series C Stock”). The Company recorded such sales as “permanent equity”be safely contained and the SEC Comment Letter suggested the appropriate accounting classification was something other than permanent equity given certain provisions within the Certificate of Designation for the Series C Stock (“COD”).packaged.

 

The Company had discussionsintends to sell, lease and/or sub-license the ESG Clean Energy System to third parties using, among other things, Simson-Maxwell’s existing distribution channels. The Company may also utilize the ESG Clean Energy System for its own account, whether in connection with its accounting advisors and the SEC staff regarding the accounting treatment for the Series C Shares. The Series C Shares have been outstanding since 2016 and the accounting treatment is applicable to all of the Company’s previously filed and yet to be filed financial statements. On September 16, 2021 the Company filed an 8-K, Item 4.02 non-reliance on previously filed financial statements and deferred filing Annual Reports on Form 10-K and quarterly reports on Form 10-Q until the appropriate accounting treatment had been determined.

In November 2021, the Company believed it had determined the appropriate accounting treatment and filed an amended Annual Report on Form 10-K/A for the year ended March 31, 2020, inclusive of restated comparative financial statements for the year ended March 31, 2019, an amended Quarterly report on Form 10-Q/A for the three months ended June 30, 2020, and an amended quarterly report on Form 10-Q/A for the three- and six-month periods ended September 30, 2020. 

Subsequent to filing the amended filings, the Company was advised by the SEC that the staff continued to question the accounting treatment for the Series C Shares. Consequently, the Company continued to defer filing Annual Reports on Form 10-K and quarterly reports on Form 10-Q until the matter had been resolved. On March 28, 2022 the Company filed Form 8-K, Item 4.02 non-reliance on previously filed financial statements

After numerous consultations with the SEC staff and the Company’s accounting advisors, in May 2022, the Company has now concluded on the proper accounting treatment and is bringing all financial statement filings current.petroleum operations, Simson-Maxwell’s power generation operations, or otherwise.

 

 
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General Medical Waste Disposal System Using Ozone Technology:

 

Camber,In January 2022, Viking acquired a Nevada corporation, is based in Houston, Texas. We are currently primarily engaged in the acquisition, development and sale of crude oil, natural gas and natural gas liquids from various known productive geological formations in Kansas, Louisiana and Texas, and hold interests in non-producing wells in Mississippi. Incorporated in Nevada in December 2003 under the name Panorama Investments Corp., the Company changed its name to Lucas Energy, Inc., effective June 9, 2006, and effective January 4, 2017, the Company changed its name to Camber Energy, Inc. With the acquisition of a majority51% interest in Viking Energy Group, Inc. described herein,Ozone Technology, LLC (“Viking Ozone”), which owns the Company’s business planintellectual property rights to a patented (i.e., US Utility Patent No. 11,565,289), proprietary medical and biohazard waste treatment system using ozone technology. Simson-Maxwell has been designated the exclusive worldwide manufacturer and vendor of this system. The technology is designed to acquirebe a majority interestsustainable alternative to incineration, chemical, autoclave and heat treatment of bio-hazardous waste, and for the treated waste to be classified as renewable fuel for waste-to-energy (“WTE”) facilities in assets or entities inmany locations around the energy sector, including engaging in the acquisition, exploration, development and production of oil and natural gas properties, both individually and through collaborative partnerships with other companies in this field of endeavor.world.

 

Open Conductor Detection Technologies:

In February 2022, Viking acquired a 51% interest in two entities, Viking Sentinel Technology, LLC (“Viking Sentinel”) and Viking Protection Systems, LLC (“Viking Protection”), that own the intellectual property rights to patented (i.e. U.S. utility patent 11,769,998 titled “ Electric Transmission Line Ground Fault Prevention Systems Using Dual, High Sensitivity Monitoring Devices’) and patent pending (i.e., US Applications 16/974,086, and 17/693,504), proprietary electric transmission and distribution open conductor detection systems. The systems are designed to detect a break in a transmission line, distribution line, or coupling failure, and to immediately terminate the power to the line before it reaches the ground. The technology is intended to increase public safety and reduce the risk of causing an incendiary event, and to be an integral component within grid hardening and stability initiatives by electric utilities to improve the resiliency and reliability of existing infrastructure.

Oil and Gas Properties

VikinExisting Assets:g

As of December 31, 2023, the Company owns leasehold interests (working interests) in properties producing from the Cline and Wolfberry formations in Texas.

InvestmentDivestitures in 2023:

 

On November 5, 2023, Mid-Con Petroleum, LLC and Mid-Con Drilling, LLC, wholly owned subsidiaries of Viking, sold 100% of their interest in oil and gas assets in Kansas, consisting of 168 producing wells, 90 injector wells and 34 non-producing wells, for gross proceeds of $515,000. On December 23, 2020, Camber entered into1, 2023, a Securities Purchase Agreement (the “Purchase Agreementsubsidiary of Petrodome Energy, LLC (“Petrodome”) with, a wholly owned subsidiary of Viking, Energy Group, Inc. (“Viking”)sold its non-operated working interest in a producing oil well in Texas for proceeds of $250,000. The Company recorded a net gain on these two transactions in the amount of $854,465, as follows:

Proceeds from sale (net of transaction costs)

 

$751,450

 

Reduction in oil and gas full cost pool (based on % of reserves disposed)

 

 

(1,049,229)

ARO recovered

 

 

1,104,806

 

Cash bond recoverable (net of fees)

 

 

47,438

 

Gain on disposal

 

$854,465

 

Following these transactions, Petrodome ceased to acquire (the “Viking Acquisition” orbe the Acquisition”) 26,274,510 sharesoperator of Viking’s common stock, constituting 51%any oil and gas properties and applied for the refund of a cash performance bond of $50,000. The refund, net of fees, is included in prepaids and other current assets at December 31, 2023 and was included in the determination of the issued common stock of Viking (the “Initial Viking Shares”), in consideration of (i) the payment of $10,900,000 in cash by Camber to Viking, which was retained by Viking (the “Cash Purchase Price”), and (ii) Camber canceling $9,200,000 in promissory notes previously issued to Camber by Viking (the February 3, 2020 promissory note for $5,000,000 and the June 25, 2020 promissory note for $4,200,000, collectively the “Viking Notes”) along with accrued interest. Pursuant to the Purchase Agreement, Viking is generally obligated (subject to certain limitations) to issue additional shares of Viking common stock to Camber to ensure that Camber shall own at least 51% of the common stock of Viking through July 1, 2022.gain on disposal.

 

In connection with the investment, on December 23, 2020, the Company also entered into (i) a termination agreement with Viking terminating the prior Amended and Restated Agreement and Plan of Merger, dated August 31, 2020, as amended (the “Termination Agreement”), and (ii) an Assignment of Camber’s 30% Membership InterestDivestitures in one of Viking’s subsidiaries, Elysium Energy Holdings, LLC, back to Viking (the “Assignment2022:”). Also in connection with the Acquisition, on December 23, 2020, the Company (i) borrowed $12,000,000 from the institutional investor described in the “Preferred Stock Financing Transactions” section below (the “Investor”); (ii) issued the Investor a promissory note in the principal amount of $12,000,000 (the “December 23rd Investor Note”), accruing interest at the rate of 10% per annum and maturing December 11, 2022; (iii) granted the Investor a first-priority security interest in the Initial Viking Shares and the Company’s other assets pursuant to a Security Agreement-Pledge (the “December 23rd Pledge Agreement”), and a general security agreement (the “December 23rd Security Agreement”), respectively; and (iv) entered into an amendment to the Company’s $6,000,000 promissory note previously issued to the Investor dated December 11, 2020, amending the acceleration provision of the note to provide that the note repayment obligations would not accelerate if Camber had increased its authorized capital stock by March 11, 2021 (the “Note Amendment”). On February 23, 2021, the Company’s stockholders approved an amendment to the Company’s Articles of Incorporation to increase the number of our authorized shares of common stock from 25,000,000 to 250,000,000, which amendment was filed with the State of Nevada on February 23, 2021.

 

On December 23, 2020, the December 23rd Investor Note was funded, and the Company closed the investment, paying the Cash and assigning the membership interests to Viking and cancelling the Viking Notes and related accrued interest. At the closing, James Doris and Frank Barker, Jr., Viking’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), respectively, were appointed the CEO and CFO, respectively,July 8, 2022, four of the Company, and Mr. Doris was appointedwholly owned subsidiaries of Petrodome Energy, LLC (“Petrodome”), a memberwholly owned subsidiary of the Board of Directors of the Company.

On January 8, 2021, the Company, entered into another purchase agreement with Viking pursuantPurchase and Sale Agreements to whichsell all of their interests in the Company increased its investment by acquiring an additional 16,153,846 shares of Viking common stock (the “Additional Viking Shares”) in consideration of (i) the Company issuing 1,890 shares of Camber’s Series C Redeemable Convertible Preferred Stock to EMC Capital Partners, LLC (“EMC”), one of the Viking’s lenders which held a secured promissory note with an original principal amount of $20,869,218 in connection with the purchase of oil and gas assets on or about February 3, 2020 (the “EMC Note”);owned by those Petrodome subsidiaries, including in the aggregate, interests in 8 producing wells, 8 shut-in wells, 2 saltwater disposal wells and (ii) EMC considering1 inactive well, to third parties for $3,590,000 in cash. The proceeds from the EMC Note, and related accrued interest, paid in full and cancelled pursuantsale were used to fully repay Petrodome’s indebtedness to CrossFirst Bank under the Cancellation Agreement described below.June 13, 2018 revolving line of credit loan.

 

 
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Simultaneously, on January 8, 2021, Viking entered into a Cancellation Agreement with EMC (the “Cancellation Agreement”) pursuant to which Viking agreed to pay $325,000 to EMC, and EMC agreed to cancel and terminateThis transaction resulted in the EMCdisposition of most of the Company’s total oil and gas reserves (see Note and all other liabilities, claims, amounts owing and other obligations under6). The Company recorded a loss on the Note.transaction in the amount of $8,961,705, as follows:

 

Proceeds from sale

 

$3,590,000

 

Reduction in oil and gas full cost pool (based on % of reserves disposed)

 

 

(12,791,680)

ARO recovered

 

 

239,975

 

Loss on disposal

 

$(8,961,705)

On

Additionally, in July 29, 2021,2022, the Company entered intoreceived an unanticipated refund ofSecurities Purchase Agreement with Viking to acquire an additional 27,500,000 shares of Viking common stock for an aggregate purchase price of $11,000,000.

As$1,200,000 performance bond as a result of these three investments,Petrodome ceasing to operate certain assets in the Company owned approximately 61%State of Louisiana. The gain from this refund was included in the outstanding common shares“loss from the sale of Viking asoil and gas properties and fixed assets’ in the Consolidated Statement of December 31, 2021.Operations.

 

The Company has determined that its ownership of the common shares of Viking gives the Company the ability to exercise significant influence over Viking, but not control from an accounting perspective pursuant to applicable accounting rules and/or guidelines, and therefore the Company has not consolidated the financial statements of Viking into the Company’s financial statements. Rather, the Company accounts for its investment in Viking under the equity method.

Merger Agreement with Viking Energy Group, Inc.

 

On February 15, 2021,August 1, 2023, Camber entered into ancompleted the previously announced merger (the “Merger”) with Viking Energy Group, Inc. (“Viking”) pursuant to the terms and conditions of the Agreement and Plan of Merger (the “Merger Agreement”) with Viking. The Merger Agreement provides that, uponbetween Camber and Viking dated February 15, 2021, which was amended on April 18, 2023 (as amended, the terms and subject to the conditions set forth therein, a newly formed wholly-owned subsidiary of Camber (“Merger Sub”) will then merge with and into Viking (the “Merger“Merger Agreement”), with Viking surviving the Merger as a wholly-ownedwholly owned subsidiary of Camber (the “Combined Company”).Camber.

 

Upon the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share: (i) of common stock, par value $0.001 per share, of Viking (the Viking“Viking Common StockStock”) issued and outstanding, immediately prior to the Effective Time, other than shares owned by Camber, Viking and Merger Sub, will bewas converted into the right to receive one share of common stock of Camber; andCamber (the “Camber Common Stock”); (ii) of Series C Convertible Preferred Stock of Viking (the Viking“Viking Series C Preferred StockStock”) issued and outstanding immediately prior to the Effective Time will bewas converted into the right to receive one share of Series A Convertible Preferred Stock of Camber (the “New Camber Series A Preferred Stock”) and (iii) of Series E Convertible Preferred Stock of Viking (the “Viking Series E Preferred Stock, and, together with the Viking Series C Preferred Stock, the “Viking Preferred Stock”). Each issued and outstanding was converted into the right to receive one share of Series H Preferred Stock of Camber (the “New Camber Series H Preferred Stock,” and, together with the New Camber Series A Preferred Stock, will bethe “New Camber Preferred”).

Each share of New Camber Series A Preferred Stock is convertible into 890 shares of common stock of Camber Common Stock (subject to a beneficial ownership limitation preventing conversion into Camber common stockCommon Stock if the holder would be deemed to beneficially own more than 9.99% of Camber’s common stock)Camber Common Stock), will beis treated equally with Camber’s common stockCamber Common Stock with respect to dividends and liquidation, and will only havehas voting rights with respect to voting: (a) on a proposal to increase or reduce Camber’s share capital; (b) on a resolution to approve the terms of a buy-back agreement; (c) on a proposal to wind up Camber; (d) on a proposal for the disposal of all or substantially all of Camber’s property, business and undertaking; (f) during the winding-up of Camber; and/or (g) with respect to a proposed merger or consolidation in which Camber is a party or a subsidiary of Camber is a party. Holders

Each share of New Camber Series H Preferred Stock has a face value of $10,000 per share, is convertible into a certain number of shares of Camber Common Stock, with the conversion ratio based upon achievement of certain milestones by Viking’s subsidiary, Viking Protection Systems, LLC (provided the holder has not elected to receive the applicable portion of the purchase price in cash pursuant to that certain Purchase Agreement, dated as of February 9, 2022, by and between Viking and Jedda Holdings, LLC), is subject to a beneficial ownership limitation of 4.99% of Camber Common Stock (but may be increased up to a maximum of 9.99% at the sole election of a holder by the provision of at least 61 days’ advance written notice) and has voting rights equal to one vote per share of Camber Series H Preferred Stock held on a non-cumulative basis.

Each outstanding option or warrant to purchase Viking Common Stock and Viking Preferred Stock will have any fractional shares of Camber common stock or preferred stock after the Merger rounded up(a “Viking Option”), to the nearest whole share.

Atextent unvested, automatically became fully vested and was converted automatically into an option or warrant (an “Adjusted Option”) to purchase, on substantially the Effective Time, each outstandingsame terms and conditions as were applicable to such Viking equity award, will be convertedOption, except that instead of being exercisable into the right to receive the merger consideration in respect of each share of Viking Common Stock, underlying such equity award and, in the case of Viking stock options, be convertedAdjusted Option is exercisable into vested Camber stock options based on the merger exchange ratio calculated as provided above (the “Exchange Ratio”).

The Merger Agreement provides, among other things, that effective as of the Effective Time, James A. Doris, the current Chief Executive Officer of both Viking and Camber, shall serve as President and Chief Executive Officer of the Combined Company following the Effective Time. The Merger Agreement provides that, as of the Effective Time, the Combined Company will have its headquarters in Houston, Texas.

The Merger Agreement also provides that, during the period from the date of the Merger Agreement until the Effective Time, each of Camber and Viking will be subject to certain restrictions on its ability to solicit alternative acquisition proposals from third parties, to provide non-public information to third parties and to engage in discussions with third parties regarding alternative acquisition proposals, subject to customary exceptions. Viking is required to hold a meeting of its stockholders to vote upon the adoption of the Merger Agreement and, subject to certain exceptions, to recommend that its stockholders vote to adopt the Merger Agreement. Camber is required to hold a meeting of its stockholders to approve the issuance of Viking Common Stock and Viking Preferred Stock in connection with the Merger (the “Merger Share Issuance”).Stock.

 

 
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The completionEach outstanding promissory note issued by Viking that is convertible into Viking Common Stock (a “Viking Convertible Note”) was converted into a promissory note convertible into Camber Common Stock (an “Adjusted Convertible Note”) having substantially the same terms and conditions as applied to the corresponding Viking Convertible Note (including, for the avoidance of doubt, any extended post-termination conversion period that applies following consummation of the Merger), except that instead of being convertible into Viking Common Stock, such Adjusted Convertible Note is convertible into Camber Common Stock.

In connection with the Merger, Camber issued approximately 49,290,152 shares of Camber Common Stock, which represented approximately 59.99% of the outstanding Camber Common Stock after giving effect to such issuance. In addition, Camber reserved for issuance approximately 88,647,137 additional shares of Camber Common Stock in connection with the potential (1) conversion of the New Camber Series A Preferred Stock, (2) conversion of the New Camber Series H Preferred Stock, (3) exercise of the Adjusted Options and (4) conversion of the Adjusted Convertible Notes.

For accounting purposes, the Merger is subjectdeemed a reverse acquisition. Consequently, Viking (the legal subsidiary) was treated as the acquiror of Camber (the legal parent). Accordingly, these consolidated financial statements reflect the financial position, operating results, and cash flow of Viking up to customary conditions, including (i) adoption of the Merger Agreement by Camber’s stockholders and approval of the Merger Share Issuances by Camber’s stockholders, (ii) receipt of required regulatory approvals, (iii) effectiveness of a registration statement on Form S-4 for the Camber common stock to be issued in the Merger (the “Form S-4”), and (iv) the absence of any law, order, injunction, decree or other legal restraint preventing the completion of the Merger or making the completion of the Merger illegal. Each party’s obligation to complete the Merger is also subject to certain additional customary conditions, including (i) subject to certain exceptions, the accuracy of the representations and warranties of the other party, (ii) subject to certain exceptions, performance by the other party of its obligations under the Merger Agreement and (iii) the absence of any material adverse effect on the other party, as defined in the Merger Agreement.

Additional closing conditions to the Merger include that in the event the NYSE American determines that the Merger constitutes, or will constitute, a “back-door listing” or “reverse merger,” Camber (and its common stock) would be required to qualify for initial listing on the NYSE American, pursuant to the applicable guidance and requirements of the NYSE as of the Effective Time.

The Merger Agreement can be terminated (i) at any time with the mutual consent of the parties; (ii) by either Camber or Viking if any governmental consent or approval required for closing is not obtained, or any governmental entity issues a final non-appealable order or similar decree preventing the Merger; (iii) by either Viking or Camber if the Merger shall not have been consummated on or before August 1, 2021; (iv) by Camber or Viking, upon the breach by the other of a term of the Merger, which is not cured within 30 days of the date of written notice thereof by the other; (v) by Camber if Viking is unable to obtain the affirmative vote of its stockholders for approval of the Merger; (vi) by Viking if Camber is unable to obtain the affirmative vote of its stockholders required pursuant to the terms of the Merger Agreement; and (vii) by Viking or Camber if there is a willful breach of the Merger Agreement by the other party thereto.

The Merger Agreement has no impact on the Camber Series C Preferred Stock.

The Merger Agreement contains customary indemnification obligations of the parties and representations and warranties.

The representations, warranties and covenants of each party set forth in the Merger Agreement have been made only for the purposes of, and were and are solely for the benefit of the parties to, the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Accordingly, the representations and warranties may not describe the actual state of affairs at the date they were made or at any other time, and investors should not rely on them as statements of fact. In addition, such representations and warranties (i) will not survive consummation of the Merger and (ii) were made only as of the date of the Merger, Agreement or such other dateand the combined financial position, operating results and cash flow of Viking and Camber from August 1, 2023 to September 30, 2023. The prior year comparative financial information is that of Viking.

James A. Doris continues to serve as is specified in the Merger Agreement. Moreover, information concerning the subject matterPresident and Chief Executive Officer of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the parties’ public disclosures. Accordingly, the Merger Agreement is included with this filing only to provide investors with information regarding the terms of the Merger Agreement, and not to provide investors with any factual information regarding Camber or Viking, their respective affiliates or their respective businesses. The Merger Agreement should not be read alone, but should instead be read in conjunction with the other information regarding Camber, Viking, their respective affiliates or their respective businesses, the Merger Agreementcombined company, and the Merger that will be containedcombined company continues to have its headquarters in or incorporated by reference into, a Form S-4 that will include a joint proxy statement of Camber and Viking and a prospectus of Viking, as well as in the Forms 10-K, Forms 10-Q and other filings that each of Camber and Viking make with the SEC.

The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is filed as Exhibit 2.1.

The Merger has not been completed. As of the date of filing this report, neither Viking or Camber has advised of its intention to terminate the Merger Agreement.

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Lineal Acquisition and Divestiture

On December 31, 2019, the Company entered into a Preferred Stock Redemption Agreement (the “Redemption Agreement”) by and between the Company and the prior owners of Lineal, whereby the Company redeemed the Company’s Series E and F Preferred Stock (the holders of such preferred stock, collectively, the “Preferred Holders”) issued in connection with the Lineal Merger (as defined in Note 2). Pursuant to the Redemption Agreement, effective as of December 31, 2019, ownership of 100% of Lineal was transferred back to the Preferred Holders, and, all of the Series E Preferred Stock and Series F Preferred Stock of the Company outstanding were canceled through the redemption (the “Lineal Divestiture”). The Redemption Agreement also provided for (a) the entry by Lineal and the Company into a new unsecured promissory note in the amount of $1,539,719, the outstanding amount of the July 2019 Lineal Note together with additional amounts loaned by Camber to Lineal through December 31, 2019 (the “December 2019 Lineal Note”); and, (b) the unsecured loan by the Company to Lineal on December 31, 2019 of an additional $800,000, entered into by Lineal in favor of the Company on December 31, 2019 (“Lineal Note No. 2”); The December 2019 Lineal Note and Lineal Note No. 2, accrued interest, payable quarterly in arrears, beginning on March 31, 2020 and continuing until December 31, 2021, when all interest and principal was due, at 8% and 10% per annum (18% upon the occurrence of an event of default), respectively. Pursuant to the Redemption Agreement, the parties thereto mutually agreed to unwind the Lineal Merger and allow for the redemption in full of Lineal by the Preferred Holders. In connection therewith, the Company redeemed the Company’s Series E and F Preferred Stock issued in connection with the Lineal Merger and ownership of 100% of Lineal was transferred back to the Preferred Holders, and all of the Series E Preferred Stock and Series F Preferred Stock of the Company outstanding were cancelled through the redemption.Houston, Texas.

 

N&B Production Payment

The Company sold a significant portion of its oil and gas production assets in Oklahoma to N&B Energy, LLC (“N&B Energy”) effective August 1, 2018. As part of the sale of its assets to N&B Energy, the Company also retained a 12.5% production payment (effective until a total of $2.5 million has been received) and a 3% overriding royalty interest, in its then existing Okfuskee County, Oklahoma assets; and an overriding royalty interest on certain other undeveloped leasehold interests, pursuant to an Assignment of Production Payment and Assignments of Overriding Royalty Interests. No payments were received in regard to any of the retained items noted above through December 31, 2020, and the filing date hereof.

Camber retained its assets in Glasscock County and operated wells in Hutchinson County, Texas, following the N&B Energy transaction until completion of the Settlement Agreement discussed below.

On January 31, 2020, the Company entered into a Compromise Settlement Agreement (the “Settlement Agreement”) with PetroGlobe Energy Holdings, LLC (“PetroGlobe”), Signal Drilling, LLC (“Signal”), Petrolia Oil, LLC (“Petrolia”), Prairie Gas Company of Oklahoma, LLC (“PGCO”), and Canadian River Trading Company, LLC (“CRTC”). Pursuant to the Settlement Agreement, the Company agreed to pay PetroGlobe $250,000, of which $100,000 was due upon execution of the Settlement Agreement, which payment has been made, and $150,000 was paid to an escrow account, which was released by the Company upon the successful transfer of all wells and partnership interests of the Company’s prior wholly-owned subsidiary C E Energy LLC (“CE”) to PetroGlobe, which was completed on July 16, 2020.

Apache Corporation Settlement

In December 2018, Apache Corporation (“Apache”) sued Camber, Sezar Energy, L.P., and Texokcan Energy Management Inc., in the 129th Judicial District Court of Harris County, Texas (Cause 2018-89515). Apache alleged causes of action for Breach of Contract, Money Had & Received and Conversion, relating to amounts Apache alleged it was owed under a joint operating agreement. On July 13, 2020, Apache filed a Second Amended Petition against Camber, Sezar, Texokcan, N&B Energy, LLC, and Richard N. Azar, II alleging Breach of Contract, Defaults under a Joint Operating Agreement, Money Had & Received and Conversion, relating to amounts Apache allegedly overpaid Sezar and Azar and Unjust Enrichment. On October 26, 2020, the Company entered into an agreement with Apache to obtain a release of all liability (both parties provided mutual releases) for $20,000 which the Company paid in October 2020, which is included in general and administrative expenses on the statement of operations for the nine months ended December 31, 2020. The litigation was dismissed against the Company.

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Preferred Stock Financing Transactions

On and effective June 22, 2020, the Company and an institutional investor, Discover Growth Fund, LLC ( “Discover”) entered into a Stock Purchase Agreement (the “June 2020 Purchase Agreement”), pursuant to which Discover purchased 630 shares of the Company’s Series C Redeemable Convertible Preferred Stock (the “Series C Preferred Stock”) for $6 million, at a 5% original issue discount to the $10,000 face value of such preferred stock (the “Face Value”). Pursuant to the June 2020 Purchase Agreement, as long as Discover holds any shares of Series C Preferred Stock, the Company agreed that, except as contemplated in connection with the Merger, the Company would not issue or enter into or amend an agreement pursuant to which the Company may issue any shares of common stock, other than (a) for restricted securities with no registration rights, (b) in connection with a strategic acquisition, (c) in an underwritten public offering, or (d) at a fixed price. The Company also agreed that it would not issue or amend any debt or equity securities convertible into, exchangeable or exercisable for, or including the right to receive, shares of common stock (i) at a conversion price, exercise price or exchange rate or other price that is based upon or varies with, the trading prices of or quotations for the shares of common stock at any time after the initial issuance of the security or (ii) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of the security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the common stock.

The Company also agreed to provide Discover a right of first offer to match any offer for financing the Company receives from any person while the shares of Series C Preferred Stock sold pursuant to the June 2020 Purchase Agreement are outstanding, except for debt financings not convertible into common stock, which are excluded from such right to match.

The Company agreed that if it issues any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to Discover, then the Company would notify Discover of such additional or more favorable term and such term, at Discover’s option, may become a part of the transaction documents with Discover.

Finally, the Company agreed to include proposals relating to the approval of the June 2020 Purchase Agreement and the issuance of the shares of common stock upon conversion of the Series C Preferred Stock sold pursuant to the June 2020 Purchase Agreement, as well as an increase in authorized common stock to fulfill the Company’s obligations to issue such shares, at the meeting held to approve the merger pursuant to the original planned merger agreement entered into with Viking in February 2020 (“First Merger Agreement”) or a separate meeting in the event the Merger is terminated prior to shareholder approval, and to use commercially reasonable best efforts to obtain such approvals as soon as possible and in any event prior to December 31, 2020.

The Company loaned $4.2 million of the funds provided by the June 2020 Purchase Agreement to Viking in connection with the purchase of the June 2020 Secured Note.

Also on June 22, 2020, the Company and Discover entered into an Amendment to Stock Purchase Agreement (the “SPA Amendment”), pursuant to which the Investor agreed to terminate the obligation set forth in the Stock Purchase Agreement previously entered into between the Company and the Investor on February 3, 2020, which contained a Repurchase Requirement substantially similar to the one contained in the June 2020 Purchase Agreement, as to the 525 shares of Series C Preferred Stock sold to Discover on February 3, 2020, which would have required that the Company pay Discover an aggregate of $5,775,000 in connection with the redemption of the 525 shares of Series C Preferred Stock the Company sold to Discover in the event the First Merger Agreement was terminated.

 

Effective as of July 9, 2021, the Company and another institutional investor, Antilles Family Office, LLC (“Antilles”), an affiliate of Discover, ( “Antilles”), entered into a Stock Purchase Agreement (the “July 2021 Purchase Agreement”).

Under the terms of the July 2021 Purchase Agreement,, pursuant to which Antilles purchased 1,575 shares of Series C Preferred Stock for $15 million, at a 5% original issue discount to the $10,000 face value of each share of preferred stock.  Between May 17 and December 31, 2022, Antilles converted 1,305 shares of Series C Preferred Stock into 393,305,736 shares of common stock (equivalent to approximately 7,866,115 common shares on a post-reverse stock split basis) pursuant to the terms and conditions of the Certificate of Designation(s), as amended, associated with the Series C Preferred Stock. 

In 2023, Antilles converted 240 shares of Series C Preferred Stock (the “2023 Series C Conversions”) into shares of common stock, with 221 of such shares of Series C Preferred Stock having been converted prior to the Merger and 19 of such shares of Series C Preferred Stock having been converted subsequent to the Merger. With respect to the 2023 Series C Conversions, pursuant to the terms and conditions of the Certificate of Designation(s), as amended, associated with the Series C Preferred Stock (the “COD”): (i) a total of 8,525,782 shares of common stock were issued to Antilles on the initial conversion(s) (of this total, 1,093,358 shares were issued subsequent to the Merger); (ii) approximately 28,955,938 shares of common stock (“True-Up Shares”) were issued to Antilles subsequent to the date(s) of the initial conversion(s) as a result of the continuation of the Measurement Period (as defined in the COD) and decline in the low volume weighted average price (“Low VWAP”) of the Company’s common stock following the date of the initial conversion(s); and (iii) as of December 31, 2023, Antilles was entitled to receive, subject to a 9.99% beneficial ownership limitation, approximately 34,488,937 additional True-Up Shares (the “Outstanding True-Up Entitlement”) based on the then Low VWAP of approximately $0.2136.  The Low VWAP fell to approximately $0.158 on or about February 14, 2024, which increased the Outstanding True-Up Entitlement, as at December 31, 2023, from 34,488,937 to 133,716,728.  Based on shares of common stock issued to Antilles between January 1, 2024 and March 12, 2024, the Outstanding True-Up Entitlement as at March 20, 2024, was approximately 105,578,350. 

On or about February 15, 2024, the Company and Antilles entered into an agreement (the “February 2024 Antilles Agreement”) which, among other things, confirmed that if the Company pays in full amounts owing under all outstanding promissory notes in favor of Antilles or its affiliates, and redeems all then outstanding shares of Series C Preferred Stock, Antilles will not thereafter deliver any Additional Notices (as defined in the COD) requesting further True-Up Shares with respect to the 2023 Series C Conversions or other already-converted shares of Series C Preferred Stock, and no as of then undelivered True-Up Shares will be owed to Antilles.

 

 
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Pursuant to the July 2021 Purchase Agreement, as long as Antilles holds any shares of Series C Preferred Stock, we agreed that, except as contemplated in connection with the Merger, we would not issue or enter into or amend an agreement pursuant to which we may issue any shares of common stock, other than (a) for restricted securities with no registration rights, (b) in connection with a strategic acquisition, (c) in an underwritten public offering, or (d) at a fixed price. We also agreed that we would not issue or amend any debt or equity securities convertible into, exchangeable or exercisable for, or including the right to receive, shares of common stock (i) at a conversion price, exercise price or exchange rate or other price that is based upon or varies with, the trading prices of or quotations for the shares of common stock at any time after the initial issuance of the security or (ii) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of the security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the common stock.

 

We also agreed that if we issue any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to Antilles, then we would notify Antilles of such additional or more favorable term and such term, at the Investor’s option, may become a part of the transaction documents with the Investor. We agreed to include proposals relating

As at December 31, 2023, Antilles held 30 shares of Series C Preferred Stock.  The Company estimated these shares would convert into approximately 9.0 million common shares pursuant to the approvalconversion formula set out in the Certificate of the July 2021 Purchase Agreement and the issuance of the shares of common stock upon conversion ofDesignation(s), as amended, associated with the Series C Preferred Stock, sold pursuant tousing approximately $0.2136 as the July 2021 Purchase Agreement, as well as an increase in authorized common stock to fulfill our obligations to issue such shares, at the Company’s next Annual Meeting, the meeting held to approve the Merger or a separate meeting in the event the Merger is terminated prior to shareholder approval, and to use commercially reasonable best efforts to obtain such approvals as soon as possible and in any event prior to January 1, 2022.

Exchange Agreement, Promissory Notes and Security Agreements with the Investor

On December 11, 2020, the Company entered into an Exchange Agreement (the “Exchange Agreementthen low volume weighted average price (“Low VWAP”) with Discover, the sole shareholder of the Company’s Series C Preferred Stockcommon stock for the purposes of calculating the Conversion Premium due upon conversion.  The Low VWAP fell to approximately $0.158 on or about February 14, 2024, which increased the underlying common share estimate from 9.0 million to 21.4 million common shares.  The February 2024 Antilles Agreement established a floor price for the Low VWAP at that time. The transactions contemplated by$0.15.  If the Exchange Agreement closed on December 11, 2020.Low VWAP during the Measurement Period (as defined in the COD) falls to $0.15, the underlying common share estimate would further increase to 26.7 million common shares . Pursuant to the ExchangeFebruary 2024 Antilles Agreement, as an accommodation toif the Company andpays in order to reducefull amounts owing under all outstanding promissory notes in favor of Antilles or its affiliates, the potential dilutive impact of the Series C Preferred Stock, by reducing the number ofCompany may redeem for cash any outstanding shares of Series C Preferred Stock Discover exchanged 600 shares of Series C Preferred Stock (the “Exchanged Shares”), withfor an aggregate face value of $6,000,000 (600 shares each with a face value of $10,000 per share), for a $6,000,000 secured amount equal to the Early Redemption Price (as defined in the COD).

Promissory Note (the “Notes and Security Agreement:

Between December 11th Investor Note”), 2020 and the 600 Preferred Shares were cancelled.

Pursuant to the Exchange Agreement (a) Discover waived all prior breaches and defaults that occurred prior to the date of the Exchange Agreement or that may continue or occur for 90 days thereafter, under any agreements entered into with Discover relating to the acquisition of shares of Series C Preferred Stock (the “90 Day Period”), and waived all rights and remedies with respect to any such breaches and defaults; (b) we agreed to timely file all reports required by the SEC for so long as Discover holds any Series C Preferred Stock (providedDecember 24, 2021, the Company was provided until December 31, 2020, to file its Quarterly Report on Form 10-Q forexecuted and delivered the quarter ended September 30, 2020); (c) we agreed to indemnify and hold Discover, its affiliates, managers and advisors, and their related parties, harmless from any losses related to any breach of the Exchange Agreement (or other transaction documents), and from any action by the Company or a creditor or stockholder of the Company, challenging the transactions contemplated by the Exchange Agreement and related agreements, except to the extent finally adjudicated to be caused solely by such indemnified party’s unexcused material breach of an express provision of the Exchange Agreement or related agreements; (d) we agreed to reserve from our outstanding common stock, shares of common stock to allow for the conversion of the outstanding Series C Preferred Stock (subject to the 90 Day Period); (e) Discover agreed to vote all shares of common stock which it holds as of the record date for any shareholder meetingfollowing Secured Promissory Notes in favor of the Company’s previously announced pending plan of merger with Viking (the “MergerDiscover:

1.

Promissory Note dated December 11, 2020 in the original amount of $6,000,000 (the “December 11th Investor Note”), which was issued in connection with the Exchange Agreement described above;

2.

Promissory Note dated December 22, 2020 in the original amount of $12,000,000 (the “December 22nd Investor Note”);

3.

Promissory Note dated April 23, 2021 in the original amount of $2,500,000 (the “April 23rd Investor Note”);

4.

Promissory Note dated December 9, 2021 in the original amount of $1,000,000 (the “December 9, 2021 Investor Note”); and

5.

Promissory Note dated December 24, 2021 with a face value of $26,315,789 (the “December 24, 2021 Investor Note”), in respect of which $25,000,000 was funded on January 3, 2022.

The December 9, 2021 Investor Note was paid in full on January 4, 2022.  All other Promissory Notes remain outstanding and have a maturity date of January 1, 2027 (collectively, the “Outstanding Notes”).  Commencing December 24, 2021, pursuant to Amendments signed on or about such date and the other proposals that are recommended for approval by the Board of Directorssatisfaction of the Company in the proxy statement filed in connection with such Merger; (f) Discover agreed to the Merger and agreed to waive any rights it may have (including favored nations, anti-dilution and/or reset rights) in connection therewith; (g) we acknowledged that Discover had previously provided noticecondition stated therein which related to the Company ofincreasing its intentauthorized capital prior to increase the beneficial ownership limitation set forth in the designationDecember 31, 2021, each of the Series C Preferred StockOutstanding Notes bear interest at a rate per annum equal to 9.99%the Wall Street Journal Prime Rate on the amendment date, being 3.25%, and that such limitation will continuewith interest payable at maturity.  Prior to apply moving forward; and (h) we provided Discover and its related parties a general release.

The Exchange Agreement also amendedDecember 24, 2021, the June 22, 2020 Stock Purchase Agreement previously entered into with Discover, pursuant to which Discover purchased 630 shares of Series C Preferred Stock, to remove from such June 22, 2020 agreement (i) the prohibitioninterest rate on Discover transferring and/or selling shares of Series C Preferred Stock; and (ii) the repurchase obligation, which required the Company to redeem for cash, at 110% of the face value thereof ($10,000applicable Outstanding Notes was 10% per share), all 630 shares of Series C Preferred Stock sold by the Company in June 2020, in the event the Merger did not close by the required date set forth in the plan of merger relating thereto (as amended from time to time), and all similar provisions in any prior agreements entered into between the Company and Discover.annum.

 

 
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TheAll Outstanding Notes are secured by a first-ranking security interest against all of the Company’s assets, including the shares of Viking owned by the Company.  Viking has also guaranteed the Company’s obligations under the Outstanding Notes.

Discover previously had the right to convert all or a portion of the amounts owing under the Outstanding Notes into shares of common stock of the Company at a fixed conversion price, but pursuant to an Agreement signed by Discover and the Company on or about November 3, 2022, Discover waived all of such conversion entitlements.

Further Particulars of Promissory Notes & Security Agreements

Further particulars regarding the various Promissory Notes and associated Security Agreements are set out below.

Prior to December 11th Investor Note (which had no conversion features upon issuance, but is now convertible as described below) had a balance of $6,000,000 and accrues24, 2021, all applicable Outstanding Notes accrued interest at the rate of 10% per annum after which the interest rate was reduced to 3.25% per annum pursuant to applicable amending agreements signed on December 24, 2021 between the Company and Discover regarding each Outstanding Note; however the interest rate increases to the highest non-usurious rate of interest allowed under applicable law upon the occurrence of an event of default, which interest is due on the maturity date, which maturity date wasis the earlier of (a) December 11, 2022 (which may be extended with the mutual consent of the partiesJanuary 1, 2027; and a written amendment to the December 11th Investor Note signed by Discover); (b) March 11, 2021, in the event the Merger does not close or is not fully consummated by such date; and (c) the date a change of control of the Company occurs, which includes any person becoming the beneficial owner of more than 50% of the combined voting power of the Company (a “Change in Ownership”), or the approval of (1) a plan of complete liquidation, (2) an agreement for the sale or disposition of all or substantially all the Company’s assets, or (3) a merger (other than a merger for purposes of redomiciling the Company), consolidation, or reorganization of the Company, which would result in a Change in Ownership, provided that the closing of the Merger will not trigger a change of control (or Change in Ownership). The December 11th Investor Note includesAll Outstanding Notes include customary events of default. Upon the occurrence of an event of default, Discover has the right to accelerate the full amount of the December 11th Investor NoteOutstanding Notes and all interest thereon, to enforce its rights under the December 11thapplicable Security AgreementAgreements (defined below), and take other actions allowed under applicable law. On or about December 23, 2020, the Company and Discover executed a First Amendment to 10% Secured Promissory Note (the “Note Amendment”) to modify item (b) above as it relates to the potential acceleration of the maturity date of the December 11th Investor Note. Specifically, the Note Amendment provided that the December 11th Investor Note shall automatically accelerate, and all amounts of unpaid principal and interest shall become due immediately in the event that the Merger does not close or is not fully consummated by March 11, 2021; however, such provision shall not apply if on or before such date the Company has increased its authorized capital to at least 250,000,000 common shares (which did occur on February 25, 2021).

 

Payment of the December 11th Investor NoteOutstanding Notes and performance of the Company’s obligations thereunder is required to be guaranteed by all subsidiaries or entities controlled or owned by the Company, or which may be owned after the date of the December 11th Investor Note, provided that no guarantees have been entered into to date.Outstanding Notes. The December 11th Investor NoteOutstanding Notes may be assigned by Discover subject to compliance with applicable securities laws. The Company may prepay the December 11th Investor NoteOutstanding Notes at any time.

 

The payment of amounts due under the December 11th Investor Note is secured by the terms of a Security Agreementthe following agreements entered into by the Company in favor of Discover whichon December 11, 2020: (i)  a Security Agreement; and (ii) a Security & Pledge Agreement.

The payment of amounts due under the December 22nd Investor Note is secured by the terms of the following agreements entered into by the Company in favor of Discover on December 22, 2020: (i)  a Security Agreement; and (ii) a Security & Pledge Agreement.

The payment of amounts due under the April 23rd Investor Note is secured by the terms of the following agreements entered into by the Company in favor of Discover on April 23, 2021: (i)  a Security Agreement; and (ii) a Security & Pledge Agreement.

The payment of amounts due under the December 24, 2021 Investor Note is secured by the terms of the following agreements entered into by the Company in favor of Discover on December 24, 2021: (i)  a Security Agreement; and (ii) a Security & Pledge Agreement.

Each of the above-noted Security Agreements provides Discover a first priority security interest in substantially all of ourthe Company’s assets, (the “December 11th Security Agreement”). Ifand if an event of default occurs under any of the December 11th Investor Note,Outstanding Notes Discover can enforce its rights under any or all of the December 11thSecurity AgreementAgreements and foreclose on our assets in order to satisfy amounts owed thereunder. 

 

As described above, in connection withPursuant to the Viking Investment, on December 23, 2020,above-noted Security & Pledge Agreements, the Company (i) borrowed an additional $12,000,000 from Discover; (ii) issued Discover a promissory note in the principal amount of $12,000,000 (“the December 23rd Investor Note”), accruing interest at the rate of 10% per annum and maturing December 11, 2022; (iii) granted Discover a first-priority security interest in the Initial Viking Shares and the Company’s other assets (the “ December 23rd Pledge Agreement”), and a general security agreement (the December 23rd Security Agreement), respectively; and (iv) entered into an amendment to the December 11th Investor Note, amending the acceleration provision of the note to provide that the note repayment obligations would not accelerate if Camber had increased its authorized capital stock by March 11, 2021, which requirement was satisfied.

On April 23, 2021, the Company (i) borrowed an additional $2,500,000 from Discover; (ii) issued Discover a promissory note in the principal amount of $2,500,000 (the “April 23rd Investor Note”), accruing interest at the rate of 10% per annum and maturing December 11, 2022; (iii) to secure payment of the April 23rd Investor Note, the December 23rd Investor Note, and the December 11th Investor Note (such notes together the “Investor Notes”), granted Discover a first-priority security interest in Camber’s shares of Viking and Camber’s other assets pursuant to a Security Agreement-Pledge (the “April 23rd Pledge Agreement”) and a general security agreement (the “April 23rd Security Agreement”). Discover originally had the right to convert amounts owing under the April 23rd Investor Note into shares of common stock of Camber at a fixed price of $1.00 per share (later amended to $1.25 per share as described below), subject to 9.99% beneficial ownership limitations.

The December 11th Investor Note,Viking owned by the December 23rd Investor NoteCompany and the April 23rd Investor Note are referred to herein collectively as, the “Discover Notes”)Company’s other assets.

 

 
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Effective July 9, 2021, CamberPromissory Notes in Favor of FK Venture, LLC

The Company has outstanding unsecured, convertible promissory notes, in the aggregate principal amount of $3.2 million, in favor of FK Venture, LLC.  The FK Notes bear interest at a rate of 12% per annum, have a maturity date of June 30, 2025, and Discover executed amendments to each of Discover Notes, pursuant to which (i) the Maturity Date of each of Discover Notes was extended from December 11, 2022, to January 1, 2024; and (ii) Discover is permitted to convert amounts owing under each of Discover Notesare convertible into shares of the Company’s common stock of Camber at a fixedconversion price of $1.25$0.4185 per share, subject to 9.99% beneficial ownership limitations.

On or about December 9, 2021, the Company received $1,000,000 from Discover and in connection therewith executed and delivered the following in favor of Discover: (i) a promissory note dated on or about December 8, 2021 in the principal amount of $1,052,631.58, representing a 5% original issue discount, accruing interest at the rate of 10% per annum and maturing March 8, 2022; (ii) a Security Agreement-Pledge granting Discover a first-priority security interest in Camber’s common shares of Viking; and (iii) a general security agreement granting Discover a first-priority security interest in Camber’s other assets. Discover may convert amounts owing under the promissory note into shares of common stock of Camber at a fixed price of $1.25 per share, subject to beneficial ownership limitations. This promissory note was paid in full by the Company on January 4, 2022.

Effective December 24 2021, the Company executed amendments to the Discover Notes, pursuant to which: (i) the Maturity Date of each Promissory Note was extended from January 1, 2024 to January 1, 2027; (ii) the conversion price was increased from $1.25 to $1.50 per share of common stock; and (iii) the interest rate was decreased from 10% per annum to the WSJ Prime Rate.share.

 

Other Agreements:Agreements with Discover and/or Antilles:

 

On or about December 24, 2021,April 2022

The Certificates of Designations with respect to the Company entered into two agreements (collectively, the “December 24th Agreements”) as follows: one agreement (the “First Agreement”) was entered into with an investor (the “First Investor”) that holds shares ofCompany’s Series C Preferred Stock of the Company (the “and Series G Preferred Shares”), and the second agreement (the “Second Agreement”) was entered into with another investor (the “Second Investor”, together with the First Investor, the “Investors”) that holds Preferred Shares along with four promissory notes, with an aggregate principal amount totaling $21,552,631.58, previously executed by the Company in favor of the Second InvestorStock (collectively, the Notes“CODs”). The December 24th Agreements are identical as to their terms.

The original securities purchase agreements between and/or the Company and the InvestorsStock Purchase Agreements regarding the purchase and sale of such Series C Preferred Stock and Series G Preferred Stock (collectively, the Preferred Shares (the “SPAs“SPA’s”) require, contain covenants requiring the Company to among other things, timely file all reports required to be filed by Company pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and to maintain sufficient reserves from its duly authorized Common Stock for issuance of all Conversion Shares (as such term is defined in the Certificate of Designation regarding the Preferred Shares (the “COD”), or the shares of Company common stock to be issued upon conversion of the Preferred Shares). On October 6, 2021, the Company received notice from the Investors that they believed the Company breached the SPAs by failing to comply with those two requirements in the SPAs, and the Notes also contain a provision stating a breach by the Company of any terms within the SPA or COD is also a breach under the Notes, which would result in an immediate acceleration of the Notes at the holder’s option.

On October 9, 2021 the Company entered into amending agreements (the “October Agreements”) with each of the First Investor and Second Investor (as disclosed by the Company in its Current Report Filed on Form 8-K filed with the Securities and Exchange Commission on October 13, 2021), pursuant to which the Investors agreed to refrain from declaring defaults or bringing a breach of contract action under the SPAs, and the Second Investor agreed to refrain from declaring defaults or bringing a breach of contract action under the Notes, provided the Company: (i) within 30 days of the date of the October Agreements, amended the COD to provide that holders of the Preferred Shares will vote together with holders of common stock on all matters other than election of directors and shareholder proposals (including proposals initiated by any holders of Preferred Shares), on an as-if converted basis, subject to the beneficial ownership limitation in the COD, even if there are insufficient shares of authorized common stock to fully convert the Preferred Shares (the “COD Amendment Requirement”); (ii) files by November 19, 2021 all reports required to be filed by the Company pursuant to the Exchange Act (the “Filing Requirement”). Throughout 2021 and early 2022, the Company did not satisfy the Filing Requirement”); and, (iii) implementsconsequently, on or about March 9, 2022, the preferred stockholders, Discover and maintains,Antilles, filed a Verified Complaint against the Company (the “Discover/Antilles Complaint”) as soon as possiblea result of the default by the Company under the CODs. A default under the CODs and/or SPA’s is also considered an event of default under each of the Outstanding Notes, and upon an event of default under the Outstanding Notes, Discover may, at its option, declare the principal and any and all interest then accrued thereon, at once due and payable, and exercise any other rights under applicable agreements. Discover did not exercise its right to declare the amount owing under the Outstanding Notes immediately due and payable, but no later than December 31, 2021,Failure by Discover to exercise such right does not constitute a sufficient reserve from its duly authorized Common Stock for issuancewaiver of all Conversion Shares (the “Reserve Requirement”). The Company complied with the COD Amendment Requirement on November 8, 2021.

On Novemberright to exercise the same in the event of any subsequent default. As of April 18, 20212022, Discover, Antilles and the Company entered into amendinga Settlement Agreement to settle the Discover/Antilles Complaint, and the Settlement Agreement was approved by the Court on or about May 12, 2022. If the Company fails to satisfy future Filing Requirements, it would be considered a default under the CODs and SPA’s, which in turn would constitute an event of default under the Outstanding Notes.

October 2022

On October 28, 2022, the Company entered into two agreements (collectively, the “Agreements”), one with Discover and the other with Antilles, in relation to an amendment to the fifth amended and restated certificate of designations regarding the Company’s Series C Preferred Stock (the “November AgreementsCOD”) with each of the First Investor and Second Investor (as disclosed by the Company in its Current Report Filed on Form 8-K filed with the Securities and Exchange Commission on November 19, 2021). Pursuant to the November Agreements, as a furtheran accommodation to the Company and in order to help facilitate implementation of the Company’s business plans and continued trading on the NYSE American the Investors agreed to extend the deadlineLLC, and in exchange for the Filing Requirement to December 6, 2021. The deadline forrelease and indemnity as provided in the Reserve Requirement remained December 31, 2021.Agreements.

 

On October 31, 2022, the Company filed with the Secretary of State of Nevada an amendment to the COD (the “Amendment), dated as of October 28, 2022 (the “Amendment Date”), pursuant to the Agreements, which amended the COD such that (i) beginning on the Amendment Date and thereafter, when determining the conversion rate for each share of Series C Preferred Stock based on the trading price of the Company’s common stock (“Common Stock”) over a certain number of previous days (“Measurement Period”), no day will be added to what would otherwise have been the end of any Measurement Period for the failure of the Equity Condition (as defined in the COD), even if the volume weighted average trading price (“Measuring Metric”) is not at least $1.50 and each Investor waived the right to receive any additional shares of Common Stock that might otherwise be due if such Equity Condition were to apply after the Agreement Date, including with respect to any pending Measurement Period; and (ii) (A) beginning on the Amendment Date and for the period through December 30, 2022, the Measuring Metric will be the higher of the amount provided in Section I.G.7.1(ii) of the COD and $0.20, and (B) beginning at market close on December 30, 2022 and thereafter, the Measuring Metric will be the volume weighted average trading price of the Common Stock on any day of trading following the date of first issuance of the Series C Preferred Stock.

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November 2022

On November 3, 20212022, the Company entered into amending agreementsan agreement (the “December AgreementsAgreement”) with eachDiscover, pursuant to which Discover absolutely and unconditionally waived and released any and all rights to receive further or additional shares of the First InvestorCompany’s common stock (the “Conversion Shares”) with respect to any and Second Investor (as disclosedall shares of Series C Preferred Stock previously converted by Discover including, but not limited to, the right to deliver additional notices for more Conversion Shares under the Fifth Amended and Restated Certificate of Designations of Preferences, Powers, Rights and Limitations of Series C Redeemable Convertible Preferred Stock filed by the Company with the Secretary of State of Nevada on November 8, 2021, as amended on October 28, 2022.  Discover also absolutely and unconditionally waived and released any and all rights to convert all or any part of any Outstanding Notes previously executed by the Company in its Current Report Filed on Form 8-K filed withfavor of Discover into shares of the SecuritiesCompany’s common stock and Exchange Commission on December 6, 2021). Pursuantagreed not to the December Agreements, as a further accommodationconvert or attempt to convert any portion of any Outstanding Notes, at any particular price or at all.

April 2023

On April 25, 2023, the Company entered into a warrant termination agreement (the “Warrant Termination Agreements”), with Antilles Family Office, LLC and Discovery Growth Fund, LLC, respectively (each, an “Investor” and collectively, the “Investors”), pursuant to which each Investor agreed to cancel and terminate, effective as of April 25, 2023 (the “Termination”) all warrants to purchase Camber’s common stock outstanding under (i) that certain Warrant Agreement, dated as of December 30, 2021, by and between the Company and the Investor named therein, and (ii) that certain Warrant Agreement, dated as of December 31, 2021, by and between the Company and the Investor named therein. The Warrant Termination Agreements are identical as to their terms.  The Investors entered into the Warrant Termination Agreements in order to help facilitate implementation of the Company’s business plans and continued trading on the NYSE American LLC, and, in exchange for the InvestorsTermination, the Company agreed to extend the deadline for the Filing Requirement to December 17, 2021. The deadline for the Reserve Requirement remained December 31, 2021.

release and indemnity as provided in each Warrant Termination Agreement. Pursuant to the December 24th Agreements,Warrant Termination Agreement, the Investor also agreed that the Company may make an Early Redemption of any remaining shares of Series C Redeemable Convertible Preferred Stock held by the Investor provided that all Promissory Notes executed by the Company in favor of the Investor or any of its affiliates have been paid in full.  The term “Early Redemption” has the meaning given to it in the Fifth Amended and Restated Certificate of Designations of Preferences, Powers, Rights and Limitations of Series C Redeemable Convertible Preferred Stock filed by the Company with the State of Nevada regarding such class of preferred stock. 

February 2024

On February 15, 2024, the Company entered into an agreement (the “Measuring Metric Floor Agreement”) with the holder of our Series C Preferred Stock pursuant to which, in exchange for the release and indemnity as a further accommodation toprovided for in the Measuring Metric Floor Agreement, the Company and in ordersuch holder agreed that (i) beginning on February 15, 2024 and thereafter, the Company agreed to help facilitate implementationpay at least fifty percent of the Company’s business plansnet proceeds received by the Company in connection with any registered or unregistered offering of equity or debt securities of the Company toward repayment of any outstanding promissory notes of the Company in favor of the holder of the Series C Preferred Stock or its affiliates and continued trading on(ii) such holder rescinded its prior notice to increase the NYSE American,beneficial ownership limitation to 9.99%, such that the parties agreed:limitation is restored to 4.99% effective as of February 22, 2024.

(i)

the deadline for the Filing Requirement is extended to January 14, 2022;

(ii)

the deadline for the Reserve Requirement remains December 31, 2021, meaning the Company is required to obtain on or before such date, approval of the proposals outlined in the preliminary proxy statement filed by the Company with the Securities and Exchange Commission on November 9, 2021 (to increase the Company’s authorized common stock);

(iii)

each and every Measurement Period (as defined in the COD) with regard to any share of Preferred converted by Investor or any affiliate of Investor prior to December 24, 2021 will terminate, and the provisions of Section I.G.1.d of the COD shall no longer apply with respect to any shares of Preferred converted prior to December 24, 2021;

(iv)

If the Reserve Requirement and the Filing Requirement are not met by the deadlines mentioned above, Company acknowledges and agrees that (A) Company will be in uncured material breach and default under all of the Notes and Agreements, and (B) all Measurement Periods will remain open and continue to run in accordance with the terms of the COD.

 

The Company satisfiedand such holder also agreed to file an amendment to the Reserve Requirement byCOD, which was filed on February 21, 2024, (i) establishing a floor price of $0.15 in connection with determining the required deadline but did not satisfyConversion Premium (as defined in the Filing Requirement.COD) associated with conversions of Series C Preferred Stock, (ii) confirming that the Company may make an early redemption of any outstanding Series C Preferred Stock provided that outstanding promissory notes in favor of the holder of the Series C Preferred Stock or its affiliates are paid in full, and (iii) confirming that no additional conversion shares will be owed to such holder if the Company’s notes in favor of it and its affiliates are paid in full and all then outstanding shares of Series C Preferred Stock have been redeemed.

Reverse Stock Split and Amendments to Articles regarding Common Shares

On December 14, 2022, the Board of Directors approved a one-for-fifty (1-for-50) reverse stock split of the Company’s (a) authorized shares of common stock; and (b) issued and outstanding shares of common stock (the “Reverse Stock Split”). The Reverse Stock Split became effective at 12:01 a.m. Central Standard Time on December 21, 2022, and was reflected with the NYSE American and in the marketplace at the open of business on December 21, 2022 (the “Effective Date”).  As a result of the Reverse Stock Split, each of the holders of the Company’s Common Stock received one (1) new share of Common Stock for every fifty (50) shares such shareholder held immediately prior. No fractional shares were issued as a result of the Reverse Stock Split. Any fractional shares that would have otherwise resulted from the Reverse Stock Split will be rounded up to the next whole number of shares. The Reverse Stock Split decreased the number of authorized shares of common stock from 1,000,000,000 to 20,000,000.  The Reverse Stock Split also affected the Company’s outstanding stock options, warrants and other exercisable or convertible instruments and resulted in the shares underlying such instruments being reduced and the exercise price being increased proportionately to the Reverse Stock Split ratio. All share and per share data have been retroactively restated in the accompanying consolidated financial statements and footnotes for all periods presented to reflect the effects of the Reverse Stock Split as if it had taken place as of the beginning of the earliest period presented.

 

 
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Series C Preferred Stock Corrections and Amendments

On December 14, 2020,April 26, 2023, the Company with the approval of the Board of Directors of the Company and the sole holder of the Company’s Series C Preferred Stock, filedheld a certificate of corrections with the Secretary of State of Nevada to correct the original designation of the Series C Preferred Stock and the first amended and restated designation thereof, to correct certain errors which were identified in such designations, which failed to clarify, in error, that (A) the failure of any holder of Series C Preferred Stock to receive the number of shares of common stock due upon conversion of Series C Preferred Stock within five trading days of any conversion notice, and any halt or suspension of trading of the Company’s common stock on its then applicable trading market or by any U.S. governmental agency, for 10 or more consecutive trading days, should not have been ‘deemed liquidation events’ under the Series C Preferred Stock designation, unless such events were due to the occurrence of an event that is solely within the control of the Company; (B) the Company was not required to redeem any shares of Series C Preferred Stock for cash solely because the Company does not have sufficient authorized but unissued shares of common stock to issue upon receipt of a notice of conversion or upon a maturity conversion (where the remaining shares of Series C Preferred Stock convert into common stock of the Company automatically on the seven year anniversary date of the Series C Preferred Stock)(a “Maturity Conversion”); and (C) that a Maturity Conversion is only required to occur to the extent that the Company has sufficient authorized but unissued shares of common stock available for issuance upon conversion in connection therewith. The corrections were made solely to match the agreements to the original intent of the parties. The parties determined the corrections were needed because without such corrections, under ASC 480- 10- S99-3A5 and ASC 480-10-S99-3A3(f), the non-corrected designations required the Series C Preferred Stock to be classified as temporary equity due to the foregoing events being outside the Company’s control. However, the corrections failed to remove all redemption provisions that were outside the control of the Company. Therefore, the Series C Preferred Stock remained in temporary equity. The embedded conversion meets the requirements to be considered a derivative liability as stipulated under ASC 815-40-25, under an assessment of the conversion premium as a freestanding instrument.

The corrections were effective as of the original filing dates with the Secretary of State of Nevada of the Company’s original Series C Preferred Stock designation (August 25, 2016) and the Company’s first amended and restated Series C Preferred Stock designation (July 8, 2019), subject to certain exceptions set forth in the Nevada Revised Statutes.

Also on December 14, 2020, the Company, with the approval of the Board of Directors of the Company and the sole holder of the Company’s Series C Preferred Stock, filed a second amended and restated designation of the Series C Preferred Stock with the Secretary of State of Nevada which was effective upon filing (the “Second Amended and Restated Designation”), which amended the first amended and restated designation of the Series C Preferred Stock (as corrected), to include the right of the Company to redeem all (but not less than all) of the outstanding shares of Series C Preferred Stock at a redemption price equal to 110% of the face value of such preferred stock ($10,000 per share), at the Company’s option, at any time, in the event the Company is not in default of any of the terms of any Stock Purchase Agreement pursuant to which such applicable shares of Series C Preferred Stock were sold; (b) formally amend the measurement period for the calculation of the conversion premiums (the “Measurement Period”) due under the terms of the Series C Preferred Stock to begin on the later of February 3, 2020 or, if no trigger event (as described in the designation of the Series C Preferred Stock) has occurred, 30 trading days, and if a trigger event has occurred 60 trading days, before the date of an applicable conversion notice, which had previously been agreed to contractually by the parties (i.e., the beginning of each future measurement period for conversions made after February 3, 2020, will extend back to February 3, 2020); and (c) update the references in the designation to the “Merger” which had previously referred to the Company’s combination with Lineal Star Holdings, LLC, which transaction was rescinded and terminated effective December 31, 2019, to refer to the planned merger with Viking, which has the effect of the Viking merger being approved by the holder of the Series C Preferred Stock and not being a ‘deemed liquidation event’ under the Second Amended and Restated Designation.

On April 14, 2021, the Company, with the approval of the Board of Directors of the Company and the holders of the Company’s Series C Preferred Stock, filed a certificate of correction with the Secretary of State of Nevada to correct the original designation of the Series C Preferred Stock, the first amended and restated designation, and the second amended and restated designation thereof to correct certain errors which were identified in such designations, which failed to clarify, in error, that (A) Section I.D.2(e) of the original Certificate of Designation (the “Designation”) implicitly excluded as “Deemed Liquidation Event,” an event or proposal that was initiated by or voted upon by the holder of the Series C Redeemable Convertible Preferred Stock (the “Preferred Shares”), and the Designation has been clarified to expressly exclude such occurrence, (B) Section I.F.4 of the Designation failed to include language to clarify the Corporation is not obligated to redeem the Preferred Shares for cash for any reason that is not solely within the control of the Corporation, (C) Section 1.G.1 of the Designation mistakenly included two subsection b’s where only one was intended, and the unintended subsection b. has been removed, (D) Section I.G.1(e) of the Designation failed to include language to clarify that the Corporation not having sufficient authorized but unissued shares, solely within the control of the Corporation and excluding any event that is not solely within the control of the Corporation, is not a reason that would otherwise trigger the obligations in such section, (E) Sections I.G.1(f) and (g) of the Designation failed to include language to clarify the particular obligations apply only if the Corporation has sufficient authorized and unissued shares, (F) Section I.G.7.e of the Designation mistakenly referenced the incorrect Conversion Price, (G) Section 1.G.9 of the Designation failed to include language to clarify the maximum number of common shares that could be potentially issuable with respect to all conversions and other events that are not solely within the control of the Corporation, that the Dividend Maturity Date is to be indefinitely extended and suspended until sufficient authorized and unissued shares become available, the number of shares required to settle the excess obligation is fixed on the date that net share settlement occurs and that all provisions of the Designation are to be interpreted so that net share settlement is within the control of the Corporation.

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The corrections were effective as of the original filing dates with the Secretary of State of Nevada of the Company’s original Series C Preferred Stock designation (August 25, 2016) and the Company’s first amended and restated Series C Preferred Stock designation (July 8, 2019), and the Company’s second amended and restated Series C Preferred Stock designation (December 14, 2020), subject to certain exceptions set forth in the Nevada Revised Statutes.

On April 20, 2021, the Company, with the approval of the Board of Directors of the Company and the holders of the Company’s Series C Preferred Stock, filed a third amended and restated designation of the Series C Preferred Stock with the Secretary of State of Nevada (the “Third Amended and Restated Designation”), which amended the Designations to state that dividends and conversion premiums will only be paid in shares of Company common stock, and state that redemption amounts will only be paid in shares of Company common stock. On July 10, 2021, the Company, with the approval of the Board of Directors of the Company and the holders of the Company’s Series C Preferred Stock, filed an amendment to its designation of its Series C Preferred Stock with the Secretary of State of Nevada (the “Fourth Amended and Restated Designation”), solely to increase the number of preferred shares designated as Series C Preferred Stock from 5,000 to 5,200.

On November 8, 2021, the Company filed with the Secretary of State of Nevada a Fifth Amended and Restated Designation regarding its Series C Preferred Stock which amended the Designations to provide voting rights to holders of the Series C Preferred Stock as required by the October 2021 Agreements (as defined herein).

Amendments to Articles Regarding Common Shares

Effective on April 16, 2020, with the approval of the Company’s stockholders at its April 16, 2020 special meeting of stockholders the Company filed a Certificate of Amendment to its Articles of Incorporation to increase its authorized shares of common stock to 25 million shares of common stock. Effective on February 23. 2021, with the approval of the Company’s stockholders at its February 23, 2021 special meeting of stockholders,which the Company filed a Certificate of Amendment to its Articles of Incorporation to increase its authorized shares of common stock to 250 million shares of common stock.

On December 30, 2021, the Company filed an amendment to the Company’s articles of incorporation to effect a proposal approved at a Special Meeting of Stockholders on December 30, 2021 whereby the Company's stockholders approved an amendment to the Company'sCompany’s Articles of Incorporation to increase the number of authorized shares of common stockCommon Stock from 250,000,00020,000,000 to 1,000,000,000.

Industry Segments

For the year ended December 31, 2021 and the nine months ended December 31, 2020, our operations were all crude oil and natural gas exploration and production.

Competition

We are in direct competition for properties with numerous oil and natural gas companies and partnerships exploring various areas of Louisiana, Texas, and elsewhere. Many competitors are large, well-known oil and natural gas and/or energy companies, although no single entity dominates the industry. Many of our competitors possess greater financial and personnel resources, enabling them to identify and acquire more economically desirable energy producing properties and drilling prospects than us. Additionally, there is competition from other fuel choices to supply the energy needs of consumers and industry.

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Regulation

Our operations are subject to various types of regulation at the federal, state and local levels. These regulations include requiring permits for the drilling of wells; maintaining hazard prevention, health and safety plans; submitting notification and receiving permits related to the presence, use and release of certain materials incidental to oil and natural gas operations; and regulating the location of wells, the method of drilling and casing wells, the use, transportation, storage and disposal of fluids and materials used in connection with drilling and production activities, surface plugging and abandonment of wells and the transporting of production. Our operations are also subject to various conservation matters, including the number of wells which may be drilled in a unit and the unitization or pooling of oil and natural gas properties. In this regard, some states allow the forced pooling or integration of tracts to facilitate exploration, while other states rely on voluntary pooling of lands and leases, which may make it more difficult to develop oil and gas properties. In addition, state conservation laws establish maximum rates of production from oil and natural gas wells, generally limiting the venting or flaring of natural gas, and impose certain requirements regarding the ratable purchase of production. The effect of these regulations is to possibly limit the amounts of oil and natural gas we can produce from our wells and to limit the number of wells or the locations at which we can drill.

In the United States, legislation affecting the oil and natural gas industry has been pervasive and is under constant review for amendment or expansion. Pursuant to such legislation, numerous federal, state and local departments and agencies issue recommended new and extensive rules and regulations binding on the oil and natural gas industry, some of which carry substantial penalties for failure to comply. These laws and regulations have a significant impact on oil and natural gas drilling, natural gas processing plants and production activities, increasing the cost of doing business and, consequently, affect profitability. Insomuch as new legislation affecting the oil and natural gas industry is common-place and existing laws and regulations are frequently amended or reinterpreted, we may be unable to predict the future cost or impact of complying with these laws and regulations. We consider the cost of environmental protection a necessary and manageable part of our business. We have historically been able to plan for and comply with new environmental initiatives without materially altering our operating strategies.

Insurance Matters 

We maintain insurance coverage which we believe is reasonable per the standards of the oil and natural gas industry. It is common for companies in these industries to not insure fully against all risks associated with their operations either because such insurance is unavailable or because premium costs are considered prohibitive. A material loss not fully covered by insurance could have an adverse effect on our financial position, results of operations or cash flows. We maintain insurance at industry customary levels to limit our financial exposure in the event of a substantial environmental claim resulting from sudden, unanticipated and accidental discharges of certain prohibited substances into the environment. Such insurance might not cover the complete amount of such a claim and would not cover fines or penalties for a violation of an environmental law.

Other Matters

Environmental. Our exploration, development, and production of oil and natural gas, including our operation of saltwater injection and disposal wells, are subject to various federal, state and local environmental laws and regulations. Such laws and regulations can increase the costs of planning, designing, installing and operating oil, natural gas, and disposal wells. Our domestic activities are subject to a variety of environmental laws and regulations, including but not limited to, the Oil Pollution Act of 1990 (“OPA”), the Clean Water Act (“CWA”), the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), the Resource Conservation and Recovery Act (“RCRA”), the Clean Air Act (“CAA”), and the Safe Drinking Water Act (“SDWA”), as well as state regulations promulgated under comparable state statutes. We are also subject to regulations governing the handling, transportation, storage, and disposal of naturally occurring radioactive materials that are found in our oil and gas operations. Civil and criminal fines and penalties may be imposed for non-compliance with these environmental laws and regulations. Additionally, these laws and regulations require the acquisition of permits or other governmental authorizations before undertaking certain activities, limit or prohibit other activities because of protected areas or species, and impose substantial liabilities for cleanup of pollution.

Under the OPA, a release of oil into water or other areas designated by the statute could result in us being held responsible for the costs of remediating such a release, certain OPA specified damages, and natural resource damages. The extent of that liability could be extensive, as set forth in the statute, depending on the nature of the release. A release of oil in harmful quantities or other materials into water or other specified areas could also result in us being held responsible under the CWA for the costs of remediation, and civil and criminal fines and penalties.

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CERCLA and comparable state statutes, also known as “Superfund” laws, can impose joint and several and retroactive liability, without regard to fault or the legality of the original conduct, on certain classes of persons for the release of a “hazardous substance” into the environment. In practice, cleanup costs are usually allocated among various responsible parties. Potentially liable parties include site owners or operators, past owners or operators under certain conditions, and entities that arrange for the disposal or treatment of, or transport hazardous substances found at the site. Although CERCLA, as amended, currently exempts petroleum, including but not limited to, crude oil, natural gas and natural gas liquids, from the definition of hazardous substance, our operations may involve the use or handling of other materials that may be classified as hazardous substances under CERCLA. Furthermore, the exemption may not be preserved in future amendments of the act, if any.

RCRA and comparable state and local requirements impose standards for the management, including treatment, storage, and disposal, of both hazardous and non- hazardous solid wastes. We generate hazardous and non-hazardous solid waste in connection with our routine operations. From time to time, proposals have been made that would reclassify certain oil and natural gas wastes, including wastes generated during drilling, production and pipeline operations, as “hazardous wastes” under RCRA, which would make such solid wastes subject to much more stringent handling, transportation, storage, disposal, and clean-up requirements. This development could have a significant impact on our operating costs. While state laws vary on this issue, state initiatives to further regulate oil and natural gas wastes could have a similar impact. Because oil and natural gas exploration and production, and possibly other activities, have been conducted at some of our properties by previous owners and operators, materials from these operations remain on some of the properties and in some instances, require remediation. In addition, in certain instances, we have agreed to indemnify sellers of producing properties from which we have acquired reserves against certain liabilities for environmental claims associated with such properties. While we do not believe that costs to be incurred by us for compliance and remediating previously or currently owned or operated properties will be material, there can be no guarantee that such costs will not result in material expenditures.

Additionally, in the course of our routine oil and natural gas operations, surface spills and leaks, including casing leaks, of oil or other materials occur, and we incur costs for waste handling and environmental compliance. Moreover, we are able to control directly the operations of only those wells for which we act as the operator. Management believes that we are in substantial compliance with applicable environmental laws and regulations.

In response to liabilities associated with these activities, accruals are established when reasonable estimates are possible. Such accruals would primarily include estimated costs associated with remediation. We have used discounting to present value in determining our accrued liabilities for environmental remediation or well closure, but no material claims for possible recovery from third party insurers or other parties related to environmental costs have been recognized in our financial statements. We adjust the accruals when new remediation responsibilities are discovered and probable costs become estimable, or when current remediation estimates must be adjusted to reflect new information.

We do not anticipate being required in the near future to expend amounts that are material in relation to our total capital expenditures program by reason of environmental laws and regulations, but inasmuch as such laws and regulations are frequently changed, we are unable to predict the ultimate cost of compliance. More stringent laws and regulations protecting the environment may be adopted in the future and we may incur material expenses in connection with environmental laws and regulations in the future.500,000,000.

 

Occupational HealthIndustry Segments 

The Company reports its operations in two industry segments: Oil & Gas and Safety. We are also subject to laws and regulations concerning occupational safety and health. Due to the continued changes in these laws and regulations, and the judicial construction of many of them, we are unable to predict with any reasonable degree of certainty our future costs of complying with these laws and regulations. We consider the cost of safety and health compliance a necessary and manageable part of our business. We have been able to plan for and comply with new initiatives without materially altering our operating strategies.

Hydraulic Fracturing. Vast quantities of natural gas, natural gas liquids and oil deposits exist in deep shale and other unconventional formations. It is customary in our industry to recover these resources through the use of hydraulic fracturing, combined with horizontal drilling. Hydraulic fracturing is the process of creating or expanding cracks, or fractures, in deep underground formations using water, sand and other additives pumped under high pressure into the formation. As with the rest of the industry, we use hydraulic fracturing as a means to increase the productivity of almost every well that we drill and complete. These formations are generally geologically separated and isolated from fresh ground water supplies by thousands of feet of impermeable rock layers. We follow applicable legal requirements for groundwater protection in our operations that are subject to supervision by state and federal regulators (including the Bureau of Land Management (“BLM”) on federal acreage). Furthermore, our well construction practices require the installation of multiple layers of protective steel casing surrounded by cement that are specifically designed and installed to protect freshwater aquifers by preventing the migration of fracturing fluids into aquifers.

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Injection rates and pressures are required to be monitored in real time at the surface during our hydraulic fracturing operations. Pressure is required to be monitored on both the injection string and the immediate annulus to the injection string. Hydraulic fracturing operations are required to be shut down if an abrupt change occurs to the injection pressure or annular pressure. These aspects of hydraulic fracturing operations are designed to prevent a pathway for the fracturing fluid to contact any aquifers during the hydraulic fracturing operations.

Hydraulic fracture stimulation requires the use of water. We use fresh water or recycled produced water in our fracturing treatments in accordance with applicable water management plans and laws. Several proposals have previously been presented to the U.S. Congress that, if implemented, would either prohibit or restrict the practice of hydraulic fracturing or subject the process to regulation under the Safe Drinking Water Act. Several states have previously considered, or are currently considering, legislation to regulate hydraulic fracturing practices that could impose more stringent permitting, transparency, and well construction requirements on hydraulic-fracturing operations or otherwise seek to ban fracturing activities altogether. Hydraulic fracturing of wells and subsurface water disposal are also under public and governmental scrutiny due to potential environmental and physical impacts, including possible contamination of groundwater and drinking water and possible links to earthquakes. In addition, some municipalities have significantly limited or prohibited drilling activities and/or hydraulic fracturing, or are considering doing so.

Restrictions on hydraulic fracturing could make it prohibitive to conduct our operations, and also reduce the amount of oil, natural gas liquids and natural gas that we are ultimately able to produce in commercial quantities from our properties.

The Endangered Species Act. The Endangered Species Act (“ESA”) restricts activities that may affect areas that contain endangered or threatened species or their habitats. While some of our assets and lease acreage may be located in areas that are designated as habitats for endangered or threatened species, we believe that we are in substantial compliance with the ESA. However, the designation of previously unidentified endangered or threatened species in areas where we intend to conduct construction activity could materially limit or delay our plans.

Global Warming and Climate Change. Various state governments and regional organizations are considering enacting new legislation and promulgating new regulations governing or restricting the emission of greenhouse gases from stationary sources such as our equipment and operations. Legislative and regulatory proposals for restricting greenhouse gas emissions or otherwise addressing climate change could require us to incur additional operating costs and could adversely affect demand for the natural gas and oil that we sell. The potential increase in our operating costs could include new or increased costs to obtain permits, operate and maintain our equipment and facilities, install new emission controls on our equipment and facilities, acquire allowances to authorize our greenhouse gas emissions, pay taxes related to our greenhouse gas emissions and administer and manage a greenhouse gas emissions program.

Taxation. Our operations, as is the case in the petroleum industry generally, are significantly affected by federal tax laws. Federal, as well as state, tax laws have many provisions applicable to corporations which could affect our future tax liabilities.

Commitments and Contingencies. We are liable for future restoration and abandonment costs associated with our oil and gas properties. These costs include future site restoration, post closure and other environmental exit costs. The costs of future restoration and well abandonment have not been determined in detail. State regulations require operators to post bonds that assure that well sites will be properly plugged and abandoned. We currently operate only in Texas, which requires a security bond based on the number of wells we operate. Management views this as a necessary requirement for operations and does not believe that these costs will have a material adverse effect on our financial position as a result of this requirement.Power.

 

Employees

 

The Company now has 9 fulltime employees, all working at the Company’s office in Houston, Texas. Outside of the Houston operation, the2 full-time employees. The Company continues to retain outside consultants as needed involved in business development, business analysis, financial consulting, web programming and designing, execution andto support of the Company’s business.

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Reports to Securities Holders

The Company provides its annual report that includes its audited financial information to its shareholders upon written request. The Company also makes its financial information equally available to any interested parties or investors through compliance with the disclosure rules of the Exchange Act. The Company is subject to disclosure filing requirements including filing Form 10-K’s annually and Form 10-Q’s quarterly. In addition, the Company files Form 8-K and other proxy and information statements from time to time as required.

The public may read and copy any materials that the Company files with the SEC at the SEC’s Public Reference Room at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by callingbusiness, including the SEC at 1-800-SEC-0330. The SEC maintains a website (http://www.sec.gov) that contains reports, proxyChief Executive Officer and information statements, and other information regarding issuers that file electronically withChief Financial Officer.

Through Simson-Maxwell, the SEC.Company has approximately 127 employees in 7 locations in Canada.

 

ITEM 1A. RISK FACTORS.

 

Our business and operations are subject to many risks. The risks described below may not be the only risks we face, as our business and operations may also be subject to risks that we do not yet know of, or that we currently believe are immaterial. If any of the events or circumstances described below actually occurs,occur, our business, financial condition, results of operations or cash flow could be materially and adversely affected and the trading price of our common stock could decline. The following risk factors should be read in conjunction with the other information contained herein, including the financial statements and the related notes. Please read “Cautionary Note Regarding Forward-Looking Statements” in this filing, where we describe additional uncertainties associated with our business and the forward-looking statements included or incorporated by reference in this filing.

 

Our securities should only be purchased by persons who can afford to lose their entire investment in us. You should carefully consider the following risk factors and other information in this filing before deciding to become a holder of our securities. If any of the following risks actually occur, our business and financial results could be negatively affected to a significant extent.

 

Risk Factors Related to the Power Generation Industry

Lineal owes us a substantial amountDecreases in the availability and quality, or increases in the cost, of money which may not be timely repaid, if at all.raw materials, key components and labor we use to make our products could materially reduce our earnings.

 

PursuantThe principal raw materials that we use to produce our products are steel, copper and aluminum as well as batteries and advanced electronic components. We also source a December 31, 2019 Redemption Agreement entered into between ussignificant number of component parts from third parties that we utilize to manufacture our products. The prices of those raw materials and components are susceptible to significant fluctuations due to trends in supply and demand, commodity prices, currencies, transportation costs, government regulations and tariffs, price controls, interest rates, economic conditions and other unforeseen circumstances beyond our control. In fact, we have recently seen such trends significantly impact our business resulting in higher costs and shortages in materials, components and labor, and such impacts may continue for the prior owners of Lineal,foreseeable future. We typically do not have long-term supply contracts in place to ensure the raw materials and components we entered into a new unsecured promissory noteuse are available in necessary amounts or at fixed prices. In the short term, we have been unable to fully mitigate raw material or component price increases through product design improvements, price increases to our customers, manufacturing productivity improvements, or hedging transactions, and if our mitigation efforts continue to not be fully effective in the amountshort or long term, our profitability could be adversely affected. Also, our ability to continue to obtain quality materials and components is subject to the continued reliability and viability of $1,539,719 with Lineal, evidencingour suppliers, including in some cases, suppliers who are the outstanding amountsole source of certain important components. It has been challenging to consistently obtain adequate, cost efficient or timely deliveries of certain required raw materials and components, or sufficient labor resources while we ramp up production to meet higher levels of demand, and if this trend continues, we may be unable to manufacture sufficient quantities of products on a prior July 2019 promissory note, together with additional amounts loaned bytimely basis. This could cause us to Lineal through December 31, 2019 (the “December 2019 Lineal Note”); and loaned Lineal anlose additional $800,000, which was evidenced by an unsecured promissory note in the amount of $800,000, entered into by Lineal in favor of Camber on December 31, 2019 (“Lineal Note No. 2”). The December 2019 Lineal Note and Lineal Note No. 2, accrue interest, payable quarterly in arrears, beginning on March 31, 2020 and continuing until December 31, 2021, when all interest and principal is due, at 8% and 10% per annum (18% upon the occurrence of an event of default), respectively. The December 2019 Lineal Note and Lineal Note No. 2 are unsecured. Duesales, incur additional costs, delay new product introductions or suffer harm to the impact of COVID-19 on its operations, Lineal notified the Company that it currently has insufficient liquidity to make scheduled interest payments due under the notes. As of December 31, 2021, Lineal is in arrears for interest due since July 1, 2020. As of December 31, 2021, the Company has fully reserved the note receivable and all accrued, but unpaid interest in its allowance for bad debts.

Our Business and operations may be adversely affected by the recent COVID-19 pandemic or other similar outbreaks.

As a result of the recent COVID-19 outbreak or other adverse public health developments, including voluntary and mandatory quarantines, travel restrictions and other restrictions, our operations, and those of our subcontractors, customers and suppliers, have and may continue to experience delays or disruptions and temporary suspensions of operations. In addition, our financial condition and results of operations have been and may continue to be adversely affected by the coronavirus outbreak.reputation.

 

 
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The timeline and potential magnitude of the COVID-19 outbreak is currently unknown. The continuation or amplification of this virusOur business could continue to more broadly affect the United States and global economy, including our business and operations, and the demand for oil and gas (as it has already). For example, a significant outbreak of coronavirus or other contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect our operating results. In addition, the effects of COVID-19 and concerns regarding its global spread have recentlybe negatively impacted the domestic and international demand for crude oil and natural gas, which has contributedif we fail to price volatility, impacted the priceadequately protect our intellectual property rights or if third parties claim that we receive for oil and natural gas and materially and adversely affected the demand for and marketabilityare in violation of our production. As the potential impact from COVID-19 is difficult to predict, the extent to which it may negatively affect our operating results or the duration of any potential business disruption is uncertain. Any impact will depend on future developments and new information that may emerge regarding the severity and duration of COVID-19 and the actions taken by authorities to contain it or treat its impact, all of which are beyond our control. These potential impacts, while uncertain, could adversely affect our operating results.their intellectual property rights.

 

Furthermore, COVID-19We consider our intellectual property rights to be important assets and seek to protect them through a combination of patent, trademark, copyright and trade secret laws, as well as licensing and confidentiality agreements. These protections may not be adequate to prevent third parties from using our intellectual property without our authorization, breaching any confidentiality agreements with us, copying or reverse engineering our products, or developing and marketing products that are substantially equivalent to or superior to our own. The unauthorized use of our intellectual property by others could reduce our competitive advantage and harm our business. Not only are intellectual property-related proceedings burdensome and costly, but they could span years to resolve and we might not ultimately prevail. We cannot guarantee that any patents, issued or pending, will provide us with any competitive advantage or will not be challenged by third parties. Moreover, the measures being takenexpiration of our patents may lead to addressincreased competition with respect to certain products.

In addition, we cannot be certain that we do not or will not infringe third parties’ intellectual property rights. We currently are, and limit the spread of the virus have adversely affected the economies and financial markets of many countries, resulting in an economic downturn that has negatively impacted,previously been, subject to such third-party infringement claims, and may continue to negatively impact, global demandbe in the future. Any such claim, even if it is believed to be without merit, may be expensive and prices for crude oiltime-consuming to defend, subject us to damages, cause us to cease making, using or selling certain products that incorporate the disputed intellectual property, require us to redesign our products, divert management time and NGLs. Ifattention, and/or require us to enter into costly royalty or licensing arrangements.

We may incur costs and liabilities as a result of product liability claims.

We face a risk of exposure to current and future product liability claims alleging to arise from the COVID-19 outbreak should continueuse of our products and that may purportedly result in injury or worsen,other damage. Although we currently maintain product liability insurance coverage, we may also experience disruptionsnot be able to commodities markets, equipment supply chainsobtain such insurance on acceptable terms in the future, if at all, or obtain insurance that will provide adequate coverage against potential claims. Product liability claims can be expensive to defend and can divert the availabilityattention of management and other personnel which could adversely affect our ability to conduct our business and operations. There are still too many variables and uncertainties regarding the COVID-19 pandemic - includingfor long periods of time, regardless of the ultimate geographic spread of the virus, the duration and severity of the outbreak and the extent of travel restrictions and business closures imposed in affected countries - to fully assess the potential impact on our business and operations.

We may have difficulty managing growth in our business, whichoutcome. A significant unsuccessful product liability defense could have a material adverse effect on our business, financial condition and results of operationsoperations. In addition, we believe our business depends on the strong brand reputation we have developed. If our reputation is damaged, we may face difficulty in maintaining our market share and pricing with respect to some of our products, which could reduce our sales and profitability.

Demand for our products is significantly affected by durable goods spending by consumers and businesses, and other macroeconomic conditions.

Our business is affected by general economic conditions, and uncertainty or adverse changes, such as the prolonged downturn in U.S. residential investment and the impact of more stringent credit standards, have previously led and could lead again to a decline in demand for our products and pressure to reduce our prices. Our sales of light-commercial and industrial generators are affected by conditions in the non-residential construction sector and by the capital investment trends for small and large businesses and municipalities. If these businesses and municipalities cannot access credit markets or do not utilize discretionary funds to purchase our products as a result of the economy or other factors, our business could suffer and our ability to executerealize benefits from our business planstrategy of increasing sales in the light-commercial and industrial sectors through, among other things, our focus on innovation and product development, including natural gas engine and modular technology, could be adversely affected. In addition, consumer confidence and home remodeling expenditures have a timely fashion. 

Becausesignificant impact on sales of our small size, growthresidential products, and prolonged periods of weakness in accordanceconsumer durable goods spending has previously had, and could again have, a material impact on our business. We currently do not have any material contracts with our business plans,customers which call for committed volume, and we cannot guarantee that our current customers will continue to purchase our products at the same level, if achieved, will place a significant strain onat all. If general economic conditions or consumer confidence were to worsen, or if the non-residential construction sector or rate of capital investments were to decline, our financial, technical, operationalnet sales and management resources. If we expandprofits would likely be adversely affected. Changes in government monetary or fiscal policies may negatively impact our activities, developments and production, andresults, including increases in interest rates which could negatively affect overall growth and impact sales of our products. Additionally, the numbertiming of projects wecapital spending by our national account customers can vary from quarter-to-quarter based on capital availability and internal capital spending budgets. Also, the availability of renewable energy mandates and investment tax credits and other subsidies can have an impact on the demand for energy storage systems. Our global operations are evaluating orexposed to political and economic risks, commercial instability and events beyond our control in the countries in which we participate, there will be additional demands onoperate. Such risks or events may disrupt our financial, technicalsupply chain and management resources. The failurenot enable us to continueproduce products to upgrade our technical, administrative, operating and financial control systems or the occurrence of unexpected expansion difficulties, including the inability to recruit and retain experienced managers, geoscientists, petroleum engineers, landmen, engineers and employees could have a material adverse effect on our business, financial condition and results of operations and our ability to execute our business plan in a timely fashion.

We depend significantly upon the continued involvement of our present management.

We depend to a significant degree upon the involvement of our management, specifically, our Chief Executive Officer, James G. Doris, and our Chief Financial Officer, Frank Barker, who were appointed on December 23, 2020 concurrent with the Acquisition. Mr. Doris is in charge of our strategic planning and operations. Our performance and success are dependent to a large extent on the efforts and continued employment of Mr. Doris and Mr. Barker. We do not believe that Mr. Doris or Mr. Barker could be quickly replaced with personnel of equal experience and capabilities, and their successor(s) may not be as effective. If Mr. Doris, Mr. Barker, or any of our other key personnel resign or become unable to continue in their present roles and if they are not adequately replaced, our business operations could be adversely affected.

We also have an active Board of Directors that meets several times throughout the year and is intimately involved in its business and the determination of our operational strategies. Members of our Board of Directors work closely with management to identify potential prospects, acquisitions and areas for further development. If any of our directors resign or become unable to continue in their present role, it may be difficult to find replacements with the same knowledge and experience and as a result, our operations may be adversely affected.meet customer demand.

 

 
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Future increasesThe industry in which we compete is highly competitive, and our tax obligations; either duefailure to increases in taxes on energy products, energy service companies and exploration activities or reductions in currently available federal income tax deductions with respect to oil and natural gas exploration and development, maycompete successfully could adversely affect our results of operations and increasefinancial condition.

We operate in markets that are highly competitive. Some of our competitors have established brands and are larger in size or are divisions of large, diversified companies which have substantially greater financial resources than we do. Some of our competitors may be willing to reduce prices and accept lower margins in order to compete with us. In addition, we could face new competition from large international or domestic companies with established brands that enter our end markets. Demand for our products may also be affected by our ability to respond to changes in design and functionality, to respond to downward pricing pressure, and to provide shorter lead times for our products than our competitors. If we are unable to respond successfully to these competitive pressures, we could lose market share, which could have an adverse impact on our results.

Our industry is subject to technological change, and our failure to continue developing new and improved products and to bring these products rapidly to market could have an adverse impact on our business.

New products, or refinements and improvements to our existing products, may have technical failures, delayed introductions, higher than expected production costs or may not be well accepted by our customers. If we are not able to anticipate, identify, develop and market high quality products in line with technological advancements that respond to changes in customer preferences, demand for our products could decline and our operating expenses.results could be adversely affected.

 

Federal, stateWe rely on independent dealers and local governmentsdistribution partners, and the loss of these dealers and distribution partners, or of any of our sales arrangements with significant private label, national, retail or equipment rental customers, would adversely affect our business.

We depend on the services of independent distributors and dealers to sell our products and provide service and aftermarket support to our end customers. We also rely on our distribution channels to drive awareness for our product categories and our brands. In addition, we sell our products to end users through private label arrangements with leading home equipment, electrical equipment and construction machinery companies; arrangements with top retailers and equipment rental companies; and our direct national accounts with telecommunications and industrial customers. Our distribution agreements and any contracts we have jurisdictionwith large national, retail and other customers are typically not exclusive, and many of the distributors with whom we do business offer competitors’ products and services. Impairment of our relationships with our distributors, dealers or large customers, loss of a substantial number of these distributors or dealers or of one or more large customers, or an increase in areas whereour distributors’ or dealers’ sales of our competitors’ products to our customers or of our large customers’ purchases of our competitors’ products could materially reduce our sales and profits. Also, our ability to successfully realize our growth strategy is dependent in part on our ability to identify, attract and retain new distributors at all layers of our distribution platform, including increasing the number of energy storage distributors, and we operatecannot be certain that we will be successful in these efforts.

We are unable to determine the specific impact of changes in selling prices or changes in volumes or mix of our products on our net sales.

Because of the wide range of products that we sell, the level of customization for many of our products, the frequent rollout of new products, the different accounting systems utilized, and imposethe fact that we do not apply pricing changes uniformly across our entire portfolio of products, we are unable to determine with specificity the effect of volume or mix changes or changes in selling prices on our net sales.

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Policy changes affecting international trade could adversely impact the demand for our products and our competitive position.

Changes in government policies on foreign trade and investment can affect the demand for our products, impact the competitive position of our products or prevent us from being able to sell products in certain countries. Our business benefits from free trade agreements, and efforts to withdraw from, or substantially modify such agreements, in addition to the implementation of more restrictive trade policies, such as more detailed inspections, higher tariffs, import or export licensing requirements, exchange controls or new barriers to entry, could have a material adverse effect on our results of operations, financial condition or cash flows. For example, we are experiencing increased tariffs on certain of our products and product components. However, these tariffs have not ultimately had a material adverse effect on our results due to the implementation of various mitigation efforts in conjunction with our supply chain and end market partners.

Risk Factors Related to the Oil and Gas Industry 

Oil and gas price fluctuations in the market may adversely affect the results of our operations.

Our profitability, cash flows and the carrying value of our oil and natural gas properties are highly dependent upon the market prices of oil and natural gas. A significant portion of our sales of oil and natural gas, if any, are made in the spot market, or pursuant to contracts based on spot market prices, and not pursuant to long-term, fixed-price contracts. Accordingly, the prices received for our oil and natural gas production are dependent upon numerous factors beyond our control. These factors include the level of consumer product demand, governmental regulations and taxes, onthe price and availability of alternative fuels, the level of foreign imports of oil and natural gas and the overall economic environment.

Historically, the oil and natural gas products we sell. Theremarkets have proven cyclical and volatile as a result of factors that are constant discussions by federal, statebeyond our control. Any additional declines in oil and local officials concerningnatural gas prices or any other unfavorable market conditions could have a varietymaterial adverse effect on our financial condition.

Actual quantities of energy tax proposals,recoverable oil and gas reserves and future cash flows from those reserves most likely will vary from our estimates.

Estimating accumulations of oil and gas is complex. The process relies on interpretations of available geological, geophysical, engineering and production data. The extent, quality and reliability of this data can vary. The process also requires certain economic assumptions, some of which if passed, would addare mandated by the SEC, such as oil and gas prices, drilling and operating expenses, capital expenditures, taxes and availability of funds. The accuracy of a reserve estimate is a function of:

·

the quality and quantity of available data;

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the interpretation of that data;

·

the accuracy of various mandated economic assumptions; and

·

the judgment of the persons preparing the estimate.

Estimates of proved reserves prepared by others might differ materially from our estimates. Actual quantities of recoverable oil and gas reserves, future production, oil and gas prices, revenues, taxes, development expenditures and operating expenses most likely will vary from our estimates. Any significant variance could materially affect the quantities and net present value of our reserves. In addition, we may adjust estimates of proved reserves to reflect production history, results of exploration and development and prevailing oil and gas prices. Our reserves also may be susceptible to drainage by operators on adjacent properties.

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Our operations will require significant expenditures of capital that may not be recovered.

We require significant expenditures of capital to locate and develop producing properties and to drill exploratory and exploitation wells. In conducting exploration, exploitation and development activities for a particular well, the presence of unanticipated pressure or increase taxesirregularities in formations, miscalculations or accidents may cause our exploration, exploitation, development and production activities to be unsuccessful, potentially resulting in abandonment of the well. This could result in a total loss of our investment. In addition, the cost and timing of drilling, completing and operating wells is difficult to predict.

Compliance with, or breach of, environmental laws can be costly and could limit our operations.

Our operations will be subject to numerous and frequently changing laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. Any properties we might own for the exploration and production of oil and gas and the wastes disposed on energy products, service companiesthese properties may be subject to the Comprehensive Environmental Response, Compensation and exploration activities. The passageLiability Act, the Oil Pollution Act of any legislation1990, the Resource Conservation and Recovery Act, the Federal Water Pollution Control Act, similar state laws, and similar Canadian laws. Under such laws, we could be required to remove or any other changesremediate previously released wastes or property contamination. Laws and regulations protecting the environment have generally become more stringent and may, in U.S. federal income tax laws could impact or increase the taxessome cases, impose “strict liability” for environmental damage. Strict liability means that we may be held liable for damage without regard to whether we were negligent or otherwise at fault. Environmental laws and regulations may expose us to liability for the conduct of or conditions caused by others or for acts that were in compliance with all applicable laws at the time they were performed. Failure to comply with these laws and regulations may result in the imposition of administrative, civil and criminal penalties.

Although we believe that our operations are requiredin substantial compliance with existing requirements of governmental bodies, our ability to payconduct continued operations is subject to satisfying applicable regulatory and consequentlypermitting controls. Our current permits and authorizations and ability to get future permits and authorizations may be susceptible on a going forward basis, to increased scrutiny, greater complexity resulting in increased costs, or delays in receiving appropriate authorizations.

We are subject to changing laws and regulations and other governmental actions that can significantly and adversely affect our business.

Federal, state, local, territorial and foreign laws and regulations relating to tax increases and retroactive tax claims, disallowance of tax credits and deductions, expropriation or nationalization of property, mandatory government participation, cancellation or amendment of contract rights, and changes in import and export regulations, limitations on access to exploration and development opportunities, as well as other political developments may adversely affect our operations.

The oil and gas we produce may not be readily marketable at the time of production.

Crude oil, natural gas, condensate and other oil and gas products are generally sold to other oil and gas companies, government agencies and other industries. The availability of ready markets for oil and gas that we might discover and the prices obtained for such oil and gas depend on many factors beyond our control, including:

·

the extent of local production and imports of oil and gas,

·

the proximity and capacity of pipelines and other transportation facilities,

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fluctuating demand for oil and gas,

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the marketing of competitive fuels, and

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the effects of governmental regulation of oil and gas production and sales.

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Natural gas associated with oil production is often not marketable due to demand or transportation limitations and is often flared at the producing well site. Pipeline facilities do not exist in certain areas of exploration and, therefore, we intend on utilizing trucks to transport any oil that is discovered.

Downturns and volatility in global economies and commodity and credit markets may materially adversely affect our business, results of operations and/or increase our operating expenses.and financial condition.

 

Our results of our operations are materially adversely affected by the conditions of the global economies and the credit, commodities and stock markets. Among other things, the Company has recently been adversely impacted, and anticipates continuing to be adversely impacted, due to a global reduction in consumer demand for oil and gas, and consumer lack of access to sufficient capital to continue to operate their businesses or to operate them at prior levels. In addition, a decline in consumer confidence or changing patterns in the availability and use of disposable income by consumers can negatively affect the demand for oil and gas and as a result our results of operations.

Because of the inherent dangers involved in oil and gas exploration,operations, there is a risk that we may incur liability or damages for ouras we conduct or our business operations, which could force us to expend a substantial amount of money in connection with litigation and/or a settlement.

 

The oil and natural gas business involve a variety of operating hazards and risks such as well blowouts, pipe failures, casing collapse, explosions, uncontrollable flows of oil, natural gas or well fluids, fires, spills, pollution, releases of toxic gas and other environmental hazards and risks. These hazards and risks could result in substantial losses to us from, among other things, injury or loss of life, severe damage to or destruction of property, natural resources and equipment, pollution or other environmental damage, cleanup responsibilities, regulatory investigation and penalties and suspension of operations. In addition, we may be liable for environmental damages caused by previous owners of property purchased and leased by us in the future.us. As a result, substantial liabilities to third parties or governmental entities may be incurred, the payment of which could reduce or eliminate the funds available for the purchase of properties and/or property interests, exploration, development or acquisitions or result in the loss of our properties and/or force us to expend substantial monies in connection with litigation or settlements. AsWe currently have no insurance to cover such our currentlosses and liabilities, and even if insurance or the insuranceis obtained, there can be no assurance that we may obtain in the future may notit will be adequate to cover any losses or liabilities. We cannot predict the availability of insurance or the availability of insurance at premium levels that justify itsour purchase. The occurrence of a significant event not fully insured or indemnified against could materially and adversely affect our financial condition and operations. We may elect to self-insure if management believes that the cost of insurance, although available, is excessive relative to the risks presented. In addition, pollution and environmental risks generally are not fully insurable. The occurrence of an event not fully covered by insurance could have a material adverse effect on our financial condition and results of operations, which could lead to any investment in us declining in value or becoming worthless.

 

We incur certain costs to comply with government regulations, particularly regulations relating to environmental protection and safety, and could incur even greater costsmay encounter operating hazards that may result in the future.substantial losses.

 

Our operations are regulated extensively at the federal, state and local levels and areWe will be subject to interruptionoperating hazards normally associated with the exploration and production of oil and gas, including hurricanes, blowouts, explosions, oil spills, cratering, pollution, earthquakes, labor disruptions and fires. The occurrence of any such operating hazards could result in substantial losses to us due to injury or termination by governmentalloss of life and regulatory authorities based on environmentaldamage to or destruction of oil and gas wells, formations, production facilities or other considerations. Moreover, we have incurred and will continue to incur costs in our efforts to comply with the requirements of environmental, safety and other regulations. Further, the regulatory environment in the oil and natural gas industry could change in waysproperties. We do not maintain insurance coverage for matters that we cannot predict and that might substantially increase our costs of compliance and, in turn, materially andmay adversely affect our operations, including war, terrorism, nuclear reactions, government fines, treatment of waste, blowout expenses, wind damage and business resultsinterruptions. Losses and liabilities arising from uninsured or underinsured events could reduce our revenues or increase our costs. There can be no assurance that any insurance we do obtain will be adequate to cover losses or liabilities associated with operational hazards. We cannot predict the continued availability of operations and financial condition.insurance, or its availability at premium levels that justify its purchase.

 

Specifically, as an owner or lessee and operator of crudeWe face strong competition from larger oil and natural gas properties, we are subject to various federal, state, localcompanies, which could result in adverse effects on our business.

The petroleum exploration and foreign regulations relating to the dischargeproduction business is highly competitive. Many of materials into,our competitors have substantially larger financial resources, staff and the protection of, the environment. These regulations may, among other things, impose liability on us for the cost of pollution cleanup resulting from operations, subject us to liability for pollution damages and require suspension or cessation of operationsfacilities. Our competitors in affected areas. Moreover, we are subject to the United States (“U.S.”) EPA rule requiring annual reportinginclude numerous major oil and gas exploration and production companies. Additionally, other companies engaged in our line of greenhousebusiness may compete with us from time to time in obtaining capital from investors. Competitors include larger companies which, in particular, may have access to greater resources, may be more successful in the recruitment and retention of qualified employees and may conduct their own refining and petroleum marketing operations, which may give them a competitive advantage. Actual or potential competitors may be strengthened through the acquisition of additional assets and interests. Additionally, there are numerous companies focusing their resources on creating fuels and/or materials which serve the same purpose as oil and gas (“GHG”) emissions. Changes in, or additions to, these regulations could lead to increased operating and compliance costs and, in turn, materially and adversely affect our business, results of operations and financial condition.but are manufactured from renewable resources.

 

 
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We are aware of the increasing focus of local, state, national and international regulatory bodies on GHG emissions and climate change issues. In addition to the U.S. EPA’s rule requiring annual reporting of GHG emissions, we are also aware of legislation proposed by U.S. lawmakers to reduce GHG emissions.

Additionally, there have been various proposals to regulate hydraulic fracturing at the federal level, including possible regulations limiting the ability to dispose of produced waters. Currently, the regulation of hydraulic fracturing is primarily conducted at the state level through permitting and other compliance requirements. Any new federal regulations that may be imposed on hydraulic fracturing could result in additional permitting and disclosure requirements (such as the reporting and public disclosure of the chemical additives used in the fracturing process) and in additional operating restrictions. In addition to the possible federal regulation of hydraulic fracturing, some states and local governments have considered imposing various conditions and restrictions on drilling and completion operations, including requirements regarding casing and cementing of wells, testing of nearby water wells, restrictions on the access to and usage of water and restrictions on the type of chemical additives that may be used in hydraulic fracturing operations. Such federal and state permitting and disclosure requirements and operating restrictions and conditions could lead to operational delays and increased operating and compliance costs and, moreover, could delay or effectively prevent the development of crude oil and natural gas from formations which would not be economically viable without the use of hydraulic fracturing.

We will continue to monitor and assess any new policies, legislation, regulations and treaties in the areas where we operate to determine the impact on our operations and take appropriate actions, where necessary. We are unable to predict the timing, scope and effect of any currently proposed or future laws, regulations or treaties, but the direct and indirect costs of such laws, regulations and treaties (if enacted) could materially and adversely affect our business, results of operations and financial condition.

Possible regulation related to global warming and climate change could have an adverse effect on our operations and demand for oil and gas.

Studies over recent years have indicated that emissions of certain gases may be contributing to warming of the Earth’s atmosphere. In response to these studies, governments have begun adopting domestic and international climate change regulations that require reporting and reductions of the emission of greenhouse gases. Methane, a primary component of natural gas, and carbon dioxide, a by-product of the burning of oil, natural gas and refined petroleum products, are considered greenhouse gases. In the United States, at the state level, many states, either individually or through multi-state regional initiatives, have begun implementing legal measures to reduce emissions of greenhouse gases, primarily through the planned development of emission inventories or regional greenhouse gas cap and trade programs or have begun considering adopting greenhouse gas regulatory programs. At the federal level, Congress has considered legislation that could establish a cap-and-trade system for restricting greenhouse gas emissions in the United States. The ultimate outcome of this federal legislative initiative remains uncertain. In addition to pending climate legislation, the EPA has issued greenhouse gas monitoring and reporting regulations. Beyond measuring and reporting, the EPA issued an “Endangerment Finding” under section 202(a) of the Clean Air Act, concluding that greenhouse gas pollution threatens the public health and welfare of current and future generations. The finding served as a first step to issuing regulations that require permits for and reductions in greenhouse gas emissions for certain facilities. Moreover, the EPA has begun regulating greenhouse gas emission from certain facilities pursuant to the Prevention of Significant Deterioration and Title V provisions of the Clean Air Act. In the courts, several decisions have been issued that may increase the risk of claims being filed by government entities and private parties against companies that have significant greenhouse gas emissions. Such cases may seek to challenge air emissions permits that greenhouse gas emitters apply for and seek to force emitters to reduce their emissions or seek damages for alleged climate change impacts to the environment, people, and property. Any existing or future laws or regulations that restrict or reduce emissions of greenhouse gases could require us to incur increased operating and compliance costs. In addition, such laws and regulations may adversely affect demand for the fossil fuels we produce, including by increasing the cost of combusting fossil fuels and by creating incentives for the use of alternative fuels and energy.

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Our officersestimates of the volume of reserves could have flaws, or such reserves could turn out not to be commercially extractable. as a result, our future revenues and directors have limited liability, and we are required in certain instances to indemnify our officers and directors for breaches of their fiduciary duties.projections could be incorrect.

 

We have adopted provisionsEstimates of reserves and of future net revenues prepared by different petroleum engineers may vary substantially depending, in our articlespart, on the assumptions made and may be subject to adjustment either up or down in the future. Our actual amounts of incorporationproduction, revenue, taxes, development expenditures, operating expenses, and bylaws which limitquantities of recoverable oil and gas reserves may vary substantially from the liabilityestimates. Oil and gas reserve estimates are necessarily inexact and involve matters of subjective engineering judgment. In addition, any estimates of our officersfuture net revenues and directorsthe present value thereof are based on assumptions derived in part from historical price and provide for indemnificationcost information, which may not reflect current and future values, and/or other assumptions made by us that only represent our best estimates. If these estimates of quantities, prices and costs prove inaccurate, we may be unsuccessful in expanding our oil and gas reserves base with our acquisitions. Additionally, if declines in and instability of oil and gas prices occur, then write downs in the capitalized costs associated with any oil and gas assets we obtain may be required. Because of the nature of the estimates of our officersreserves and directorsestimates in general, we can provide no assurance that reductions to our estimated proved oil and gas reserves and estimated future net revenues will not be required in the full extent permitted by Nevada corporate law. Our articles generally providefuture, and/or that our officersestimated reserves will be present and/or commercially extractable. If our reserve estimates are incorrect, the value of our common stock could decrease and directors shall have no personal liabilitywe may be forced to us orwrite down the capitalized costs of our stockholders for monetary damages for breaches of their fiduciary duties as directors, except for breaches of their duties of loyalty, acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law, acts involving unlawful payment of dividends or unlawful stock purchases or redemptions, or any transaction from which a director derives an improper personal benefit. Such provisions substantially limit our stockholders’ ability to hold officersoil and directors liable for breaches of fiduciary duty, and may require us to indemnify our officers and directors.gas properties.

 

We currently have outstanding indebtedness andOur business will suffer if we may incur additional indebtedness which could reduce our financial flexibility, increase interest expense and adversely impact our operations in the future.cannot obtain or maintain necessary licenses.

 

We currently have outstanding indebtednessOur operations will require licenses, permits and in some cases renewals of licenses and permits from various governmental authorities. Our, or our partners’, ability to obtain, sustain or renew such licenses and permits on acceptable terms is subject to change in regulations and policies and to the discretion of the applicable governments, among other factors. Our inability to obtain, or our loss of or denial of extension of, any of these licenses or permits could hamper our ability to produce revenues from our operations.

Our operations may be subject to various litigation matters in the future that could have an adverse effect on our business.

From time to time, we may incur significant amountsbecome a defendant in various litigation matters. The nature of additional indebtedness in order to make acquisitions or to develop properties. Our level of indebtedness could affect our operations exposes us to further possible litigation claims, including litigation relating to climate change in several ways, including the following:

·

future. There is a significant portion of our cash flows could be used to service our indebtedness;

·

a high level of debt would increase our vulnerability to general adverse economic and industry conditions;

·

any covenants contained in the agreements governing our outstanding indebtedness could limit our ability to borrow additional funds;

·

dispose of assets, pay dividends and make certain investments;

·

a high level of debt may place us at a competitive disadvantage compared to our competitors that are less leveraged and, therefore, they may be able to take advantage of opportunities that our indebtedness may prevent us from pursuing; and

·

debt covenants to which we may agree may affect our flexibility in planning for, and reacting to, changes in the economy and in its industry.

A high level of indebtedness increases the risk that we may default on our debt obligations. We may notany matter in litigation could be able to generate sufficient cash flows to pay the principal or interest on our debt, and future working capital, borrowings or equity financing may not be available to pay or refinance such debt. If we do not have sufficient funds and are otherwise unable to arrange financing, we may have to sell significant assets or have a portionadversely decided against us regardless of our assets foreclosed uponbelief, opinion and position, which could have a material adverse effect on our business, financial condition and results of operations. Litigation is highly costly and the costs associated with defending litigation could also have a material adverse effect on our financial condition.

 

We may experience adverse impacts on our reported results of operations as a result of adopting new accounting standardsbe affected by global climate change or interpretations.by legal, regulatory, or market responses to such change.

 

Our implementationThe growing political and scientific sentiment is that increased concentrations of carbon dioxide and complianceother greenhouse gases in the atmosphere are influencing global weather patterns. Changing weather patterns, along with changesthe increased frequency or duration of extreme weather conditions, could impact the availability or increase the cost to produce our products. Additionally, the sale of our products can be impacted by weather conditions.

Concern over climate change, including global warming, has led to legislative and regulatory initiatives directed at limiting greenhouse gas emissions. For example, proposals that would impose mandatory requirements on greenhouse gas emissions continue to be considered by policy makers in accounting rules, including new accounting rules and interpretations, could adverselythe provinces, states or territories where we operate. Laws enacted that directly or indirectly affect our reportedoil and gas production could impact our business and financial position or operating results or cause unanticipated fluctuations in our reported operating results in future periods.results.

 

 
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If oil or natural gas prices decrease or drilling efforts are unsuccessful, we may be required to record write-downs of our oil and natural gas properties.

We could be required to write down the carrying value of certain of our oil and natural gas properties. Write-downs may occur when oil and natural gas prices are low, or if we have downward adjustments to our estimated proved reserves, increases in our estimates of operating or development costs, deterioration in drilling results or mechanical problems with wells where the cost to re-drill or repair is not supported by the expected economics.

Accounting rules require that the carrying value of oil and natural gas properties be periodically reviewed for possible impairment. Under the full cost method of accounting, capitalized oil and natural gas property costs less accumulated depletion, net of deferred income taxes, may not exceed a ceiling amount equal to the present value, discounted at 10%, of estimated future net revenues from proved oil and natural gas reserves plus the cost of unproved properties not subject to amortization (without regard to estimates of fair value), or estimated fair value, if lower, of unproved properties that are subject to amortization. Should capitalized costs exceed this ceiling, which is tested on a quarterly basis, an impairment is recognized. While an impairment charge reflects our long-term ability to recover an investment, reduces our reported earnings and increases our leverage ratios, it does not impact cash or cash flow from operating activities.

Our future success depends on our ability to replace reserves that are produced.

Because the rate of production from oil and natural gas properties generally declines as reserves are depleted, our future success depends upon our ability to economically find or acquire and produce additional oil and natural gas reserves. Except to the extent that we acquire additional properties containing proved reserves, conduct successful exploration and development activities, or, through engineering studies, identify additional behind-pipe zones or secondary recovery reserves, our proved reserves will decline as our reserves are produced. Future oil and natural gas production, therefore, is highly dependent upon our level of success in acquiring or finding additional reserves that are economically recoverable. We cannot assure you that we will be able to find or acquire and develop additional reserves at an acceptable cost.

We may acquire significant amounts of unproved property to further our development efforts. Development and exploratory drilling and production activities are subject to many risks, including the risk that no commercially productive reservoirs will be discovered. We may acquire both proved and producing properties as well as undeveloped acreage that we believe will enhance growth potential and increase our earnings over time. However, we cannot assure you that all of these properties will contain economically viable reserves or that we will not abandon our initial investments. Additionally, we cannot assure you that unproved reserves or undeveloped acreage that we acquire will be profitably developed, that new wells drilled on our properties will be productive or that we will recover all or any portion of our investments in our properties and reserves.

Our lack of industry and geographical diversification may increase the risk of an investment in our company.

We operate in the oil and gas sector, and our current leases are located in North America in Texas. This lack of geographic diversification may make our holdings more sensitive to economic developments within a regional area, which may result in reduced rates of return or higher rates of default than might be incurred with a company that is more geographically diverse.

Our business depends on oil and natural gas transportation and processing facilities and other assets that are owned by third parties.

The marketability of our oil and natural gas depends in part on the availability, proximity and capacity of pipeline systems, processing facilities, oil trucking fleets and rail transportation assets owned by third parties. The lack of available capacity on these systems and facilities, whether as a result of proration, physical damage, scheduled maintenance or other reasons, could result in the delay or discontinuance of development plans for our properties. The curtailments arising from these and similar circumstances may last from a few days to several months.

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Our leasehold acreage is subject to leases that will expire over the next several years unless production is established or maintained or the leases are extended.

Some of our acreage is currently held by production or held by operations, but some is not. Unless production in paying quantities is established or operations are commenced on units containing these latter leases during their terms, those leases may expire. Likewise, if we are unable to maintain production on acreage held by production or operations, those leases may expire. If our leases expire and we are unable to renew the leases, we will lose our right to develop or utilize the related properties.

Deficiencies of title to our leased interests could significantly affect our financial condition.

We, or our partners, often incur the expense of a title examination prior to acquiring oil and natural gas leases or undivided interests in oil and natural gas leases or other developed rights. If an examination of the title history of a property reveals that an oil or natural gas lease or other developed rights have been purchased in error from a person who is not the owner of the mineral interest desired, our interest would substantially decline in value or be eliminated. In such cases, the amount paid for such oil or natural gas lease or leases or other developed rights may be lost.

Risk Factors Related to our Investments in New Technologies

Because of the unique difficulties and uncertainties inherent in technology development, we face a risk of not being able to capitalize on our license or ownership of intellectual property.

Potential investors should be aware of the difficulties normally encountered by companies developing new technology and the high rate of failure of such enterprises. The likelihood of our successful ability to commercialize intellectual property we own or license must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the development of new technology with limited personnel and financial means. These potential problems include, but are not limited to, unanticipated technical problems that extend the time and cost of product development, or unanticipated problems with the operation of the technology.

Technology development involves significant time and expense and can be uncertain.

The development of technology associated with our licensed or owned intellectual property will be costly, complex and time-consuming. Any investment into technology development and commercialization often involves a long wait until a return, if any, is achieved on such investment. We plan to make investments in research and development relating to our owned and licensed intellectual property and technology. Investments in new technology and processes are inherently speculative.

Successful technical development of technologies associated with intellectual property does not guarantee successful commercialization.

We may successfully complete the technical development of technologies associated with our owned or licensed intellectual property, but we may still fail to commercialize that technology at scale or at a cost attractive to the target industries. Our success will depend largely on our ability to prove the capabilities and cost-effectiveness of the developed technology. Upon demonstration, the technology may not have the capabilities they were designed to have or that we believed they would have, or they may be more expensive than anticipated. Furthermore, even if we do successfully demonstrate the technology’s capabilities, potential customers may be more comfortable doing business with a larger, more established, more proven company than us. Moreover, competing technologies may prevent us from gaining wide market acceptance of the technology. Significant revenue from new technology investments may not be achieved for a number of years, if at all.

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Other companies may claim that we infringe their intellectual property, which could materially increase our costs and harm our ability to generate future revenue and profit.

We do not believe that we infringe the proprietary rights of any third party, but claims of infringement are becoming increasingly common, and third parties may assert infringement claims against us. It may be difficult or impossible to identify, prior to receipt of notice from a third party, the trade secrets, patent position or other intellectual property rights of a third party, either in the United States or in foreign jurisdictions. Any such assertion may result in litigation or may require us to obtain a license for the intellectual property rights of third parties. If we are required to obtain licenses to use any third-party technology, we would have to pay royalties, which may significantly reduce any profit on our products. In addition, any such litigation could be expensive and disruptive to our ability to generate revenue or enter into new market opportunities. If any of our products were found to infringe other parties’ proprietary rights and we are unable to come to terms regarding a license with such parties, we may be forced to modify our products to make them non-infringing or to cease production of such products altogether.

Renewable energy investments may be linked to government subsidies.

Profitability of any investments we make in renewable and/or clean energy opportunities may depend on the availability of government subsidies, tax credits or other types of incentives, and there is no guaranty such subsidies, tax credits or incentives will be available in the future.

Risk Factors Related to our Operations.

We have identified material weaknesses in our disclosure controls and procedures and internal control over financial reporting. If not remediated, our failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could result in material misstatements in our financial statements and a failure to meet our reporting and financial obligations, each of which could have a material adverse effect on our financial condition and the trading price of our common stock.

 

Maintaining effective internal control over financial reporting and effective disclosure controls and procedures are necessary for us to produce reliable financial statements. As reported under “Part II - Item 9A. Controls and Procedures”, as of December 31, 2021,2023, our CEO and CFO have determined that our disclosure controls and procedures were not effective, and such disclosure controls and procedures have not been deemed effective since approximately September 30, 2017. Separately, management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 20212023 and determined that such internal control over financial reporting was not effective as a result of such assessment.

 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.

 

Maintaining effective disclosure controls and procedures and effective internal control over financial reporting are necessary for us to produce reliable financial statements and the Company is committed to remediating its material weaknesses in such controls as promptly as possible. However, there can be no assurance as to when these material weaknesses will be remediated or that additional material weaknesses will not arise in the future. Any failure to remediate the material weaknesses, or the development of new material weaknesses in our internal control over financial reporting, could result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial obligations, which in turn could have a material adverse effect on our financial condition and the trading price of our common stock, and/or result in litigation against us or our management. In addition, even if we are successful in strengthening our controls and procedures, those controls and procedures may not be adequate to prevent or identify irregularities or facilitate the fair presentation of our financial statements or our periodic reports filed with the SEC.

 

Risks Relating to Our Oil and Gas Operations and Industry

We are subject to production declines and loss of revenue due to shut-in wells.

The majority ofmay have difficulty managing growth in our oil and gas production revenues come from a number of producing wells. In the event those wells are required to be shut-in (as they were for various periods in the past), our production and revenuebusiness, which could be adversely affected. Our wells are shut-in from time-to-time for maintenance, workovers, upgrades and other matters outside of our control, including repairs, adverse weather (including hurricanes, flooding and tropical storms), inability to dispose of produced water or other regulatory and market conditions. Any significant period where our wells, and especially our top producing wells, are shut-in, would have a material adverse effect on our business, financial condition and results of production, oiloperations and gas revenues and net income or loss for the applicable period. However, notwithstanding the above, Camber’s management believes that Camber’s non-operated properties will be immaterial to the combined company following the merger and following the merger the combined company’s management will determine what course to take regarding such combined company assets, including Camber’s non-operated properties.

Many of our leases are in areas that have been partially depleted or drained by offset wells.

Many of our leases are in areas that have been partially depleted or drained by offset drilling. Interference from offset drilling may inhibit our ability to find or recover commercial quantities of oil and/or may resultexecute our business plan in an acceleration in the decline in productiona timely fashion. 

Because of our wells,small size, growth in accordance with our business plans, if achieved, will place a significant strain on our financial, technical, operational and management resources. If we expand our activities, developments and production, and increase the number of projects we are evaluating or in which may in turnwe participate, there will be additional demands on our financial, technical and management resources. The failure to continue to upgrade our technical, administrative, operating and financial control systems or the occurrence of unexpected expansion difficulties, including the inability to recruit and retain experienced managers, geoscientists, petroleum engineers, landmen, engineers and employees could have ana material adverse effect on our recovered barrelsbusiness, financial condition and results of operations and our ability to execute our business plan in a timely fashion.

Need for Additional Financing

The Company currently has limited funds and the lack of additional funds may negatively impact the Company’s ability to pursue its business strategy to conduct operations in the oil and consequently our resultsgas industry and to acquire, invest in and/or provide professional advisory and consulting services to companies undergoing or anticipating periods of operations.rapid growth. Even if the Company’s funds prove to be sufficient to provide such services or to acquire an interest in, or complete a transaction with, an entity, the Company may not have enough capital to exploit the opportunity. The ultimate success of the Company may depend upon its ability to raise additional capital. The Company may investigate the availability, source, or terms that might govern the acquisition of additional capital but will not do so until it determines a need for additional financing. If additional capital is needed, there is no assurance that funds will be available from any source or, if available, that they can be obtained on terms acceptable to the Company. If not available, the Company’s operations will be limited to those that can be financed with its modest capital.

 

 
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No Assurance of Success or Profitability

There is no assurance that the Company will be able to successfully implement its business plan and provide the contemplated services to its client companies. Even if the Company is successful in providing its services to its client companies, there is a risk that it will not generate revenues or profits, or that the market price of the Company’s common stock will increase.

Crude oilIf we lose the services of our Chief Executive Officer, our operations could be disrupted, and natural gas prices are highly volatile in general and low prices will negatively affect our financial results.business could be harmed.

 

We rely heavily on the day-to-day involvement of our CEO, James Doris, in managing the Company’s affairs. Mr. Doris is an integral part of all material elements of our existing operations and immediate growth initiatives. We do not have a long-term employment or other agreement with Mr. Doris. If he ceases to be involved with us for any reason, our operations would likely be disrupted, and our business would likely be harmed.

Cybersecurity breaches or business system disruptions may adversely affect our business.

We rely on our information technology infrastructure and management information systems to operate and record almost every aspect of our business. This may include confidential or personal information belonging to us, our employees, customers, suppliers, or others. Similar to other companies, our systems and networks, and those of third parties with whom we do business, could be subject to cybersecurity breaches caused by, among other things, illegal hacking, insider threats, computer viruses, phishing, malware, ransomware, or acts of vandalism or terrorism, or acts perpetrated by criminals or nation-state actors. Furthermore, we may also experience increased cybersecurity risk as some of our onshore personnel may periodically work remotely.

In addition to our own systems and networks, we use third-party service providers to process certain data or information on our behalf. Due to applicable laws and regulations, we may be held responsible for cybersecurity incidents attributed to our service providers to the extent it relates to information we share with them. Although we seek to require that these service providers implement and maintain reasonable security measures, we cannot control third parties and cannot guarantee that a security breach will not occur in their systems or networks.

Despite our efforts to continually refine our procedures, educate our employees, and implement tools and security measures to protect against such cybersecurity risks, there can be no assurance that these measures will prevent unauthorized access or detect every type of attempt or attack. Our oilpotential future upgrades, refinements, tools and gas revenues, operatingmeasures may not be completely effective or result in the anticipated improvements, if at all, and may cause disruptions in our business operations. In addition, a cyberattack or security breach could go undetected for an extended period of time, and the ensuing investigation of the incident would take time to complete. During that period, we may not necessarily know the impact to our systems or networks, costs and actions required to fully remediate and our initial remediation efforts may not be successful, and the errors or actions could be repeated before they are fully contained and remediated. A breach or failure of our systems or networks, critical third-party systems on which we rely, or those of our customers or vendors, could result in an interruption in our operations, disruption to certain systems that are used to operate our vessels or other assets, unplanned capital expenditures, unauthorized publication of our confidential business or proprietary information, unauthorized release of customer, employee or third party data, theft or misappropriation of funds, violation of privacy or other laws, and exposure to litigation or indemnity claims including resulting from customer-imposed cybersecurity controls or other related contractual obligations. There could also be increased costs to detect, prevent, respond, or recover from cybersecurity incidents. Any such breach, or our delay or failure to make adequate or timely disclosures to the public, regulatory or law enforcement agencies or affected individuals following such an event, could have a material adverse effect on our business, reputation, financial position, results profitability,of operations and cash flow,flows, and cause reputational damage.

Increasing legal and regulatory focus on data privacy and security issues could expose us to increased liability and operational changes and costs.

Along with our own data and information in the normal course of our business, we collect and retain certain data that is subject to specific laws and regulations. The compliant processing of this data domestically and transferring of this data across international borders continues to increase in complexity. This data is subject to regulation at various levels of government in many areas of our business and in jurisdictions across the world, including data privacy and security laws such as the California Consumer Privacy Act (“CCPA”), the California Privacy Rights Act (“CPRA”), the EU General Data Protection Regulation (“GDPR”), the U.K. and General Data Protection Regulation (“U.K. GDPR”), the standard contractual clauses (“SCC”) adopted by the European Commission and the U.K. Parliament for the processing and transfer of personal data in compliance with the GDPR and/or the U.K. GDPR, and Quebec’s Bill 64 (“Bill 64”). We also operate, or may in the future rateoperate, in other jurisdictions that have issued, or are considering issuing, data privacy laws and regulations. The U.S. Federal Trade Commission recently adopted rules requiring the reporting of growthcertain data breaches that may apply to our operations and abilitythose of our subsidiaries. As the number and complexities of such laws and regulations continue to borrowincrease, we will face increasingly complex compliance, monitoring, and control obligations. As the implementation, interpretation, and enforcement of such laws continues to progress and evolve, there may also be developments that amplify such risks. Any failure by us to comply with these laws and regulations, including as a result of a security or privacy breach, or otherwise, could expose us to litigation and enforcement, and result in significant penalties, fines, and other liabilities.

The Company is required to indemnify its Officers and Directors

Nevada law provides for the indemnification of the Company’s directors, officers, employees, and agents, under certain circumstances, against attorney’s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on behalf of the Company. If the Company were called upon to indemnify an officer or director, then the portion of its available funds expended for such purpose would reduce the amount otherwise available for the Company’s business. This indemnification obligation and the resultant costs associated with indemnification may also discourage our Company from bringing a lawsuit against directors and officers for breaches of their fiduciary duties and may similarly discourage the filing of derivative litigation by our shareholders against our directors and officers even though such actions, if successful, might otherwise benefit our company and shareholders.

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The Company would bear the expenses of such litigation for any of its directors, officers, employees, or obtain additional capital,agents, upon such person’s promise to repay the Company if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by the Company which it may be unable to recoup.

We may be dependent upon outside advisors.

To supplement the Company’s officers, directors and principal shareholders, the Company may be required to employ accountants, technical experts, appraisers, attorneys, or other outside consultants or advisors. The selection of any such advisors will be made by the Company without any input from stockholders. Furthermore, it is anticipated that such persons may be engaged on an “as needed” basis without a continuing fiduciary or other obligation to the Company. In the event the Company considers it necessary to hire outside advisors, such persons may be affiliates of the Company.

The staff of the SEC’s Division of Enforcement notified Viking that the Staff had made a preliminary determination to recommend that the SEC file an enforcement action against Viking, as well as against its CEO and its former CFO, for alleged violation so securities laws.

In April of 2019, the carryingstaff (the “Staff”) of the SEC’s Division of Enforcement notified Viking that the Staff had made a preliminary determination to recommend that the SEC file an enforcement action against Viking, as well as against its CEO and its former CFO, for alleged violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder during the period from early 2014 through late 2016. The Staff’s notice was not a formal allegation or a finding of wrongdoing by Viking, and Viking has communicated with the Staff regarding its preliminary determination. We believe Viking has adequate defenses and intends to vigorously defend any enforcement action that may be initiated by the SEC. However, the defense of an action filed by the SEC against Viking, its CEO and/or former CFO, could take resources away from our operations, divert management attention, or potentially result in penalties, fines or sanctions, which could materially adversely affect us or the value of our oilsecurities.

We only own approximately 60.5% of Simson-Maxwell, and natural gas properties,other Simson-Maxwell stakeholders are substantially dependent upon prevailing pricesable to exercise some control over its operations.

We do not own 100% of crude oilSimson-Maxwell, but rather we own approximately 60.5% of Simson-Maxwell’s issued and natural gas. Lower crude oil and natural gas prices also may reduce the amount of crude oil and natural gas that we can produce economically. Historically, the markets for crude oil and natural gas have been very volatile, and such marketsoutstanding shares. We are likely to continue to be volatile in the future. Prices for oil and natural gas fluctuate widely in responsea party to a varietyShareholders’ Agreement regarding the ownership and governance of factors beyond our control, such as:Simson-Maxwell, and although we are entitled to elect the majority of the directors of Simson-Maxwell, we have to obtain approval from at least one other shareholder of Simson-Maxwell in connection with the following matters:

 

 

·

overall U.S. and global economic conditions;

·

weather conditions and natural disasters;

·

seasonal variationsany fundamental change to the corporate structure of the Simson-Maxwell and/or any subsidiary of Simson-Maxwell if such fundamental change is dilutive to the existing shareholders, including without limitation, in oil and natural gas prices;

·

price and availabilityrespect of alternative fuels;

·

technological advances affecting oil and natural gas production and consumption;

·

consumer demand;

·

domestic and foreign supply of oil and natural gas;

·

variations in levels of production;

·

regional price differentials and quality differentials of oil and natural gas; price and quantity of foreign imports of oil, NGLs, and natural gas;

·

global pandemics and epidemics,each such entity: any amendment, modification, repeal or other variation to its articles, any amendment to its authorized share capital, or any proposal to create, reclassify, re-designate, subdivide, consolidate, or otherwise change any shares (whether issued or unissued) or partnership units, as COVID-19;

·

the completion of large domestic or international exploration and production projects;

·

restrictions on exportation of oil and natural gas;

·

the availability of refining capacity;

·

the impact of energy conservation efforts;

·

political conditions in or affecting other oil producing and natural gas producing countries, including the current conflicts in the Middle East and conditions in South America and Russia; and

·

domestic and foreign governmental regulations, actions and taxes.

Further, oil and natural gas prices do not necessarily fluctuate in direct relation to each other. Our revenue, profitability, and cash flow depend upon the prices of supply and demand for oil and natural gas, and a drop in prices can significantly affect our financial results and impede our growth. In particular, declines in commodity prices may:

·

negatively impact the value of our reserves, because declines in oil and natural gas prices would reduce the value and amount of oil and natural gas that we can produce economically;case may be;

 

 

 

 

·

reduce the amountissuance of any shares in the capital of the Simson-Maxwell and/or any subsidiary of Simson-Maxwell or any securities, warrants, options or rights convertible into, exchangeable for, or carrying the right to subscribe for or purchase, shares in the capital of the Simson-Maxwell and/or any subsidiary of Simson-Maxwell, as the case may be, if such issuance is dilutive to the existing shareholders;

·

the redemption or purchase for cancellation of any shares in the capital of the Simson-Maxwell and/or any subsidiary of Simson-Maxwell, or any other return of capital by the Simson-Maxwell and/or any subsidiary of Simson-Maxwell, other than any purchase of shares in accordance with the Shareholders’ Agreement;

·

the conversion, exchange, reclassification, re-designation, subdivision, consolidation, or other change of or to any shares in the capital of the Simson-Maxwell and/or any subsidiary of Simson-Maxwell if any such action is dilutive to the existing shareholders;

·

the acquisition or commencement of any business other than Simson-Maxwell’s current business or the entering into of any amalgamation, merger, partnership, joint venture, or other combination, or any agreement with respect to any of the foregoing, with any person or business by the Simson-Maxwell and/or any subsidiary of Simson-Maxwell if any such action is dilutive to the existing shareholders;

·

any dissolution, liquidation, or winding-up of the Simson-Maxwell and/or any subsidiary of Simson-Maxwell or other distribution of the assets of the Simson-Maxwell and/or any subsidiary of Simson-Maxwell for the purpose of winding-up its affairs, whether voluntary or involuntary, except where such dissolution, liquidation, or winding-up or other distribution is done voluntarily by the Simson-Maxwell and/or any subsidiary of Simson-Maxwell in order to reorganize its corporate structure, provided that the board of directors of Simson-Maxwell determines (without inquiring into or giving effect to the personal circumstances of any individual shareholder) that the interests of no one shareholder shall be disproportionately adversely affected vis-à-vis the interests of any other shareholder by such reorganization;

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·

any declaration or payment of dividends by the Simson-Maxwell or other similar payment or distribution by the Simson-Maxwell to all of the shareholders, except for payment or distribution to all common shareholders or the payment of dividends on any issued preferred shares as required under their terms;

·

any sale, proposed sale, lease, exchange, or other disposition of all or a substantial portion of the property, assets, or business of the Simson-Maxwell and/or any subsidiary of Simson-Maxwell, other than in the ordinary course of business;

·

any provision of any guarantee, indemnity, or other financial support by the Simson-Maxwell and/or any subsidiary of Simson-Maxwell;

·

any transaction not in the ordinary course of business between Simson-Maxwell and/or any subsidiary of Simson-Maxwell and any person not dealing at arm’s length with Simson-Maxwell and/or any subsidiary of Simson-Maxwell or any of the shareholders. For the avoidance of doubt, entering into employment agreements with employees, hiring decisions, and compensation arrangements are excluded from this provision; or

·

any change in the registered office of the Simson-Maxwell and/or any subsidiary of Simson-Maxwell.

Profitability & expansion initiatives at Simson-Maxwell are not guaranteed.

The Company’s majority-owned subsidiary, Simson-Maxwell, provides power generation products, services and custom energy solutions to commercial and industrial clients, primarily in Canada. Simson-Maxwell is not currently operating at a profit and the Company’s objective is to assist Simson-Maxwell with becoming profitable and expanding Simson-Maxwell’s business throughout North America. There can be no assurance either will occur as both initiatives are subject to a number of risks and influences, including several beyond the Company’s control.

We currently have outstanding indebtedness and we may incur additional indebtedness which could reduce our financial flexibility, increase interest expense and adversely impact our operations in the future.

We currently have outstanding indebtedness and, in the future, may incur significant amounts of additional indebtedness in order to make acquisitions or to develop properties. Our level of indebtedness could affect our operations in several ways, including the following:

·

a significant portion of our cash flow available for capital expenditures, repaymentflows could be used to service our indebtedness;

·

a high level of debt would increase our vulnerability to general adverse economic and industry conditions;

·

any covenants contained in the agreements governing our outstanding indebtedness could limit our ability to borrow additional funds;

·

dispose of assets, pay dividends and other corporate purposes;make certain investments;

·

a high level of debt may place us at a competitive disadvantage compared to our competitors that are less leveraged and, therefore, they may be able to take advantage of opportunities that our indebtedness may prevent us from pursuing; and

 

 

 

 

·

limit Camber’s abilitydebt covenants to borrow money or raise additional capital.which we may agree may affect our flexibility in planning for, and reacting to, changes in the economy and in its industry.

Downturns and volatility in global economies and commodity and credit markets have materially adversely affected our business, results of operations and financial condition.

Our results of operations are materially adversely affected by the conditions of the global economies and the credit, commodities and stock markets. Among other things, we have recently been adversely impacted, and anticipate to continue to be adversely impacted, due to a global reduction in consumer demand for oil and gas, and consumer lack of access to sufficient capital to continue to operate their businesses or to operate them at prior levels. In addition, a decline in consumer confidence or changing patterns in the availability and use of disposable income by consumers can negatively affect the demand for oil and gas and as a result our results of operations.

 

 
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We face intense competition in connection with our oil and gas operations.

We are in direct competition for properties with numerous oil and natural gas companies, drilling and income programs and partnerships exploring various areasA high level of Texas and Oklahoma. Many competitors are large, well-known energy companies, although no single entity dominatesindebtedness increases the industry. Many of our competitors possess greater financial and personnel resources enabling them to identify and acquire more economically desirable energy producing properties and drilling prospects than us. Additionally, there is competition from other fuel choices to supply the energy needs of consumers and industry. Management believes that a viable marketplace exists for smaller producers of natural gas and crude oil.

Our oil and gas competitors may use superior technology and data resourcesrisk that we may be unable to afford or that would require a costly investment by us in order to compete with them more effectively.

The oil and gas industry is subject to rapid and significant advancements in technology, including the introduction of new products and services using new technologies and databases. Asdefault on our competitors use or develop new technologies, wedebt obligations. We may be placed at a competitive disadvantage, and competitive pressures may force us to implement new technologies at a substantial cost. In addition, many of our competitors will have greater financial, technical and personnel resources that allow them to enjoy technological advantages and may in the future allow them to implement new technologies before we can. We cannot be certain that we willnot be able to implement technologies on a timely basisgenerate sufficient cash flows to pay the principal or at a cost that is acceptable to us. One or more of the technologies that we will use or that we may implement in the future may become obsolete, and we may be adversely affected.

Restrictions on drilling activities intended to protect certain species of wildlife may adversely affect our ability to conduct drilling activities in some of the areas where we operate.

Oil and natural gas operations in our operating areas can be adversely affected by seasonal or permanent restrictions on drilling activities designed to protect various wildlife. Seasonal restrictions may limit our ability to operate in protected areas and can intensify competition for drilling rigs, oilfield equipment, services, supplies and qualified personnel, which may lead to periodic shortages when drilling is allowed. These constraints and the resulting shortages or high costs could delay our operations and materially increase our operating and capital costs. Permanent restrictions imposed to protect endangered species could prohibit drilling in certain areas or require the implementation of expensive mitigation measures. Specifically, applicable laws protecting endangered species prohibit the harming of endangered or threatened species, provide for habitat protection, and impose stringent penalties for noncompliance. The designation of previously unprotected species as threatened or endangered in areas where we operate could cause us to incur increased costs arising from species protection measures or could result in limitations, delays, or prohibitionsinterest on our explorationdebt, and production activities that could have an adverse impact on our abilityfuture working capital, borrowings or equity financing may not be available to develop and produce our reserves.

pay or refinance such debt. If we do not hedge our exposurehave sufficient funds and are otherwise unable to reductions in oil and natural gas prices,arrange financing, we may be subjecthave to sell significant reductions in prices. Alternatively, we use oil and natural gas price hedging contracts, which involve credit risk and may limit future revenues from price increases and result in significant fluctuations in our profitability.

In the event that we choose not to hedge our exposure to reductions in oil and natural gas prices by purchasing futures and by using other hedging strategies, we may be subject to significant reduction in prices which couldassets or have a material negative impact on our profitability. Alternatively, we use hedging transactions with respect to a portion of our oil and natural gas production to achieve more predictable cash flow and to reduce our exposure to price fluctuations. While the use of hedging transactions limits the downside risk of price declines, their use also may limit future revenues from price increases. Hedging transactions also involve the risk that the counterparty may be unable to satisfy its obligations.

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Declines in oil and, to a lesser extent, NGL and natural gas prices, have in the past, and will continue in the future to, adversely affect our business, financial condition and results of operations may adversely affect our ability to meet our capital expenditure obligations or targets and financial commitments.

The price we receive for oil and, to a lesser extent, natural gas and NGLs, heavily influences our revenue, profitability, cash flows, liquidity, access to capital, present value and quality of reserves, the nature and scale of our operations and future rate of growth. Oil, NGL and natural gas are commodities and, therefore, their prices are subject to wide fluctuations in response to relatively minor changes in supply and demand. In recent years, the markets for oil and natural gas have been volatile. These markets will likely continue to be volatile in the future. Further, oil prices and natural gas prices do not necessarily fluctuate in direct relation to each other. In general, our financial results are more sensitive to movements in oil prices. The price of crude oil has experienced significant volatility over the last five years, with the price per barrel of West Texas Intermediate (“WTI”) crude rising from a low of $27 in February 2016 to a high of $76 in October 2018, then, in 2020, dropping below $20 per barrel due in part to reduced global demand stemming from the recent global COVID-19 outbreak, provided that pricing has since increased to over $100 per barrel prior to the filing of this Report. A prolonged period of low market prices for oil and natural gas, or further declines in the market prices for oil and natural gas, will likely result in capital expenditures being further curtailed and will adversely affect our business, financial condition and liquidity and our ability to meet obligations, targets or financial commitments and could ultimately lead to restructuring or filing for bankruptcy, which would have a material adverse effect on our stock price and indebtedness.

Our oil and gas operations are substantially dependent on the availability of water. Restrictions on our ability to obtain water may have an adverse effect on our financial condition, results of operations and cash flows.

Water is an essential component of deep shale oil and natural gas production during both the drilling and hydraulic fracturing, or fracking processes. Our oil and gas operations and future operations could be adversely impacted if we are unable to locate sufficient amounts of water or dispose of or recycle water used in our exploration and production operations. Currently, the quantity of water required in certain completion operations, such as hydraulic fracturing, and changing regulations governing usage may lead to water constraints and supply concerns (particularly in some parts of the country). As a result, future availability of water from certain sources used in the past may be limited. Moreover, the imposition of new environmental initiatives and conditions could include restrictions on our ability to conduct certain operations such as hydraulic fracturing or disposal of waste, including, but not limited to, produced water, drilling fluids and other wastes associated with the exploration, development or production of oil and natural gas. The CWA and analogous state laws impose restrictions and strict controls regarding the discharge of pollutants, including produced waters and other oil and natural gas waste, into navigable waters or other regulated federal and state waters. Permits or other approvals must be obtained to discharge pollutants to regulated waters and to conduct construction activities in such waters and wetlands. Uncertainty regarding regulatory jurisdiction over wetlands and other regulated waters has, and will continue to, complicate and increase the cost of obtaining such permits or other approvals. The CWA and analogous state laws provide for civil, criminal and administrative penalties for any unauthorized discharges of pollutants and unauthorized discharges of reportable quantities of oil and other hazardous substances. Many state discharge regulations, and the Federal National Pollutant Discharge Elimination System General permits issued by the United States Environmental Protection Agency (“EPA”), prohibit the discharge of produced water and sand, drilling fluids, drill cuttings and certain other substances related to the oil and natural gas industry into coastal waters. While generally exempt under federal programs, many state agencies have also adopted regulations requiring certain oil and natural gas exploration and production facilities to obtain permits for storm water discharges. There has been recent nationwide concern over earthquakes associated with Class II underground injection control wells, a predominant storage method for crude oil and gas wastewater. It is likely that new rules and regulations will be developed to address these concerns, possibly eliminating access to Class II wells in certain locations, and increasing the cost of disposal in others. Finally, EPA studies have previously focused on various stages of water use in hydraulic fracturing operations. It is possible that, in the future, the EPA will move to more strictly regulate the use of water in hydraulic fracturing operations. While we cannot predict the impact that these changes may have on our business at this time, they may be material to our business, financial condition, and operations. Compliance with environmental regulations and permit requirements governing the withdrawal, storage and use of surface water or groundwater necessary for hydraulic fracturing of wells or the disposal or recycling of water will increase our operating costs and may cause delays, interruptions or termination of our operations, the extent of which cannot be predicted. In addition, our inability to meet our water supply needs to conduct our completion operations may impact our business, and any such future laws and regulations could negatively affect our financial condition, results of operations and cash flows.

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If we acquire crude oil and natural gas properties in the future, our failure to fully identify existing and potential problems, to accurately estimate reserves, production rates or costs, or to effectively integrate the acquired properties into our operations could materially and adversely affect our business, financial condition and results of operations.

From time to time, we seek to acquire crude oil and natural gas properties. Although we perform reviews of properties to be acquired in a manner that we believe is duly diligent and consistent with industry practices, reviews of records and properties may not necessarily reveal existing or potential problems, and may not permit us to become sufficiently familiar with the properties in order to fully assess their deficiencies and potential. Even when problems with a property are identified, we may assume environmental and other risks and liabilities in connection with acquired properties pursuant to the acquisition agreements. Moreover, there are numerous uncertainties inherent in estimating quantities of crude oil and natural gas reserves (as discussed further below), actual future production rates and associated costs with respect to acquired properties. Actual reserves, production rates and costs may vary substantially from those assumed in our estimates. We may be unable to locate or make suitable acquisitions on acceptable terms and future acquisitions may not be effectively and profitably integrated. Acquisitions involve risks that could divert management resources and/or result in the possible loss of key employees and customers of the acquired operations. For the reasons above, among others, an acquisition may have a material and adverse effect on our business and results of operations, particularly during the periods in which the operations of the acquired properties are being integrated into our ongoing operations or if we are unable to effectively integrate the acquired properties into our ongoing operations.

If we make any acquisitions or enter into any business combinations in the future, they may disrupt or have a negative impact on our business.

If we make acquisitions or enter into any business combinations in the future, funding permitting, we could have difficulty integrating the acquired companies’ assets personnel and operations with our own. Additionally, acquisitions, mergers or business combinations we may enter into in the future (other than the Merger) could result in a change of control of the Company, and a change in the Board of Directors or officers of the Company. In addition, the key personnel of the acquired business may not be willing to work for us. We cannot predict the effect expansion may have on our core business. Regardless of whether we are successful in making an acquisition or completing a business combination, the negotiations could disrupt our ongoing business, distract our management and employees and increase our expenses. In addition to the risks described above, acquisitions and business combinations are accompanied by a number of inherent risks, including, without limitation, the following:

·

the difficulty of integrating acquired companies, concepts and operations;

·

the potential disruption of the ongoing businesses and distraction of our management and the management of acquired companies;

·

change in our business focus and/or management;

·

difficulties in maintaining uniform standards, controls, procedures and policies;

·

the potential impairment of relationships with employees and partners as a result of any integration of new management personnel;

·

the potential inability to manage an increased number of locations and employees;

·

our ability to successfully manage the companies and/or concepts acquired;

·

the failure to realize efficiencies, synergies and cost savings; or

·

the effect of any government regulations which relate to the business acquired.

Our business could be severely impaired if and to the extent that we are unable to succeed in addressing any of these risks or other problems encountered in connection with an acquisition or business combination, many of which cannot be presently identified. These risks and problems could disrupt our ongoing business, distract our management and employees, increase our expenses and adversely affect our results of operations.

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Any acquisition or business combination transaction we enter into in the future could cause substantial dilution to existing stockholders, result in one party having majority or significant control over the Company or result in a change in business focus of the Company.

Our business is subject to extensive regulation.

As many of our activities are subject to federal, state and local regulation, and as these rules are subject to constant change or amendment, our operations may be adversely affected by new or different government regulations, laws or court decisions applicable to our operations.

Government regulation and liability for environmental matters may adversely affect our business and results of operations.

Crude oil and natural gas operations are subject to extensive federal, state and local government regulations, which may be changed from time to time. Matters subject to regulation include discharge permits for drilling operations, drilling bonds, reports concerning operations, the spacing of wells, unitization and pooling of properties and taxation. From time to time, regulatory agencies have imposed price controls and limitations on production by restricting the rate of flow of crude oil and natural gas wells below actual production capacity in order to conserve supplies of crude oil and natural gas. There are federal, state and local laws and regulations primarily relating to protection of human health and the environment applicable to the development, production, handling, storage, transportation and disposal of crude oil and natural gas, byproducts thereof and other substances and materials produced or used in connection with crude oil and natural gas operations. In addition, we may inherit liability for environmental damages caused by previous owners of property we purchase or lease. As a result, we may incur substantial liabilities to third parties or governmental entities. The implementation of new, or the modification of existing, laws or regulations could have a material adverse effect on us.

The crude oil and natural gas reserves we report in our SEC filings are estimates and may prove to be inaccurate.

There are numerous uncertainties inherent in estimating crude oil and natural gas reserves and their estimated values. The reserves we report in our filings with the SEC now and in the future will only be estimates and such estimates may prove to be inaccurate because of these uncertainties. Reservoir engineering is a subjective and inexact process of estimating underground accumulations of crude oil and natural gas that cannot be measured in an exact manner. Estimates of economically recoverable crude oil and natural gas reserves dependforeclosed upon a number of variable factors, such as historical production from the area compared with production from other producing areas and assumptions concerning effects of regulations by governmental agencies, future crude oil and natural gas prices, future operating costs, severance and excise taxes, development costs and work-over and remedial costs. Some or all of these assumptions may in fact vary considerably from actual results. For these reasons, estimates of the economically recoverable quantities of crude oil and natural gas attributable to any particular group of properties, classifications of such reserves based on risk of recovery, and estimates of the future net cash flows expected therefrom prepared by different engineers or by the same engineers but at different times may vary substantially. Accordingly, reserve estimates may be subject to downward or upward adjustment. Actual production, revenue and expenditures with respect to our reserves will likely vary from estimates, and such variances may be material.

Additionally, “probable” and “possible reserve estimates” are considered unproved reserves and as such, the SEC views such estimates to be inherently unreliable, may be misunderstood or seen as misleading to investors that are not “experts” in the oil or natural gas industry. Unless you have such expertise, you should not place undue reliance on these estimates. Except as required by applicable law, we undertake no duty to update this information and do not intend to update this information.

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The calculated present value of future net revenues from our proved reserves will not necessarily be the same as the current market value of our estimated oil and natural gas reserves.

You should not assume that the present value of future net cash flows as included in our public filings is the current market value of our estimated proved oil and natural gas reserves. We generally base the estimated discounted future net cash flows from proved reserves on current costs held constant over time without escalation and on commodity prices using an unweighted arithmetic average of first-day-of-the-month index prices, appropriately adjusted, for the 12-month period immediately preceding the date of the estimate. Actual future prices and costs may be materially higher or lower than the prices and costs used for these estimates and will be affected by factors such as:

·

actual prices we receive for oil and natural gas;

·

actual cost and timing of development and production expenditures;

·

the amount and timing of actual production; and

·

changes in governmental regulations or taxation.

In addition, the 10% discount factor that is required to be used to calculate discounted future net revenues for reporting purposes under GAAP is not necessarily the most appropriate discount factor based on the cost of capital in effect from time to time and risks associated with our business and the oil and natural gas industry in general.

Crude oil and natural gas development, re-completion of wells from one reservoir to another reservoir, restoring wells to production and exploration, drilling and completing new wells are speculative activities and involve numerous risks and substantial and uncertain costs.

Our oil and gas operations will be materially dependent upon the success of our future development program. Even considering our business philosophy to avoid wildcat wells, drilling for crude oil and natural gas and reworking existing wells involves numerous risks, including the risk that no commercially productive crude oil or natural gas reservoirs will be encountered. The cost of exploration, drilling, completing and operating wells is substantial and uncertain, and drilling operations may be curtailed, delayed or cancelled as a result of a variety of factors beyond our control, including: unexpected drilling conditions; pressure or irregularities in formations; equipment failures or accidents; inability to obtain leases on economic terms, where applicable; adverse weather conditions and natural disasters; compliance with governmental requirements; and shortages or delays in the availability of drilling rigs or crews and the delivery of equipment. Furthermore, we cannot provide investors with any assurance that we will be able to obtain rights to additional producing properties in the future and/or that any properties we obtain rights to will contain commercially exploitable quantities of oil and/or gas.

Drilling or reworking is a highly speculative activity. Even when fully and correctly utilized, modern well completion techniques such as hydraulic fracturing and horizontal drilling do not guarantee that we will find crude oil and/or natural gas in our wells. Hydraulic fracturing involves pumping a fluid with or without particulates into a formation at high pressure, thereby creating fractures in the rock and leaving the particulates in the fractures to ensure that the fractures remain open, thereby potentially increasing the ability of the reservoir to produce oil or natural gas. Horizontal drilling involves drilling horizontally out from an existing vertical well bore, thereby potentially increasing the area and reach of the well bore that is in contact with the reservoir. Our future drilling activities may not be successful and, if unsuccessful, such failure would have an adverse effect on our future results of operations and financial condition. Our overall drilling success rate and/or our drilling success rate for activities within a particular geographic area may decline in the future. We may identify and develop prospects through a number of methods, some of which do not include lateral drilling or hydraulic fracturing, and some of which may be unproven. The drilling and results for these prospects may be particularly uncertain. Our drilling schedule may vary from our capital budget. The final determination with respect to the drilling of any scheduled or budgeted prospects will be dependent on a number of factors, including, but not limited to: the results of previous development efforts and the acquisition, review and analysis of data; the availability of sufficient capital resources to us and the other participants, if any, for the drilling of the prospects; the approval of the prospects by other participants, if any, after additional data has been compiled; economic and industry conditions at the time of drilling, including prevailing and anticipated prices for crude oil and natural gas and the availability of drilling rigs and crews; our financial resources and results; the availability of leases and permits on reasonable terms for the prospects; and the success of our drilling technology.

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These projects may not be successfully developed and the wells discussed, if drilled, may not encounter reservoirs of commercially productive crude oil or natural gas. There are numerous uncertainties in estimating quantities of proved reserves, including many factors beyond our control. If we are unable to find commercially exploitable quantities of oil and natural gas in any properties we may acquire in the future, and/or we are unable to commercially extract such quantities we may find in any properties we may acquire in the future, the value of our securities may decline in value.

Unless we replace our oil and natural gas reserves, our reserves and production will decline, which would adversely affect our business, financial condition and results of operations.

The rate of production from our oil and natural gas properties will decline as our reserves are depleted. Our future oil and natural gas reserves and production and, therefore, our income and cash flow, are highly dependent on our success in (a) efficiently developing and exploiting our current reserves on properties owned by us or by other persons or entities and (b) economically finding or acquiring additional oil and natural gas properties. In the future, we may have difficulty acquiring new properties. During periods of low oil and/or natural gas prices, it will become more difficult to raise the capital necessary to finance expansion activities. If we are unable to replace our production, our reserves will decrease, and our business, financial condition and results of operations would be adversely affected.

The unavailability or high cost of drilling rigs, completion equipment and services, supplies and personnel, including hydraulic fracturing equipment and personnel, could adversely affect our ability to establish and execute exploration and development plans within budget and on a timely basis, which could have a material adverse effect on our business, financial condition and results of operations.

Shortages or the high cost of drilling rigs, completion equipment and services, supplies or personnel could delay or adversely affect our operations. When drilling activity in the United States increases, associated costs typically also increase, including those costs related to drilling rigs, equipment, supplies and personnel and the services and products of other vendors to the industry. These costs may increase, and necessary equipment and services may become unavailable to us at economical prices. Should this increase in costs occur, we may delay drilling activities, which may limit our ability to establish and replace reserves, or we may incur these higher costs, which may negatively affect our business, financial condition and results of operations.

The oil and gas industry is cyclical and, from time to time, there is a shortage of drilling rigs, equipment, supplies or qualified personnel. During these periods, the costs and delivery times of rigs, equipment and supplies tend to increase, in some cases substantially. In addition, the demand for, and wage rates of, qualified drilling rig crews rise as the number of active rigs in service increases within a geographic area. If increasing levels of exploration and production result in response to strong prices of oil and natural gas, the demand for oilfield services will likely rise, and the costs of these services will likely increase, while the quality of these services may suffer. The future lack of availability or high cost of drilling rigs, as well as any future lack of availability or high costs of other equipment, supplies, insurance or qualified personnel, in the areas in which we operate could materially and adversely affect our business and results of operations.

Federal and state legislation and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays.

Hydraulic fracturing is a common practice that is used to stimulate production of hydrocarbons from tight formations. The process involves the injection of water, sand and chemicals under pressure into rock formations to fracture the surrounding rock and stimulate production. There has been increasing public controversy regarding hydraulic fracturing with regard to the transportation and use of fracturing fluids, impacts on drinking water supplies, use of waters, and the potential for impacts to surface water, groundwater, air quality and the environment generally. A number of lawsuits and enforcement actions have been initiated implicating hydraulic fracturing practices. Additional legislation or regulation could make it more difficult to perform hydraulic fracturing, cause operational delays, increase our operating costs or make it easier for third parties opposing the hydraulic fracturing process to initiate legal proceedings. New legislation or regulations in the future could have the effect of prohibiting the use of hydraulic fracturing, which would prevent us from completing our wells as planned and would have a material adverse effect on production from our wells. If these legislative and regulatory initiatives cause a material delay or decrease in our drilling or hydraulic fracturing activities, our business and profitability could be materially impacted.

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Future acquired properties may not be worth what we pay due to uncertainties in evaluating recoverable reserves and other expected benefits, as well as potential liabilities.

Successful property acquisitions require an assessment of a number of factors beyond our control. These factors include estimates of recoverable reserves, exploration potential, future natural gas and oil prices, operating costs, production taxes and potential environmental and other liabilities. These assessments are complex and inherently imprecise. Our review of the properties we acquire may not reveal all existing or potential problems. In addition, our review may not allow us to fully assess the potential deficiencies of the properties. We do not inspect every well, and even when we inspect a well, we may not discover structural, subsurface, or environmental problems that may exist or arise. There may be threatened or contemplated claims against the assets or businesses we acquire related to environmental, title, regulatory, tax, contract, litigation or other matters of which we are unaware, which could materially and adversely affect our production, revenues and results of operations. We may not be entitled to contractual indemnification for pre-closing liabilities, including environmental liabilities, and our contractual indemnification may not be effective. At times, we acquire interests in properties on an “as is” basis with limited representations and warranties and limited remedies for breaches of such representations and warranties. In addition, significant acquisitions can change the nature of our operations and business if the acquired properties have substantially different operating and geological characteristics or are in different geographic locations than our existing properties.

 

Risks Relating To An Investment In Our Securities

 

If we are unable to maintain compliance with NYSE American continued listing standards, our common stock may be delisted from the NYSE American equities market, which would likely cause the liquidity and market price of our common stock to decline.

 

Our common stock is currently listed on the NYSE American. The NYSE American will consider suspending dealings in, or delisting, securities of an issuer that does not meet its continued listing standards. If we cannot meet the NYSE American continued listing requirements, the NYSE American may delist our common stock, which could have an adverse impact on us and the liquidity and market price of our stock.

 

On February 24, 2020, weApril 12, 2023, the Company received noticea deficiency letter (the “Deficiency Notice”) from the NYSE American LLC (the “ExchanNYSE Americange”) indicating that we werethe Company was not in compliance with certain of the Exchange’sNYSE American continued listing standards as set forth in Part 10Sections 1003(a)(i), (ii) and (iii) of the NYSE American Company Guide (the “Company GuideEquity Deficiency”). Specifically, because we reportedSection 1003(a)(i) of the NYSE American Company Guide requires a listed company’s stockholders’ equity of $3.1be at least $2.0 million as of December 31, 2019 andif it has reported losses from continuing operations and/or net losses in threetwo of our fourits three most recent fiscal years then ended, we did not comply withyears. Section 1003(a)(ii) of the NYSE American Company Guide because we hadrequires a listed company’s stockholders’ equity of less than $4,000,000 andbe at least $4.0 million if it has reported losses from continuing operations and/or net losses in three of ourits four most recent fiscal years. In order to maintain our listing on the Exchange, the Exchange requested we submit a plan of compliance (the “Plan”) by March 25, 2020 addressing how we intended to regain compliance with Section 1003(a)(ii) of the Company Guide by August 24, 2021, which plan was submitted and accepted. On May 8, 2020, the Company was notified by the NYSE that the NYSE Regulation accepted the Company’s plan to regain compliance with the Exchange’s continued listing standards set forth in Section 1003(a)(ii)(iii) of the NYSE American Company Guide requires a listed company’s stockholders’ equity be at least $6.0 million if it has reported losses from continuing operations and/or net losses in its five most recent fiscal years. The Deficiency Notice noted that the Company reported stockholders’ deficit of $(17.1) million as of December 31, 2022, and losses from continuing operations and/or net losses in its five most recent fiscal years then ended.  In response to the Deficiency Notice the Company submitted a Continued Listing Compliance Plan (the “Company GuideCompliance Plan”) by August 24, 2021, subject to periodic reviewthe NYSE outlining the Company’s intent and plan to remedy the Equity Deficiency and regain compliance prior to the NYSE’s required deadline of April 12, 2024, which was confirmed as accepted by the NYSE for complianceon or about June 21, 2023.

As required by the NYSE as a condition of accepting the Compliance Plan, the Company submitted quarterly reports to the NYSE following the Company’s filing with the initiatives set forthSecurities and Exchange Commission (“SEC”) of its Quarterly Reports on Form 10-Q for the quarters ended 6/30/2023 and 9/30/2023 (the “Q3 10-Q”), which were accepted by the NYSE on October 25, 2023 and January 10, 2024, respectively.  The balance sheet within Q3 10-Q reflected a stockholders’ equity position of $29,189,192 as of 9/30/2023. As disclosed in the plan. Ifbalance sheet included herein, the Company’s stockholders’ equity position as of 12/31/2023 was $24,297,733.  With the stockholders’ equity position being greater than $6.0 million for two consecutive quarters the Company isanticipates the NYSE recognizing the Company has cured the Equity Deficiency within the required timeframe.  If, however, the NYSE does not in compliance withformally recognize the continued listing standards by August 24, 2021,Equity Deficiency as being cured, or if the Company does not make progress consistent with the plan during the plan period, the NYSE staff may initiate delisting proceedings as appropriate. We are continuing to make progress with our plan of compliance as previously submitted to the NYSE. During the plan period, we are able to continue our listing and will be subject to continued periodic review by the Exchange staff. If we do not make progress consistent with the Plan during the plan period, we will be subject to delisting procedures as set forth in the Company Guide. Pursuant to a letter dated January 21, 2021, the Exchange advised the Company is back in compliance with all of the Exchange’sviolates another continued listing standards set forth in Company Guide. Specifically, the Company has resolved the continued listing deficiency with respect to Section 1003(a)(ii)standard, it might cause a delisting of the Company Guide referenced in the Exchange’s letter dated February 24, 2020. The Company is subject to NYSE Regulation’s normal continued listing monitoring, and in accordance with Section 1009(h) of the Company Guide, if the Company is again determined to be below any of the continued listing standards within 12 months of the date of the January 21, 2021 letter, the Exchange will examine the relationship between the two incidents of noncompliance and re-evaluate the Company’s method of financial recovery from the first incident. NYSE Regulation will then take the appropriate action, which, depending on the circumstances, may include truncating the compliance procedures described Section 1009 of the Company Guide or immediately initiating delisting proceedings.our common stock.  

 

 
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On May 21, 2021, we received notice from the Exchange that the Company is not in compliance with the Exchange’s continued listing standards as set forth in Section 1007 of the Company given the Company failed to timely file (the “Filing Delinquency”) its Form 10-K for the 9-month transition period ended December 31, 2020 (the “Report”). We believe this delinquency will be cured via the filing of this Report.

The Company previously filed a Form 12b-25 with the Securities and Exchange Commission on May 6, 2021, to extend the due date for the Report. The Form 12b-25 disclosed that the Report was unable to be filed on time due to delays in assembling the financial information required to be reviewed by the Company’s independent auditor, and in completing the accounting of certain transactions affecting the Company. Such further delay in filing the Report past the deadline set forth in the Form 12b-25 is due to issues that have arisen in connection with (i) finalizing the determination of the fair values of both assets and liabilities associated with the Company’s acquisition of a controlling interest in Viking Energy Group, Inc. in December of 2020, and (ii) key personnel changes at the Company’s independent auditing firm. The Company is taking steps to complete the required accounting and plans to file the Report as soon as practicable.

During the six-month period from the date of the Filing Delinquency (the “Initial Cure Period”), the Exchange will monitor the Company and the status of the Report and any subsequent delayed filings, including through contact with the Company, until the Filing Delinquency is cured. If the Company fails to cure the Filing Delinquency within the Initial Cure Period, the Exchange may, in the Exchange’s sole discretion, allow the Company’s securities to be traded for up to an additional six-month period (the “Additional Cure Period”) depending on the Company’s specific circumstances. If the Exchange determines an Additional Cure Period is not appropriate, suspension and delisting procedures will commence in accordance with the procedures set out in Section 1010 hereof. If the Exchange determines that an Additional Cure Period of up to six months is appropriate and the Company fails to file its Delinquent Report and any subsequent delayed filings by the end of that period, suspension and delisting procedures will generally commence.

If we are unable to retain compliance with the NYSE American criteria for continued listing, our common stock would be subject to delisting. A delisting of our common stock could negatively impact us by, among other things, reducing the liquidity and market price of our common stock and reducing the number of investors willing to hold or acquire our common stock, which could negatively impact our ability to raise equity financing. In addition, delisting from the NYSE American might negatively impact our reputation and, as a consequence, our business.  Additionally,It would also be a default under the Outstanding Notes and Discover would be able to enforce all relevant security and foreclose on the Company’s assets. Further, if we were delisted from the NYSE American and we are not able to list our common stock on another national exchange we will no longer be eligible to use Form S-3 registration statements (we are currently not eligible to use Form S-3 until potentially in mid-2023 due to late filings) and will instead be required to file a Form S-1 registration statement for any primary or secondary offerings of our common stock, which would delay our ability to raise funds in the future, may limit the type of offerings of common stock we could undertake, and would increase the expenses of any offering, as, among other things, registration statements on Form S-1 are subject to SEC review and comments whereas take downs pursuant to a previously filed Form S-3 are not.

 

If we are delisted from the NYSE American, your ability to sell your shares of our common stock would also be limited by the penny stock restrictions, which could further limit the marketability of your shares.

 

If our common stock is delisted from the NYSE American, it would come within the definition of “penny stock” as defined in the Exchange Act and would be covered by Rule 15g-9 of the Exchange Act. That Rule imposes additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and accredited investors. For transactions covered by Rule 15g-9, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser’s written agreement to the transaction prior to the sale. Consequently, Rule 15g-9, if it were to become applicable, would affect the ability or willingness of broker-dealers to sell our securities, and accordingly would affect the ability of stockholders to sell their securities in the public market. These additional procedures could also limit our ability to raise additional capital in the future.

 

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We do not intend to pay cash dividends to our stockholders.

 

We currently anticipate that we will retain all future earnings, if any, to finance the growth and development of our business. We do not intend to pay cash dividends in the foreseeable future. Any payment of cash dividends will depend upon our financial condition, capital requirements, earnings and other factors deemed relevant by our Board of Directors. As a result, only appreciation of the price of our common stock, which may not occur, will provide a return to our stockholders.

 

We currently have a volatile market for our common stock, and the market for our common stock is and may remain volatile in the future.

 

We currently have a highly volatile market for our common stock, which market is anticipated to remain volatile in the future. Factors that could affect our stock price or result in fluctuations in the market price or trading volume of our common stock include:

 

 

·

our actual or anticipated operating and financial performance and drilling locations, including reserve estimates;

 

 

 

 

·

quarterly variations in the rate of growth of our financial indicators, such as net income/loss per share, net income/loss and cash flows, or those of companies that are perceived to be similar to us;

 

 

 

 

·

changes in revenue, cash flows or earnings estimates or publication of reports by equity research analysts;

 

 

 

 

·

speculation in the press or investment community;

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·

public reaction to our press releases, announcements and filings with the SEC;

 

 

 

 

·

sales of our common stock by us or other stockholders, or the perception that such sales may occur;

 

 

 

 

·

the amount of our freely tradable common stock available in the public marketplace;

 

 

 

 

·

general financial market conditions and oil and natural gas industry market conditions, including fluctuations in commodity prices;

 

 

 

 

·

the realization of any of the risk factors that we are subject to;

 

 

 

 

·

the recruitment or departure of key personnel;

 

 

 

 

·

commencement of, or involvement in, litigation;

 

 

 

 

·

the prices of oil and natural gas;

 

 

 

 

·

the success of our exploration and development operations, and the marketing of any oil and natural gas we produce;

 

 

 

 

·

changes in market valuations of companies similar to the Company; and

 

 

 

 

·

domestic and international economic, public health, legal and regulatory factors unrelated to our performance.

 

Our common stock is listed on the NYSE American under the symbol “CEI.” Our stock price may be impacted by factors that are unrelated or disproportionate to our operating performance. The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.

 

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These broad market fluctuations may adversely affect the trading price of our common stock. Additionally, general economic, political, public health and market conditions, such as recessions, interest rates or international currency fluctuations, or global virus outbreaks may adversely affect the market price of our common stock. You should exercise caution before making an investment in us.

 

A prolonged decline in the market price of our common stock could affect our ability to obtain additional financing which would adversely affect our operations.

 

Historically, we have relied on equity and debt financing as primary sources of financing. A prolonged decline in the market price of our common stock or a reduction in our accessibility to the global markets may result in our inability to secure additional financing which would have an adverse effect on our operations.

 

Nevada law and our Articles of Incorporation authorize us to issue shares of stock which shares may cause substantial dilution to our existing stockholders.

 

We have authorized capital stock consisting of 1,000,000,000500,000,000 shares of common stock, $0.001 par value $0.001 per share, and 10,000,000 shares of preferred stock, $0.001 par value $0.001 per share. As of May 16, 2022 , weMarch 20, 2024, Camber had (i) 414,290,116148,940,299 shares of common stock outstanding andoutstanding; (ii) 28,092 designated Series A Convertible Preferred Stock (“Series A Preferred Stock”), 28,092 of which were outstanding; (iii) 5,200 designated shares of Series C Preferred Stock, 1,60530 of which were outstanding; (iv) 25,000 designated shares of Series G Redeemable Convertible Preferred Stock (“Series G Preferred Stock”), 5,272 of which were outstanding, (iii) 25,000 authorized shares ofand; (v) 2,075 designated Series GH Convertible Preferred Stock (“Series H Preferred Stock”), 275 of which 7,908 were outstanding (each as described in greater detail below under “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Description of Capital Stock”). As a result, our Board of Directors has the ability to issue a large number of additional shares of common stock without stockholder approval, subject to the requirements of the NYSE American (which generally require stockholder approval for any transactions which would result in the issuance of more than 20% of our then outstanding shares of common stock or voting rights representing over 20% of our then outstanding shares of stock), which if issued could cause substantial dilution to our then stockholders. Shares of additional preferred stock may also be issued by our Board of Directors without stockholder approval, with voting powers and such preferences and relative, participating, optional or other special rights and powers as determined by our Board of Directors, which may be greater than the shares of common stock currently outstanding. As a result, shares of preferred stock may be issued by our Board of Directors which cause the holders to have majority voting power over our shares, provide the holders of the preferred stock the right to convert the shares of preferred stock they hold into shares of our common stock, which may cause substantial dilution to our then common stock stockholders and/or have other rights and preferences greater than those of our common stock stockholders. Investors should keep in mind that the Board of Directors has the authority to issue additional shares of common stock and preferred stock, which could cause substantial dilution to our existing stockholders. Additionally, the dilutive effect of any preferred stock which we may issue may be exacerbated given the fact that such preferred stock may have super voting rights and/or other rights or preferences which could provide the preferred stockholders with substantial voting control over us subsequent to the date of this filing and/or give those holders the power to prevent or cause a change in control. As a result, the issuance of shares of common stock and/or Preferred Stock may cause the value of our securities to decrease and/or become worthless.

 

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Stockholders may be diluted significantly through our efforts to obtain financing and/or satisfy obligations through the issuance of additional shares of our common stock.

 

Wherever possible, our Board of Directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of shares of our common stock. Subject to certain consent rights of the holder of our Series C Preferred Stock, our Board of Directors has authority, without action or vote of the stockholders, to issue all or part of the authorized but unissued shares of common stock (subject to NYSE American rules which limit among other things, the number of shares we can issue without stockholder approval to no more than 20% of our outstanding shares of common stock, subject to certain exceptions). These actions will result in dilution of the ownership interests of existing stockholders, and that dilution may be material.

 

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If persons engage in short sales of our common stock, including sales of shares to be issued upon exercise of our outstanding warrants, convertible debentures and preferred stock, the price of our common stock may decline.

 

Selling short is a technique used by a stockholder to take advantage of an anticipated decline in the price of a security. In addition, holders of options, warrants and other convertible securities will sometimes sell short knowing they can, in effect, cover through the exercise or conversion of options, warrants and other convertible securities, thus locking in a profit. A significant number of short sales or a large volume of other sales within a relatively short period of time can create downward pressure on the market price of a security. Further sales of common stock issued upon exercise or conversion of options, warrants and other convertible securities could cause even greater declines in the price of our common stock due to the number of additional shares available in the market upon such exercise/conversion, which could encourage short sales that could further undermine the value of our common stock. You could, therefore, experience a decline in the value of your investment as a result of short sales of our common stock.

 

The market price for our common stock may be volatile, and our stockholders may not be able to sell our stock at a favorable price or at all.

 

Many factors could cause the market price of our common stock to rise and fall, including: actual or anticipated variations in our quarterly results of operations; changes in market valuations of companies in our industry; changes in expectations of future financial performance; fluctuations in stock market prices and volumes; issuances of dilutive common stock or other securities in the future; the addition or departure of key personnel; announcements by us or our competitors of acquisitions, investments or strategic alliances; and the increase or decline in the price of oil and natural gas.

 

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Substantial sales of our common stock, or the perception that such sales might occur, could depress the market price of our common stock.

 

We cannot predict whether future issuances of our common stock or resales in the open market will decrease the market price of our common stock. The impact of any such issuances or resales of our common stock on our market price may be increased as a result of the fact that our common stock is thinly, or infrequently, traded. The exercise of any options that we have or that we may grant to directors, executive officers and other employees in the future, the issuance of common stock in connection with acquisitions and other issuances of our common stock (including shares previously registered in our registration statements and prospectus supplements, and/or in connection with future registration statements or prospectus supplements) could have an adverse effect on the market price of our common stock. In addition, future issuances of our common stock may be dilutive to existing stockholders. Any sales of substantial amounts of our common stock in the public market, or the perception that such sales might occur, could lower the market price of our common stock.

 

We incur significant costs as a result of operating as a fully reporting publicly traded company and our management is required to devote substantial time to compliance initiatives.

 

We incur significant legal, accounting and other expenses in connection with our status as a fully reporting public company. Specifically, we are required to prepare and file annual, quarterly and current reports, proxy statements and other information with the SEC. Additionally, our officers, directors and significant stockholders are required to file Forms 3, 4 and 5 and Schedules 13D/G with the SEC disclosing their ownership of the Company and changes in such ownership. Furthermore, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and rules subsequently implemented by the SEC have imposed various new requirements on public companies, including requiring changes in corporate governance practices. In addition, the Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure of controls and procedures. The costs and expenses of compliance with SEC rules and our filing obligations with the SEC, or our identification of deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses, could materially adversely affect our results of operations or cause the market price of our stock to decline in value.

 

Securities analyst coverage or lack of coverage may have a negative impact on our common stock’s market price.

 

The trading market for our common stock will depend, in part, on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If securities or industry analysts stop their coverage of us or additional securities and industry analysts fail to cover us in the future, the trading price for our common stock would be negatively impacted. If any analyst or analysts who cover us downgrade our common stock, changes their opinion of our shares or publishes inaccurate or unfavorable research about our business, our stock price would likely decline. If any analyst or analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease and we could lose visibility in the financial markets, which could cause our stock price and trading volume to decline.

 

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Due to the fact that our common stock is listed on the NYSE American, we are subject to financial and other reporting and corporate governance requirements which increase our cost and expenses.

 

We are currently required to file annual and quarterly information and other reports with the SEC that are specified in Sections 13 and 15(d) of the Exchange Act. Additionally, due to the fact that our common stock is listed on the NYSE American, we are also subject to the requirements to maintain independent directors, comply with other corporate governance requirements and are required to pay annual listing and stock issuance fees. These obligations require a commitment of additional resources including, but not limited, to additional expenses, and may result in the diversion of our senior management’s time and attention from our day-to-day operations. These obligations increase our expenses and may make it more complicated or time consuming for us to undertake certain corporate actions due to the fact that we may require the approval of the NYSE American for such transactions and/or NYSE American rules may require us to obtain stockholder approval for such transactions.

 

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You may experience future dilution as a result of future equity offerings or other equity issuances.

 

We may in the future issue additional shares of our common stock or other securities convertible into or exchangeable for our common stock.

 

Risks Relating to Our Series C Preferred Stock

 

The full amount of premiums, interest and dividends through the maturity date of our Series C Preferred Stock is due upon the repayment/redemption or conversion, as applicable, of the Series C Preferred Stock.

 

The Series C Preferred Stock provides that all applicable dividends, which initially accrued in the amount of 24.95% per annum and which increase or decrease subject to the terms of the Series C Preferred Stock, based on among other things, the trading price of the Company’s common stock, up to a maximum of 34.95% per annum, are due upon conversion or repayment/redemption (where applicable) thereof, for the full seven-year term of such securities.

 

The requirement that we pay all premiums and dividends through maturity and the adjustable nature of such premium and dividend rates, may force us to issue the holders significant additional shares of common stock, which may cause significant dilution to existing stockholders. Pursuant to the Third Amended and Restated Certificate of Designation, the Company has the option to redeem any or all shares of Series C Preferred Stock by paying Holder, in registered or unregistered shares of Common Stock valued at an amount per share equal to 100% of the Liquidation Value for the shares redeemed, and the Corporation will use its best efforts to register such shares.

 

The number of shares of common stock issuable in consideration for premiums, interest and dividends through maturity on the Series C Preferred Stock continue to be adjustable after the conversion of such securities.

 

Pursuant to the terms of the Series C Preferred Stock, the conversion rate of such securities in connection with the premiums and dividends due on such securities through maturity (7 years, regardless of when converted), continues to be adjustable after the issuance of such securities. Specifically, such securities remain adjustable, based on a discount to the lowest daily volume weighted average price during a measuring period for a period of 30 or 60 days (depending on whether or not a Triggering Event has occurred, and potentially longer if certain equity conditions are not satisfied) after the applicable number of shares stated in the initial conversion notice have actually been received into the holder’s designated brokerage account in electronic form and fully cleared for trading (subject to certain extensions described in the applicable securities). Because the holders of the Series C Preferred Stock are limited to holding not more than 9.99% of the Company’s common stock upon exercise/conversion of any security, they may not receive all of the shares due upon any conversion, until it has sold shares and been issued additional shares and as such, the beginning date for the applicable 30 or 60 day period after conversion is impossible to determine and may be a significant additional number of days after the initial conversion.

 

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In the event of a decrease in the Company’s stock price during the applicable measuring periods, the conversion rate of the premiums and dividends due on such applicable securities will adjust downward and holders of Series C Preferred Stock would be due additional shares of common stock for their conversions, which issuances may cause further significant dilution to existing stockholders and the sale of such shares may cause the value of the Company’s common stock to decline in value. Furthermore, it is likely that the sale by holders of the shares of common stock received in connection with any conversion, during the applicable measuring period, will cause the value of the Company’s common stock to decline in value and the conversion rate to decrease and will result in holder being due additional shares of common stock during the measuring period, which will trigger additional decreases in the value of the Company’s common stock upon further public sales. If this were to occur, holder would be entitled to receive an increasing number of shares, upon conversion of the remaining securities, which could then be sold, triggering further price declines and conversions for even larger numbers of shares, which would cause additional dilution to our existing stockholders and would likely cause the value of our common stock to decline.

 

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The issuance of common stock upon conversion of the Series C Preferred Stock will cause immediate and substantial dilution and the sale of such stock will cause significant downward pressure on our stock price.

 

The issuance of common stock upon conversion of the Series C Preferred Stock will result in immediate and substantial dilution to the interests of other stockholders. Although holders may not receive shares of common stock exceeding 9.99% of our outstanding shares of common stock immediately after affecting such conversion, this restriction does not prevent holders from receiving shares up to the 9.99% limit, selling those shares, and then receiving the rest of the shares it is due, in one or more tranches, while still staying below the 9.99% limit. If holders choose to do this, it will cause substantial dilution to the then holders of our common stock. Additionally, the continued sale of shares issuable upon successive conversions will likely create significant downward pressure on the price of our common stock as holders sells material amounts of our common stock over time and/or in a short period of time. This could place further downward pressure on the price of our common stock and in turn result in holders receiving an ever-increasing number of additional shares of common stock upon conversion of its securities, and adjustments thereof, which in turn will likely lead to further dilution, reductions in the exercise/conversion price of holders securities and even more downward pressure on our common stock, which could lead to our common stock becoming devalued or worthless.

 

Holders of Series C Preferred Stock Hold a Liquidation Preference in the Company.

 

Upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, after payment or provision for payment of debts and other liabilities of the Company, prior to any distribution or payment made to the holders of Preferred Stock or Common Stock by reason of their ownership thereof, the Holders of Series C Preferred Stock will be entitled to be paid out of the assets of the Company available for distribution to its stockholders an amount with respect to each share of Series C Preferred Stock equal to $10,000.00, plus an amount equal to any accrued but unpaid Dividends thereon. Because the dividends currently require that interest be paid on the Face Value of between 24.95% and 34.95% per annum, for the entire seven-year term of the Series C Preferred Stock (even if payable sooner than seven years after the issuance date), the total liquidation value required to be paid to Discover upon a liquidation, dissolution or winding up of the Company is approximately $133.9$1.03 million. BecauseIf our  net assets total less than $133.9$1.03 million, it is likely that our common stockholders would not receive any amount in the event the Company was liquidated, dissolved or wound up, and the Series C Preferred shareholders would instead receive the entire amount of available funds after liquidation.

 

If the Company determines to liquidate, dissolve or wind-up its business and affairs, or upon closing or occurrence of any Deemed Liquidation Event, the Company will to the extent allowed under applicable law, but thereafter, prior to or concurrently with the closing, effectuation or occurrence any such action, redeem the Series C Preferred Stock for cash, by wire transfer of immediately available funds to an account designated by Holder, at the Early Redemption Price (defined below) if the event is prior to the Dividend Maturity Date, or at the Liquidation Value if the event is on or after the Dividend Maturity Date. Notwithstanding any other provision, the Company will not be required to redeem any shares of Series C Preferred Stock for cash solely because the Company does not have sufficient authorized but unissued shares of Common Stock to issue upon receipt of a Delivery Notice, upon a maturity conversion, or for any other reason that is not solely within the control of the Company.

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A “Deemed Liquidation Event” means: (a) a merger or consolidation in which the Company is a constituent party or a subsidiary of the Company is a constituent party and the Company issues shares of its capital stock pursuant to such merger or consolidation, except (i) any such merger or consolidation involving the Company or a subsidiary in which the Company is the surviving or resulting Company, (ii) any merger effected exclusively to change the domicile of the Company, (iii) any transaction or series of transactions in which the holders of the voting securities of the Company outstanding immediately prior to such transaction continue to retain more than 50% of the total voting power of such surviving entity, or (iv) the merger with Viking; (b) Company issues convertible or equity securities that are senior to the Series C Preferred Stock in any respect, other than the securities issued in the Merger; (c) Holder does not receive the number of Conversion Shares stated in a Delivery Notice with 5 Trading Days of the notice due to the occurrence of an event that is solely within the control of the Company and excluding any event that is not solely within the control of the Company; (d) trading of the Common Stock is halted or suspended by the Trading Market or any U.S. governmental agency for 10 or more consecutive trading days, due to the occurrence of an event that is solely within the control of the Company and excluding any event that is not solely within the control of the Company; or (e) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any subsidiary of the Company of all or substantially all the assets of the Company and its subsidiaries taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Company if substantially all of the assets of the Company and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where one or more Holders initiate consideration of and vote upon a proposal for such sale, lease, transfer, exclusive license or other disposition, or it is to a wholly owned subsidiary of the Company, other than the Merger and except otherwise agreed to by holders holding a majority of the then outstanding Series C Preferred Stock.

 

The “Early Redemption Price” is the sum of the following: (a) 100% of the Face Value, plus (b) the Conversion Premium, minus (c) any Dividends that have been paid, for each share of Series C Preferred Stock redeemed.

 

The “Conversion Premium” for each share of Series C Preferred Stock means the Face Value, multiplied by the product of (i) the applicable Dividend Rate, and (ii) the number of whole years between the Issuance Date and the Dividend Maturity Date.

 

The “Dividend Maturity Date” means the date that is 7 years after the Issuance Date.

 

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Holders of our Series C Preferred Stock effectively have the ability to consent to any material transaction involving the Company.

 

Due to the restrictions placed on the Company as a result of the Series C Preferred Stock, including, but not limited to the significant liquidation preference discussed above and the fact that, as long as there are any issued and outstanding shares of Series C Preferred Stock, we agreed that we would not issue or enter into or amend an agreement pursuant to which we may issue any shares of common stock, other than (a) for restricted securities with no registration rights, (b) in connection with a strategic acquisition, (c) in an underwritten public offering, or (d) at a fixed price; or issue or amend any debt or equity securities convertible into, exchangeable or exercisable for, or including the right to receive, shares of common stock (i) at a conversion price, exercise price or exchange rate or other price that is based upon or varies with, the trading prices of or quotations for the shares of common stock at any time after the initial issuance of the security or (ii) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of the security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the common stock. Holder has to effectively consent to any material transaction involving the Company. In the event holders do not consent to any such transaction, we may be prohibited (either effectively or otherwise) from completing a material transaction in the future, including, but not limited to a combination or acquisition which may be accretive to stockholders. Furthermore, holders may condition the approval of a future transaction, which conditions may not be favorable to stockholders.

 

Some of ourOur Series C Preferred Stockholders have rights of first refusal to provide further funding and favored nationStockholder has favored-nation rights.

 

We have granted the Investor a right of first offer to match any offer for financing we receive from any person while the shares ofagreed with our Series C Preferred Stock sold pursuant to the June 2020 Purchase Agreement are outstanding, except for debt financings not convertible into common stock, which are excluded from such right to match. Such right of first refusal may delay or prevent us from raising funding in the future.

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We have also agreed with some of Series C Preferred Stock holdersholder that if we issue any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to the Series C Preferred Stock holder, then we would notify Series C Preferred Stock holder of such additional or more favorable term and such term, at the holder’s option, may become a part of the transaction documents with the holder, including the Series C Preferred Stock and the agreements relating to the sale thereof. Such favored nations provisions may make it more costly to complete transactions in the future, may prevent future transactions from occurring and/or may provide the holders additional rights than they currently have, all of which may cause significant dilution to existing stockholders, and/or cause the value of our common stock to decline in value.

 

The holders of our Series C Preferred Stock, subject to applicable contractual restrictions, and/or a third party, may sell short our common stock, which could have a depressive effect on the price of our common stock.

 

The holders of our Series C Preferred Stock are currently prohibited from selling the Company’s stock short; however, in the event a trigger event occurs under the Series C Preferred Stock such restriction is waived. Additionally, nothing prohibits a third party from selling the Company’s common stock short based on their belief that due to the dilution caused by the conversions of our Series C Preferred Stock, that the trading price of our common stock will decline in value. The significant downward pressure on the price of our common stock as any of our Series C Preferred Stockholders sell material amounts of our common stock could encourage investors to short sell our common stock. This could place further downward pressure on the price of our common stock and in turn result in our Series C Preferred Stock holdersStockholders receiving additional shares of common stock upon exercise/conversion of its securities, and adjustments thereof.

 

Item 1C. Cybersecurity

The Company’s CEO, James Doris, holds Viking preferred stock which, upon termination from Camber could afford him enough shareholder votes to control Viking, and dilute Camber’s ownership interest below 51%.Board Oversight of Cybersecurity Matters

 

The Company’s CEOBoard of Directors recognizes the critical importance of developing, implementing, and director, James Doris, holds 28,092 shares of Viking’s Series C Preferred Stock, with each share of Viking preferred stock entitlingmaintaining a robust cybersecurity risk management strategy and governance program in order to safeguard the holder to convert such share of Viking preferred stock into 28,092 shares of Viking common stock,confidentiality, integrity and entitling the holder to 37,500 votes on all matters submitted to a vote of the stockholders of the Corporation on the later of: (i) July 1, 2022; or (ii) the date on which Camber Energy, Inc. (“Camber”) no longer owns or is entitled to own at least 51% of the outstanding shares of the Corporation’s Common Stock. By virtue of such preferred stock ownership, and the possibility of Camber owning less than 51% of the outstanding shares of common stock of the Company after July 1, 2022, Mr. Doris could control the election of the membersavailability of the Company’s Boardsystems and information. The Board’s Audit Committee is tasked with overseeing cybersecurity threats, risk management strategy and governance. The management of Directorscybersecurity risk has been integrated into the Company’s overall risk management processes.

Management of Cybersecurity Matters

The Company’s management is responsible for assessing, identifying and generally exercise control overmanaging cybersecurity risks, threats and incidents. The Company has no internal IT function and engages third party providers that possess the affairs of Viking. Pursuantrequisite skills, systems and processes to effectively manage day-to-day IT operations, including cybersecurity.  This includes, but is not limited to:

·

Employing appropriate incident prevention and detection software (e.g., antivirus, anti-malware, firewall, endpoint detection and response, identity and access management, multifactor authentication, virtual private network, web content filter, spam filter, data loss protection software, security information and event management software);

·

Employing industry-standard encryption protocols;

·

Employing backup/disaster recovery software;

·

Conducting regular vulnerability scans of Company systems and networks.

Cybersecurity incidents are communicated to the December 23 Purchase Agreement, wherebyCompany’s senior management, including the Company acquired 51%CEO and CFO, who direct the Company’s response with the assistance of Viking, Viking is generally obligated (subject to certain limitations) to issue additional sharesthird-party specialists. Management notifies the Audit Committee of Viking common stock to Camber to ensure that Camber shall own at least 51%any cybersecurity incidents, including the nature of the common stock of Viking through July 1, 2022, which effectively prohibits Mr. Doris from obtaining control overincident, the affairs of Viking at least until July 1, 2022. There can be no assurance that after July 1, 2022, conflicts of interest will not arise with respectCompany’s remediation actions and any required improvements and changes to Mr. Doris’s ownership of the preferred stock, or that such conflicts will be resolved in a manner favorable to the Company.systems and processes.

 

Item 2. PropertiesMaterial Impact on Company

 

Effective December 23, 2020, the Company relocated its offices to 15915 Katy Freeway, Suite 450, Houston, Texas 77094, the current registered office of Viking, consolidating all administrative functions in one location. The Company terminated its month-to-month lease at 1415 Louisiana, Suite 3500, Houston, Texas, 77002.has not been materially affected by, and is not likely to be materially affected by, any significant cybersecurity incidents.

 

 
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Item 2. Properties

Effective December 1, 2023, the Company relocated its offices to 12 Greenway Plaza, Suite 1100, Houston, Texas 77046.

Through Simson-Maxwell, the Company has 7 locations in Western Canada, consisting of (i) Port Coquitlam, British Columbia; (ii) Edmonton, Alberta; (iii) Calgary, Alberta; (iv) Nanaimo, British Columbia; (v) Prince George, British Columbia; (vi) Fort St. John, British Columbia; and (vii) Terrace, British Columbia.

Oil and Natural Gas Properties

 

Current OperationsOil and Business Information - CamberNatural Gas Reserves at December 31, 2023 and 2022

 

As of December 31, 2021, the Company had leasehold interests (working interests) in properties producing from the Cline2023, all of our proved oil and Wolfberry formations, which were producing an average of approximately 43.7 net barrels of oil equivalent per day (“BOEPD”) from 18 active well bores. The ratio between the gross and net production varies due to varied working interests and net revenue interests in each well. Our production sales totaled 7,994 BOE, net to our interest, for the year ended December 31, 2021. At December 31, 2021, Camber’s total estimated proved producingnatural gas reserves were approximately 73,800 BOE,located in the United States, in the State of which 48,400 Bbls were crude oil and NGL reserves and 152,400 Mcf were natural gas reserves.Texas. 

 

The following tables set forth summary information with respect to Camber’sour proved reserves as of December 31, 2021.2023 and 2022. For additional information see Supplemental Information “Oil and Natural Gas Producing Activities (Unaudited)” to our consolidated financial statements in “Item 8-Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Under SEC reporting requirements, proved undeveloped reserves include only those reserves in which the Company has current plans to develop, generally within five years. 

 

 

Proved Reserves at December 31, 2023

 

Reserves Category

 

Crude Oil

(BBLs)

 

 

NGL

(BBLs)

 

 

Natural Gas

(MCF)

 

 

Total Proved

(BOE) (1)

 

 

Crude Oil

(BBLs)

 

 

Natural Gas (MCF)

 

 

Total Proved

(BOE) (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proved Reserves

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Developed

 

48,400

 

-

 

152,400

 

73,800

 

 

34,250

 

160,770

 

61,045

 

Developed Non-Producing

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

-

 

 

 

 

 

Undeveloped

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Proved Reserves

 

 

48,400

 

 

 

-

 

 

 

152,400

 

 

 

73,800

 

 

 

34,250

 

 

 

160,770

 

 

 

61,045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated Future Net Cash Flows

 

 

 

 

 

 

 

$2,251,600

 

 

 

 

-

 

$1,608,240

 

10% annual discount for estimated timing of cash flows

 

 

 

 

 

 

 

 

(993,600)

 

 

 

 

 

 

(669,870)

Standardized Measure of Discounted Future Net Cash Flows - (PV10) (2)

 

 

 

 

 

 

 

$1,258,000

 

Discounted Future Net Cash Flows - (PV10) (2)

 

 

 

 

 

$938,370

 

 

 

Proved Reserves at December 31, 2022

 

Reserves Category

 

Crude Oil

(BBLs)

 

 

Natural Gas (MCF)

 

 

Total Proved

(BOE) (1)

 

 

 

 

 

 

 

 

 

 

 

Proved Reserves

 

 

 

 

 

 

 

 

 

Developed

 

 

105,375

 

 

 

-

 

 

 

105,375

 

Developed Non-Producing

 

 

21,369

 

 

 

-

 

 

 

21,369

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Proved Reserves

 

 

126,744

 

 

 

-

 

 

 

126,744

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated Future Net Cash Flows

 

 

 

 

 

 

 

 

 

$4,503,786

 

10% annual discount for estimated timing of cash flows

 

 

 

 

 

 

 

 

 

 

(1,532,187)

Discounted Future Net Cash Flows - (PV10) (2)

 

 

 

 

 

 

 

 

 

$2,971,599

 

 

(1) - BOE (barrels of oil equivalent) is calculated by a ratio of 6 MCF to 1 BBL of Oil

(2) - PV-10 represents the discounted future net cash flows attributable to our proved oil and natural gas reserves discounted at 10%. PV-10 of our total year-end proved reserves is considered a non-US GAAP financial measure as defined by the SEC. We believe that the presentation of the PV-10 is relevant and useful to our investors because it presents the discounted future net cash flows attributable to our proved reserves.reserves without consideration of income tax affects. We further believe investors and creditors use our PV-10 as a basis for comparison of the relative size and value of our reserves to other companies. 

 

 
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Net Production, Unit Prices and Costs

 

The following table presents certain information with respect to oil and natural gas production attributable to our interests in all of our properties in the United States, the revenue derived from the sale of such production, average sales prices received and average production costs during the yearyears ended December 31, 20212023 and 2022. All production and expense data includes the nine months endedresults of Mid-Con Petroleum and Mid-Con Drilling through November 5, 2023 and Petrodome through December 31, 2020.1, 2023, the respective dates of disposition.

 

 

Unit of

 

December 31,

 

December 31,

 

 

Unit of

 

December 31,

 

 

Measure

 

2021

 

 

2020

 

 

Measure

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil

 

Barrels

 

4,242

 

3,319

 

 

Barrels

 

12,348

 

24,510

 

Natural Gas

 

Mcf

 

13,067

 

11,093

 

 

Mcf

 

 

5,589

 

 

 

205,374

 

NGL

 

Gallons

 

 

131,048

 

 

 

118,697

 

BOE

 

 

 

 

9,449

 

 

 

7,994

 

 

 

 

 

13,280

 

 

 

58,739

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil

 

Barrels

 

$273,234

 

$109,570

 

 

Barrels

 

 

12,348

 

 

 

2,254,134

 

Natural Gas

 

Mcf

 

40,186

 

13,910

 

 

Mcf

 

 

5,589

 

 

 

978,971

 

NGL

 

Gallons

 

 

87,802

 

 

 

27,333

 

 

 

 

$401,222

 

 

$150,813

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Sales Prices

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil

 

Barrels

 

$64.41

 

 

$33.01

 

 

Barrels

 

 

73.83

 

 

 

91.97

 

Natural Gas

 

Mcf

 

$3.08

 

 

$1.25

 

 

Mcf

 

 

6.61

 

 

 

4.77

 

NGL

 

Gallons

 

$.67

 

 

$.23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production - Lease operating expenses

 

 

 

$134,684

 

 

$131,937

 

 

 

 

 

658,505

 

 

 

1,633,765

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Cost of Production per BOE

 

 

 

$14.25

 

 

$16.51

 

 

 

 

 

49.59

 

 

 

27.81

 

 

Drilling and other exploratoryOther Exploratory and development activitiesDevelopment Activities

 

During the year ended December 31, 2021 and the nine months ended December 31, 2020,2023 the Company had no grossdid not drill any new wells. The Company focused primarily on preserving and maintaining existing assets and selling certain assets to pay down debt. Maintenance included, among other things, replacing tubing and pumps, replacing heater treaters, changing compressors, repressurizing wells, repairing water line leaks, replacing chokes and other items.

Present Activities

The Company is not presently drilling any new wells.

Delivery Commitments

The Company is not currently committed to provide a fixed and determinable quantity of oil or net wells that weregas in the process of being drilled, nor did we have any drilling plansnear future under existing contracts or delivery commitments.agreements.

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ITEM 3. LEGAL PROCEEDINGS

 

Camber is periodically named in legal actions arising from normal business activities. Camber evaluatesFrom time to time, the merits of these actions and, if it determines that an unfavorable outcome is probable and canCompany may be reasonably estimated, Camber will establish the necessary reserves. We are not currently involved in legal proceedingslitigation relating to claims arising out of commercial operations in the normal course of business. As of December 31, 2023, there were no pending or threatened lawsuits that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition orthe Company’s results of operations. We may become involved in material legal proceedings

Merger-Related Litigation

On February 9, 2024, plaintiff Lawrence Rowe, on behalf of himself and all other similarly situated former public minority shareholders of Viking, filed against the Company and its CEO a putative Class Action Complaint (i.e. C.A. No.4:24-cv-00489) styled Lawrence Rowe, Individually and on Behalf of All Others Similarly Situated v. James A. Doris and Camber Energy, Inc., in the future.U.S. District Court for the Southern District of Texas, Houston Division.  The Complaint alleges breaches of fiduciary duty in connection with the merger between Viking and the Company and seek to recover damages for the alleged breaches.  The defendants deny the allegations and intend to move to dismiss the case.

Shareholder-Related Litigation

The Company was the target of a “short” report issued by Kerrisdale Capital in early October, 2021, and as a result of such short report, on October 29, 2021, a Class Action Complaint (i.e. C.A.No.4:21-cv-03574) was filed against the Company, its CEO and CFO by Ronald E. Coggins, Individually and on Behalf of All Others Similarly Situated v. Camber Energy, Inc., et al.; in the U.S. District Court for the Southern District of Texas, Houston Division, pursuant to which the Plaintiffs sought to recover damages alleged to have been suffered by them as a result of the defendants’ violations of federal securities laws.   The Company and the other Defendants filed a Motion to Dismiss (“MTD”) the Class Action Complaint, and on September 22, 2023, the Court granted the MTD in full.  On October 25, 2023, the Court signed a joint stipulation submitted by the parties, dismissing the case with prejudice.

On or about June 30, 2022, the Company was made aware of a Shareholder Derivative Complaint filed in the U.S. District Court for the Southern District of Texas, Houston Division (Case No. 4:22-cv-2167) against the Company, its current directors, and certain of its former directors (the “Houston Derivative Complaint”). The allegations contained in the Houston Derivative Complaint involve state-law claims for breach of fiduciary duty and unjust enrichment and a federal securities claim under Section 14(a) of the Securities Exchange Act of 1934.  On January 20, 2023, the U.S. District Court held that certain claims brought by the plaintiff relating to director actions and statements made in proxy statements prior to June 30, 2019, were time barred, but did not dismiss certain claims brought by plaintiff relating to director actions and statements made in proxy statements after June 30, 2019.  Pursuant to Article 6 of the Amended and Restated Bylaws, on February 15, 2023, the Company’s Board of Directors (the “Board”) formed a Committee of the Board (the “Special Litigation Committee”) to investigate, analyze, and evaluate the remaining allegations in the Houston Derivative Complaint. The Special Litigation Committee completed its investigation and found no basis to conclude that any Camber officer’s or director’s conduct “involved intentional misconduct, fraud or a knowing violation of law,” which would be required under applicable Nevada law to prevail on any claims for breach of fiduciary duty or federal proxy violations; and, on November 17, 2023, filed with the U.S. District Court a Motion to Terminate or, in the alternative, schedule an evidentiary hearing on the Motion.  Briefing on the motion was completed on January 12, 2024, and it remains pending.  The defendants deny the allegations contained in the Houston Derivative Complaint.

 

Maranatha Oil Matter

 

In November 2015, Randy L. Robinson, d/b/a Maranatha Oil Co. sued the Company in Gonzales County, Texas (Cause No. 26160). The plaintiff alleged that it assigned oil and gas leases to the Company in April 2010, retaining a 4% overriding royalty interest and 50% working interest and that the Company failed to pay such overriding royalty interest or royalty interest. The interests relate to certain oil and gas properties which the Company subsequently sold to Nordic Oil USA in April 2013. The petition alleges causes of actions for breach of contract, failure to pay royalties, non-payment of working interest, fraud, fraud in the inducement of contract, money had and received, constructive trust, violation of theft liability act, continuing tort and fraudulent concealment. The suit seeks approximately $100,000 in amounts alleged owed, plus pre-and post-judgment interest. The Company has filed a denial to the claims and intends to vehemently defend itself against the allegations.

 

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Apache CorporationPinch vs. Petrodome Matter

 

In or about late 2011 or early 2012, Petrodome Operating, LLC (“Petrodome Operating”), a wholly owned subsidiary of Petrodome Energy, LLC (which in or about December, 2018, Apache Corporation (“Apache”) sued Camber, Sezar2017 become a wholly owned subsidiary of Viking), on behalf of various working interest owners, including Petrodome East Creole, LLC, another subsidiary of Petrodome Energy, L.P., and Texokcan Energy Management Inc.,LLC, coordinated the drilling of an approx. 13,000 foot well in the 129th Judicial District Court of Harris County, Texas (Cause 2018-89515)Kings Bayou Field in Cameron Parish, LA.  Petrodome Operating engaged a third party to complete the drilling work.  The subject well produced hydrocarbons from 2012 until approximately June 2016, at which time production ceased, after which Petrodome Operating arranged for the well to be plugged in accordance with State guidelines.  During the time the well was producing hydrocarbons, royalty and/or over-riding royalty payments were made to various mineral and/or land/owners (collectively, “Mineral Owners”).   Apache alleged causes ofIn or about October, 2019 the Mineral Owners commenced an action for Breach of Contract, Money Had & Received and Conversion, relating to amounts Apache alleged it was owed under a joint operating agreement. Apache is seeking $656,908 in actual damages, exemplary damages, pre- and post-judgment interest, court costs, and other amounts to which it may be entitled. Camber filed a general denial to the claims and asserted the affirmative defense of failure to mitigate. On July 13, 2020, Apache filed a Second Amended Petition against Camber, Sezar, Texokcan, N&B Energy,Petrodome Operating, Petrodome East Creole, LLC and Richard N. Azar, II alleging Breachothers claiming the Mineral Owners suffered damages (i.e., a loss of Contract, Defaults under a Joint Operating Agreement, Money Had & Received and Conversion, relating to amounts Apache allegedly overpaid Sezar and Azar and Unjust Enrichment. On October 26, 2020, the Company entered into an agreement with Apache to obtain a release of all liability (both parties provided mutual releases) for $20,000, which was paid in October 2020, and the litigation against the Company was dismissed.

N&B Energy

On September 12, 2019, N&B Energy filed a petition in the District Court for the 285th Judicial District of Bexar County, Texas (Case #2019CI11816). Pursuant to the petition, N&B Energy raises claims against the Company for breach of contract, unjust enrichment, money had and received and disgorgement, in connection with $706,000 which it alleges it is owed under the July 2018 Asset Purchase Agreement between the Company and N&B Energy (the “Sale Agreement”), for true-ups and post-closing adjustments associated therewith. The petition sought amounts owed, pre- and post-judgment interest, and attorney’s fees. On October 21, 2020, the arbitrator issued an Interim Stage II Order granting an award that acknowledged the claims of both parties that resulted in an arbitration award in favor of N&B Energy of approximately $52,000, which was paid in December 2020.

Litigation Following Short Report

The Company was the target of a “short” report issued by Kerrisdale Capital in early October, 2021, androyalty and/or over-riding royalty payments) as a result of such short report there was an action commenced against the Company, James Dorissubject well not, according to the Mineral Owners, being drilled and/or completed properly.  Petrodome Operating, Petrodome East Creole, LLC and Frank Barker by or on behalf of certain shareholders of Camber in connection with losses alleged to have been suffered by the shareholders. The Companyother defendants denied the Mineral Owners’ claims and Messrs. Doris and Barker have retained the firm of Baker Botts LLPengaged counsel to defend the action,action.

In or about November, 2023, the parties, without the subject Petrodome entities admitting liability, agreed to fully and denycompletely settle the allegations containedmatter and pay the Mineral Owners a total sum of $6.5 million, of which Petrodome is liable for $4.15 million. Payment of Petrodome’s portion of the settlement is fully covered by insurance.  At December 31, 2023, the Company recorded an accrued liability in respect of this settlement and a receivable related to the insurance proceeds in the claim.amount of $4.15 million.  In or about February, 2024, the action commenced by the Mineral Owners was dismissed with prejudice.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

 
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PART II

 

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 

Market Information

 

Our common stock is quoted on the NYSE American under the symbol “CEI”.

 

Holders

 

As of May 6, 2022,March 20, 2024, there were approximately 16,90053,290 record holders of our common stock, not including holders who hold their shares in street name.stock.

 

Description of Capital Stock

 

The total number of shares of all classes of stock that we have authority to issue is 1,010,000,000,510,000,000, consisting of 1,000,000,000500,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share. As of May 16, 2022, we hadMarch 20, 2024, Camber had: (i) 414,290,116148,940,299 shares of common stock outstanding,outstanding; (ii) 28,092 designated Series A Convertible Preferred Stock (“Series A Preferred Stock”), 28,092 of which were outstanding; (iii) 5,200 designated shares of Series C Preferred Stock, 1,60530 of which were outstanding and (iii)outstanding; (iv) 25,000 designated shares of Series G Redeemable Convertible Preferred Stock 7,908(“Series G Preferred Stock”), 5,272 of which were outstanding, and; (v) 2,075 designated Series H Convertible Preferred Stock (“Series H Preferred Stock”), 275 of which were outstanding.

 

Common Stock

 

Holders of our common stock: (i) are entitled to share ratably in all of our assets available for distribution upon liquidation, dissolution or winding up of our affairs; (ii) do not have preemptive, subscription or conversion rights, nor are there any redemption or sinking fund provisions applicable thereto; and (iii) are entitled to one vote per share on all matters on which stockholders may vote at all stockholder meetings. Each stockholder is entitled to receive the dividends as may be declared by our directors out of funds legally available for dividends. Our directors are not obligated to declare a dividend. Any future dividends will be subject to the discretion of our directors and will depend upon, among other things, future earnings, the operating and financial condition of our Company, our capital requirements, general business conditions and other pertinent factors.

 

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The presence of the persons entitled to vote 33% of the outstanding voting shares on a matter before the stockholders shall constitute the quorum necessary for the consideration of the matter at a stockholders meeting.

 

The vote of the holders of a majority of the votes cast on the matter at a meeting at which a quorum is present shall constitute an act of the stockholders, except for the election of directors, who shall be appointed by a plurality of the shares entitled to vote at a meeting at which a quorum is present. The common stock does not have cumulative voting rights, which means that the holders of a majority of the common stock voting for election of directors can elect 100% of our directors if they choose to do so.

 

Preferred Stock

 

Subject to the terms contained in any designation of a series of preferred stock, the Board of Directors is expressly authorized, at any time and from time to time, to fix, by resolution or resolutions, the following provisions for shares of any class or classes of preferred stock:

 

 

1)

The designation of such class or series, the number of shares to constitute such class or series which may be increased (but not below the number of shares of that class or series then outstanding) by a resolution of the Board of Directors;

 

 

 

 

2)

Whether the shares of such class or series shall have voting rights, in addition to any voting rights provided by law, and if so, the terms of such voting rights;

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3)

The dividends, if any, payable on such class or series, whether any such dividends shall be cumulative, and, if so, from what dates, the conditions and dates upon which such dividends shall be payable, and the preference or relation which such dividends shall bear to the dividends payable on any share of stock of any other class or any other shares of the same class;

 

 

 

 

4)

Whether the shares of such class or series shall be subject to redemption by the Company, and, if so, the times, prices and other conditions of such redemption or a formula to determine the times, prices and such other conditions;

 

 

 

 

5)

The amount or amounts payable upon shares of such series upon, and the rights of the holders of such class or series in, the voluntary or involuntary liquidation, dissolution or winding up, or upon any distribution of the assets, of the Company;

 

 

 

 

6)

Whether the shares of such class or series shall be subject to the operation of a retirement or sinking fund, and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the shares of such class or series for retirement or other corporate purposes and the terms and provisions relative to the operation thereof;

 

 

 

 

7)

Whether the shares of such class or series shall be convertible into, or exchangeable for, shares of stock of any other class or any other series of the same class or any other securities and, if so, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and conditions of conversion or exchanges;

 

 

 

 

8)

The limitations and restrictions, if any, to be effective while any shares of such class or series are outstanding upon the payment of dividends or the making of other distributions on, and upon the purchase, redemption or other acquisition by the Company of the common stock or shares of stock of any other class or any other series of the same class;

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9)

The conditions or restrictions, if any, upon the creation of indebtedness of the Company or upon the issuance of any additional stock, including additional shares of such class or series or of any other series of the same class or of any other class;

 

 

 

 

10)

The ranking (be it pari passu, junior or senior) of each class or series vis-à-vis any other class or series of any class of preferred stock as to the payment of dividends, the distribution of assets and all other matters;

 

 

 

 

11)

Facts or events to be ascertained outside the articles of incorporation of the Company, or the resolution establishing the class or series of stock, upon which any rate, condition or time for payment of distributions on any class or series of stock is dependent and the manner by which the fact or event operates upon the rate, condition or time of payment; and

 

 

 

 

12)

Any other powers, preferences and relative, participating, optional and other special rights, and any qualifications, limitations and restrictions thereof, insofar as they are not inconsistent with the provisions of our articles of incorporation, as amended, to the full extent permitted by the laws of the State of Nevada.

 

The powers, preferences and relative, participating, optional and other special rights of each class or series of preferred stock, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding.

 

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Series A Convertible Preferred Stock

 

On or about August 31, 2020,1, 2023, Camber filed with the BoardState of Directors approved the designationNevada a Certificate of 28,092 sharesDesignations of Preferences, Powers, Rights and Limitations of Series A Convertible Preferred Stock (the Series“Series A Preferred Stock”), which were designated with the Secretary of State of Nevada on August 31, 2020 (the “Series A Designation”) to have substantially similar rights as the Series C Preferred Stock of Viking (as amended), as adjusted for the exchange ratio set out in the merger agreement at that time, which was subsequently terminated as noted below.

On December 23, 2020, the Company entered into (i) a termination agreement with Viking terminating the Amended and Restated Agreement and Plan of Merger, dated August 31, 2020, as amended to date.

On February 15, 2021, the Company entered into a new Agreement and Plan of Merger with Viking. Pursuant to the terms of the Agreement and Plan of Merger with Viking, upon closing of the Merger, each one (1) share of Viking Series C Preferred Stock (“Viking Preferred Stock”) issued and outstanding immediately prior to the Effective Time, shall be converted into the right to receive one (1) share of the to be designated Series A Convertible Preferred Stock of Camber (the “New Camber PreferredCOD”).

 

Each share of Camber Series A Preferred Stock will be convertible into 890 shares of common stock of Camber subject to a 9.99% beneficial ownership limitation, will be treated equally with the Company’s common shareholders with respect to dividends and liquidation, and will have(1) has no right to vote on any matters, questions or proceedings of Camber, except: (a)(i) on a proposal to increase or reduce Camber’s authorized share capital; (b)capital, (ii) on a resolution to approve the terms of aany buy-back agreement; (c)agreement, (iii) on a proposal to wind up Camber; (d)Camber, (iv) on a proposal for the disposal of all or substantially all of Camber’s property, business and undertaking;undertaking, (f) during the winding-up of Camber;Camber, and/or (g) with respect to a proposed merger or consolidation in which Camber is a party or a subsidiary of Camber is a party.

Asparty, in each case on an as-converted basis (subject to a 9.99% beneficial ownership limitation); (2) will receive, upon the occurrence of December 31, 2021 and 2020,a liquidation of Camber, the Company had nosame amount of consideration that would have been due if such shares of Series A Convertible Preferred Stock issued or outstanding.had been converted into Camber’s common stock immediately prior to such liquidation; and (3) is convertible, at the option of the holder thereof, into 890 shares of Camber’s common stock (subject to a beneficial ownership limitation preventing conversion into Camber’s common stock if the holder would be deemed to beneficially own more than 9.99% of Camber’s common stock). The Series A Preferred Stock does not have any redemption rights and shares equally in any dividends authorized by the board of directors for distribution to holders of Camber’s common stock, on an as-converted basis. James A. Doris, the Chief Executive Officer and director of Camber, currently holds all 28,092 outstanding shares of Series A Preferred Stock.

 

Series C Redeemable Convertible Preferred Stock

On or about November 8, 2021, Camber filed with the State of Nevada the Fifth Amended and Restated Certificate of Designations of Preferences, Powers, Rights and Limitations of Series C Redeemable Convertible Preferred Stock (the “Series C COD”).

 

Holders of the Series C Preferred Stock are entitled to cumulative dividends in the amount of 24.95% per annum (adjustable up to 34.95% if a trigger event, as described in the designation of the Series C Preferred StockCOD occurs), payable upon redemption, conversion, or maturity, and when, as and if declared by our Boardboard of Directorsdirectors in its discretion, provided that upon any redemption, conversion, or maturity, seven years of dividends are due and payable on such redeemed, converted or matured stock. The Series C Preferred Stock ranks senior to the common stock. The Series C Preferred Stock has no right to vote on any matters, questions or proceedings of the CompanyCamber including, without limitation, the election of directors except: (a) during a period where a dividend (or part of a dividend) is in arrears; (b) on a proposal to reduce the Company’sCamber’s share capital; (c) on a resolution to approve the terms of a buy-back agreement; (d) on a proposal to wind up the Company;Camber; (e) on a proposal for the disposal of all or substantially all of the Company’sCamber’s property, business and undertakings; and (f) during the winding-up of the Company.Camber.

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The Series C Preferred Stock may be converted into shares of our common stock (“Conversion Shares”) at any time at the option of the holder, or at ourCamber’s option if certain equity conditions (as defined in the certificate of designation for the Series C Preferred Stock)COD), are met. Upon conversion, weCamber will pay the holders of the Series C Preferred Stock being converted through the issuance of common shares,stock, in an amount equal to the dividends that such shares would have otherwise earned if they had been held through the maturity date (i.e., seven years), and issue to the holders such number of shares of Commoncommon stock equal to $10,000 per share of Series C Preferred Stock (the Face Value“Face Value”) multiplied by the number of such shares of Series C Preferred Stock divided by the applicable Conversion Priceconversion price of $3.25 per share$162.50 (after adjustment following the December 21, 2022 reverse stock split) adjusted for any future forward or reverse splits..splits.

 

The conversion premium under the Series C Preferred Stock is payable and the dividend rate under the Series C Preferred Stock is adjustable. Specifically, the conversion rate of such premiums and dividends equals 95% of the average of the lowest 5 individual daily volume weighted average prices during the Measuring Period (as defined below), not to exceed 100% of the lowest sales prices on the last day of the Measuring Period, less $0.05 per share of common stock, unless a trigger event has occurred, in which case the conversion rate equals 85% of the lowest daily volume weighted average price during the Measuring Period, less $0.10 per share of common stock not to exceed 85% of the lowest sales prices on the last day of such the Measuring Period, less $0.10 per share. The Measuring Period“Measuring Period” is the period beginning, if no trigger event has occurred, 30 trading days, and if a trigger event has occurred, 60 trading days, before the applicable notice has been provided regarding the exercise or conversion of the applicable security, and ending, if no trigger event has occurred, 30 trading days, and if a trigger event has occurred, 60 trading days, after the applicable number of shares stated in the initial exercise/conversion notice have actually been received into the holder’s designated brokerage account in electronic form and fully cleared for trading. Trigger events are described in the designation of the Series C Preferred Stock, but include items which would typically be events of default under a debt security, including filing of reports late with the SEC.

 

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The Series C Preferred Stock has a maturity date that is seven years after the date of issuance and, if the Series C Preferred Stock has not been wholly converted into shares of common stock prior to such date, all remaining outstanding Series C Preferred Stock will automatically be converted in to shares of Common Stock,common stock, to the extent the CorporationCamber has sufficient authorized but unissued shares of Common Stockcommon stock available for issuance upon conversion. Notwithstanding any other provision of this designation, available authorized and unissued shares of Common Stockcommon stock will be a limit and cap on the maximum number of common shares that could be potentially issuable with respect to all conversions and other events that are not solely within the control of the Corporation. The CorporationCamber. Camber will at all times use its best efforts to authorize sufficient shares. The number of shares required to settle the excess obligation is fixed on the date that net share settlement occurs. The Dividend Maturity Date will be indefinitely extended and suspended until sufficient authorized and unissued shares become available. 100% of the Face Value, plus an amount equal to any accrued but unpaid dividends thereon, automatically becomes payable in the event of a liquidation, dissolution or winding up by us.Camber.

 

WeCamber may not issue any preferred stock that is pari passu or senior to the Series C Preferred Stock with respect to any rights for a period of one year after the earlier of such date (i) a registration statement is effective and available for the resale of all shares of common stock issuable upon conversion of the Series C Preferred Stock, or (ii) Rule 144 under the Securities Act is available for the immediate unrestricted resale of all shares of common stock issuable upon conversion of the Series C Preferred Stock.

 

The Series C Preferred Stock is subject to a beneficial ownership limitation, which prevents any holder of the Series C Preferred Stock from converting such Series C Preferred Stock into common stock, if upon such conversion, the holder would beneficially own greater than 9.99% of ourCamber’s outstanding common stock.

 

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Pursuant to the Fifth Amended and RestatedSeries C COD, which was filed as required by the October 2021 Agreements, holders of the Series C Preferred Stock are permitted to vote together with holders of common stock on all matters other than election of directors and shareholder proposals (including proposals initiated by any holders of Preferred Shares)preferred shares), on an as-if converted basis, subject to the beneficial ownership limitation in the Series C COD, even if there are insufficient shares of authorized common stock to fully convert the Series C Preferred Stock. Also pursuant to certain agreements entered into with the holders of the Series C Preferred Stock in October 2021, Agreements, due to the occurrence of a Trigger Event the Companytrigger event, Camber no longer has the right to conduct an early redemption of the Series C Preferred Stock as provided for in the Designation.Series C COD.

 

The following tables presentOn October 31, 2022, Camber filed with the Secretary of State of Nevada an amendment to the Series C COD (the “Series C Amendment”), dated as of October 28, 2022 (the “Series C Amendment Date”), pursuant to agreements between Camber and each of Discover and Antilles signed on October 28, 2022, which amended the Series C COD such that (i) beginning on the Series C Amendment Date and thereafter, when determining the conversion rate for each share of Series C Preferred Stock based on the trading price of Camber’s common stock over a rangecertain number of estimatesprevious days (“Measurement Period”), no day will be added to what would otherwise have been the end of any Measurement Period for the failure of the numberEquity Condition (as defined in the Series C COD), even if the volume weighted average trading price (“Measuring Metric”) is not at least $1.50 and each holder of Series C Preferred Stock waived the right to receive any additional shares potentially issuableof common stock that might otherwise be due if such Equity Condition were to settle futureapply after the Series C Amendment Date, including with respect to any pending Measurement Period; and (ii) (A) beginning on the Series C Amendment Date and for the period through December 30, 2022, the Measuring Metric will be the higher of the amount provided in Section I.G.7.1(ii) of the Series C COD and $0.20, and (B) beginning at market close on December 30, 2022 and thereafter, the Measuring Metric will be the volume weighted average trading price of the common stock on any day of trading following the date of first issuance of the Series C Preferred Stock.

On February 21, 2024, Camber filed with the Secretary of State of Nevada a second amendment to the Series C COD  pursuant to an between Camber and Antilles signed on February 15, 2024, which amended the Series C COD as follows: (i) establishing a floor price of $0.15 in connection with determining the Conversion Premium (as defined in the COD) associated with conversions of Series C Preferred Stock, (ii) confirming that the Company may make an early redemption of any outstanding Series C Preferred Stock provided that outstanding promissory notes in favor of the holder of the Series C Preferred Stock or its affiliates are paid in full, and (iii) confirming that no additional conversion shares will be owed to such holder if the Company’s notes in favor of it and its affiliates are paid in full and all then outstanding atshares of Series C Preferred Stock have been redeemed.

As of December 31, 2021, including2023, Antilles held 30 shares of Series C Preferred Stock and Camber estimated these shares would be able to convert into approximately 8,996,279 shares of common stock pursuant to the conversion premiums, reflecting considerationformula set out in the Series C COD associated with the Series C Preferred Stock, using approximately $0.2136 as the low volume weighted average price of all provisions that pertainCamber’s common stock for the purposes of calculating the Conversion Premium due upon conversion.  The Company has the right to redeem the 30 shares of Series C Preferred Stock for cash in an amount equal to the computation of settlements as follows:Early Redemption Price provided any debt due to Antilles or its affiliate is paid in full.

Estimate of Common Shares Due to Series C Pref. Shareholders (assuming Dividends/Conversion Premium are paid in stock as opposed to cash)

Series C Pref. Shares Outstanding - December 31, 2020

2,093

Assume Triggering Event

 Yes

Low VWAP During Measurement

Period - $0.3475

 

 

Low VWAP During Measurement

Period - $0.50

 

 

Low VWAP During Measurement

Period - $1.00

 

 

 

 

 

 

 

 

 

 

Conversion Price for Preferred Stock

 

$

3.25

 

 

Conversion Price for Preferred Stock

 

$

3.25

 

 

Conversion Price for Preferred Stock

 

$

3.25

 

VWAP during Measurement Period

 

$

0.3475

 

 

VWAP during Measurement Period

 

$

0.5000

 

 

VWAP during Measurement Period

 

$

1.0000

 

Price for Calculating Conversion Premium (i.e. 85% of VWAP less $0.10)

 

$

0.1954

 

 

Price for Calculating Conversion Premium (i.e. 85% of VWAP less $0.10)

 

$

0.3250

 

 

Price for Calculating Conversion Premium (i.e. 85% of VWAP less $0.10)

 

$

0.7500

 

Series C Pref Shares

 

$

2,093

 

 

Series C Pref Shares

 

$

2,093

 

 

Series C Pref Shares

 

 

2,093

 

Face value per share

 

$

10,000

 

 

Face value per share

 

$

10,000

 

 

Face value per share

 

$

10,000

 

Total value

 

$

20,930,000

 

 

Total value

 

$

20,930,000

 

 

Total value

 

$

20,930,000

 

Annual Conversion Premium

 

$

7,315,035

 

 

Annual Conversion Premium

 

$

7,315,035

 

 

Annual Conversion Premium

 

$

7,315,035

 

Total conversion Premium (7 years worth of dividends)

 

$

51,205,245

 

 

Total conversion Premium (7 years worth of dividends)

 

$

51,205,245

 

 

Total conversion Premium (7 years worth of dividends)

 

$

51,205,245.00

 

Underlying common shares for Face Value Portion

 

 

6,440,000

 

 

Underlying common Shares for Face Value Portion

 

 

6,440,000

 

 

Underlying common shares for Face Value Portion

 

 

6,440,000

 

Underlying common shares for Conversion Premium

 

 

262,053,454

 

 

Underlying common shares for Conversion Premium

 

 

157,554,600

 

 

Underlying common shares for Conversion Premium

 

 

68,273,660

 

Total Potential Shares

 

 

268,493,454

 

 

Total Potential Shares

 

 

163,994,600

 

 

Total Potential Shares

 

 

74,713,660

 

Series C Pref. Shares Outstanding – December 31, 2021

3,886

Assume Triggering Event

 No

Low VWAP During Measurement

Period - $0.3475

 

 

Low VWAP During Measurement

Period - $0.50

 

 

Low VWAP During Measurement

Period - $1.00

 

 

 

 

 

 

 

 

 

Conversion Price for Preferred Stock

 

$

3.25

 

 

Conversion Price for Preferred Stock

 

$

3.25

 

 

Conversion Price for Preferred Stock

 

$

3.25

 

VWAP during Measurement Period

 

$

0.3475

 

 

VWAP during Measurement Period

 

$

0.5000

 

 

VWAP during Measurement Period

 

$

1.0000

 

Price for Calculating Conversion Premium (i.e. 95% of VWAP less $0.05)

 

$

0.2801

 

 

Price for Calculating Conversion Premium (i.e. 95% of VWAP less $0.05)

 

$

0.4250

 

 

Price for Calculating Conversion Premium (i.e. 95% of VWAP less $0.05)

 

$

0.9000

 

Series C Pref Shares

 

 

2,093

 

 

Series C Pref Shares

 

 

2,093

 

 

Series C Pref Shares

 

 

2,093

 

Face value per share

 

$

10,000

 

 

Face value per share

 

$

10,000

 

 

Face value per share

 

$

10,000

 

Total value

 

$

20,930,000

 

 

Total value

 

$

20,930,000

 

 

Total value

 

$

20,930,000

 

Annual Conversion Premium

 

$

7,315,035

 

 

Annual Conversion Premium

 

$

7,315,035

 

 

Annual Conversion Premium

 

$

7,315,035

 

Total conversion Premium (7 years worth of dividends)

 

$

51,205,245

 

 

Total conversion Premium (7 years worth of dividends)

 

$

51,205,245

 

 

Total conversion Premium (7 years worth of dividends)

 

$

51,205,245

 

Underlying common shares for Face Value Portion

 

 

6,440,000

 

 

Underlying common Shares for Face Value Portion

 

 

6,440,000

 

 

Underlying common shares for Face Value Portion

 

 

6,440,000

 

Underlying common shares for Conversion Premium

 

 

182,810,586

 

 

Underlying common shares for Conversion Premium

 

 

120,482,929

 

 

Underlying common shares for Conversion Premium

 

 

56,894,717

 

Total Potential Shares

 

 

189,250,586

 

 

Total Potential Shares

 

 

126,922,929

 

 

Total Potential Shares

 

 

63,334,717

 

 

 
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As of December 31, 2023, Antilles is entitled to approximately 34.5 million shares of common stock in connection with the prior conversion of approximately 240 shares of Series C Preferred Stock as a result of: (i) Camber not being compliant with all Equity Conditions (as defined in the COD), specifically as it relates to Camber not being in compliance with the NYSE American continued listing standards regarding the minimum stockholders’ equity threshold; (ii) the Measurement Period (as defined in the COD) in respect of the prior conversions being extended each day Camber is not in compliance with said Equity Condition(s); and (iii) the volume weighted average price of Camber’s common stock being lower than the price on the dates of the initial conversion of the 240 shares of Series C Preferred Stock.

Series G Convertible Preferred Stock

 

On or about December 30, 2021, the CompanyCamber filed with the State of Nevada a Certificate of Designations of Preferences, Powers, Rights and Limitations of Series G Redeemable Convertible Preferred Stock (the “COD”“Series G COD”).

 

Pursuant to the Series G COD, the Series G Redeemable Convertible Preferred Stock (“Series G Preferred Stock”) may be converted into shares of common stock at any time at the option of the holder at a price per share of common stock equal to one cent above the closing price of the Company’sCamber’s common stock on the date of the issuance of such shares of Series G Preferred Stock, or as otherwise specified in thethat certain Stock Purchase Agreement, dated as of December 30, 2021, by and between Camber and Antilles (the “Series G SPA”), subject to adjustment as otherwise provided in the Series G COD. Upon conversion, the CompanyCamber will pay the holders of the Series G Preferred Stock being converted a conversion premium equal to the amount of dividends that such shares would have otherwise earned if they had been held through the maturity date.

 

The Series G Preferred Stock, with respect to dividend rights and rights upon liquidation, winding-up or dissolution, rank: (a) senior to the Company’sCamber’s common stock; (b) junior to the Series C Redeemable Convertible Preferred Stock, (c) senior to the Series E Redeemable Convertible Preferred Stock and Series F Redeemable Convertible Preferred Stock, as such may be designated as of the date of this Designation,the Series G COD, or which may be designated by the CompanyCamber after the date of this Designation; (d) senior, pari passu or junior with respect to any other series of Preferred Stock, as set forth in the Certificate of Designations of Preferences, Powers, Rights and Limitations with respect to such Preferred Stock;preferred stock; and (d) junior to all existing and future indebtedness of the Company.Camber.

 

Except as prohibited by applicable law or as set forth herein,in the Series G SPA or Series G COD, the holders of shares of Series G Preferred Stock will have the right to vote together with holders of common stock and Series C Preferred Stock on all matters other than: (i)than the election of directors; (ii)directors and any shareholder proposals including(including proposals initiated by any holder of shares of Series G Preferred Stock), in each instance on an as-converted basis, subject to the beneficial ownership limitation in the Series G COD even if there are insufficient shares of authorized common stock to fully convert the shares of Series G Preferred Stock into common stock.

 

Commencing on the date of the issuance of any such shares of Series G Preferred Stock, each outstanding share of Series G Preferred Stock will accrue cumulative dividends at a rate equal to 10.0% per annum, subject to adjustment as provided in the COD (to a maximum of 30% per annum), of the Face Value.face value of $10,000 per share. Dividends will be payable with respect to any shares of Series G Preferred Stock upon any of the following: (a) upon redemption of such shares in accordance with the Series G COD; (b) upon conversion of such shares in accordance with the Series G COD; and (c) when, as and if otherwise declared by theCamber’s board of directors of the Corporation.directors.

 

Dividends, as well as any applicable Conversion Premiumconversion premium payable hereunder,under the Series G COD, will be paid in shares of common stock valued at (i) if there is no Material Adverse Change (“MACMAC”) as at the date of payment or issuance of common shares for the Conversion Premium,conversion premium, as applicable, (A) 95.0% of the average of the 5 lowest individual daily volume weighted average prices of the common stock on the Trading MarketNYSE American during the applicable Measurement Period,measurement period, which may be non-consecutive, less $0.05 per share of common stock, not to exceed (B) 100% of the lowest sales price on the last day of such Measurement Periodmeasurement period less $0.05 per share of common stock, or (ii) during the time that any MAC is ongoing, (A) 85.0% of the lowest daily volume weighted average price during any Measurement Periodmeasurement period for any conversion by Holder,a holder, less $0.10 per share of common stock, not to exceed (B) 85.0% of the lowest sales price on the last day of any Measurement Period,measurement period, less $0.10 per share of common stock.

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On the Dividend Maturity Date,dividend maturity date (as further described in the CorporationSeries G COD), Camber may redeem any or all shares of Series G Preferred Stock by paying Holder,its holder, in registered or unregistered shares of common stock valued at an amount per share equal to 100% of the Liquidation Value (as described and defined in the Series G COD) for the shares redeemed, and the CorporationCamber will use its best efforts to register such shares.

Series H Convertible Preferred Stock

On or about August 1, 2023, Camber filed with the State of Nevada a Certificate of Designations of Preferences, Powers, Rights and Limitations of Series H Convertible Preferred Stock (the “Series H COD”).

Each share of Series H Preferred Stock (1) votes an aggregate of 1 voting share on all shareholder matters, voting together with Camber’s common stock as a single class (subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the sole election of the holder thereof); (2) will receive, upon the occurrence of a liquidation of Camber, the same amount of consideration that would have been due if such shares of Series H Preferred Stock had been converted into common stock immediately prior to such liquidation; and (3) is convertible, at the option of the holder thereof, into up to 15,983,333 shares of Camber Common Stock (subject to a 4.99% beneficial ownership limitation, which may be increased to 9.99% at the sole election of the holder thereof) upon achievement of certain sales milestones. Pursuant to that certain Securities Purchase Agreement between Viking and Jedda Holdings LLC, dated as of February 9, 2022: (i) on or about August 9, 2023, 200 shares of Series H Preferred Stock were converted into 3,333,333 shares of Camber’s common stock; (ii) the outstanding 275 shares of Series H Preferred Stock are convertible into shares of Camber’s common stock at a price of $0.60 per share; (iii) the $10,000 face value per share of each share of Series H Preferred Stock will be convertible into Camber’s common stock at a price per share of: (a) $0.75 once Viking Protection Systems, LLC, a majority owned subsidiary of Viking (“Viking Protections”) has sold between 10,000 and 20,000 Units of the electric transmission ground fault prevention trip signal engaging system developed and sold by Viking Protections (“Units”); (b) $1.00 once Viking Protections has sold between 20,000 and 30,000 Units; (c) $1.25 once Viking Protections has sold between 30,000 and 50,000 Units; (d) $1.50 once Viking Protections has sold between 50,000 and 100,000 Units; and (e) $2.00 once Viking Protections has sold at least 100,000 Units. The Series H Preferred Stock does not have any redemption rights and shares equally in any dividends authorized by Camber’s board of directors for distribution to holders of Camber’s common stock, on an as-converted basis.

 

Dividend Policy

 

We have not declared or paid cash dividends or made distributions in the past. We do not anticipate that we will pay cash dividends or make distributions in the foreseeable future. We currently intend to retain and reinvest future earnings to finance operations. We may however declare and pay dividends in shares of our common stock in the future (similar to how we have in the past).

 

Sales of Unregistered Securities

There have been no sales of unregistered securities during the year ended December 31, 2021,2023, which have not previously been disclosed in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K, except as set forth below:

 

The Company issued to one of its preferred stockholders a total of 7,568,61711,770,671 shares of common stock pursuant to preferred stockholders. The shares of common stock were due in connection with the stockholder’s conversion of2023 Series C Preferred Stock into common stock.  The sharesConversions (as defined above), and were issued pursuant to the exemptions from registration provided by Sections 3(a)(9), 4(a)(1) and, 4(a)(2) and/or 3(a)(10) of the Securities Act of 1933, as amended, and/or Rule 144 promulgated thereunder, as the shares of common stock were issued in exchange for preferred stock of the Company held by the preferred stockholder, there was no additional consideration for the exchanges, there was no remuneration for the solicitation of the exchanges, the exchanged securities had been held by the preferred stockholder for the requisite holding period, the preferred stockholder was not an affiliate of the Company, the Company was not a shell company, there was no general solicitation and the transactions with the shareholders did not involve a public offering.

 

 
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ITEM 6. SELECTED FINANCIAL DATA.

 

Not required under Regulation S-K for “smaller reporting companies.

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

You should read the following discussion and analysis in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this annual report on Form 10-K.

 

In preparing the management’s discussion and analysis, the registrant presumes that you have read or have access to the discussion and analysis for the preceding fiscal year.

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This document includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended or the Reform Act. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earning, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions of performance; and statements of belief; and any statements of assumptions underlying any of the foregoing. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following:

 

The Company’s ability to raise capital and the terms thereof; and other factors referenced in this Form 10-K.

 

The use in this Form 10-K of such words as “believes”, “plans”, “anticipates”, “expects”, “intends”, and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. These forward-looking statements present the Company’s estimates and assumptions only as of the date of this report. Except for the Company’s ongoing obligation to disclose material information as required by the federal securities laws, the Company does not intend, and undertakes no obligation, to update any forward-looking statements.

 

Although the Company believes that the expectations reflected in any of the forward-looking statements are reasonable, actual results could differ materially from those projected or assumed or any of the Company’s forward-looking statements. The Company’s future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.

 

PLAN OF OPERATIONS

Overview

Camber Energy, Inc. (“Camber”, the “Company”, “we”, “us” or “our”) is a growth-oriented diversified energy company. Through our majority-owned subsidiaries we provide custom energy and power solutions to commercial and industrial clients in North America, and have a majority interest in: (i) an entity with intellectual property rights to a fully developed, patented, proprietary Medical and Bio-Hazard Waste Treatment system using Ozone Technology; and (ii) entities with the intellectual property rights to fully developed, patented and patent pending, proprietary Electric Transmission and Distribution Open Conductor Detection Systems. Also, we hold a license to a patented clean energy and carbon-capture system with exclusivity in Canada and for multiple locations in the United States. Various of our other subsidiaries own interests in oil properties in the United States. The Company is also exploring other renewable energy-related opportunities and/or technologies, which are currently generating revenue, or have a reasonable prospect of generating revenue within a reasonable period of time.

 
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PLAN OF OPERATIONSCustom Energy and Power Solutions:

 

OverviewSimson-Maxwell Acquisition

On August 6, 2021, Viking acquired approximately 60.5% of the issued and outstanding shares of Simson-Maxwell Ltd. (“Simson-Maxwell”), a Canadian federal corporation, for $7,958,159 in cash. Simson-Maxwell manufactures and supplies power generation products, services and custom energy solutions. Simson-Maxwell provides commercial and industrial clients with efficient, flexible, environmentally responsible and clean-tech energy systems involving a wide variety of products, including CHP (combined heat and power), tier 4 final diesel and natural gas industrial engines, solar, wind and storage. Simson-Maxwell also designs and assembles a complete line of electrical control equipment including switch gear, synchronization and paralleling gear, distribution, Bi-Fuel and complete power generation production controls. Operating for over 80 years, Simson-Maxwell’s seven branches assist with servicing a large number of existing maintenance arrangements and meeting the energy and power-solution demands of the Company’s other customers.

Clean Energy and Carbon-Capture System:

In August 2021, Viking entered into a license agreement with ESG Clean Energy, LLC (“ESG”), to utilize ESG’s patent rights and know-how related to stationary electric power generation and heat and carbon dioxide capture (the “ESG Clean Energy System”). The intellectual property licensed by Viking includes certain patents and/or patent applications, including: (i) U.S. Patent No.: 10,774,733, File date: October 24, 2018, Issue date: September 15, 2020, Titled: “Bottoming Cycle Power System”; (ii)  U.S. Patent No.: 17/661,382, Issue date:  August 8, 2023, Titled:  ‘Systems and Methods Associated With Bottoming Cycle Power Systems for Generating Power, Capturing Carbon Dioxide and Producing Products’; (iii)  U.S. Patent No.: 11624307, Issue date:  April 22, 2023, Titled: ‘Systems and Methods Associated With Bottoming Cycle Power Systems for Generating Power and Capturing Carbon Dioxide (iv) European (validated in the United Kingdom, France and Germany) Patent No.:  EP3728891, Issue date: April 12, 2023, Titled: “Bottoming Cycle Power System”; (v) U.S. Patent Application No.: 17/224,200, File date: April 7, 2021, Titled: “Bottoming Cycle Power System” (which was subsequently approved by the U.S. Patent & Trademark Office in March, 2022 (No. 11,286,832); (vi) U.S. Patent Application No.: 17/358,197, File date: June 25, 2021, Titled: “Bottoming Cycle Power System”; (vii) U.S. Patent Application No.: 17/448,943, File date: September 27, 2021, Titled: “Systems and Methods Associated With Bottoming Cycle Power Systems for Generating Power and Capturing Carbon Dioxide”; and (viii) U.S. Patent Application No.: 17/448,938, File date: September 27, 2021, Titled: “Systems and Methods Associated With Bottoming Cycle Power Systems for Generating Power, Capturing Carbon Dioxide and Producing Products.

 

The Company’s business planESG Clean Energy System is designed to, engageamong other things, generate clean electricity from internal combustion engines and utilize waste heat to capture approximately 100% of the carbon dioxide (CO2) emitted from the engine without loss of efficiency, and in a manner to facilitate the acquisition, exploration, development and production of oilcertain commodities. Patent No. 11,286,832, for example, covers the invention of an “exhaust-gas-to-exhaust-gas heat exchanger” that efficiently cools – and natural gas properties, both individuallythen reheats – exhaust from a primary power generator so greater energy output can be achieved by a secondary power source with safe ventilation. Another key aspect of this patent is the development of a carbon dioxide capture system that utilizes the waste heat of the carbon dioxide pump to heat and through collaborative partnerships with other companies in this field of endeavor. The Company’s majority-owned investee, Viking Energy Group, Inc., has relationships with industry expertsregenerate the adsorber that enables carbon dioxide to be safely contained and formulated an acquisition strategy, with emphasis on acquiring under-valued, producing properties from distressed vendors or those deemed as non-core assets by larger sector participants. packaged.

The Company does not focus on speculative exploration programs, but rather targets propertiesintends to sell, lease and/or sub-license the ESG Clean Energy System to third parties using, among other things, Simson-Maxwell’s existing distribution channels. The Company may also utilize the ESG Clean Energy System for its own account, whether in connection with current productionits petroleum operations, Simson-Maxwell’s power generation operations, or otherwise.

Medical Waste Disposal System Using Ozone Technology:

In January 2022, Viking acquired a 51% interest in Viking Ozone Technology, LLC (“Viking Ozone”), which owns the intellectual property rights to a patented (i.e., US Utility Patent No. 11,565,289), proprietary medical and untapped reserves.biohazard waste treatment system using ozone technology. Simson-Maxwell has been designated the exclusive worldwide manufacturer and vendor of this system. The Company’s growth strategy includestechnology is designed to be a sustainable alternative to incineration, chemical, autoclave and heat treatment of bio-hazardous waste, and for the following key initiatives:treated waste to be classified as renewable fuel for waste-to-energy (“WTE”) facilities in many locations around the world.

 

44

·

Acquisition of under-valued producing oil and gas assets

·

Employ enhanced recovery techniques to maximize production

·

Implement responsible, lower-risk drilling programs on existing assets

·

Aggressively pursue cost-efficiencies

·

Opportunistically explore strategic mergers and/or acquisitions

·

Actively hedge mitigating commodity risk

Table of Contents

 

Open Conductor Detection Technologies:

In February 2022, Viking acquired a 51% interest in two entities, Viking Sentinel Technology, LLC (“Viking Sentinel”) and Viking Protection Systems, LLC (“Viking Protection”), that own the intellectual property rights to patented (i.e. U.S. utility patent 11,769,998 titled “ Electric Transmission Line Ground Fault Prevention Systems Using Dual, High Sensitivity Monitoring Devices’) and patent pending (i.e., US Applications 16/974,086, and 17/693,504), proprietary electric transmission and distribution open conductor detection systems. The following overview providessystems are designed to detect a backgroundbreak in a transmission line, distribution line, or coupling failure, and to immediately terminate the power to the line before it reaches the ground. The technology is intended to increase public safety and reduce the risk of causing an incendiary event, and to be an integral component within grid hardening and stability initiatives by electric utilities to improve the resiliency and reliability of existing infrastructure.

Oil and Gas Properties

Existing Assets:

As of December 31, 2023, the Company owns leasehold interests (working interests) in properties producing from the Cline and Wolfberry formations in Texas.

Divestitures in 2023:

On November 5, 2023, Mid-Con Petroleum, LLC and Mid-Con Drilling, LLC, wholly owned subsidiaries of Viking, sold 100% of their interest in oil and gas assets in Kansas, consisting of 168 producing wells, 90 injector wells and 34 non-producing wells, for gross proceeds of $515,000. On December 1, 2023, a subsidiary of Petrodome Energy, LLC (“Petrodome”), a wholly owned subsidiary of Viking, sold its non-operated working interest in a producing oil well in Texas for proceeds of $250,000. The Company recorded a net gain on these two transactions in the amount of $854,465, as follows:

Proceeds from sale (net of transaction costs)

 

$751,450

 

Reduction in oil and gas full cost pool (based on % of reserves disposed)

 

 

(1,049,229)

ARO recovered

 

 

1,104,806

 

Cash bond recoverable (net of fees)

 

 

47,438

 

Gain on disposal

 

$854,465

 

Following these transactions, Petrodome ceased to be the operator of any oil and gas properties and applied for the refund of a cash performance bond of $50,000. The refund, net of fees, is included in prepaids and other current strategy being implementedassets at December 31, 2023 and was included in the determination of the gain on disposal.

Divestitures in 2022:

On July 8, 2022, four of the wholly owned subsidiaries of Petrodome Energy, LLC (“Petrodome”), a wholly owned subsidiary of the Company, entered into Purchase and Sale Agreements to sell all of their interests in the oil and gas assets owned by managementthose Petrodome subsidiaries, including in the aggregate, interests in 8 producing wells, 8 shut-in wells, 2 saltwater disposal wells and 1 inactive well, to third parties for $3,590,000 in cash. The proceeds from the sale were used to fully repay Petrodome’s indebtedness to CrossFirst Bank under the June 13, 2018 revolving line of credit loan.

This transaction resulted in the disposition of most of the Company’s total oil and gas reserves (see Note 6). The Company recorded a loss on the transaction in the amount of $8,961,705, as follows:

Proceeds from sale

 

$3,590,000

 

Reduction in oil and gas full cost pool (based on % of reserves disposed)

 

 

(12,791,680)

ARO recovered

 

 

239,975

 

Loss on disposal

 

$(8,961,705)

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Additionally, in July 2022, the Company received an unanticipated refund of a $1,200,000 performance bond as a result of Petrodome ceasing to operate certain assets in the State of Louisiana. The gain from this refund was included in the “loss from the sale of oil and gas properties and fixed assets’ in the Consolidated Statement of Operations.

Merger with Viking Energy Group, Inc.

On August 1, 2023, Camber completed the previously announced merger (the “Merger”) with Viking pursuant to the terms and conditions of the Agreement and Plan of Merger between Camber and Viking dated February 15, 2021, which was amended on April 18, 2023 (as amended, the “Merger Agreement”), with Viking surviving the Merger as a wholly owned subsidiary of Camber.

Upon the terms and conditions in the Merger Agreement, each share: (i) of common stock, par value $0.001 per share, of Viking (the “Viking Common Stock”) issued and outstanding, other than shares owned by Camber, was converted into the right to receive one share of common stock of Camber (the “Camber Common Stock”); (ii) of Series C Preferred Stock of Viking (the “Viking Series C Preferred Stock”) issued and outstanding was converted into the right to receive one share of Series A Convertible Preferred Stock of Camber (the “New Camber Series A Preferred Stock”) and (iii) of Series E Convertible Preferred Stock of Viking (the “Viking Series E Preferred Stock,” and, together with the Viking Series C Preferred Stock, the “Viking Preferred Stock”) issued and outstanding was converted into the right to receive one share of Series H Preferred Stock of Camber (the “New Camber Series H Preferred Stock,” and, together with the New Camber Series A Preferred Stock, the “New Camber Preferred”).

Each share of New Camber Series A Preferred Stock is convertible into 890 shares of Camber Common Stock (subject to a beneficial ownership limitation preventing conversion into Camber Common Stock if the holder would be deemed to beneficially own more than 9.99% of Camber Common Stock), is treated equally with Camber Common Stock with respect to dividends and liquidation, and only has voting rights with respect to voting: (a) on a proposal to increase or reduce Camber’s share capital; (b) on a resolution to approve the terms of a buy-back agreement; (c) on a proposal to wind up Camber; (d) on a proposal for the disposal of all or substantially all of Camber’s property, business and undertaking; (f) during the year ended December 31, 2021winding-up of Camber; and/or (g) with respect to a proposed merger or consolidation in which Camber is a party or a subsidiary of Camber is a party.

Each share of New Camber Series H Preferred Stock has a face value of $10,000 per share, is convertible into a certain number of shares of Camber Common Stock, with the conversion ratio based upon achievement of certain milestones by Viking’s subsidiary, Viking Protection Systems, LLC (provided the holder has not elected to receive the applicable portion of the purchase price in cash pursuant to that certain Purchase Agreement, dated as of February 9, 2022, by and between Viking and Jedda Holdings, LLC), is subject to a beneficial ownership limitation of 4.99% of Camber Common Stock (but may be increased up to a maximum of 9.99% at the sole election of a holder by the provision of at least 61 days’ advance written notice) and has voting rights equal to one vote per share of Camber Series H Preferred Stock held on a non-cumulative basis.

Each outstanding option or warrant to purchase Viking Common Stock (a “Viking Option”), to the extent unvested, automatically became fully vested and was converted automatically into an option or warrant (an “Adjusted Option”) to purchase, on substantially the same terms and conditions as were applicable to such Viking Option, except that instead of being exercisable into Viking Common Stock, such Adjusted Option is exercisable into Camber Common Stock.

Each outstanding promissory note issued by Viking that is convertible into Viking Common Stock (a “Viking Convertible Note”) was converted into a promissory note convertible into Camber Common Stock (an “Adjusted Convertible Note”) having substantially the same terms and conditions as applied to the corresponding Viking Convertible Note (including, for the avoidance of doubt, any extended post-termination conversion period that applies following consummation of the Merger), except that instead of being convertible into Viking Common Stock, such Adjusted Convertible Note is convertible into Camber Common Stock.

In connection with the Merger, Camber issued approximately 49,290,152 shares of Camber Common Stock, which represented approximately 59.99% of the outstanding Camber Common Stock after giving effect to such issuance. In addition, Camber reserved for issuance approximately 88,647,137 additional shares of Camber Common Stock in connection with the potential (1) conversion of the New Camber Series A Preferred Stock, (2) conversion of the New Camber Series H Preferred Stock, (3) exercise of the Adjusted Options and (4) conversion of the Adjusted Convertible Notes.

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For accounting purposes, the Merger is deemed a reverse acquisition. Consequently, Viking (the legal subsidiary) was treated as the acquiror of Camber (the legal parent). Accordingly, these consolidated financial statements reflect the financial position, operating results, and cash flow of Viking up to the date of the Merger, and the nine months ended December 31, 2020.combined financial position, operating results and cash flow of Viking and Camber from August 1, 2023 to September 30, 2023. The prior year comparative financial information is that of Viking.

James A. Doris continues to serve as President and Chief Executive Officer of the combined company, and the combined company continues to have its headquarters in Houston, Texas.

 

Going Concern Qualification

 

The Company’s consolidated financial statements included herein have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company generated a net loss of $169.7 million$(33,021,812) for the year ended December 31, 2021 (the “2021 Loss”)2023, as compared to a net loss of $52.0 million$(17,358,259) for the nine-month periodyear ended December 31, 2020.2022. The 2021 Lossloss for the year ended December 31, 2023, was comprised of, among other things, certain non-cash items, with a net impact of $163.8 million including: (i) a loss on changesgoodwill impairment of $14,486,745; (ii) change in fair value of the derivative liability relating to the Series C Preferred Stock of $152.8 million; (ii) equity in$9,150,459; (iii) loss on extinguishment of unconsolidated entitydebt of $9.4 million$605,507; (iii) amortization of debt discount of $1,711,518; (iv) depreciation, depletion and share based compensationamortization of $1.6 million.$1,002,562; (v) impairment of oil and gas and intangible assets of $1,016,760; and (vi) accretion of asset retirement obligation of $155,463.

 

As of December 31, 2021,2023, the Company had a stockholders’ deficitequity of $71.8 million and total$24,297,733, long-term debt, net of $21.5 million.

Ascurrent portion, of December 31, 2021, the Company has$39,971,927 and a working capital deficiency of approximately $90.7 million.$12,142,644. The largest components of current liabilities creating this working capital deficiency wasis drawings by Simson-Maxwell against its bank credit facility of $3,365,995, accrued interest on notes payable to Discover of $5,052,487 and a derivative liability associated with our Series C Preferred Stock of $93.1 million.

Management believes it will be able to continue to leverage the expertise and relationships of its operational and technical teams to enhance existing assets and identify new development, drilling and acquisition opportunities in order to improve the Company’s financial position. The Company may have the ability, if it can raise additional capital, to acquire new assets in a separate division from existing subsidiaries.

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Nonetheless, recent oil and gas price volatility as a result of geopolitical conditions and the global COVID-19 pandemic have already had and may continue to have a negative impact on the Company’s financial position and results of operations. Negative impacts could include but are not limited to: The Company’s ability to sell [its] oil and gas production, reduction in the selling price of the Company’s oil and gas, failure of a counterparty to make required hedge payments, possible disruption of production as a result of worker illness or mandated production shutdowns, the Company’s ability to maintain compliance with loan covenants and/or refinance existing indebtedness, and access to new capital and financing.$3,863,321.

 

These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern for the twelve months following the issuance of its financial statements for the year ended December 31, 2021.concern. The Company’s ability to continue as a going concern is dependent upon its ability to utilize the resources in place to generate future profitable operations, to develop additional acquisition opportunities, and to obtain the necessary financing to meet its debt obligations and repay its liabilities arising from business operations when they come due. Management believes the Company willmay be able to continue to develop new opportunities and willmay be able to obtain additional funds through debt and / or equity financings to facilitate its developmentbusiness strategy; however, there is no assurance of additional funding being available. These consolidated financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company have to curtail operations or be unable to continue in existence.

 

During the year ended December 31, 2021 and the nine months ended December 31, 2020, the Company sold 1,575 and 630 shares, respectively, of Series C Preferred Stock pursuant to the terms of various Stock Purchase Agreements, for total cash proceeds of $15.0 and $6.0 million, respectively.  During the year ended December 31, 2021, the Company sold 10,544 shares of Series G Preferred Stock for total proceeds of $5.0 million

Although the Company has been successful in obtaining the financial resources in the past, these conditions continue to raise substantial doubt regarding the Company’s ability to continue as a going concern. Therefore, the Company believes it appropriate to continue to include a going concern qualification in its financial statements.

RESULTS OF OPERATIONS

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Additionally, recent oil and gas price volatility as a result of geopolitical conditions and the global COVID-19 pandemic have already had and are expected to continue to have a negative impact on the Company’s financial position and results of operations. Negative impacts could include but are not limited to the Company’s ability to sell its oil and gas production, reduction in the selling price of the Company’s oil and gas, failure of a counterparty to make required payments, possible disruption of production as a result of worker illness or mandated production shutdowns or ‘stay-at-home’ orders, and access to new capital and financing.

Our primary sources of cash for the year ended December 31, 2021 were from funds generated from the sale of preferred stock. The primary uses of cash were funds used in operations and funds invested in connection with the Viking Acquisition.

Pursuant to the December 31, 2019 Redemption Agreement, we entered into a new unsecured promissory note in the amount of $1,539,719 with Lineal, evidencing the repayment of the prior July 2019 Lineal Note, together with additional amounts loaned by Camber to Lineal through December 31, 2019; and loaned Lineal an additional $800,000, which was evidenced by an unsecured promissory note in the amount of $800,000, entered into by Lineal in favor of the Company on December 31, 2019. The December 2019 Lineal Note and Lineal Note No. 2, accrue interest, payable quarterly in arrears, beginning on March 31, 2020 and continuing until December 31, 2021, when all interest and principal is due, at 8% and 10% per annum (18% upon the occurrence of an event of default), respectively. The December 2019 Lineal Note and Lineal Note No. 2 are unsecured. Such loans are described in greater detail above under “Item 1. Business - General - Lineal Acquisition and Divestiture”, and Lineal has advised it does not have resources to repay the loans. The loans have been fully reserved as of December 31, 2020.

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On June 22, 2020, the Company and the Investor (as defined above) entered into a Stock Purchase Agreement pursuant to which the Investor purchased 630 shares of Series C Preferred Stock for $6 million (of which $4.2 million of such funds were subsequently loaned to Viking as discussed herein).

 

The following discussion of the consolidated financial condition and results of operationoperations of the Company should be read in conjunction with the consolidated financial statements and the related Notes included elsewhere in this Report.

 

Liquidity and Capital Resources

 

 

 

December 31,

 

 

December 31,

 

Working Capital:

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Current assets

 

$5,935,604

 

 

$909,836

 

Current liabilities

 

$96,664,577

 

 

$95,048,013

 

Working capital (deficit)

 

$(90,728,973)

 

$(94,138,177)

 

 

Year Ended

December 31,

 

 

Nine Months Ended

December 31,

 

Cash Flows:

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Net Cash Used in Operating Activities

 

$(3,414,166)

 

$(2,688,067)

Net Cash Provided by (Used in) Investing Activities

 

$15,100,000

 

 

$15,100,000)

Net Cash Provided by Financing Activities

 

$23,500,000

 

 

$18,000,000

 

Increase (Decrease) in Cash during the Period

 

$4,985,834

 

 

$211,933

 

Cash, end of Period

 

$5,854,382

 

 

$868,548

 

The Company had current assets of $5,935,604 as of December 31, 2021, as compared to $909,836 as of December 31, 2020. The Company had current liabilities of $96,664,577 as of December 31, 2021, as compared to $95,048,013 as of December 31, 2020. The Company had a working capital deficit of $90,728,973 of December 31, 2021, as compared to a working capital deficit of $94,138,177 as of December 31, 2020.

Net cash used by operating activities increased to $3,414,166 during the year ended December 31, 2020, as compared to cash used by operating activities of $2,688,067 for the nine months ended December 31, 2020, as the operating period was for twelve months as compared to nine months.

Net cash used by investing activities of $15,100,000 during the year ended December 31, 2021 as compared to cash used by investing activities of the same amount during the nine-month period ended December 31, 2020, representing investments in Viking.

Net cash provided by financing activities increased to $23,500,000 during the year ended December 31, 2021, as compared to $18,000,000 for the nine-month period ended December 31, 2020. This increase is mainly due to issuance of the Series C and Series G Preferred stock to facilitate the acquisition of additional investments in Viking.

Revenue

The Company had gross revenues of $401,222 for the year ended December 31, 2021 as compared to $150,814 for the nine months ended December 31, 2020 primarily due to twelve months of revenues compared to nine months for the prior period.

 

 

Years Ended December 31,

 

Working Capital:

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Current assets

 

$19,653,836

 

 

$18,950,740

 

Current liabilities

 

$31,796,480

 

 

$25,290,333

 

Working capital deficit

 

$(12,142,644)

 

$(6,339,593)

  

 
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Years Ended December 31,

 

Cash Flows:

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Net Cash Used in Operating Activities

 

$(5,342,265)

 

$(3,760,376)

Net Cash Provided by Investing Activities

 

$661,147

 

 

$6,580,575

 

Net Cash Provided by (Used in) Financing Activities

 

$2,347,829

 

 

$(3,048,788)

Decrease in Cash during the Period

 

$(2,333,289)

 

$(228,589)

Cash and Cash Equivalents, end of Period

 

$906,060

 

 

$3,239,349

 

Net cash used in operating activities increased to $(5,342,265) during the fiscal year ended December 31, 2023, as compared to $(3,760,376) in the comparable period in 2022. This increase is primarily the result of a lower overall increase in net operating assets as compared to the prior year.

Net cash flows from investing activities decreased to $661,147 during the fiscal year ended December 31, 2023, as compared to $6,580,575 in the comparable period in 2022. This decrease is due to higher proceeds from the sale of oil and gas properties and the sale of notes receivable in 2022.

Net cash used in financing activities increased to $2,347,829 during the fiscal year ended December 31, 2023, as compared to $(3,048,788) in the comparable period in 2022. This increase is mainly due to  the impact of the issuance of debt during 2023 as compared to the repayment of debt in 2022.

Segment and Consolidated Results

The Company has two reportable segments: Oil and Gas Production and Power Generation. The power generation segment provides custom energy and power solutions to commercial and industrial clients in North America and the oil and gas segment is involved in exploration and production with properties in central and southern United States. We evaluate segment performance based on revenue and operating income (loss).

Information related to our reportable segments and our consolidated results for the years ended December 31, 2023 and 2022 is presented below.

 

 

Year Ended December 31, 2023

 

 

 

Oil and Gas

 

 

Power Generation

 

 

Total

 

Loss from Operations is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

1,042,024

 

 

$

31,012,299

 

 

$

32,054,323

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods

 

 

-

 

 

 

21,340,506

 

 

 

21,340,506

 

Lease operating costs

 

 

658,505

 

 

 

-

 

 

 

658,505

 

General and administrative

 

 

4,864,323

 

 

 

10,010,569

 

 

 

14,874,892

 

Impairment of oil & gas and intangible assets

 

 

347,050

 

 

 

669,710

 

 

 

1,016,760

 

Depreciation, depletion and amortization

 

 

595,360

 

 

 

407,202

 

 

 

1,002,562

 

Accretion - ARO

 

 

155,463

 

 

 

-

 

 

 

155,463

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

6,620,701

 

 

 

32,427,987

 

 

 

39,048,688

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

$

(5,578,677

)

 

$

(1,415,688

)

 

$

(6,994,365

)

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Year Ended December 31, 2022

 

 

 

Oil and Gas

 

 

Power Generation

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

Loss from Operations is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$3,984,122

 

 

$20,054,038

 

 

$24,038,160

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods

 

 

-

 

 

 

13,627,457

 

 

 

13,627,457

 

Lease operating costs

 

 

1,633,765

 

 

 

-

 

 

 

1,633,765

 

General and administrative

 

 

4,245,434

 

 

 

10,584,883

 

 

 

14,830,317

 

Stock based compensation

 

 

1,614,334

 

 

 

-

 

 

 

1,614,334

 

Impairment of intangible assets

 

 

-

 

 

 

451,772

 

 

 

451,772

 

Depreciation, depletion and amortization

 

 

1,104,240

 

 

 

394,926

 

 

 

1,499,166

 

Accretion - ARO

 

 

55,521

 

 

 

-

 

 

 

55,521

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

8,653,294

 

 

 

25,059,038

 

 

 

33,712,332

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

$(4,669,172)

 

$(5,005,000)

 

$(9,674,172)

Revenue

The Company had gross revenues of $32,054,323 for the year ended December 31, 2023 as compared to $24,038,160 for the year ended December 31, 2022, an increase of 33%. Power revenues grew by almost 55% driven by significantly stronger unit sales. Oil and gas revenues declined by almost 74% reflecting the impact of oil and gas divestitures in the second half of 2022 and in 2023.

Expenses

 

The Company’s operating expenses were $5,834,587increased by 16% to $39,048,688 for the year ended December 31, 2021, as compared to $5,351,1872023 from $33,712,232 for the nine months ended December 31, 2020. General and administrative expenses decreased by $1,025,425, while share based compensation increased by $1,500,393 during the year ended December 31, 2021 which was partially offset by2022. Lease operating costs, depreciation depletion and amortization decreased as a $2.2 million chargeresult of dispositions of oil and gas interests. Cost of sales increased significantly as compared to bad debt for the Lineal loan duringprior year, consistent with the nine months ended December 31, 2020.increase in power segment revenues.

 

Income (Loss) from Operations

 

The Company generated a loss from operations of $5,433,365$(6,994,365) for the year ended December 31, 2021,2023, as compared to a loss from operations of $5,200,373 from operations for the nine months ended December 31, 2020, due primarily to those items listed above.

Other income (expense)

The Company had other income (expense) of $(164,241,804)$(9,674,172) for the year ended December 31, 2021,2022, due to the reasons explained above.

Other Income and Expense

The Company recorded other expense of $26,027,447 for the year ended December 31, 2023 as compared to ($46,811,015)$7,684,087 for the nine monthsyear ended December 31, 2020. The largest components2022, an increase of this change is$18,343,360. This increase was driven by (i) higher interest expense due to the recognitionassumption of adebt following the Merger; (ii) change in the fair value of derivative liabilities of $(152,831,568) duringacquired at the year ended December 31, 2021 as comparedMerger date; (iii) higher debt discount amortization, and (iv) a goodwill impairment charge related to $(41,878,821) for the nine months ended December 31, 2020, and equity in losses of unconsolidated affiliates of $(9,430,946) during the year ended December 31, 2021 as compared to $(5,401,540) for the nine months ended December 31, 2020, which was primarily the loss associated with the equity investment in Viking.Merger.

 

Off Balance Sheet Arrangements

 

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in the Company’s securities.

 

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Seasonality

 

The Company’s operating results are not affected by seasonality.

 

Inflation

 

The Company’s business and operating results are not currently affected in any material way by inflation although they could be adversely affected in the future were inflation to increase, resulting in cost increases.

 

Critical Accounting PoliciesCRITICAL ACCOUNTING POLICIES AND ESTIMATES

 

We prepare our consolidated financial statements in conformity with U.S. GAAP, which requires management to make certain estimates and assumptions and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the consolidated financial statements are prepared and actual results could differ from our estimates and such differences could be material. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions. On a regular basis, we review our critical accounting policies and how they are applied in the preparation of our consolidated financial statements, as well as the sufficiency of the disclosures pertaining to our accounting policies in the footnotes accompanying our consolidated financial statements. Described below are the most significant policies we apply in preparing our consolidated financial statements, some of which are subject to alternative treatments under GAAP. We also describe the most significant estimates and assumptions we make in applying these policies. See “Note 24 - Summary of Significant Accounting Policies” to our consolidated financial statements.

 

Consolidation of Variable Interest Entities

The Company consolidates the financial results of its subsidiaries, defined as entities in which the Company holds a controlling financial interest.

Several of the Company’s subsidiaries are considered to be Variable Interest Entities (“VIE’s”) which are defined as an entity for which any of the following conditions exist:

1.

57

The total equity is not sufficient to permit the entity to finance its activities without additional subordinated financial support.

2.

The equity holders as a group have one of the following four characteristics:

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i.

Lack the power to direct activities that most significantly impact the entity’s economic performance.

ii.

Possess non-substantive voting rights.

iii.

Lack the obligation to absorb the entity’s expected losses.

iv.

Lack the right to receive the entity expected residual returns.

The Company consolidates the financial results of a VIE when it is determined that the Company is the primary beneficiary of the VIE.

 

Oil and Gas Property Accounting

 

The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under this method of accounting, all costs of acquisition, exploration and development of oil and natural gas properties (including such costs as leasehold acquisition costs, geological expenditures, dry hole costs, tangible and intangible development costs and direct internal costs) are capitalized as the cost of oil and natural gas properties when incurred.

 

The full cost method requires the Company to calculate quarterly, by cost center, a “ceiling,” or limitation on the amount of properties that can be capitalized on the balance sheet. To the extent capitalized costs of oil and natural gas properties, less accumulated depletion and related deferred taxes, exceed the sum of the discounted future net revenues of proved oil and natural gas reserves, the lower of cost or estimated fair value of unproved not properties subject to amortization, the cost of properties not being amortized, and the related tax amounts, such excess capitalized costs are charged to expense.

 

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No

The Company recorded an impairment expense was recorded forcharge of $347,050 on the year endedvalue of its oil and gas assets at December 31 2021 or the nine-month period ended December 31, 2020.2023.

 

Proved Reserves

 

Estimates of our proved reserves included in this report are prepared in accordance with U.S. SEC guidelines for reporting corporate reserves and future net revenue. The accuracy of a reserve estimate is a function of:

 

i.

the quality and quantity of available data;

 

ii.

the interpretation of that data;

 

iii.

the accuracy of various mandated economic assumptions; and

 

iv.

the judgment of the persons preparing the estimate.

 

Our proved reserve information included in this report was predominately based on estimates. Because these estimates depend on many assumptions, all of which may substantially differ from future actual results, reserve estimates will be different from the quantities of oil and gas that are ultimately recovered. In addition, results of drilling, testing and production after the date of an estimate may justify material revisions to the estimate.

 

In accordance with SEC requirements, we based the estimated discounted future net cash flows from proved reserves on the unweighted arithmetic average of the prior 12-month commodity prices as of the first day of each of the months constituting the period and costs on the date of the estimate.

 

The estimates of proved reserves materially impact depreciation, depletion, amortization and accretion (“DD&A”)&A expense. If the estimates of proved reserves decline, the rate at which we record DD&A expense will increase, reducing future net income. Such a decline may result from lower market prices, which may make it uneconomic to drill for and produce from higher-cost fields.

 

Asset Retirement Obligation

 

Asset retirement obligations (“ARO”) primarily represent the estimated present value of the amount we will incur to plug, abandon and remediate our producing properties at the projected end of their productive lives, in accordance with applicable federal, state and local laws. We determined our ARO by calculating the present value of estimated cash flows related to the obligation. The retirement obligation is recorded as a liability at its estimated present value as of the obligation’s inception, with an offsetting increase to proved properties. Periodic accretion of discount of the estimated liability is recorded as accretion expense in the accompanying consolidated statements of operations and comprehensive income.operations.

 

ARO liability is determined using significant assumptions, including current estimates of plugging and abandonment costs, annual inflation of these costs, the productive lives of wells and a risk-adjusted interest rate. Changes in any of these assumptions can result in significant revisions to the estimated ARO.

 

Revenue Recognition

Oil and Gas Revenues

Sales of crude oil, natural gas, and natural gas liquids (“NGLs”) are included in revenue when production is sold to a customer in fulfillment of performance obligations under the terms of agreed contracts. Performance obligations primarily comprise delivery of oil, gas, or NGLs at a delivery point, as negotiated within each contract. Each barrel of oil, million BTU (“MMBtu”) of natural gas, or other unit of measure is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated. Performance obligations are satisfied at a point in time once control of the product has been transferred to the customer. The Company considers a variety of facts and circumstances in assessing the point of control transfer, including but not limited to: whether the purchaser can direct the use of the hydrocarbons, the transfer of significant risks and rewards, the Company’s right to payment, and transfer of legal title. In each case, the time between delivery and when payments are due is not significant.

 
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Derivative LiabilitiesPower Generation Revenues

Through its 60.5% ownership in Simson-Maxwell, the Company manufactures and sells power generation products, services and custom energy solutions.

Sale of Power Generation Units

 

The Company considers the completed unit or units to be a single performance obligation for purposes of revenue recognition and recognizes revenue when control of the product is transferred to the customer, which typically occurs upon shipment or delivery to the customer. Progress payments are recognized as contract liabilities until the completed unit is delivered. Revenue is measured as the amount of consideration the Company expects to be entitled in exchange for the transfer of the units, which is generally the price stated in the contract. The Company does not allow returns because of the customized nature of the units and does not offer discounts, rebates, or other promotional incentives or allowances to customers. Simson-Maxwell has elected to recognize the cost for freight activities when control of the product has transferred to the customer as an expense within cost of goods.

Parts Revenue

The Company considers the purchase orders for parts, which in some cases are governed by master sales agreements, to be the contracts with the customers. For each contract, the Company considers the commitment to transfer products, each of which is distinct, to be the identified performance obligations. Revenue is measured as the amount of consideration the Company expects to be entitled in exchange for the transfer of product, which is generally the price stated in the contract specific for each item sold, adjusted for the value of expected returns. Simson-Maxwell has elected to recognize the cost for freight activities when control of the product has transferred to the customer as an expense within cost of goods sold in the consolidated statements of comprehensive income. Parts revenues are recognized at the point in time when control of the product is transferred to the customer, which typically occurs upon shipment or delivery to the customer.

Service and Repairs

Service and repairs are generally performed on customer owned equipment and billed based on labor hours incurred. Each repair is considered a performance obligation. As a result of control transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. Simson-Maxwell generally uses the cost-to-cost measure of progress for its service work because the customer controls the asset as it is being serviced. Most service and repairs are completed in one or two days.

Goodwill

Goodwill is the excess of cost of an acquired entity over the fair value of amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is subject to impairment testing at least annually and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. An entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after completing the assessment, it is determined that certain obligationsit is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company will proceed to issue shares relatinga quantitative test. The Company may also elect to conversionsperform a quantitative test instead of a qualitative test for any or all of our reporting units. The test compares the fair value of an entity’s reporting units to the carrying value of those reporting units. This quantitative test requires various judgments and estimates. The Company estimates the fair value of the reporting unit using a market approach in combination with a discounted operating cash flow approach. Impairment of goodwill is measured as the excess of the carrying amount of goodwill over the fair values of recognized and unrecognized assets and liabilities of the reporting unit.

Intangible Assets

Intangible assets include amounts capitalized for the Company’s license agreement with ESG as described in Note 2. This asset is amortized on a straight-line basis over the remaining life of the related patents being licensed, which is approximately 16 years.

Additionally, with the acquisition of Simson-Maxwell, the Company identified other intangible assets consisting of customer relationships (which is being amortized on a straight-line basis over 10 years) and Simson-Maxwell brand (which is not being amortized) with an aggregate appraised fair value $3,908,126.

With the acquisition of a 51% interest in Viking Ozone, Viking Sentinel and Viking Protection, as described in Note 8, the Company has aggregate intangible assets of $15,433,340. These assets have an indefinite life and are not being amortized.

The Company reviews these intangible assets, at least annually, for possible impairment when events or changes in circumstances that the assets carrying amount may not be recoverable. In evaluating the future benefit of its intangible assets, the Company estimates the anticipated discounted future net cash flows of the intangible assets over the remaining estimated useful life. If the carrying amount is not recoverable, an impairment loss is recorded for the excess of the carrying value of the asset over its fair value.

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The Company  recorded an impairment charge of $669,710 related to Simson-Maxwell’s intangible assets during the year ended December 31, 2023.

Derivative Liability

The Series C Preferred Stock containCOD contains provisions that could result in modification of the Series C Preferred Stock conversion price that is based on a variable that is not an input to the fair value of a “fixed-for-fixed” option as defined under FASB ASC Topic No. 815 - 40.

 

The Series C Preferred Stock are convertible into shares of common stock at a fixed $3.25$162.50 conversion rate. Upon conversion, the holder is entitled to dividends as if the shares had been held to maturity, which is referred to as the Conversion Premium. The Conversion Premium may be paid in shares or cash, at the option of the Company. If the Conversion Premium is paid in cash, the amount is fixed and generally not subject to adjustment. If the Conversion Premium is paid in shares, the conversion ratio is based on a VWAP calculation based on the lowest stock price over the Measurement Period. The Measurement Period is 30 trading days (or 60 trading days if there is a Triggering Event) prior to the conversion date and 30 trading days (or 60 trading days if there is a Triggering Event) after the conversion date. The VWAP calculation is subject to adjustment if there is a Triggering Event and the Measurement Period is subject to adjustment in the event that the Company is in default of one or more Equity Conditions provided in the Certificate of Designation.COD. For example, the Measurement period may be extended one day for every day the Company is not in compliance with one or more of the Equity Conditions. Trigger Eventsevents are described in the designation of the Series C Preferred Stock, but include items which would typically be events of default under a debt security, including filing of reports late with the SEC.

 

At the conversion date, the number of shares due for the Conversion Premium is estimated based on the previous 30-day (or 60 day) VWAP. If the Company does not elect to pay the Conversion Premium in cash, the Company will issue all shares due for the conversion and the estimated shares due for the conversion premium. If the VWAP calculation for the portion of the Measurement Period following the date of conversion is lower than the VWAP for the portion of the Measurement Period prior to the date of conversion, the holder will be issued additional shares of common shares,stock, referred to as “true-up”True-Up shares. If the VWAP calculation is higher, no true-upTrue-Up shares are issued.

 

The Company has determined that the Series C Preferred Stock contains an embedded derivative liability atrelating to the end of each period includes a derivative liability for the outstanding Series C sharesConversion Premium and, upon conversion, a derivative liability for the potential obligation to issue True-Up Shares relating to Series C shares that have been converted and the Measurement Period has not expired, if applicable.

 

Prior to April 20, 2021, theThe fair value of the derivative liability relating to the Conversion Premium for any outstanding Series C Shares wasis equal to the cash required to settle the Conversion Premium. On April 20, 2021, the Company amended the Series C Stock certificate of designation (COD) to require all conversions to be in common shares, thus removing the cash option for redemption of the Conversion Premium. The amendment required reclassification of the Series C Stock recorded in temporary equity to be reclassified to permanent equity with no further quarterly adjustments. The removal of the cash option for conversion of the Conversion Premium changed the cash redemption assumption to assume, in all cases, share redemption. Therefore, the derivative liability is required to be recorded at the fair value of the equivalent number of common shares issuable to satisfy the Conversion Premium. We recorded an adjustment to derivative liability and loss on derivative on April 20, 2021 and we will record changes in fair value of the derivative liability each quarter thereafter as long as any Series C Stock are outstanding. We estimated the fair value of the derivative liability for the outstanding Series C Stock Conversion Premium using the period end number of shares required to satisfy the Conversion Premium generally at the period end closing share price of the Company’s common stock, except as noted below.

The fair value of the potential true-upTrue-Up share obligation has been estimated using a binomial pricing mode and the lesser of the conversion price or the low closing price of the Company’s stock subsequent to the conversion date. and the historical volatility of the Company’s common stock.stock (See Note 12).

 

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The Company is a smaller reporting company and is traded onCapitalized terms used but not defined in this section have the NYSE American exchange. Historically, our stock price has been extremely volatile and subjectmeaning assigned to large and sometimes unexplained price variations on a daily or weekly basis. In addition, the Company declared four reverse stock splitsthem in 2018 and 2019 and the Company’s common stock generally trades at less than $1.00 per share. These factors have exacerbated daily volatility of our stock price. Consequently, we believe that the closing price of our stock on the reporting date may not, in all cases, represent the fair value of the common share required to satisfy the redemption of the Series C preferred Stock. Recognizing that the closing share price of our publicly traded stock is an observable input to fair value, we used such price for determining fair value in most cases and only considered an alternative measure of fair value when the closing price of the Company’s common stock varied by more than 20% from the five-day moving average immediately prior to the measurement date. In such cases, we used an average closing price of the previous 30-day period as an estimate of fair value, adjusted for stock splits if applicable. In addition, conversion of the Series C shares requires a significant number of common shares to be issued in relation to the total number of shares outstanding. We do not believe that the market price of the Company’s common stock appropriately reflects the potential for significant dilution caused by a large conversion and may not be representative of market value. In cases where the number of common shares required to satisfy a conversion of the Series C shares into common stock was significant in relation to the total number of shares outstanding (approximately 30% or greater) we determined the fair value of the embedded features based on the historical market capitalization of the Company.COD.

 

ItemITEM 7A. Quantitative and Qualitative Disclosures About Market Risk.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

The Company, as a smaller reporting company (as defined by Rule 12b-2 of the Exchange Act), is not required to furnish information required by this item.

 

 
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

INDEX TO THE FINANCIAL STATEMENTS

 

 

 

Page 

 

Report of Independent Registered Public Accounting Firm (PCAOB #76)ID# 76)

 

F-1

 

Consolidated Balance Sheets as of December 31, 2021and 20202023 and 2022

F-2

Consolidated Statements of Operations for the years ended December 31, 2023 and 2022

 

F-3

 

Consolidated Statements of Operations for the year ended December 31, 2021 and the Nine Months Ended December 31, 2020

F-4

Consolidated Statement of Changes in Stockholders’ Equity (Deficit) yearDeficit for the years ended December 31, 20212023 and the Nine Months Ended December 31, 20202022

 

F-5

 

Consolidated Statements of Cash Flows for the yearyears ended December 31, 20212023 and the Nine Months Ended December 31, 20202022

 

F-6F-7

 

Notes to Consolidated Financial Statements

 

F-7F-8

 

 

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Your Vision Our Focus

cei_10kimg4.jpgcei_10kimg6.jpg

 

REPORT Report of Independent Registered Public Accounting FirmOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Shareholders and

Board of Directors ofand Shareholders

Camber Energy, Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of Camber Energy, Inc. (the “Company”) as of December 31, 20212023, and 2020,2022, and the related consolidated statements of operations, comprehensive loss, changes in stockholders’ deficit, and cash flows for each of the two years in the period from April 1, 2020 to December 31, 2020 and the year ended December 31, 2021,2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20212023, and 20202022, and the results of its operations and its cash flows for each of the two years in the period from April 1, 2020 to December 31, 2020 and for the year ended December 31, 2021,2023, in conformity with accounting principles generally accepted in the United States of America.

 

Explanatory Paragraph – Going Concern

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully describeddiscussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a significant workingnet capital deficiency has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditionsthat raise substantial doubt about the Company’sits ability to continue as a going concern. Management’sManagement's plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’sentity’s management. Our responsibility is to express an opinion on the Company’sthese financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditsaudit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’sentity's internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

Turner, Stone & Company, L.L.P.

Accountants and Consultants

12700 Park Central Drive, Suite 1400

Dallas, Texas 75251

Telephone: 972-239-1660 ⁄ Facsimile: 972-239-1665

Toll Free: 877-853-4195

Web site: turnerstone.com  

cei_10kimg8.jpg

INTERNATIONALASSOCIATIONOF ACCOUNTANTS AND AUDITORS

Critical Audit Matters

 

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate relate.

 

Series C Preferred Stock

·

Impairment of Indefinite Life Intangible Assets:The impairment evaluation of the Company’s indefinite life intangible assets is an assessment that begins with the Company’s monitoring of indicators of impairment on an individual asset basis, which the Company believes is the lowest level for which there are identifiable cash flows. The Company reviews indefinite life intangible assets for impairment indicators on a quarterly basis or whenever events or changes in circumstances indicate the carrying amount of the assets may not be fully recoverable. The Company performed a full quantitative impairment assessment as of December 31, 2023, for all indefinite life intangible assets. When performing a quantitative impairment assessment, the Company estimates discounted cash flows at the asset level from continuing use through the remainder of the asset’s estimated useful life. If the estimated discounted cash flows are not sufficient to recover an indefinite life intangible asset’s carrying value, the Company recognizes an impairment to reduce the carrying value to the estimated fair value. The Company applies significant judgment in estimating the fair value of its intangible assets, based on expected revenues, industry, and business growth, and expected residual cash flows at net present value. We identified the impairment of indefinite life intangible assets as a critical audit matter because of the significant judgment required by management to determine estimated expected revenues, growth, and discounted cash flows. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s judgements and estimates.

 

As discussed in Notes 1 and 14, the Company issued a series of preferred stock that contained several features which derived value from sources unrelated to the host preferred stock instrument. The Company determined certain of the features included in the Series C Preferred Stock designations, including the conversion, dividend and liquidation value, required that the preferred stock be reported as a component of temporary equity with the conversion and dividend components bifurcated and accounted for on a stand-alone basis as derivatives. The determination of fair value of these derivatives as well as the value of the temporary equity involved using complex valuation methodologies and significant assumptions including volume weighted prices and the estimated valuation of the Company’s common stock taking into consideration the effect of these dilutive instruments.

How the Critical Audit Matter was Addressed in the Audit: Our audit procedures related to management’s model which included projected revenues based on forecasted growth rates and discounted cash flow analysis included the following, among others:

-

We evaluated management’s ability to forecast future cash flows by evaluating management’s forecast of estimated future cash flows assumptions including, but not limited to, the forecasted performance driven by expected industry receptivity, existing sales orders or outstanding bids, market share, and expected operating costs.

-

We reviewed the completeness and accuracy of the underlying data used in management’s forecast.

-

We assessed the underlying source information where available and mathematical accuracy of the calculations.

 

We identified auditing the Company’s evaluation of the accounting for the features included in the Series C Preferred Stock, specifically the methods and assumptions used to estimate the fair value of the derivative liabilities, as a critical audit matter.

·

Goodwill Impairment Assessment:The Company assesses goodwill for impairment annually during the fourth quarter or more frequently when events or changes in circumstances indicate that impairment may exist. Reporting units are tested for impairment by comparing the fair value of each reporting unit with its carrying amount. Management uses a market capitalization approach to estimate the fair value of reporting unit. During the third quarter of 2023, the Company identified a triggering event. The Company performed an impairment test of the reporting unit as of September 30, 2023, and concluded the fair value of the reporting unit was less than the carrying amount. The Company recognized an impairment charge of approximately $14,486,745 during the year ended December 31, 2023.

 

How We Addressed the Matter in Our Audit:

 

The primary procedures we performed to address this critical audit matter included:

We identified the evaluation of the goodwill impairment assessment of the reporting unit as a critical audit matter. A high degree of subjective auditor judgment was required to evaluate certain assumptions used in the Company’s estimate of the fair value of the reporting unit.

 

Changes in these assumptions could have had a significant effect on the Company’s assessment of the fair value of the reporting unit.

How the Critical Audit Matter was Addressed in the Audit:Our audit procedures related to the impairment of goodwill included:

-

We assessed the methodology, assumptions and mathematical accuracy of the model developed by the Company to assess whether the goodwill is impaired.

-

We assessed the analysis utilized to calculate the implied impairment.

-

We performed a sensitivity analysis of the Company’s historic stock prices for the 15-days before and 15-days after December 31, 2023.

·

Series C Preferred Stock:The Company issued a series of preferred stock that contained several features which derive value from sources unrelated to the host preferred stock instrument. The Company determined certain of the features included in the Series C Preferred Stock designations, including the conversion, dividend, and liquidation value, required that the conversion and dividend components be bifurcated and accounted for on a stand-alone basis as derivatives. The determination of fair value of these derivatives involved using complex valuation methodologies and significant assumptions including volume weighted prices and the estimated valuation of the Company’s common stock taking into consideration the effect of these dilutive instruments. We identified auditing the Company’s evaluation of the accounting for the features included in the Series C Preferred Stock, specifically the methods and assumptions used to estimate the fair value of the derivative liabilities, as a critical audit matter.

How the Critical Audit Matter was Addressed in the Audit:Our audit procedures related to management’s fair value model for the bifurcated features of the Series C Preferred Stock included:

 

-

Obtaining and reviewing the underlying Series C Preferred Stock certificate of designation and related amendments to understand the terms and conditions, economic substance, and identify embedded features requiring evaluation.

 

-

Testing management’s development of the assumptions used in the valuation models applied and the reasonableness of those assumptions.

 

-

Obtaining an understanding of management’s process for developing the estimated fair value of the embedded features, including evaluation of the appropriateness of the method selected by the Company, identifying the significant assumptions used to determine the fair value estimate, and the application of those assumptions in the related method.

 

-

TestingAssessing the data and significant assumptions used in developing the fair value estimate, including procedures to determine whether the data was complete and accurate and sufficiently precise.

 

·

Estimation of Proved Oil and Gas Reserves:The Company uses the full cost method of accounting for oil and natural gas properties. This accounting method requires management to make estimates of proved oil and natural gas reserves and related future cash flows to compute and record depreciation, depletion, and amortization expense, as well as to assess potential impairment of oil and natural gas properties (the full cost ceiling test). To estimate the volume of proved oil and natural gas reserves quantities, management makes significant estimates and assumptions including forecasting the production decline rate of producing properties.

In addition, the estimation of proved oil and natural gas reserves is also impacted by management’s judgements and estimates regarding the financial performance of wells associated with those proved oil and natural gas reserves to determine if wells are expected to be economical under the appropriate pricing assumptions that are required in the estimation of depreciation, depletion and amortization expense and potential ceiling test impairment assessments.

We identified the estimation of proved oil and natural gas reserves as it relates to the recognition of depreciation, depletion and the assessment of potential impairment as a critical audit matter.

How the Critical Audit Matter was Addressed in the Audit:Our audit procedures related to the estimation of provided oil and gas reserves included: 

-

The work of management's specialists was used in performing the procedures to evaluate the reasonableness of the proved developed oil and gas reserve volumes. As a basis for using this work, the specialists' qualifications were understood and the Company’s relationship with the specialists was assessed.

-

Evaluated the methods and assumptions used by the specialists.

-

We assessed the Company’s inputs and assumptions used in the valuation models applied and the reasonableness of those assumptions.

/s/ Turner, Stone & Company, L.L.P.

We have served as the Company’sCompany's auditor since 20212016.

 

Dallas, Texas

May 19, 2022March 25, 2024

 

Turner, Stone & Company, L.L.P.

Accountants and Consultants

12700 Park Central Drive, Suite 1400

Dallas, Texas 75251

Telephone: 972-239-1660 ⁄ Facsimile: 972-239-1665

  Toll Free: 877-853-4195

 cei_10kimg5.jpg

 Web site: turnerstone.com 

INTERNATIONAL ASSOCIATION OF ACCOUNTANTS AND AUDITORS

F-1

Table of Contents

 

CAMBER ENERGY, INC.

CONSOLIDATED BALANCE SHEETS

 

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash

 

$5,854,382

 

 

$868,548

 

Accounts receivable - oil and gas - net

 

 

24,389

 

 

 

7,077

 

Prepaid expenses

 

 

56,833

 

 

 

34,211

 

Total current assets

 

 

5,935,604

 

 

 

909,836

 

 

 

 

 

 

 

 

 

 

Oil and gas properties, full cost method

 

 

 

 

 

 

 

 

Proved developed producing oil and gas properties, net

 

 

68,884

 

 

 

74,877

 

Total oil and gas properties, net

 

 

68,884

 

 

 

74,877

 

 

 

 

 

 

 

 

 

 

Due from Viking Energy, Inc.

 

 

4,100,000

 

 

 

0

 

Equity method investment

 

 

36,299,592

 

 

 

15,830,538

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$46,404,080

 

 

$16,815,251

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$1,449,335

 

 

$996,382

 

Accrued expenses and other current liabilities

 

 

2,103,674

 

 

 

67,397

 

Current taxes payable

 

 

3,000

 

 

 

3,000

 

Derivative liability

 

 

93,108,568

 

 

 

93,981,234

 

Total current liabilities

 

 

96,664,577

 

 

 

95,048,013

 

 

 

 

 

 

 

 

 

 

Long-term debt - net of current portion

 

 

21,500,000

 

 

 

18,000,000

 

Asset retirement obligation

 

 

53,055

 

 

 

46,748

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

118,217,632

 

 

 

113,094,761

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 11)

 

 

0

 

 

 

0

 

 

 

 

 

 

 

 

 

 

TEMPORARY EQUITY

 

 

 

 

 

 

 

 

Preferred Stock Series C, 2,093 shares issued and outstanding as of December 31, 2020, liquidation preference of $72,135,245

 

 

0

 

 

 

5,946,052

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

Preferred Stock Series C, 5,200 shares authorized, $0.001 par value, 3,886 shares issued and outstanding as of December 31, 2021, liquidation preference of $133,930,990.

 

 

4

 

 

 

0

 

Preferred Stock Series G, 25,000 authorized, $0.001 par value, 10,544 issued and outstanding as of December 31, 2021, liquidation preference of $10,540,000

 

 

10

 

 

 

0

 

Common stock, 1,000,000,000 shares authorized of $0.001 par value, 257,132,026 and 25,000,000 shares issued and outstanding as of December 31, 2021 and 2020

 

 

257,132

 

 

 

25,000

 

Additional paid-in-capital

 

 

409,217,417

 

 

 

209,362,384

 

Accumulated Deficit

 

 

(481,288,115)

 

 

(311,612,946)

 

 

 

 

 

 

 

 

 

TOTAL STOCKHOLDERS' DEFICIT

 

 

(71,813,552)

 

 

(102,225,562)

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

 

$46,404,080

 

 

$16,815,251

 

The accompanying notes are an integral part of these financial statements

F-2

Table of Contents

CAMBER ENERGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

 

Nine Months

 

 

 

Year Ended

 

 

Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

Oil and gas sales

 

$401,222

 

 

$150,814

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

Lease operating costs

 

 

134,684

 

 

 

131,937

 

General and administrative

 

 

4,150,708

 

 

 

5,176,133

 

Stock based compensation

 

 

1,536,895

 

 

 

36,502

 

Depreciation, depletion, amortization and accretion

 

 

12,300

 

 

 

6,615

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

5,834,587

 

 

 

5,351,187

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(5,433,365)

 

 

(5,200,373)

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

Interest expense

 

 

(1,979,290)

 

 

(67,397)
Equity (deficit) in earnings of uncolidated entities

 

 

(9,430,946)

 

 

(5,401,540)
Gain (loss) on derivative liability

 

 

(152,831,568)

 

 

(41,878,821)
Interest and other income

 

 

0

 

 

 

765,516

 

Other expenses

 

 

0

 

 

 

(228,773)

 

 

 

 

 

 

 

 

 

Total other income (expense)

 

 

(164,241,804)

 

 

(46,811,015)

 

 

 

 

 

 

 

 

 

Net income (loss) before income taxes

 

 

(169,675,169)

 

 

(52,011,388)
Income tax benefit (expense)

 

 

0

 

 

 

0

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Camber Energy, Inc.

 

 

(169,675,169)

 

 

(52,011,388)
Less preferred dividends

 

 

(84,156,455)

 

 

(6,929,910)

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to common stockholders

 

$(253,831,624)

 

$(58,941,298)

 

 

 

 

 

 

 

 

 

Income (loss) per weighted average number of common shares outstanding - basic and diluted

 

$(2.05)

 

$(3.36)

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

 

Basic and Diluted

 

 

124,077,234

 

 

 

17,556,725

 

 

 

At December 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash

 

$906,060

 

 

$3,239,349

 

Accounts receivable, net

 

 

8,545,449

 

 

 

5,276,622

 

Inventory, net

 

 

9,795,969

 

 

 

10,276,662

 

Prepaids and other current assets

 

 

406,358

 

 

 

158,107

 

Total current assets

 

 

19,653,836

 

 

 

18,950,740

 

 

 

 

 

 

 

 

 

 

Oil and gas properties, full cost method

 

 

 

 

 

 

 

 

Proved oil and gas properties, net

 

 

1,083,576

 

 

 

1,285,918

 

Total oil and gas properties, net

 

 

1,083,576

 

 

 

1,285,918

 

 

 

 

 

 

 

 

 

 

Fixed assets, net

 

 

1,639,759

 

 

 

1,716,200

 

Right of use assets, net

 

 

3,900,632

 

 

 

4,357,328

 

ESG Clean Energy license, net

 

 

4,268,437

 

 

 

4,577,131

 

Other intangibles - Simson Maxwell, net

 

 

2,417,145

 

 

 

3,254,600

 

Other intangibles - Variable Interest Entities

 

 

15,433,340

 

 

 

15,433,340

 

Goodwill

 

 

52,970,485

 

 

 

-

 

Due from related parties

 

 

334,437

 

 

 

327,132

 

Deposits and other assets

 

 

10,300

 

 

 

10,300

 

TOTAL ASSETS

 

$101,711,947

 

 

$49,912,689

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$6,759,819

 

 

$3,905,247

 

Accrued expenses and other current liabilities

 

 

10,993,350

 

 

 

1,248,301

 

Customer deposits

 

 

2,769,486

 

 

 

5,447,025

 

Due to Parent

 

 

-

 

 

 

6,572,300

 

Undistributed revenues and royalties

 

 

1,633,838

 

 

 

2,378,739

 

Current portion of operating lease liability

 

 

1,357,653

 

 

 

1,304,047

 

Due to related parties

 

 

643,121

 

 

 

629,073

 

Current portion of notes payable - related parties

 

 

407,154

 

 

 

56,916

 

Bank indebtedness - credit facility

 

 

3,365,995

 

 

 

3,111,350

 

Derivative liability

 

 

3,863,321

 

 

 

-

 

Current portion of long-term debt - net of discount

 

 

2,743

 

 

 

637,335

 

Total current liabilities

 

 

31,796,480

 

 

 

25,290,333

 

Long term debt - net of current portion and debt discount

 

 

39,971,927

 

 

 

2,106,281

 

Notes payable - related parties - net of current portion

 

 

578,863

 

 

 

627,153

 

Operating lease liability, net of current portion

 

 

2,588,287

 

 

 

3,160,654

 

Contingent obligations

 

 

1,435,757

 

 

 

1,435,757

 

Asset retirement obligation

 

 

1,042,900

 

 

 

1,927,196

 

TOTAL LIABILITIES

 

 

77,414,214

 

 

 

34,547,374

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 14)

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Preferred stock Series A, $0.001 par value, 50,000 shares authorized, 28,092 shares issued and outstanding as of December 31, 2023 and 2022

 

 

28

 

 

 

28

 

Preferred stock Series C, $0.001 per value, 5,200 shares authorized, 30 shares issued and outstanding as of December 31, 2023. Liquidation preference of $1,033,950.

 

 

1

 

 

 

-

 

Preferred stock Series G, $0.001 par value, 25,000 authorized, 5,272 shares issued and outstanding as of December 31, 2023. No liquidation preference.

 

 

5

 

 

 

-

 

Preferred stock Series H, $0.001 par value, 2,075 shares authorized, 275 and 475 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively

 

 

3

 

 

 

5

 

Common stock, $0.001 par value, 500,000,000 shares authorized, 119,301,921 and 44,852,611 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively

 

 

119,302

 

 

 

44,853

 

Additional paid-in capital

 

 

169,460,183

 

 

 

127,757,269

 

Accumulated other comprehensive loss

 

 

(248,814)

 

 

(425,677)

Accumulated deficit

 

 

(154,837,638)

 

 

(122,187,673)

Parent’s stockholders’ equity in Camber

 

 

14,493,070

 

 

 

5,188,805

 

Non-controlling interest

 

 

9,804,663

 

 

 

10,176,510

 

TOTAL STOCKHOLDERS’ EQUITY

 

 

24,297,733

 

 

 

15,365,315

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$101,711,947

 

 

$49,912,689

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-3F-2

Table of Contents

 

CAMBER ENERGY, INC.

CONSOLIDATED STATEMENTSTATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITYOPERATIONS

 

 

 

Series C

 

 

Series C

 

 

Series G

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock

 

 

Preferred Stock

 

 

Preferred Stock

 

 

Common Stock

 

 

Additional

 

 

 

 

 

Total

 

 

 

Number

 

 

 

 

 

Number

 

 

 

 

 

Number

 

 

 

 

 

Number

 

 

 

 

 

Paid In

 

 

Accumulated

 

 

Stockholders'

 

 

 

Of Shares

 

 

Amount

 

 

Of Shares

 

 

Amount

 

 

Of Shares

 

 

Amount

 

 

Of Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

(Deficit) Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances, December 31, 2020

 

 

2,093

 

 

$5,946,052

 

 

 

-

 

 

$-

 

 

 

-

 

 

$-

 

 

 

25,000,000

 

 

$25,000

 

 

$209,362,384

 

 

$(311,612,946)

 

 

(102,225,562)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares issued for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of Series C Preferred Stock

 

 

-

 

 

 

0

 

 

 

(1,672)

 

 

(2)

 

 

-

 

 

 

0

 

 

 

176,301,780

 

 

 

176,301

 

 

 

141,632,774

 

 

 

0

 

 

 

141,809,073

 

True-Up Shares

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

54,330,153

 

 

 

54,331

 

 

 

45,740,826

 

 

 

0

 

 

 

45,795,157

 

Issuance of Common Shares for Consulting Fees

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

1,500,094

 

 

 

1,500

 

 

 

1,493,358

 

 

 

0

 

 

 

1,494,858

 

Equity contribution

 

 

-

 

 

 

(11,208,840)

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

11,208,840

 

 

 

0

 

 

 

11,208,840

 

Warrants issued for compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

42,037

 

 

 

-

 

 

 

42,037

 

Issuance of Series G Stock for cash

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

10,544

 

 

 

10

 

 

 

-

 

 

 

0

 

 

 

313,681

 

 

 

 

 

 

 

313,691

 

Issuance of Common stock warrants for cash

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

4,686,309

 

 

 

 

 

 

 

4,686,309

 

Issuance of Series C Preferred Shares for Cash Proceeds

 

 

1,890

 

 

 

6,164,308

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

(6,164,308)

 

 

0

 

 

 

(6,164,308)
Series C fair value adjustment

 

 

-

 

 

 

512,686

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

(512,686)

 

 

0

 

 

 

(512,686)
Issuance of Series C Preferred Shares for Cash Proceeds

 

 

-

 

 

 

0

 

 

 

1,575

 

 

 

2

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

2

 

Other

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

-

 

 

 

(1)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Transfer of Series C Preferred Stock to Permanent Equity

 

 

(3,983)

 

 

(1,414,206)

 

 

3,983

 

 

 

4

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

1,414,202

 

 

 

0

 

 

 

1,414,206

 

Net Loss  

 

 

-

 

 

 

-

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

0

 

 

 

(169,675,169)

 

 

(169,675,169)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances December 31, 2021

 

 

-

 

 

$0

 

 

 

3,886

 

 

$4

 

 

 

10,544

 

 

$10

 

 

 

257,132,026

 

 

$257,132

 

 

$409,217,417

 

 

$(481,288,115)

 

$(71,813,552)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances, March 31, 2020

 

 

2,819

 

 

$9,801,446

 

 

 

-

 

 

$0

 

 

 

-

 

 

$0

 

 

 

5,000,000

 

 

$5,000

 

 

$179,783,233

 

 

$(259,601,558)

 

 

(79,813,325)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares issued for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of Series C Preferred Stock

 

 

(756)

 

 

(1,734,473)

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

19,823,486

 

 

 

19,823

 

 

 

28,790,997

 

 

 

0

 

 

 

28,810,820

 

True-Up Shares

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Issuance of Common Shares for Consulting Fees

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

176,514

 

 

 

177

 

 

 

209,325

 

 

 

0

 

 

 

209,502

 

Issuance of Series C Preferred Shares for Cash Proceeds

 

 

630

 

 

 

2,217,671

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

(2,217,671)

 

 

0

 

 

 

(2,217,671)
Series C Preferred Stock exchanged for debt

 

 

(600)

 

 

(1,542,092)

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Change in fair value of Series C shares

 

 

-

 

 

 

(2,796,500)

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

2,796,500

 

 

 

0

 

 

 

2,796,500

 

Net Loss  

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

0

 

 

 

(52,011,388)

 

 

(52,011,388)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances December 31, 2020

 

 

2,093

 

 

$5,946,052

 

 

 

-

 

 

$0

 

 

 

-

 

 

$0

 

 

 

25,000,000

 

 

$25,000

 

 

$209,362,384

 

 

$(311,612,946)

 

$(102,225,562)

 

 

Year Ended December 31,

 

 

 

2023

 

 

 2022

 

Revenue

 

 

 

 

 

 

Power generation units and parts

 

$18,631,593

 

 

$9,000,562

 

Service and repairs

 

 

12,380,706

 

 

 

11,053,476

 

Oil and gas

 

 

1,042,024

 

 

 

3,984,122

 

Total revenue

 

 

32,054,323

 

 

 

24,038,160

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

Cost of goods sold

 

 

21,340,506

 

 

 

13,627,457

 

Lease operating costs

 

 

658,505

 

 

 

1,633,765

 

General and administrative

 

 

14,874,892

 

 

 

14,830,317

 

Stock based compensation

 

 

-

 

 

 

1,614,334

 

Impairment of oil and gas properties

 

 

347,050

 

 

 

-

 

Impairment of intangible assets

 

 

669,710

 

 

 

451,772

 

Depreciation, depletion & amortization

 

 

1,002,562

 

 

 

1,499,166

 

Accretion - asset retirement obligation

 

 

155,463

 

 

 

55,521

 

Total operating expenses

 

 

39,048,688

 

 

 

33,712,332

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(6,994,365)

 

 

(9,674,172)

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

Interest expense

 

 

(1,408,096)

 

 

(638,346)

Amortization of debt discount

 

 

(1,711,518)

 

 

(99,695)

Change in fair value of derivative liability

 

 

(9,150,459)

 

 

-

 

(Loss) gain on disposal of membership interests and assets

 

 

854,465

 

 

 

(7,747,347)

Loss on extinguishment of debt

 

 

(605,507)

 

 

-

 

Goodwill impairment

 

 

(14,486,745)

 

 

-

 

Interest and other income

 

 

480,413

 

 

 

801,301

 

Total other expense, net

 

 

(26,027,447)

 

 

(7,684,087)

 

 

 

 

 

 

 

 

 

Net loss before income taxes

 

 

(33,021,812)

 

 

(17,358,259)

Income tax benefit (expense)

 

 

-

 

 

 

-

 

Net loss

 

 

(33,021,812)

 

 

(17,358,259)

Net loss attributable to non-controlling interest

 

 

(371,847)

 

 

(1,930,930)

Net loss attributable to Camber Energy, Inc.

 

$(32,649,965)

 

$(15,427,329)

 

 

 

 

 

 

 

 

 

Loss per common share, basic and diluted

 

$(0.46)

 

$(0.35)

Weighted average number of common shares outstanding,  basic and diluted

 

 

71,380,635

 

 

 

44,645,990

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-3

Table of Contents

CAMBER ENERGY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

 

 

Year Ended December 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Net loss

 

$(33,021,812)

 

$(17,358,259)

Foreign currency translation adjustment

 

 

176,863

 

 

 

(247,696)

 

 

 

 

 

 

 

 

 

Total comprehensive loss

 

 

(32,844,949)

 

 

(17,605,955)

 

 

 

 

 

 

 

 

 

Less comprehensive loss attributable to non-controlling interest

 

 

 

 

 

 

 

 

Loss attributable to non-controlling interest

 

 

(371,847)

 

 

(1,930,930)

Foreign currency translation adjustment attributable to non-controlling interest

 

 

69,861

 

 

 

(97,840)

 

 

 

 

 

 

 

 

 

Comprehensive loss attributable to non-controlling interest

 

 

(301,986)

 

 

(2,028,770)

 

 

 

 

 

 

 

 

 

Comprehensive loss attributable to Camber Energy, Inc.

 

$(32,542,963)

 

$(15,577,185)

The accompanying notes are an integral part of these consolidated financial statements.

F-4

Table of Contents

 

CAMBER ENERGY, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT

 

 

 Preferred Stock

 

 

 Preferred Stock

 

 

 Preferred Stock

 

 

 Preferred Stock

 

 

 

 

 

 

 Additional

 

 

 Accumulated

Other

 

 

 

 

 

 

 Total

 

 

 

Series A

 

 

Series C

 

 

Series G

 

 

Series H

 

 

Common Stock

 

 

Paid-in

 

 

 Comprehensive

 

 

(Accumulated

 

 

Noncontrolling

 

 

Stockholders'

 

 

 

Number

 

 

Amount

 

 

Number

 

 

Amount

 

 

Number

 

 

Amount

 

 

Number

 

 

Amount

 

 

Number

 

 

Amount

 

 

Capital

 

 

(Loss)

 

 

Deficit)

 

 

Interest

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2022

 

 

28,092

 

 

$28

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

475

 

 

$5

 

 

 

44,852,611

 

 

$44,853

 

 

$127,757,269

 

 

$(425,677)

 

$(122,187,673)

 

$10,176,510

 

 

$15,365,315

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares issued on exercise of warrants

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,849,306

 

 

 

3,849

 

 

 

(3,849)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Reverse merger adjustment

 

 

-

 

 

 

-

 

 

 

49

 

 

 

1

 

 

 

5,272

 

 

 

5

 

 

 

-

 

 

 

-

 

 

 

32,876,514

 

 

 

32,876

 

 

 

28,167,903

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

28,200,785

 

Common shares issued on conversion of debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,625,905

 

 

 

9,626

 

 

 

6,506,430

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,516,056

 

Common shares issued on conversion of Series H preferred stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(200)

 

 

(2)

 

 

3,333,333

 

 

 

3,333

 

 

 

(3,331)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Common shares issued on conversion of Series C preferred stock

 

 

-

 

 

 

-

 

 

 

(19)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,093,358

 

 

 

1,094

 

 

 

(1,094)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Common shares issued on true-up of Series C preferred stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

23,670,894

 

 

 

23,671

 

 

 

7,036,855

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

7,060,526

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

176,863

 

 

 

-

 

 

 

-

 

 

 

176,863

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(32,649,965)

 

 

(371,847)

 

 

(33,021,812)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2023

 

 

28,092

 

 

$28

 

 

 

30

 

 

$1

 

 

 

5,272

 

 

$5

 

 

 

275

 

 

$3

 

 

 

119,301,921

 

 

$119,302

 

 

$169,460,183

 

 

$(248,814)

 

$(154,837,638)

 

$9,804,663

 

 

$24,297,733

 

F-5

Table of Contents

 

 

Preferred Stock

 

 

Preferred Stock

 

 

Preferred Stock

 

 

Preferred Stock

 

 

 

 

 

 

Additional

 

 

Accumulated

Other

 

 

 

 

 

 

Total

 

 

 

Series A

 

 

Series C

 

 

Series G

 

 

Series H

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

(Accumulated

 

 

Noncontrolling

 

 

Stockholders'

 

 

 

Number

 

 

Amount

 

 

Number

 

 

Amount

 

 

Number

 

 

Amount

 

 

Number

 

 

Amount

 

 

Number

 

 

Amount

 

 

Capital

 

 

(Loss)

 

 

Deficit)

 

 

Interest

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2021

 

 

28,092

 

 

$28

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

41,102,609

 

 

$41,103

 

 

$120,316,152

 

 

$(177,981)

 

$(106,760,344)

 

$4,609,271

 

 

$18,028,229

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rounding difference

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Shares issued in acquisition of membership interest in Viking Ozone, LLC

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,333,333

 

 

 

3,333

 

 

 

1,996,667

 

 

 

-

 

 

 

-

 

 

 

2,420,189

 

 

 

4,420,189

 

Shares issued in acquisition of membership interest in Viking Sentinel, LLC

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

416,667

 

 

 

417

 

 

 

232,917

 

 

 

-

 

 

 

-

 

 

 

224,184

 

 

 

457,518

 

Shares issued in acquisition of membership interest in Viking Protection, LLC

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

475

 

 

 

5

 

 

 

-

 

 

 

-

 

 

 

4,433,329

 

 

 

-

 

 

 

-

 

 

 

4,686,542

 

 

 

9,119,876

 

Adjustment to acquisition of Simson-Maxwell

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

167,254

 

 

 

167,254

 

Warrants issued for services

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

778,204

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

778,204

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(247,696)

 

 

-

 

 

 

-

 

 

 

(247,696)

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(15,427,329)

 

 

(1,930,930)

 

 

(17,358,259)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2022

 

 

28,092

 

 

$28

 

 

 

-

 

 

$-

 

 

 

-

 

 

$-

 

 

 

475

 

 

$5

 

 

 

44,852,611

 

 

$44,853

 

 

$127,757,269

 

 

$(425,677)

 

$(122,187,673)

 

$10,176,510

 

 

$15,365,315

 

The accompanying notes are an integral part of these consolidated financial statements.

F-6

Table of Contents

CAMBER ENERGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

Nine Months

 

 

 

Year Ended

 

 

Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$(169,675,169)

 

$(52,011,388)

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net loss to cash provided (used) by operating activities

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

1,536,895

 

 

 

36,502

 

Depreciation, depletion, amortization and accretion

 

 

12,300

 

 

 

6,615

 

Change in fair value of derivative liability

 

 

152,831,569

 

 

 

41,878,823

 

Bad debt expense

 

 

0

 

 

 

2,339,719

 

(Equity) deficit in earnings of unconsolidated entity

 

 

9,430,946

 

 

 

5,401,540

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(17,312)

 

 

248,286

 

Prepaid expenses and other assets

 

 

(22,622)

 

 

341,524

 

Accounts payable and accrued expenses

 

 

2,489,227

 

 

 

(929,688)

 

 

 

 

 

 

 

 

 

Net cash (used ) in operating activities

 

 

(3,414,166)

 

 

(2,688,067)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Loan to Viking prior to investment

 

 

(4,100,000)

 

 

(4,200,000)
Cash paid for Viking investment

 

 

(11,000,000)

 

 

(10,900,000)

 

 

 

 

 

 

 

 

 

Net cash provided (used) in investing activities

 

 

(15,100,000)

 

 

(15,100,000)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of Series C Preferred Stock

 

 

15,000,000

 

 

 

0

 

Proceeds from issuance of Series G Preferred Stock

 

 

5,000,000

 

 

 

0

 

Proceeds from long-term debt

 

 

3,500,000

 

 

 

18,000,000

 

 

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

 

23,500,000

 

 

 

18,000,000

 

 

 

 

 

 

 

 

 

 

Net increase in cash

 

 

4,985,834

 

 

 

211,933

 

Cash, beginning of period

 

 

868,548

 

 

 

656,615

 

 

 

 

 

 

 

 

 

 

Cash, end of period

 

$5,854,382

 

 

$868,548

 

 

 

 

 

 

 

 

 

 

Supplemental Cash Flow Information

 

 

 

 

 

 

 

 

Cash paid for:

 

 

 

 

 

 

 

 

Interest

 

$6,002

 

 

$0

 

Taxes

 

$0

 

 

$0

 

 

 

Year Ended

 

 

 

December 31,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$(33,021,812)

 

$(17,358,259)

Adjustments to reconcile net loss to cash used in operating activities:

 

 

 

 

 

 

 

 

Change in fair value of derivative liability

 

 

9,150,459

 

 

 

-

 

Stock-based compensation

 

 

-

 

 

 

1,614,334

 

Depreciation, depletion and amortization

 

 

1,002,562

 

 

 

1,499,166

 

Accretion – asset retirement obligation

 

 

155,463

 

 

 

55,521

 

Amortization of right-of-use assets

 

 

1,318,822

 

 

 

1,356,179

 

Loss on extinguishment of debt

 

 

605,507

 

 

 

-

 

Amortization of debt discount

 

 

1,711,518

 

 

 

99,695

 

Goodwill impairment

 

 

14,486,745

 

 

 

-

 

Impairment of intangible assets

 

 

669,710

 

 

 

451,772

 

Impairment of oil and gas assets

 

 

347,050

 

 

 

-

 

Loss (gain) on disposal of membership interests and assets

 

 

(854,465)

 

 

8,963,372

 

   Bad debt expense

 

 

207,582

 

 

 

1,172,000

 

Foreign currency translation adjustment

 

 

176,887

 

 

 

(247,696)

Changes in operating assets and liabilities, net of effects of business combination during the year

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(3,476,409)

 

 

2,332,464

 

Prepaid expenses and other assets

 

 

47,104

 

 

 

456,745

 

Inventory

 

 

480,693

 

 

 

(4,786,227)

Accounts payable

 

 

1,225,903

 

 

 

(4,420,222)

Accrued expenses and other current liabilities

 

 

5,144,360

 

 

 

(351,908)

Related party payables

 

 

6,743

 

 

 

267,074

 

Customer deposits

 

 

(2,677,539)

 

 

5,424,010

 

   Operating lease liabilities

 

 

(1,304,247

 

 

 (1,334,853

Undistributed revenues and royalties

 

 

(744,901)

 

 

1,046,457

 

Net cash used in operating activities

 

 

(5,342,265)

 

 

(3,760,376)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Proceeds from sale of oil and gas properties

 

 

751,450

 

 

 

3,590,000

 

Investment in and acquisition of oil and gas properties

 

 

-

 

 

 

(9,813)

Acquisition of fixed assets

 

 

(245,258)

 

 

(75,923)

Proceeds from sale of fixed assets

 

 

-

 

 

 

76,311

 

Cash acquired on Merger

 

 

154,955

 

 

 

-

 

Collection of notes receivable

 

 

-

 

 

 

3,000,000

 

Net cash provided by investing activities

 

 

661,147

 

 

 

6,580,575

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Repayment of long-term debt

 

 

(373,739)

 

 

(8,632,438)

Proceeds on issuance of long-term debt

 

 

4,586,923

 

 

 

-

 

Proceeds from (repayment of) non-interest bearing advances from parent

 

 

(2,120,000)

 

 

2,472,300

 

Advances on Simson Maxwell bank credit facility

 

 

254,645

 

 

 

3,111,350

 

Net cash provided by (used in) financing activities

 

 

2,347,829

 

 

 

(3,048,788)

 

 

 

 

 

 

 

 

 

Net decrease in cash

 

 

(2,333,289)

 

 

(228,589)

Cash, beginning of year

 

 

3,239,349

 

 

 

3,467,938

 

Cash, end of year

 

$906,060

 

 

$3,239,349

 

 

 

 

 

 

 

 

 

 

Cash paid for interest

 

$526,988

 

 

$624,723

 

Cash paid for taxes

 

$-

 

 

$-

 

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

 

 

 

 

 

 

 

 

Issuance of shares on conversion of debt

 

3,832,273

 

 

 

-

 

Issuance of shares on true-up of Series C Preferred Stock

 

7,060,526

 

 

 

-

 

Addition of right-of-use asset and lease liability

 

785,486

 

 

-

 

Issuance of shares for purchase of VIE interests

 

 

-

 

 

2,250,000

 

Issuance of preferred shares for purchase of VIE interests

 

 

-

 

 

4,750,000

 

Contingent obligation associated with acquisition of VIE interests

 

 

-

 

 

1,435,757

 

Issuance of warrants for services

 

 

-

 

 

778,204

 

 

 The accompanying notes are an integral part of these consolidated financial statements.

 

F-5F-7

Table of Contents

 

CAMBER ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – RELATIONSHIP WITH AND INVESTMENT IN VIKING ENERGY GROUP, INC.Note 1. Merger with Viking Energy Group, Inc.

 

On December 23, 2020August 1, 2023, Camber Energy, Inc. (“Camber”, the “Company”, “we”, “us” or “our”)  acquired a 51% interest incompleted the previously announced merger (the “Merger”) with Viking Energy Group, Inc. (“Viking”). On January 8, 2021 the Company acquired an additional interest in Viking resulting in the Company owning approximately 63% of the outstanding common shares of Viking. The Company has determined that its ownership of the common shares of Viking gives the Company the ability to exercise significant influence over Viking, but not control and accounts for its investment in Viking under the equity method.

December 23, 2020 Transaction

On December 23, 2020, the Company entered into a Securities Purchase Agreement with Viking, pursuant to which Camber acquired (“Camber’s Acquisition”) 26,274,510 shares of Viking common stock (“Camber’s Viking Shares”), which constituted 51% of the total outstanding common stock of Viking, in consideration of (i) Camber’s payment of $10,900,000 to Viking (the “Cash Purchase Price”), and (ii) cancellation of $9,200,000 in promissory notes issued by Viking to Camber (“Camber’s Viking Notes”). Pursuant to the purchase agreement, Viking is obligated to issue additional shares of Viking common stock to Camber to ensure that Camber shall own at least 51% of the common stock of Viking through July 1, 2022.

In connection with Camber’s Investment, the Company and Viking terminated their previous merger agreement, dated August 31, 2020, as amended, and the Company assigned its membership interests in one of Viking’s subsidiaries, Elysium Energy Holdings, LLC, to Viking. Also in connection with Camber’s Acquisition, effective December 23, 2020, the Company (i) borrowed $12,000,000 from an institutional investor; (ii) issued the investor a promissory note in the principal amount of $12,000,000, accruing interest at the rate of 10% per annum and maturing December 11, 2022 (the “Camber Investor Note”); (iii) granted the Investor a first-priority security interest in Camber’s Viking Shares and Camber’s other assets pursuant to a pledge agreement and a general security agreement, respectively; and (iv) entered into an amendment to the Company’s $6,000,000 promissory note previously issued to the investor dated December 11, 2020 (the “Additional Camber Investor Note”), amending the acceleration provision of the note to provide that the note repayment obligations would not accelerate if the Company increased its authorized capital stock by March 11, 2021 (and the Company increased its authorized capital stock in February 2021 as required). In order to close Camber’s Investment, effective December 23, 2020, Viking entered into a Guaranty Agreement, guaranteeing repayment of the Camber Investor Note and the Additional Camber Investor Note.

On December 23, 2020, the Camber Investor Note was funded, and the Company and Viking closed Camber’s Investment, with the Company paying the Cash Purchase Price to Viking and cancelling Camber’s Viking Notes, as additional consideration. In exchange, Viking issued 26,274,510 shares of its common stock to Camber, representing 51% of Viking’s total outstanding common shares, the Viking Shares. At the closing, James Doris and Frank Barker, Jr., Viking’s CEO and CFO, were appointed the CEO and CFO of Camber, and Mr. Doris was appointed a member of the Board of Directors of Camber.

Extinguishment of $18.9 million promissory note

On January 8, 2021, the Company entered into another purchase agreement with Viking pursuant to which the Company agreed to acquire an additional 16,153,846 shares of Viking common stock (the “Shares”) in consideration of (i) the Company issuing 1,890 shares of Camber’s Series C Redeemable Convertible Preferred Stock to EMC Capital Partners, LLC (“EMC”), one of the Viking’s lenders which held a secured promissory note issued by Viking to EMC in the original principal amount of $20,869,218 in connection with the purchase of oil and gas assets on or about February 3, 2020 (the “EMC Note”); and (ii) EMC considering the EMC Note paid in full and cancelled pursuant to the Cancellation Agreement described below.

Simultaneously, on January 8, 2021, Viking entered into a Cancellation Agreement with EMC (the “Cancellation Agreement”) pursuant to which Viking agreed to pay $325,000 to EMC,terms and EMC agreed to cancel and terminate inconditions of the EMC Note and all other liabilities, claims, amounts owing and other obligations under the Note. At the same time, the Company entered into a purchase agreement with EMC pursuant to which (i) the Company agreed to issue 1,890 shares of Camber’s Series C Redeemable Convertible Preferred Stock to EMC, and (ii) EMC agreed to enter into the Cancellation Agreement with Viking to cancel the EMC Note.

F-6

Table of Contents

February 2021 Merger Agreement with Viking

On February 15, 2021, the Company entered into an Agreement and Plan of Merger (thebetween Camber and Viking dated February 15, 2021, which was amended on April 18, 2023 (as amended, the “Merger Agreement”) with Viking. The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, a newly-formed wholly-owned subsidiary of Camber (“Merger Sub”) will merge with and into Viking (the “Merger”), with Viking surviving the Merger as a wholly-ownedwholly owned subsidiary of the Company.Camber.

 

Pursuant toUpon the terms and conditions in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share: (i) of common stock, par value $0.001 per share, of Viking (the “Viking Common Stock”) issued and outstanding, immediately prior to the Effective Time, other than shares owned by Camber, Viking and Merger Sub, will bewas converted into the right to receive one share of common stock of the Company; andCamber (the “Camber Common Stock”); (ii) of Series C Convertible Preferred Stock of Viking (the “Viking Series C Preferred Stock”) issued and outstanding immediately prior to the Effective Time will bewas converted into the right to receive one share of Series A Convertible Preferred Stock of the CompanyCamber (the “Camber“New Camber Series A Preferred Stock”). Each and (iii) of Series E Convertible Preferred Stock of Viking (the “Viking Series E Preferred Stock,” and, together with the Viking Series C Preferred Stock, the “Viking Preferred Stock”) issued and outstanding was converted into the right to receive one share of Series H Preferred Stock of Camber (the “New Camber Series H Preferred Stock,” and, together with the New Camber Series A Preferred Stock, will convertthe “New Camber Preferred”).

Each share of New Camber Series A Preferred Stock is convertible into 890 shares of common stock of Camber Common Stock (subject to a beneficial ownership limitation preventing conversion into Camber common stockCommon Stock if the holder would be deemed to beneficially own more than 9.99% of the Company’s common stock)Camber Common Stock), will beis treated equally with the Company’s common stockCamber Common Stock with respect to dividends and liquidation, and will only havehas voting rights with respect to voting: (a) on a proposal to increase or reduce the Company’sCamber’s share capital; (b) on a resolution to approve the terms of a buy-back agreement; (c) on a proposal to wind up Camber; (d) on a proposal for the disposal of all or substantially all of Camber’s property, business and undertaking; (f) during the winding-up of Camber; and/or (g) with respect to a proposed merger or consolidation in which Camber is a party or a subsidiary of Camber is a party. Holders

Each share of New Camber Series H Preferred Stock has a face value of $10,000 per share, is convertible into a certain number of shares of Camber Common Stock, with the conversion ratio based upon achievement of certain milestones by Viking’s subsidiary, Viking Protection Systems, LLC (provided the holder has not elected to receive the applicable portion of the purchase price in cash pursuant to that certain Purchase Agreement, dated as of February 9, 2022, by and between Viking and Jedda Holdings, LLC), is subject to a beneficial ownership limitation of 4.99% of Camber Common Stock (but may be increased up to a maximum of 9.99% at the sole election of a holder by the provision of at least 61 days’ advance written notice) and has voting rights equal to one vote per share of Camber Series H Preferred Stock held on a non-cumulative basis.

Each outstanding option or warrant to purchase Viking Common Stock and Viking Preferred Stock will have any fractional shares of Camber common stock or preferred stock after the Merger rounded up(a “Viking Option”), to the nearest whole share.

Atextent unvested, automatically became fully vested and was converted automatically into an option or warrant (an “Adjusted Option”) to purchase, on substantially the Effective Time, each outstandingsame terms and conditions as were applicable to such Viking equity award, will be convertedOption, except that instead of being exercisable into the right to receive the merger consideration in respect of each share of Viking Common Stock, underlying such equity award and, in the case of Viking stock options, be convertedAdjusted Option is exercisable into vested Camber stock options based on the merger exchange ratio calculated as provided above (the “Exchange Ratio”).Common Stock.

 

The Merger Agreement provides, among other things,Each outstanding promissory note issued by Viking that effective as of the Effective Time, James A. Doris, the current Chief Executive Officer of both the Company and Viking, shall continue to serve as President and Chief Executive Officer following the Effective Time. The Merger Agreement provides that, as of the Effective Time, the Combined Company will have its headquarters in Houston, Texas.

The Merger Agreement also provides that, during the period from the date of the Merger Agreement until the Effective Time, each of Viking and the Company will be subject to certain restrictions on its ability to solicit alternative acquisition proposals from third parties, to provide non-public information to third parties and to engage in discussions with third parties regarding alternative acquisition proposals, subject to customary exceptions. Viking is required to hold a meeting of its stockholders to vote upon the adoption of the Merger Agreement and, subject to certain exceptions, to recommend that its stockholders vote to adopt the Merger Agreement. The Company is required to hold a meeting of its stockholders to approve the issuance ofconvertible into Viking Common Stock (a “Viking Convertible Note”) was converted into a promissory note convertible into Camber Common Stock (an “Adjusted Convertible Note”) having substantially the same terms and conditions as applied to the corresponding Viking Preferred Stock in connection withConvertible Note (including, for the Merger (the “Merger Share Issuances”).

The completionavoidance of doubt, any extended post-termination conversion period that applies following consummation of the MergerMerger), except that instead of being convertible into Viking Common Stock, such Adjusted Convertible Note is subject to customary conditions, including (i) adoption of the Merger Agreement by the Company’s stockholders and approval of the Merger Share Issuances by the Company’s stockholders, (ii) receipt of required regulatory approvals, (iii) effectiveness of a registration statement on Form S-4 for the Company’s common stock to be issued in the Merger (the “Form S-4”), and (iv) the absence of any law, order, injunction, decree or other legal restraint preventing the completion of the Merger or making the completion of the Merger illegal. Each party’s obligation to complete the Merger is also subject to certain additional customary conditions, including (i) subject to certain exceptions, the accuracy of the representations and warranties of the other party, (ii) subject to certain exceptions, performance by the other party of its obligations under the Merger Agreement, and (iii) the absence of any material adverse effect on the other party, as defined in the Merger Agreement.convertible into Camber Common Stock.

 

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Additional closing conditionsIn connection with the Merger, Camber issued approximately 49,290,152 shares of Camber Common Stock, which represented approximately 59.99% of the outstanding Camber Common Stock after giving effect to such issuance. In addition, Camber reserved for issuance approximately 88,647,137 additional shares of Camber Common Stock in connection with the potential (1) conversion of the New Camber Series A Preferred Stock, (2) conversion of the New Camber Series H Preferred Stock, (3) exercise of the Adjusted Options and (4) conversion of the Adjusted Convertible Notes.

For accounting purposes, the Merger is deemed a reverse acquisition. Consequently, Viking (the legal subsidiary) was treated as the acquiror of Camber (the legal parent). Accordingly, these consolidated financial statements reflect the financial position, operating results, and cash flow of Viking up to the Merger include that in the event the NYSE American determines that the Merger constitutes, or will constitute, a “back-door listing” or “reverse merger”, the Company (and its common stock) would be required to qualify for initial listing on the NYSE American, pursuant to the applicable guidance and requirements of the NYSE as of the Effective Time.

The Merger Agreement can be terminated (i) at any time with the mutual consent of the parties; (ii) by either the Company or Viking if any governmental consent or approval required for closing is not obtained, or any governmental entity issues a final non-appealable order or similar decree preventing the Merger; (iii) by either Company or Viking if the Merger shall not have been consummated on or before August 1, 2021; (iv) by the Company or Viking, upon the breach by the other of a termdate of the Merger, whichand the combined financial position, operating results and cash flow of Viking and Camber from August 1, 2023 to December 31, 2023. The prior year comparative financial information is not cured within 30 daysthat of the date of written notice thereof by the other; (v) by Company or Viking is unable to obtain the affirmative vote of its stockholders for approval of the Merger; (vi) by Viking if Company is unable to obtain the affirmative vote of its stockholders required pursuant to the terms of the Merger Agreement; and (vii) by Company or Viking if there is a willful breach of the Merger Agreement by the other party thereto.Viking.

 

The Merger Agreement contains customary indemnification obligations of the parties and representations and warranties.

As of the date hereof, neither Viking nor Camber has advised of its intention to terminate the Merger Agreement.

July, 2021 Transaction

On July 29, 2021, the Company entered into a Securities Purchase Agreement with Viking to acquire an additional 27,500,000 shares of Viking common stock for an aggregate purchase price of $11,000,000.

Accounting for the Viking Investment

As noted above, in accordance with the terms of the Viking Investment, Mr. James A. Doris became thecontinues to serve as President and Chief Executive Officer of the Company, resultingcombined company, and the combined company continues to have its headquarters in Mr. Doris being the President and Chief Executive Officer of each of the Company and Viking. Mr. Doris does not own any shares of the Company but he owns or controls shares of Series C Preferred Stock of Viking with significant voting rights. Such voting rights were suspended until July 1, 2022 or if Mr. Doris were no longer the Chief Executive Officer of the Company. The Company has determined that it has the ability to exercise significant influence over the operations and policies of Viking, but not control of Viking given the voting rights associated with Mr. Doris’ Series C Preferred Stock. Consequently, the Company accounts for the Viking Investment under the equity method.Houston, Texas.

 

NOTE 2 – ORGANIZATION AND OPERATIONS OF THE COMPANYNote 2.Company Overview and Operations

 

Camber is a growth-oriented diversified energy company. Through our majority-owned subsidiaries we provide custom energy and power solutions to commercial and industrial clients in North America, and have a majority interest in: (i) an independententity with intellectual property rights to a fully developed, patented, proprietary Medical and Bio-Hazard Waste Treatment system using Ozone Technology; and (ii) entities with the intellectual property rights to fully developed, patented and patent pending, proprietary Electric Transmission and Distribution Open Conductor Detection Systems. Also, we hold a license to a patented clean energy and carbon-capture system with exclusivity in Canada and for multiple locations in the United States. Various of our other subsidiaries own interests in oil properties in the United States. The Company is also exploring other renewable energy-related opportunities and/or technologies, which are currently generating revenue, or have a reasonable prospect of generating revenue within a reasonable period of time.

Custom Energy and Power Solutions:

Simson-Maxwell Acquisition

On August 6, 2021, Viking, acquired approximately 60.5% of the issued and outstanding shares of Simson-Maxwell Ltd. (“Simson-Maxwell”), a Canadian federal corporation, for $7,958,159 in cash. Simson-Maxwell manufactures and supplies power generation products, services and custom energy solutions. Simson-Maxwell provides commercial and industrial clients with efficient, flexible, environmentally responsible and clean-tech energy systems involving a wide variety of products, including CHP (combined heat and power), tier 4 final diesel and natural gas company engagedindustrial engines, solar, wind and storage. Simson-Maxwell also designs and assembles a complete line of electrical control equipment including switch gear, synchronization and paralleling gear, distribution, Bi-Fuel and complete power generation production controls. Operating for over 80 years, Simson-Maxwell’s seven branches assist with servicing a large number of existing maintenance arrangements and meeting the energy and power-solution demands of the Company’s other customers.

Clean Energy and Carbon-Capture System:

In August 2021, Viking entered into a license agreement with ESG Clean Energy, LLC (“ESG”), to utilize ESG’s patent rights and know-how related to stationary electric power generation and heat and carbon dioxide capture (the “ESG Clean Energy System”). The intellectual property licensed by Viking includes certain patents and/or patent applications, including: (i) U.S. Patent No.: 10,774,733, File date: October 24, 2018, Issue date: September 15, 2020, Titled: “Bottoming Cycle Power System”; (ii) U.S. Patent No.: 17/661,382, Issue date: August 8, 2023, Titled: ‘Systems and Methods Associated With Bottoming Cycle Power Systems for Generating Power, Capturing Carbon Dioxide and Producing Products’; (iii) U.S. Patent No.: 11624307, Issue date: April 22, 2023, Titled: ‘Systems and Methods Associated With Bottoming Cycle Power Systems for Generating Power and Capturing Carbon Dioxide’ (iv) European (validated in the acquisition,United Kingdom, France and Germany) Patent No.: EP3728891, Issue date: April 12, 2023, Titled: “Bottoming Cycle Power System”; (v) U.S. Patent Application No.: 17/224,200, File date: April 7, 2021, Titled: “Bottoming Cycle Power System” (which was subsequently approved by the U.S. Patent & Trademark Office in March, 2022 (No. 11,286,832); (vi) U.S. Patent Application No.: 17/358,197, File date: June 25, 2021, Titled: “Bottoming Cycle Power System”; (vii) U.S. Patent Application No.: 17/448,943, File date: September 27, 2021, Titled: “Systems and Methods Associated With Bottoming Cycle Power Systems for Generating Power and Capturing Carbon Dioxide”; and (viii) U.S. Patent Application No.: 17/448,938, File date: September 27, 2021, Titled: “Systems and Methods Associated With Bottoming Cycle Power Systems for Generating Power, Capturing Carbon Dioxide and Producing Products.

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The ESG Clean Energy System is designed to, among other things, generate clean electricity from internal combustion engines and utilize waste heat to capture approximately  100% of the carbon dioxide (CO2) emitted from the engine without loss of efficiency, and in a manner to facilitate the production of certain commodities. Patent No. 11,286,832, for example, covers the invention of an “exhaust-gas-to-exhaust-gas heat exchanger” that efficiently cools – and then reheats – exhaust from a primary power generator so greater energy output can be achieved by a secondary power source with safe ventilation. Another key aspect of this patent is the development of a carbon dioxide capture system that utilizes the waste heat of the carbon dioxide pump to heat and saleregenerate the adsorber that enables carbon dioxide to be safely contained and packaged.

The Company intends to sell, lease and/or sub-license the ESG Clean Energy System to third parties using, among other things, Simson-Maxwell’s existing distribution channels. The Company may also utilize the ESG Clean Energy System for its own account, whether in connection with its petroleum operations, Simson-Maxwell’s power generation operations, or otherwise.

Medical Waste Disposal System Using Ozone Technology:

In January 2022, Viking acquired a 51% interest in Viking Ozone Technology, LLC (“Viking Ozone”), which owns the intellectual property rights to a patented (i.e., US Utility Patent No. 11,565,289), proprietary medical and biohazard waste treatment system using ozone technology. Simson-Maxwell has been designated the exclusive worldwide manufacturer and vendor of crude oil, natural gas,this system. The technology is designed to be a sustainable alternative to incineration, chemical, autoclave and natural gas liquids from various known productive geological formationsheat treatment of bio-hazardous waste, and for the treated waste to be classified as renewable fuel for waste-to-energy (“WTE”) facilities in Louisianamany locations around the world.

Open Conductor Detection Technologies:

In February 2022, Viking acquired a 51% interest in two entities, Viking Sentinel Technology, LLC (“Viking Sentinel”) and Texas. ThroughViking Protection Systems, LLC (“Viking Protection”), that own the recent acquisitions,intellectual property rights to patented (i.e. U.S. utility patent 11,769,998 titled " Electric Transmission Line Ground Fault Prevention Systems Using Dual, High Sensitivity Monitoring Devices’) and patent pending (i.e., US Applications 16/974,086, and 17/693,504), proprietary electric transmission and distribution open conductor detection systems. The systems are designed to detect a break in a transmission line, distribution line, or coupling failure, and to immediately terminate the power to the line before it reaches the ground. The technology is intended to increase public safety and reduce the risk of causing an incendiary event, and to be an integral component within grid hardening and stability initiatives by electric utilities to improve the resiliency and reliability of existing infrastructure.

Oil and Gas Properties

Existing Assets:

As of December 31, 2023, the Company owns approximately 72% ofleasehold interests (working interests) in properties producing from the outstanding common stock of Viking. Through the Company’s planned merger with Viking, the Company will continue to be engagedCline and Wolfberry formations in the acquisition, exploration, development and production of oil and natural gas properties, both individually and through collaborative partnerships with other companiesTexas.

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Divestitures in this field of endeavor.2023:

 

A novel strainOn November 5, 2023, Mid-Con Petroleum, LLC and Mid-Con Drilling, LLC, wholly owned subsidiaries of coronavirus (“COVID-19”) was first identifiedViking, sold 100% of their interest in December 2019, and subsequently declared a global pandemic by the World Health Organization on March 11, 2020. As a result of the outbreak, many companies have experienced disruptions in their operations, workforce and markets served, including a significant reduction in the demand for petroleum-based products. The market for the Company’s oil and gas assets began being adversely impacted byin Kansas, consisting of 168 producing wells, 90 injector wells and 34 non-producing wells, for gross proceeds of $515,000.

On December 1, 2023, a subsidiary of Petrodome Energy, LLC (“Petrodome”), a wholly owned subsidiary of Viking, sold its non-operated working interest in a producing oil well in Texas for proceeds of $250,000.

The Company recorded a net gain on these two transactions in the effectsamount of COVID-19 in March$854,465, as follows:

Proceeds from sale (net of transaction costs)

 

$751,450

 

Reduction in oil and gas full cost pool (based on % of reserves disposed)

 

 

(1,049,229)

ARO recovered

 

 

1,104,806

 

Cash bond recoverable (net of fees)

 

 

47,438

 

Gain on disposal

 

$854,465

 

Following these transactions, Petrodome ceased to be the operator of 2020 when circumstances surrounding, and responses to, the pandemic, including stay-at-home orders, began to materialize in North America. Due to the Company’s limitedany oil and gas productionproperties and applied for the fact thatrefund of a cash performance bond of  $50,000. The refund, net of fees, is included in prepaids and other current assets at December 31, 2023 and was included in the determination of the gain on disposal.

Divestitures in 2022:

On July 8, 2022, four of the wholly owned subsidiaries of Petrodome Energy, LLC (“Petrodome”), a wholly owned subsidiary of the Company, entered into Purchase and Sale Agreements to sell all of their interests in the oil and gas assets owned by those Petrodome subsidiaries, including in the aggregate, interests in 8 producing wells, 8 shut-in wells, 2 saltwater disposal wells and 1 inactive well, to third parties for $3,590,000 in cash. The proceeds from the sale were used to fully repay Petrodome’s indebtedness to CrossFirst Bank under the June 13, 2018 revolving line of credit loan.

This transaction resulted in the disposition of most of the Company’s current properties are non-operated,total oil and gas reserves (see Note 6). The Company recorded a loss on the transaction in the amount of $8,961,705, as follows:

Proceeds from sale

 

$3,590,000

 

Reduction in oil and gas full cost pool (based on % of reserves disposed)

 

 

(12,791,680)

ARO recovered

 

 

239,975

 

Loss on disposal

 

$(8,961,705)

Additionally, in July 2022, the Company has yetreceived an unanticipated refund of a $1,200,000 performance bond as a result of Petrodome ceasing to experience a significant adverse impactoperate certain assets in the State of Louisiana. The gain from COVID-19. However,this refund was included in the full extent“loss from the sale of the COVID-19 outbreak and changes in demand for oil and gas properties and fixed assets’ in the impact on the Company’s operations is uncertain. A prolonged disruption could have a material adverse impact on the financial results, assets (including requiring write-downs or impairments), and business operationsConsolidated Statement of the Company.Operations.

 

NOTE 3 – LIQUIDITY AND GOING CONCERN CONSIDERATIONSNote 3.Going Concern

 

The Company’s consolidated financial statements included herein have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company generated a net loss of $169.7 million$(33,021,812) for the year ended December 31, 2021 (the “2021 Loss”)2023, as compared to a net loss of $52.0 million$(17,358,259) for the nine-month periodyear ended December 31, 2020.2022. The 2021 Lossloss for the year ended December 31, 2023, was comprised of, among other things, certain non-cash items, with a net impact of $163.8 million including: (i) a loss on changesgoodwill impairment of $14,486,745; (ii) change in fair value of the derivative liability relatingof $9,150,459; (iii) loss on extinguishment of debt of $605,507; (iii) amortization of debt discount of $1,711,518; (iv) depreciation, depletion and amortization of $1,002,562; (v) impairment of oil and gas and intangible assets of $1,016,760, and; (vi) accretion of asset retirement obligation of $155,463.

As of December 31, 2023, the Company had a stockholders’ equity of $24,297,733, long-term debt, net of current, of $39,971,927 and a working capital deficiency of $12,142,644. The largest components of current liabilities creating this working capital deficiency is drawings by Simson-Maxwell against its bank credit facility of $3,365,995, accrued interest on notes payable to the Series C Preferred StockDiscover of $152.8 million; (ii) equity in loss$5,052,487 and a derivative liability of unconsolidated entity of $9.4 million (iii) and share based compensation of $1.6 million.$3,863,321.

 

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As of December 31, 2021, the Company had stockholders’ deficit of $71.8 million and total long-term debt of $21.5 million.

As of December 31, 2021, the Company has a working capital deficiency of approximately $90.7 million. The largest components of current liabilities creating this working capital deficiency was a derivative liability associated with our Series C Preferred Stock of $93.1 million.   

Management believes it will be able to continue to leverage the expertise and relationships of its operational and technical teams to enhance existing assets and identify new development, drilling and acquisition opportunities in order to improve the Company’s financial position. The Company may have the ability, if it can raise additional capital, to acquire new assets in a separate division from existing subsidiaries.

Nonetheless, recent oil and gas price volatility as a result of geopolitical conditions and the global COVID-19 pandemic have already had and may continue to have a negative impact on the Company’s financial position and results of operations. Negative impacts could include but are not limited to: The Company’s ability to sell [its] oil and gas production, reduction in the selling price of the Company’s oil and gas, failure of a counterparty to make required hedge payments, possible disruption of production as a result of worker illness or mandated production shutdowns, the Company’s ability to maintain compliance with loan covenants and/or refinance existing indebtedness, and access to new capital and financing.

 

These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern for the twelve months following the issuance of its financial statements for the year ended December 31, 2021.concern. The Company’s ability to continue as a going concern is dependent upon its ability to utilize the resources in place to generate future profitable operations, to develop additional acquisition opportunities, and to obtain the necessary financing to meet its debt obligations and repay its liabilities arising from business operations when they come due. Management believes the Company willmay be able to continue to develop new opportunities and willmay be able to obtain additional funds through debt and / or equity financings to facilitate its developmentbusiness strategy; however, there is no assurance of additional funding being available. These consolidated financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company have to curtail operations or be unable to continue in existence.

 

During April 2021Note 4.Summary of Significant Accounting Policies

Recently issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2023-09 (“ASU 2023-09”), Income Taxes, which enhances the transparency of income tax disclosures by expanding annual disclosure requirements related to the rate reconciliation and income taxes paid. The amendments are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied on a prospective basis. Retrospective application is permitted. The Company borrowed $2,500,000 fromis currently evaluating this ASU to determine its impact on the Company's disclosures.

In November 2023, the FASB issued Accounting Standards Update 2023-07 (“ASU 2023-07”), Segment Reporting, which improves reportable segment disclosure requirements. ASU 2023-07 primarily enhances disclosures about significant segment expenses by requiring that a public entity disclose significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of segment profit or loss. This ASU also (i) requires that a public entity disclose, on an Institutional Investor,annual and interim basis, an amount for other segment items by reportable segment, and a description of its composition; (ii) requires that all annual disclosures are provided in the interim periods; (iii) clarifies that if the CODM uses more than one measure of profitability in assessing segment performance and deciding how to allocate resources, that one or more of those measures may be reported; (iv) requires disclosure of the title and position of the CODM and a description of how the reported measures are used by the CODM in assessing segment performance and in July 2021deciding how to allocate resources; (v) requires that an entity with a single segment provide all new required disclosures. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 and requires retrospective application. Early adoption is permitted. The amendments under ASU 2023-07 relate to financial disclosures and its adoption will not have an impact on the Company’s results of operations, financial position or cash flows. The Company sold 1,575 shares of Series C Preferred Stock to Antilleswill adopt ASU 2023-07 for s $15 millionthe annual reporting period ending December 31, 2024 and for working capital and new acquisitions.interim reporting periods thereafter.

 

Management believes it will be ableChanges in Presentation and Reclassifications

The following items have been reclassified in the Consolidated Statement of Cash Flows for the year ended December 31, 2022 to continueconform to service its debt obligations, and obtain the financial resources to accomplish these objectives through both debt and equity raises as evidenced by historical results as well as those achieved after the current balance sheet date.

Although the Companyyear presentation: (i) amortization of right of use assets and change in operating lease liabilities have been separately disclosed, and; (ii) bad debt expense has been successful in obtaining the financial resources in the past, these conditions continue to raise substantial doubt regardingseparately disclosed. These reclassifications had no effect on the Company’s ability to continue as a going concern. Therefore, the Company believes it appropriate to continue to include a going concern qualification in itsconsolidated operating results, financial statements.

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NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIEScondition or cash flows.

 

a) Basis of Presentation

 

The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for consolidated financial information and with the instructions to Form 10-K as promulgated by the Securities and Exchange Commission (the “SEC”). Accordingly, these consolidated financial statements include all of the disclosures required by generally accepted accounting principles for complete consolidated financial statements.

 

b) Basis of Consolidation

 

The consolidated financial statements presented herein reflect the consolidated financial results of the Company, its wholly owned subsidiaries, Viking Energy Group, Inc. (“Viking”), Camber Permian LLC, a Texas limited liability company, CE Operating LLC an Oklahoma limited liability company, C Eand CE Operating LLC, the wholly owned subsidiaries of Viking (Mid-Con Petroleum, LLC, Mid-Con Drilling, LLC, Mid-Con Development, LLC, and Petrodome Energy, LLC,LLC.), and Simson-Maxwell (a majority owned subsidiary of Viking).

In January 2022, Viking acquired a Texas limited liability company,51% ownership interest in Viking Ozone, and in February 2022, Viking acquired a 51% ownership interest in both Viking Sentinel and Viking Protection. These entities were formed to facilitate the monetization of acquired intellectual properties (see Note 7). These entities are variable interest entities in which was assigned to PetroGlobe in July 2020 as discussed below under “Note 11 – Commitments and Contingencies” – “Legal Proceedings. the Company owns a controlling financial interest; consequently, these entities are also consolidated.

All significant intercompany transactions and balances have been eliminated. The Compnay’s investment in Viking is accounted for under the equity method.

 

c) Foreign Currency

Foreign currency denominated assets and liabilities are translated into U.S. dollars using the exchange rates in effect at the balance sheet date. Results of operations and cash flows of businesses conducted in foreign currency are translated using the average exchange rates throughout the period. The effect of exchange rate fluctuations on translation of assets and liabilities is included as a component of stockholders’ equity in accumulated other comprehensive income (loss). Gains and losses from foreign currency transactions have been insignificant.

d) Use of Estimates in the Preparation of Consolidated Financial Statements

 

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities. Significant areas requiring the use of management estimates relate to the determination of the fair value of derivative liabilities,the Company’s various series of preferred stock, impairment of long-lived assets, goodwill, fair value of commodity derivatives, stock-based compensation, asset retirement obligations, and the determination of expected tax rates for future income tax recoveries.

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The estimates of proved, probable and possible oil and gas reserves are used as significant inputs in determining the depletion of oil and gas properties and the impairment of proved and unproved oil and gas properties. There are numerous uncertainties inherent in the estimation of quantities of proved, probable and possible reserves and in the projection of future rates of production and the timing of development expenditures. Similarly, evaluations for impairment of proved and unproved oil and gas properties are subject to numerous uncertainties including, among others, estimates of future recoverable reserves and commodity price outlooks. Actual results could differ from the estimates and assumptions utilized.

 

d)e) Financial Instruments

 

Accounting Standards Codification, “ASC” Topic 820-10, “Fair Value Measurement” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 820-10 defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measurement. The carrying amounts reported in the consolidated balance sheets for deposits, accrued expensescash and other current liabilities,cash equivalents, accounts receivable, accounts payable, derivative liabilities, amount due to director,debt instruments and convertible notescertain other assets and liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

 

 

·

Level 1: inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

 

·

Level 2: inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

 

 

·

Level 3: inputs to the valuation methodology are unobservable inputs to measure fair value of assets and significantliabilities for which there is little, if any market activity at the measurement date, using reasonable inputs and assumptions based upon the best information at the time, to the fair value measurement.extent that inputs are available without undue cost and effort.

 

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As of December 31, 2023, the significant inputs to the Company’s derivative liability relative to the Company’s Series C Redeemable Convertible Preferred Stock (the “Series C Preferred Stock”) were Level 3 inputs.

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Assets and liabilities measured at fair value as of and for the year ended December 31, 20212023 are classified below based on the three fair value hierarchy described above:

 

Description

 

Quoted

Prices in

Active

Markets for

Identical Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant Unobservable

Inputs

(Level 3)

 

 

Total Gains

(Losses)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liability - Series C preferred Stock

 

 

 

 

 

 

 

 

93,108,568

 

 

 

(152,831,568)

Derivative liability- Series G Preferred Stock

 

 

 

 

 

 

 

 

--

 

 

 

--

 

 

 

$-

 

 

$-

 

 

$93,108,568

 

 

$(152,831,568)

Description

 

Quoted

Prices in

Active

Markets

for

Identical

Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant Unobservable

Inputs

(Level 3)

 

 

Total 

Losses

(year ended

Dec. 31,

2023)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liability - Series C Preferred Stock

 

$-

 

 

$-

 

 

$3,863,321

 

 

$(7,383,811)

Derivative liability – Convertible Debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,766,648)

 

 

$-

 

 

$-

 

 

$3,863,321

 

 

$(9,150,459)

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e)f) Cash and Cash Equivalents

 

Cash and cash equivalents include cash in banks and financial instruments which mature withinhighly liquid investment securities that have original maturities of three months ofor less. Accounts at banks in the date of purchase.United States are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000, while accounts at banks in Canada are insured by the Canada Deposit Insurance Corporation (“CDIC”) up to CAD $100,000. The Company maintainsCompany’s cash and cash equivalents in bank deposit accounts, whichbalances may at times may exceed federallythe FDIC or CDIC insured limits of $250,000. At December 31, 2021 and 2020, the Company’s cash in excess of the federally insured limit was $5,604,382 and $618,548, respectively. Historically, the Company has not experienced any losses in such accounts. The Company had no cash equivalents at December 31, 2021 or 2020, respectively.limits.

 

f)g) Accounts Receivable

 

Accounts receivable net, include amounts due for the Company’s oil and gas revenues from prior month production.operations consist of purchaser receivables and joint interest billing receivables. The Company evaluates these accounts receivable for collectability and, when necessary, records allowances for expected credit losses. In establishing the required allowance, if any, management considers significant factors such as historical losses, current receivables aging, the debtors’ current ability to pay its obligation to the Company and existing industry and economic data. At December 31, 20212023 and 2020 there were no allowances for doubtful accounts.

g) Notes Receivable

Notes receivable include amounts due toDecember 31, 2022, the Company pursuanthas not recorded an allowance for credit losses related to financial agreements stipulating interest rates, payment termsoil and maturity dates. As of December 31, 2021 and 2020, Note’s receivable balances included two notes due from Lineal in the amounts of $1,539,719 and $800,000, respectively, net of reserves of $2,339,719, which amount was recognized as bad debt expense for the nine months ended December 31, 2020.

h) Investment in Unconsolidated Entitiesgas.

 

The Company accounts forextends credit to its investmentpower generation customers in unconsolidated entities under the equity methodnormal course of accounting when itbusiness. The Company performs ongoing credit evaluations and generally does not own a controlling financial interest and it has the ability to exercise significant influence over the operating and financial policies of the entity.require collateral. Payment terms are generally 30 days. The Company carries its trade accounts receivable at invoice amount less an allowance for its investments in Viking and Elysium (until the Company’s Elysium interest was assigned to Viking on December 23, 2020) under the equity method.  Under the equity method, the investment is initially recorded at cost and the investment is reduced for dividends or distributions it receives and increased or decreased for its proportionate share of earnings or losses of the entity.

We assess the potential for other-than-temporary impairment of our equity method investments when impairment indicators are identified. We consider all available information, including the recoverability of the investment, the earnings and near-term prospects of the affiliate, factors related to the industry, conditions of the affiliate, and our ability, if any, to influence the management of the affiliate. We assess fair value based on valuation methodologies, as appropriate, including the present value of estimated future cash flows, estimates of sales proceeds, and external appraisals. If an investment is considered to be impaired and the decline in value is other than temporary, we record an appropriate write-down.

i) Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over their useful lives. Amortization of the equipment under capital leases related to the Lineal operations was computed using the straight-line method over lives ranging from 3 to 5 years and is included in depreciation expense. Costs of maintenance and repairs were charged to expense when incurred.

Long-lived assets including intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the assets carrying amount to determine if an impairment of such asset is necessary. This evaluation, as well as an evaluation of our intangible assets, requires the Company to make long-term forecasts of the future revenues and costs related to the assets subject to review. Forecasts require assumptions about demand for the Company’s services and future market conditions. Estimating future cash flows requires significant judgment, and the Company’s projections may vary from the cash flows eventually realized. Future events and unanticipated changes to assumptions could requireexpected credit losses. On a provision for impairment in a future period. The effect of any impairment would be to expense the difference between the fair value (less selling costs) of such asset and its carrying value. Such expense would be reflected in earnings. No impairments were deemed necessary for the year ended December 31, 2021 and the nine months ended December 31, 2020.

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j) Acquisitions

Accounting Standards Update (ASU) 2017-01, Clarifying the Definition of a Business (ASU 2017-01) provides a screen test to determine when a set of assets and activities should not be considered a business. Under ASU 2017-01, the Company will perform an initial screening test as of the acquisition date that, if met, results in the conclusion that the set is not a business. If the initial screening test is not met,periodic basis, the Company evaluates whetherits accounts receivable and establishes an allowance for expected credit losses based upon management’s estimates that include a review of the set is a business based on whether there are inputshistory of past write-offs and a substantive process in place. The definitioncollections and an analysis of a business impacts whethercurrent credit conditions. At December 31, 2023 and December 31, 2022, the Company consolidates an acquisition under business combination guidance or asset acquisition guidance.had a reserve for expected credit losses on power generation accounts receivable of  $36,678 and $19,330, respectively. The Company does not accrue interest on past due accounts receivable.

 

k) Limitation on Capitalized Costsh) Inventory

 

Under the full-cost method of accounting, weInventories are required,stated at the end of each reporting date, to perform a test to determine the limit on the book value of our oil and natural gas properties (the “Ceiling” test). If the capitalized costs of our oil and natural gas properties, net of accumulated amortization and related deferred income taxes, exceed the Ceiling, this excess or impairment is charged to expense. The expense may not be reversed in future periods, even though higher oil and natural gas prices may subsequently increase the Ceiling. The Ceiling is defined as the sum of:

(a) the present value, discounted at 10 percent, and assuming continuation of existing economic conditions, of 1) estimated future gross revenues from proved reserves, which is computed using oil and natural gas prices determined as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month hedging arrangements pursuant to SAB 103, less 2) estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves, plus

(b) the cost of properties not being amortized; plus

(c) the lower of cost or estimated fairnet realizable value, and consist of unproven propertiesparts, equipment and work in process. Work-in-process and finished goods included the cost of materials, direct labor and overhead. At the closing of each reporting period, the Company evaluates its inventory in order to adjust the costs being amortized, net ofinventory balance for obsolete and slow-moving items.

 

(d)Inventory consisted of the related tax effects related to the difference between the bookfollowing at December 31, 2023 and tax basis of our oil and natural gas properties.2022:

 

No impairment expense was recorded for the year ended December 31, 2021 and the nine months ended December 31, 2020.

 

 

 December 31,

 

 

 

2023

 

 

2022

 

Units and work in process

 

$8,181,067

 

 

$8,749,903

 

Parts

 

 

2,839,833

 

 

 

2,791,626

 

 

 

 

11,020,900

 

 

 

11,541,529

 

Reserve for obsolescence

 

 

(1,224,931)

 

 

(1,264,867)

 

 

$9,795,969

 

 

$10,276,662

 

 

l)i) Oil and Gas Properties

 

The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under this method of accounting, all costs associated with acquisition, exploration and development of oil and gas reserves, including directly related overhead costs, are capitalized. General and administrative costs related to production and general overhead are expensed as incurred.

 

All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit of production method using estimates of proved reserves. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in operations. Unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is included in loss from operations before income taxes.

 

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m)j) Limitation on Capitalized Costs

Under the full-cost method of accounting, we are required, at the end of each reporting date, to perform a test to determine the limit on the book value of our oil and natural gas properties (the “Ceiling” test). If the capitalized costs of our oil and natural gas properties, net of accumulated amortization and related deferred income taxes, exceed the Ceiling, this excess or impairment is charged to expense. The expense may not be reversed in future periods, even though higher oil and natural gas prices may subsequently increase the Ceiling. The Ceiling is defined as the sum of:

(a)

the present value, discounted at 10 percent, and assuming continuation of existing economic conditions, of 1) estimated future gross revenues from proved reserves, which is computed using oil and natural gas prices determined as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month hedging arrangements pursuant to SAB 103, less 2) estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves, plus

(b)

the cost of properties not being amortized; plus

(c)

the lower of cost or estimated fair value of unproven properties included in the costs being amortized, net of

(d)

the related tax effects related to the difference between the book and tax basis of our oil and natural gas properties.

k) Oil and Gas Reserves

 

Reserve engineering is a subjective process that is dependent upon the quality of available data and the interpretation thereof, including evaluations and extrapolations of well flow rates and reservoir pressure. Estimates by different engineers often vary, sometimes significantly. In addition, physical factors such as the results of drilling, testing and production subsequent to the date of an estimate, as well as economic factors such as changes in product prices, may justify revision of such estimates. Because proved reserves are required to be estimated using recent prices of the evaluation, estimated reserve quantities can be significantly impacted by changes in product prices. The Company uses a third-party engineering firm to estimate its oil and gas reserves.

l) Accounting for Leases

The Company uses the right-of-use (“ROU”) model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. When determining the lease term, the Company includes option periods that it is reasonably certain to exercise as failure to renew the lease would impose a significant economic detriment.

For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months.

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The Company elected the package of practical expedients permitted under the transition guidance for the revised lease standard, which allowed Viking to carry forward the historical lease classification, retain the initial direct costs for any leases that existed prior to the adoption of the standard and not reassess whether any contracts entered into prior to the adoption are leases. The Company also elected to account for lease and non-lease components in lease agreements as a single lease component in determining lease assets and liabilities. In addition, the Company elected not to recognize the right-of-use assets and liabilities for leases with lease terms of one year or less.

m) Business Combinations

The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customer lists, acquired technology, and trade names from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

 

n) Goodwill

Goodwill is the excess of cost of an acquired entity over the fair value of amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is subject to impairment testing at least annually and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. An entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after completing the assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company will proceed to a quantitative test. The Company may also elect to perform a quantitative test instead of a qualitative test for any or all of our reporting units. The test compares the fair value of an entity’s reporting units to the carrying value of those reporting units. This quantitative test requires various judgments and estimates. The Company estimates the fair value of the reporting unit using a market approach in combination with a discounted operating cash flow approach. Impairment of goodwill is measured as the excess of the carrying amount of goodwill over the fair values of recognized and unrecognized assets and liabilities of the reporting unit.

o) Intangible Assets

Intangible assets include amounts related to the Company’s license agreement with ESG Clean Energy, LLC, and its investments in Viking Ozone, LLC, Viking Protection Systems, LLC and Viking Sentinel, LLC. Additionally, as part of the acquisition of Simson-Maxwell, Viking identified intangible assets consisting of Simson-Maxwell’s customer relationships and its brand. These intangible assets are described in detail in Note 7.

The intangible assets related to the ESG Clean Energy license and the Simson-Maxwell customer relationships are being amortized on a straight-line basis over 16 years (the remaining life of the related patents) and 10 years, respectively. The other intangible assets are not amortized.

The Company reviews these intangible assets, at least annually, for possible impairment when events or changes in circumstances that the assets carrying amount may not be recoverable. In evaluating the future benefit of its intangible assets, the Company estimates the anticipated discounted future net cash flows of the intangible assets over the remaining estimated useful life. If the carrying amount is not recoverable, an impairment loss is recorded for the excess of the carrying value of the asset over its fair value.

p) Income (loss)(Loss) per Share

 

Basic and diluted income (loss) per share calculations areis calculated on the basis of the weighted average number of shares of the Company’s common stock outstanding during the year. Diluted earnings per share give effect to all dilutive potential shares of common sharesstock outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted earnings per share, the average stock price for the period is used to determine the number of shares assumed to be purchased from the exercise price of the options and warrants. Purchases of treasury stock reduce the outstanding shares commencing on the date that the stock is purchased. Common stock equivalents are excluded from the calculation when a loss is incurred as their effect would be anti-dilutive.

 

o)For the years ended December 31, 2023 and 2022, there were approximately 15,998,576 and 17,204,020 common stock equivalents, respectively, that were omitted from the calculation of diluted income per share as they were anti-dilutive.

q) Revenue Recognition

Oil and Gas Revenues

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Sales of crude oil, natural gas, and natural gas liquids (“NGLs”) are included in revenue when production is sold to a customer in fulfillment of performance obligations under the terms of agreed contracts. Performance obligations primarily comprise delivery of oil, gas, or NGLs at a delivery point, as negotiated within each contract. Each barrel of oil, million BTU (“MMBtu”) of natural gas, or other unit of measure is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated. Performance obligations are satisfied at a point in time once control of the product has been transferred to the customer. The Company considers a variety of facts and circumstances in assessing the point of control transfer, including but not limited to: whether the purchaser can direct the use of the hydrocarbons, the transfer of significant risks and rewards, the Company’s right to payment, and transfer of legal title. In each case, the time between delivery and when payments are due is not significant.

 

p)The following table disaggregates the Company’s oil and gas revenue by source for the years ended December 31, 2023 and 2022:

 

 

Years Ended

 

 

 

December 31,

 

 

 

2023

 

 

2022

 

Oil

 

$912,024

 

 

$2,254,134

 

Natural gas and natural gas liquids

 

 

36,955

 

 

 

978,970

 

Well operations

 

 

93,445

 

 

 

751,018

 

 

 

$1,042,424

 

 

$3,984,122

 

Power Generation Revenues

Through its 60.5% ownership in Simson-Maxwell, the Company manufactures and sells power generation products, services and custom energy solutions. Simson-Maxwell provides commercial and industrial clients with emergency power generation capabilities. Simson Maxwell’s derives its revenues as follows:

1.

Sale of power generation units. Simson-Maxwell manufactures and assembles power generation solutions. The solutions may consist of one or more units and are generally customized for each customer. Contracts are required to be executed for each customized solution. The contracts generally require customers to submit non-refundable progress payments for measurable milestones delineated in the contract. The Company considers the completed unit or units to be a single performance obligation for purposes of revenue recognition and recognizes revenue when control of the product is transferred to the customer, which typically occurs upon shipment or delivery to the customer. Sales, use, value add and other similar taxes assessed by governmental authorities and collected concurrent with revenue-producing activities are excluded from revenue. Progress payments are recognized as contract liabilities until the completed unit is delivered. Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for the transfer of the units, which is generally the price stated in the contract. The Company does not allow returns because of the customized nature of the units and does not offer discounts, rebates, or other promotional incentives or allowances to customers. Simson-Maxwell has elected to recognize the cost for freight activities when control of the product has transferred to the customer as an expense within cost of goods.

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2.

Parts revenue- Simson-Maxwell sells spare parts and replacement parts to its customers. Simson-Maxwell is an authorized parts distributor for a number of national and international power generation manufacturers. The Company considers the purchase orders for parts, which in some cases are governed by master sales agreements, to be the contracts with the customers. For each contract, the Company considers the commitment to transfer products, each of which is distinct, to be the identified performance obligations. Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for the transfer of product, which is generally the price stated in the contract specific for each item sold, adjusted for the value of expected returns. Sales, use, value add and other similar taxes assessed by governmental authorities and collected concurrent with revenue-producing activities are excluded from revenue. Simson-Maxwell has elected to recognize the cost for freight activities when control of the product has transferred to the customer as an expense within cost of goods sold in the consolidated statements of comprehensive income. Parts revenues are recognized at the point in time when control of the product is transferred to the customer, which typically occurs upon shipment or delivery to the customer.

3.

Service and repairs- Simson-Maxwell offers service and repair of various types of power generation systems. Service and repairs are generally performed on customer owned equipment and billed based on labor hours incurred. Each repair is considered a performance obligation. As a result of control transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. Simson-Maxwell generally uses the cost-to-cost measure of progress for its service work because the customer controls the asset as it is being serviced. Most service and repairs are completed within one or two days.

The following table disaggregates Simson-Maxwell’s revenue by source for the years ended December 31, 2023 and 2022:

 

 

Years Ended

 

 

 

December 31,

 

 

 

2023

 

 

2022

 

Power generation units

 

$13,488,525

 

 

$4,901,791

 

Parts

 

 

5,143,068

 

 

 

4,098,771

 

Total units and parts

 

 

18,631,593

 

 

 

9,000,562

 

Service and repairs

 

 

12,380,706

 

 

 

11,053,476

 

 

 

$31,012,299

 

 

$20,054,038

 

r) Income Taxes

 

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the consolidated financial statements and the tax basis of assets and liabilities by using estimated tax rates for the year in which the differences are expected to reverse.

 

The Company recognizes deferred tax assets and liabilities to the extent that we believe that these assets and/or liabilities are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. If we determine that the Company would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

 

In assessing the realizability of its deferred tax assets, management evaluated whether it is more likely than not that some portion, or all of its deferred tax assets, will be realized. The realization of its deferred tax assets relates directly to the Company’s ability to generate taxable income. The valuation allowance is then adjusted accordingly.

 

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The Company recognizes the benefits, if any, of uncertain tax positions taken or expected to be taken in tax returns in the provision for income taxes only for those positions that are more likely than not to be realized. The Company follows a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating tax positions and tax benefits, which may require periodic adjustments and which may not accurately forecast actual outcomes. The Company’s policy is to include interest and penalties associated with income tax obligations in income tax expense.

q)s) Stock-Based Compensation

 

The Company may issue stock options to employees and stock options or warrants to non-employees in non-capital raising transactions for services and for financing costs. The cost of stock options and warrants issued to employees and non-employees is measured on the grant date based on the fair value. The fair value is determined using the Black-Scholes option pricing model. The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period.

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The fair value of stock options and warrants is determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option model requires management to make various estimates and assumptions, including expected term, expected volatility, risk-free rate, and dividend yield. The expected term represents the period of time that stock-based compensation awards granted are expected to be outstanding and is estimated based on considerations including the vesting period, contractual term and anticipated employee exercise patterns. Expected volatility is based on the historical volatility of the Company’s stock. The risk-free rate is based on the U.S. Treasury yield curve in relation to the contractual life of stock-based compensation instrument. The dividend yield assumption is based on historical patterns and future expectations for the Company dividends.

 

r) Derivative Liabilities

The Series C Preferred Stock and Series G preferred stock contain provisions that could result in modification of the conversion price that is based on a variable that is not an input to the fair value of a “fixed-for-fixed” option as defined under FASB ASC Topic No. 815 - 40.

The Series C Preferred Stock are convertible into shares of common stock at a fixed $3.25 conversion rate. Upon conversion, the holder is entitled to dividends as if the shares had been held to maturity, which is referred to as the Conversion Premium. The Conversion Premium may be paid in shares or cash, at the option of the Company. If the Conversion Premium is paid in cash, the amount is fixed and not subject to adjustment. If the Conversion Premium is paid in shares, the conversion ratio is based on a VWAP calculation based on the lowest stock price over the Measurement Period. The Measurement Period is 30 days (or 60 days if there is a Triggering Event) prior to the conversion date and 30 days (or 60 days if there is a Triggering Event) after the conversion date. The VWAP calculation is subject to adjustment if there is a Triggering Event and the Measurement Period is subject to adjustment in the event that the Company is in default of one or more Equity Conditions provided in the Certificate of Designation. For example, the Measurement period may be extended one day for every day the Company is not in compliance with one or more of the Equity Conditions. Trigger events are described in the designation of the Series C Preferred Stock, but include items which would typically be events of default under a debt security, including filing of reports late with the SEC.

 At the conversion date, the number of shares due for the Conversion Premium is estimated based on the previous 30-day VWAP. If the Company does not elect to pay the Conversion Premium in cash, the Company will issue all shares due for the conversion and the estimated shares due for the conversion premium. If the VWAP calculation for the portion of the Measurement Period following the date of conversion is lower than the VWAP for the portion of the Measurement Period prior to the date of conversion, the holder will be issued additional common shares, referred to as “true-up” shares. If the VWAP calculation is higher, no true-up shares are issued.

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 The derivative liability at the end of each period includes a derivative liability for the outstanding Series C shares and a derivative liability for the potential obligation to issue True-Up Shares relating to Series C shares that have been converted and the Measurement Period has not expired, if applicable

The fair value of the derivative liability relating to the Conversion Premium for any outstanding Series C Shares is equal to the cash required to settle the Conversion Premium. The fair value of the potential true-up share obligation has been estimated using a binomial pricing mode and the lesser of the conversion price or the low closing price of the Company’s stock subsequent to the conversion date. and the historical volatility of the Company’s common stock.

The Series G Convertible Preferred stock is redeemable or convertible into a variable number of common shares, at the option of the Company. The conversion rate is determined at the time of conversion using a VWAP calculation similar to the Series C Stock described above.  As a result, the Series G Preferred Stock contains an embedded derivative that is required to be recorded at fair value.  The Company has determined that the fair value of the embedded derivative as of December 31, 2021 is negligible due to the restrictions on conversion.  The embedded derivative associated with the Series G Stock is marked to market at each reporting date with changes in fair value recorded in income.

s)t) Impairment of Long-LivedLong-lived Assets

 

The Company, at least annually, is required to review its long-lived assets 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.

 

Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally determined by using the asset’s expected future discounted cash flows or market value. The Company estimates the fair value of the assets based on certain assumptions such as budgets, internal projections, and other available information as considered necessary. There is no impairment of long-lived assets during the year ended December 31, 2021 and the nine months ended December 31, 2020.

 

w)u) Accounting for Asset Retirement Obligations

 

Asset retirement obligations (“ARO”) primarily represent the estimated present value of the amount the Company will incur to plug, abandon and remediate its producing properties at the projected end of their productive lives, in accordance with applicable federal, state and local laws. The Company determined its ARO by calculating the present value of estimated cash flows related to the obligation. The retirement obligation is recorded as a liability at its estimated present value as of the obligation’s inception, with an offsetting increase to proved properties.

 

z) Subsequent eventsThe following table describes the changes in the Company’s asset retirement obligations for the years ended December 31, 2023 and 2022: 

 

 

Years Ended

 

 

 

December 31,

 

 

 

2023

 

 

2022

 

Asset retirement obligation – beginning

 

$1,927,196

 

 

$2,111,650

 

ARO recovered on sale of assets

 

 

(1,104,806)

 

 

(239,975)

ARO acquired on the Merger

 

 

65,047

 

 

 

-

 

Accretion expense

 

 

155,463

 

 

 

55,521

 

Asset retirement obligation – ending

 

$1,042,900

 

 

$1,927,196

 

v) Derivative Liabilities

Convertible Preferred Shares

 

The Company has evaluated all subsequent events from December 31, 2021 throughSeries C Preferred Stock and the dateCompany’s Series G Redeemable Convertible Preferred Stock (the “Series G Preferred Stock”) contain provisions that could result in modification of filingthe conversion price that is based on a variable that is not an input to the fair value of this report.

NOTE 5 – OIL AND GAS PROPERTIES

Camber uses the full cost method of accounting for oila “fixed-for-fixed” option as defined under FASB ASC Topic No. 815 - 40, “Derivatives and natural gas producing activities. Costs to acquire mineral interests in oil and natural gas properties, to drill and equip exploratory wells used to find proved reserves, and to drill and equip development wells including directly related overhead costs and related asset retirement costs are capitalized.Hedging”.

 

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Under this method, all costs, including internal costs directly related to acquisition, exploration and development activities are capitalized as oil and natural gas property costs on a country-by-country basis. Costs not subject to amortization consist of unproved properties that are evaluated on a property-by-property basis. Amortization of these unproved property costs begins when the properties become proved or their values become impaired. Camber assesses overall values of unproved properties, if any, on at least an annual basis or when there has been an indication that impairment in value may have occurred. Impairment of unproved properties is assessed based on management’s intention with regard to future development of individually significant properties and the ability of Camber to obtain funds to finance its programs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is added to the capitalized costs to be amortized.

Sales of oil and natural gas properties are accounted for as adjustments to the net full cost pool with no gain or loss recognized, unless the adjustment would significantly alter the relationship between capitalized costs and proved reserves. If it is determined that the relationship is significantly altered, the corresponding gain or loss will be recognized in the statements of operations.

Impairments

For the year ended December 31, 2021 and the nine months ended December 31, 2020, the Company recorded $0 and $0 of impairments of its oil and gas properties, respectively.

NOTE 6 – NOTES RECEIVABLE

Due to the impact of COVID-19 on its operations, Lineal notified the Company that it currently has insufficient liquidity to make scheduled interest payments due under the notes. The Company is in negotiations with Lineal to restructure the notes receivable and an allowance has been applied to the full principal and accrued interest of these notes as of December 31, 2021 and 2020.

The following table summarizes the Lineal notes receivable as of December 31, 2021 and 2020:

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Note receivable from Lineal Star Holdings, LLC pursuant to a Promissory Note dated effective December 31, 2019, in the original principal amount of $1,539,719, accruing annual interest of 10.5%, due quarterly beginning on March 31, 2020, maturing December 31, 2021. The Company has ceased recording accrued but unpaid interest, and has reserved the full balance of the note as of December 31, 2021 and 2020.

 

 

 

 

 

 

See also “Note 13 – Lineal Merger Agreement and Divestiture”.

 

 

1,539,719

 

 

 

1,539,719

 

Note receivable from Lineal Star Holdings, LLC pursuant to a Promissory Note No. 2 dated effective December 31, 2019, in the original principal amount of $800,000, accruing annual interest of 8%, due quarterly beginning on March 31, 2020, maturing December 31, 2021. The Company has ceased recording accrued but unpaid interest, and has reserved the full balance of the note as of December 31, 2021 and 2020.

 

 

 

 

 

 

 

 

See also “Note 13 – Lineal Merger Agreement and Divestiture”.

 

 

800,000

 

 

 

800,000

 

Total notes receivable

 

 

2,339,719

 

 

 

2,339,719

 

Less: allowance for doubtful collection

 

 

(2,339,719)

 

 

(2,339,719)

 Total notes receivable - net

 

$-

 

 

$-

 

NOTE 7– INVESTMENT IN UNCONSOLIDATED ENTITY’S

The Company accounts for its investments in Viking and Elysium (until the Company’s Elysium interest was assigned to Viking on December 23, 2020) under the equity method.  The Company owns 0% of Elysium as of December 31, 2021 and 2020, respectively (25% from February 3, 2020 to June 25, 2020, 30% from June 26, 2020 to December 23, 2020, and 0% upon the completion of the Company’s acquisition of 51% of Viking as explained in Note 1 – Relationship with and Ownership of Viking Energy Group, Inc.

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Table below shows the changes in the investment in unconsolidated entities for the year ended December 31, 2020 and the nine months ended December 31, 2020, respectively:

 

 

December 31,

2021

 

 

December 31,

2020

 

Carrying amount at beginning of year

 

$15,830,538

 

 

$957,169

 

Investment in Elysium

 

 

 

 

 

 

Proportionate share of Elysium earnings (loss)

 

 

-

 

 

 

(2,953,680)

Investment in Viking

 

 

29,900,000

 

 

 

20,274,909

 

Proportionate share of Viking earnings (loss)

 

 

(9,430,946)

 

 

(2,447,860)

 

 

 

 

 

 

 

 

 

Carrying amount at end of year

 

$36,299,592

 

 

$15,830,538

 

NOTE 8 – ASSET RETIREMENT OBLIGATIONS

The following table presents the reconciliation of the beginning and ending aggregate carrying amounts of long-term obligations associated with the future retirement of oil and natural gas properties for the year ended December 31, 2021 and the nine months ended December 31, 2020 respectively.

 

 

 December 31,

2021

 

 

 December 31,

2020

 

Carrying amount at beginning of year

 

$

46,748

 

 

$

71,150

 

Accretion

 

 

6,307

 

 

 

5,825

 

Dispositions

 

 

-

 

 

(30,227

Carrying amount at end of year

 

$

53,055

 

 

$

46,748

 

F-17

Table of Contents

NOTE 9 – LONG-TERM DEBT AND OTHER SHORT-TERM BORROWINGS

Long term debt and other short-term borrowings consisted of the following at December 31, 2021 and 2020:

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Note payable to Discover Growth Fund, LLC pursuant to a 10.0% Secured Promissory Note dated December 11, 2020 in the original amount of $6,000,000 with interest and principal due at maturity on January 1, 2027. The Note is secured by lien on substantially all of the Company’s assets.

 

$6,000,000

 

 

$6,000,000

 

 

 

 

 

 

 

 

 

 

Note payable to Discover Growth Fund, LLC, pursuant to a 10.0% Secured Promissory Note dated December 22, 2020 in the original amount of $12,000,000 with interest and principal due at maturity on January 1, 2027. The Note is secured by first lien on the Company’s ownership in Viking.

 

 

12,000,000

 

 

 

12,000,000

 

 

 

 

 

 

 

 

 

 

Note payable to Discover Growth Fund, LLC pursuant to a 10.0% Secured Promissory Note dated April 23, 2021 in the original amount of $2,500,000 with interest and principal due at maturity on January 1, 2027. The Note is secured by lien on substantially all of the Company’s assets.

 

 

2,500,000

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Note payable to Discover Growth Fund, LLC pursuant to a 10.0% Secured Promissory Note dated December 9, 2021 in the original amount of $1,000,000 with interest and principal due at maturity on March 8, 2022. The Note is secured by lien on substantially all of the Company’s assets. The note was paid in full on January 4, 2022.

 

 

1,000,000

 

 

 

0

 

 

 

 

 

 

 

 

 

 

Total long-term debt associated with Camber Energy, Inc.

 

 

21,500,000

 

 

 

18,000,000

 

Less current portion

 

 

-

 

 

 

-

 

 

 

$

21,500,000

 

 

$18,000,000

 

Principal maturities of long-term debt for the next five years and thereafter are as follows:

Twelve-month period ended December 31,

 

 

 

 

 

 

 

2022

 

$1,000,000

 

2023

 

 

-

 

2024

 

 

-

 

2025

 

 

-

 

2026

 

 

-

 

Thereafter

 

 

20,500,000

 

 

 

 

 

 

 

 

$21,500,000

 

Interest expenses for the year ended December 31, 2021 and the nine months ended December 31, 2020 was $1,979,290 and $67,397, respectively.

The above notes were in default at various times, but have been resolved through settlement (see Note 15 Stockholders Deficit)

NOTE 10 – DERIVATIVE LIABILITIES

 

The Series C Preferred Stock are convertible into shares of common stock at a fixed $3.25$162.50 conversion rate. Upon conversion, the holder is entitled to dividends as if the shares had been held to maturity, which is referred to as the Conversion Premium. The Conversion Premium may be paid in shares or cash, at the option of the Company. If the Conversion Premium is paid in cash, the amount is fixed and not subject to adjustment. If the Conversion Premium is paid in shares, the conversion ratio is based on a volume weighted average stock price of the Company’s common stock (“VWAP”) calculation based on the lowest stock price over the Measurement Period. The conversion price is equal to 95% (85% following a Triggering Event) of the five lowest VWAPs over the Measurement Period, less $0.05 ($0.10 following a Triggering Event) per share. The Measurement Period is 30 trading days (or 60 trading days if there is a Triggering Event) prior to the conversion date and 30 trading days (or 60 trading days if there is a Triggering Event) after the conversion date. The VWAP calculation is subject to adjustment if there is a Triggering Event and the Measurement Period is subject to adjustment in the event that the Company is in default of one or more Equity Conditions provided in the Certificate of Designation.Designation (“COD”). For example, the Measurement periodPeriod may be extended one day for every day the Company is not in compliance with one or more of the Equity Conditions. Trigger events are described in the designation of the Series C Preferred Stock, but include items which would typically be events of default under a debt security, including filing of reports late with the SEC.

 

At the conversion date, the number of shares due for the Conversion Premium is estimated based on the previous 30-day VWAP. If the Company does not elect to pay the Conversion Premium in cash, the Company will issue all shares due for the conversion and the estimated shares due for the conversion premium.VWAP (or 60 trading days if there is a Triggering Event). If the VWAP calculation for the portion of the Measurement Period following the date of conversion is lower than the VWAP for the portion of the Measurement Period prior to the date of conversion, the holder will be issued additional shares of common shares,stock, referred to as “true-up”True-Up shares. If the VWAP calculation is higher, no true-upTrue-Up shares are issued.

 

The Company has determined that the Series C Preferred Stock contains an embedded derivative liability relating to the Conversion Premium and, upon conversion, a derivative liability for the potential obligation to issue True-Up Shares relating to shares of Series C Preferred Stock that have been converted and the Measurement Period has not expired, if applicable.

The fair value of the derivative liability relating to the Conversion Premium for any outstanding shares of Series C Preferred Stock is equal to the cash required to settle the Conversion Premium. The fair value of the potential True-Up share obligation has been estimated using a binomial pricing mode and the lesser of the conversion price or the lowest closing price of the Company’s stock subsequent to the conversion date, and the historical volatility of the Company’s common stock.

The Series G Convertible Preferred stock is redeemable or convertible into a variable number of shares of common stock, at the option of the Company. The conversion rate is determined at the time of conversion using a VWAP calculation similar to the Series C Preferred Stock described above. As a result, the Series G Preferred Stock contains an embedded derivative that is required to be recorded at fair value. The Company has determined that the fair value of the embedded derivative is negligible due to the restrictions on conversion.

Capitalized terms used but not defined herein with respect to the Series C Preferred Stock or the Series G Preferred Stock have the meaning assigned to them in the Fifth Amended and Restated Certificate of Designations of Preferences, Powers, Rights and Limitations of Series C Redeemable Convertible Preferred Stock filed by the Company with the Secretary of State of Nevada on November 8, 2021, as amended on October 28, 2022 (as amended, the “Series C COD”) or the Certificate of Designations of Preferences, Powers, Rights and Limitations of Series G Redeemable Convertible Preferred Stock filed by the Company with the Secretary of State of Nevada on December 30, 2021 (the “Series G COD”), as applicable.

Convertible Debt

We review the terms of convertible debt issues to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

F-18F-20

Table of Contents

 

                OurBifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense.

The Company has adopted a sequencing approach to allocating its authorized and unissued shares when the number of such shares is insufficient to satisfy all convertible instruments or option type contracts that may be settled in shares. Specifically, the Company allocates it authorized and unissued shares based on the inception date of each instrument, with shares allocated first to those instruments with the earliest inception dates. Instruments with later inception dates for which no shares remain to be allocated are reclassified to asset or liability.

w) Undistributed Revenues and Royalties

The Company records a liability for cash collected from oil and gas sales that have not been distributed. The amounts are distributed in accordance with the working interests of the respective owners.

x) Subsequent events

The Company has evaluated all subsequent events from December 31, 2023 through the date of filing of this report (see Note 17).

Note 5. Merger of Camber Energy, Inc. and Viking Energy Group, Inc.

As discussed in Note 1, the Merger has been accounted for as a reverse acquisition with Viking treated as the acquiror of Camber for financial accounting purposes.

The transaction consideration transferred by the accounting acquirer for its interest in the accounting acquiree is based on the number of equity interests the legal subsidiary would have had to issue to give the owners of the legal parent the same percentage equity interest in the combined entity that results from the reverse acquisition. This was determined as follows:

Number of Viking shares of common stock outstanding at merger date

 

 

119,218,508

 

Viking shareholder ownership interest in the merged entity

 

 

64.9%

Grossed up number of shares

 

 

183,699,488

 

Number of shares theoretically issued to Camber shareholders

 

 

64,480,980

 

Viking share price at date of merger

 

$0.807

 

Consideration transferred

 

$52,036,151

 

The consideration transferred was allocated to the assets acquired and liabilities assumed of Camber based upon their estimated fair values as of the merger closing date, and any excess value of the consideration transferred over the net assets was recognized as goodwill, as follows:

Consideration transferred

 

$52,036,151

 

 

 

 

 

 

Net Assets Acquired and Liabilities Assumed (Camber):

 

 

 

 

Cash

 

$154,955

 

Prepaids

 

 

247,917

 

Oil and gas properties

 

 

1,475,000

 

Advances due from Viking

 

 

4,452,300

 

Investment in Viking

 

 

23,835,365

 

Goodwill

 

 

67,457,229

 

Total net assets acquired

 

 

97,622,766

 

 

 

 

 

 

Accounts payable

 

$1,628,669

 

Accrued expenses and other current liabilities

 

 

253,353

 

Derivative liability

 

 

3,540,036

 

Long term debt

 

 

40,099,510

 

Asset retirement obligations

 

 

65,047

 

Total net liabilities assumed

 

 

45,586,615

 

 

 

 

 

 

Total Net Assets Acquired and Liabilities Assumed

 

$52,036,151

 

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Table of Contents

At September 30, 2023, the Company concluded that the significant decline in the Company’s share price between the date of the Merger and September 30, 2023 was an indicator of impairment and therefore performed an impairment assessment at that date. Based upon this assessment, the Company recorded an impairment charge of $14,486,745 during the year ended December 31, 2023.

Note 6. Oil and Gas Properties 

The following table summarizes the Company’s oil and gas activities by classification and geographical cost center for the year ended December 31, 2023:

 

 

December 31,

 

 

 

 

 

 

 

 

December 31,

 

 

 

2022

 

 

Adjustments

 

 

Impairments

 

 

2023

 

Proved developed producing oil and gas properties

 

 

 

 

 

 

 

 

 

 

 

 

United States cost center

 

$3,872,488

 

 

$(2,397,488)

 

$(347,050)

 

$1,127,950

 

Accumulated depreciation, depletion and amortization

 

 

(2,803,375)

 

 

2,759,001

 

 

 

-

 

 

 

(44,374)

Proved developed producing oil and gas properties, net

 

$1,069,113

 

 

$361,513

 

 

$(347,050)

 

$1,083,576

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Undeveloped and non-producing oil and gas properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States cost center

 

 

785,302

 

 

 

(785,302)

 

 

-

 

 

 

-

 

Accumulated depreciation, depletion and amortization

 

 

(568,497)

 

 

568,497

 

 

 

-

 

 

 

-

 

Undeveloped and non-producing oil and gas properties, net

 

$216,805

 

 

$(216,805)

 

$-

 

 

$-

 

Total Oil and Gas Properties, Net

 

$1,285,918

 

 

$144,708

 

 

$(347,050)

 

$1,083,576

 

During the year ended December 31, 2023, the Company recorded an addition to oil and gas properties of $1,475,000 related to the merger with Camber (see Note 5). For the year ended December 31, 2023, the Company recorded a disposal of $1,049,229 ($1,285,918 less $236,689 of depletion expense) related to the sale of its assets in Kansas and Texas (see Note 2 – 2023 Divestitures) and an impairment charge of $347,050 related to its remaining oil and gas assets driven by a decrease in commodity prices.

Note 7. Intangible Assets

ESG Clean Energy License

The Company’s intangible assets include costs associated with securing an Exclusive Intellectual Property License Agreement with ESG in August 2021, pursuant to which Viking received (i) an exclusive license to ESG’s patent rights and know-how related to stationary electric power generation (not in connection with vehicles), including methods to utilize heat and capture carbon dioxide in Canada, and (ii) a non-exclusive license to the intellectual property in up to 25 sites in the United States that are operated by the Company or its affiliates.

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Table of Contents

In consideration of the licenses, Viking paid an up-front royalty of $1,500,000 and Viking was obligated to make additional royalty payments as follows: (i) an additional $1,500,000 on or before January 31, 2022, which may be paid in whole or in part in the form of Viking’s common stock based on the price of Viking’s common stock on August 18, 2021, at ESG’s election; (ii) an additional $2,000,000 on or before April 20, 2022, which may be paid in whole or in part in the form of Viking’s common stock based on the price of Viking’s common stock on August 18, 2021, at ESG’s election; and (iii) continuing royalties of not more than 15% of the Company’s net revenues generated using the intellectual property, with the continuing royalty percentage to be jointly determined by the parties collaboratively based on the parties’ development of realistic cashflow models resulting from initial projects utilizing the intellectual property, and with the parties utilizing mediation if they cannot jointly agree to the continuing royalty percentage.

With respect to the payments noted in (i) and (ii) above, totaling $3,500,000, on or about November 22, 2021, the Company paid $500,000 to or on behalf of ESG and ESG elected to accept $2,750,000 in shares of Viking’s common stock at the applicable conversion price, resulting in 6,942,691 shares, leaving a balance owing of $250,000 which was paid in January 2022.

The Company’s exclusivity with respect to Canada shall terminate if minimum continuing royalty payments to ESG are not at least equal to the following minimum payments based on the date that ESG first begins capturing carbon dioxide and selling for commercial purposes one or more commodities from a system installed and operated by ESG using the intellectual property (the “Trigger Date”):

 

 

Minimum

Payments

 

Years from the Trigger Date:

 

For Year

Ended

 

Year two

 

$500,000

 

Year three

 

 

750,000

 

Year four

 

 

1,250,000

 

Year five

 

 

1,750,000

 

Year six

 

 

2,250,000

 

Year seven

 

 

2,750,000

 

Year eight

 

 

3,250,000

 

Year nine and after

 

 

3,250,000

 

The Company’s management believes that the Trigger Date could occur as early as the second quarter of 2024 but there is no assurance that it will occur at that or any time.

If the continuing royalty percentage is adjusted jointly by the parties downward from the maximum of 15%, then the minimum continuing royalty payments for any given year from the Trigger Date shall also be adjusted downward proportionally.

The Company recognized amortization expense of $308,694 for the year ended December 31, 2023. The estimated future amortization expense for each of the next five years is $304,465 per year.

F-23

Table of Contents

The ESG intangible asset consisted of the following at December 31, 2023 and December 31, 2022:

 

 

Years Ended

 

 

 

December 31,

 

 

 

2023

 

 

2022

 

ESG Clean Energy License

 

$5,000,000

 

 

$5,000,000

 

Accumulated amortization

 

 

(731,563)

 

 

(422,869)

 

 

$4,268,437

 

 

$4,577,131

 

Other intangibles – Simson-Maxwell – Customer Relationships and Brand

The Company allocated a portion of the purchase price of Simson-Maxwell to Customer Relationships with a fair value of $1,677,453 and an estimated useful life of 10 years, and the Simson-Maxwell Brand with a fair value of $2,230,673 and an indefinite useful life.

The Company recognized amortization expense for the Customer Relationship intangible of $167,745 for the year ended December 31, 2023. The estimated future amortization expense for each of the next five years is $167,745 per year.

The Company periodically reviews the fair value of the Customer Relationships and Brand to determine if an impairment charge should be recognized. For the year ended December 31, 2023, the Company recorded an impairment charge of $311,837 related to the Simmax Brand and $357,873 related to Customer Relationships, driven by lower actual and forecast revenue growth as compared to the date of acquisition. For the year ended December 31, 2022, the Company recorded an impairment charge of $367,907 and $83,865, respectively, related to these assets for the same reason.

The Other intangibles – Simson-Maxwell consisted of the following at December 31, 2023 and 2022:

 

 

Years Ended

 

 

 

December 31,

 

 

 

2023

 

 

2022

 

Simmax Brand

 

$2,230,673

 

 

$2,230,673

 

Customer Relationships

 

 

1,677,453

 

 

 

1,677,453

 

Impairment of intangible assets

 

 

(1,121,482)

 

 

(451,772)

Accumulated amortization

 

 

(369,499)

 

 

(201,754)

 

 

$2,417,145

 

 

$3,254,600

 

Note 8. Intangible Assets - Variable Interest Entity Acquisitions (VIE’s)

Medical Waste Disposal System

Choppy

On January 18, 2022, Viking entered into a Securities Purchase Agreement to purchase 51 units, representing 51%, of Viking Ozone, from Choppy Group LLC, a Wyoming limited liability company (“Choppy”), in consideration of the issuance of 8,333,333 shares of Viking common stock to Choppy, 3,333,333 of which shares were issued at closing, 3,333,333 of which shares are to be issued to Choppy after 5 units of the System (as defined below) have been sold, and 1,666,667 of which shares are to be issued to Choppy after 10 units of the System have been sold. Viking Ozone was organized on or about January 14, 2022, for the purpose of developing and distributing a medical and biohazard waste treatment system using ozone technology (the “System”), and on or about January 14, 2022, Choppy was issued all 100 units of Viking Ozone in consideration of Choppy’s assignment to Viking Ozone of all of Choppy’s intellectual property and intangible assets, including patent rights, know-how, procedures, methodologies, and contract rights in connection with the System, and specifically the invention entitled “Multi-Chamber Medical Waste Ozone-Based Treatment Systems and Methods (Docket No. RAS-101A) and related patent application. On January 18, 2022 Viking acquired 51 units (51%) of Viking Ozone from Choppy with Choppy retaining the remaining 49 units (49%) of Viking Ozone, and Viking issued 3,333,333 shares of Viking common stock to Choppy. Viking and Choppy then entered into an Operating Agreement on January 18, 2022 governing the operation of Viking Ozone. Based on the closing price of the Company’s stock on January 18, 2022, the fair value was approximately $2,000,000. The Company determined the acquisition of a 51% interest in Viking Ozone was the acquisition of and initial consolidation of a VIE that is not a business. The acquisition was recorded as follows:

F-24

Table of Contents

Purchase Price:

 

 

 

Fair value of stock at closing

 

$2,000,000

 

Fair value of contingent consideration

 

 

495,868

 

Total consideration

 

$2,495,868

 

 

 

 

 

 

Purchase Price Allocation:

 

 

 

 

Intangible asset

 

$4,916,057

 

Non-controlling interest

 

 

(2,420,189)

Camber ownership interest

 

$2,495,868

 

Open Conductor Detection Technologies

Virga

On February 9, 2022, Viking entered into a Securities Purchase Agreement to purchase 51 units, representing 51% of Viking Sentinel, from Virga Systems LLC, a Wyoming limited liability company (“Virga”), in consideration of the issuance of 416,667 shares of Viking common stock to Virga. Viking Sentinel was formed on or about January 31, 2022, and Virga was issued all 100 units of Viking Sentinel in consideration of Virga’s assignment to Viking Sentinel of all of Virga’s intellectual property and intangible assets, including patent rights, know-how, procedures, methodologies, and contract rights in connection with an end of line protection with trip signal engaging for distribution system, and related patent application(s). On February 9, 2022 Viking acquired 51 units (51%) of Viking Sentinel from Virga with Virga retaining the remaining 49 units (49%) of Viking Sentinel, and Viking issued 416,667 shares of Viking common stock to Virga. Viking and Virga then entered into an Operating Agreement on February 9, 2022 governing the operation of Viking Sentinel. The Company determined the acquisition of a 51% interest in Viking Sentinel was the acquisition and initial consolidation of a VIE that is not a business. The acquisition was recorded as follows:

Purchase Price:

 

 

 

Fair value of stock at closing

 

$233,334

 

Total consideration

 

$233,334

 

 

 

 

 

 

Purchase Price Allocation:

 

 

 

 

Intangible asset

 

$457,518

 

Non-controlling interest

 

 

(224,184)

Camber ownership interest

 

$233,334

 

Jedda

On February 9, 2022, Viking entered into a Securities Purchase Agreement to purchase (the “Purchase”) 51 units (the “Units”), representing a 51% ownership interest in Viking Protection Systems, LLC (“Viking Protection”), from Jedda Holdings LLC (“Jedda”). In consideration for the Units, Viking agreed to issue to Jedda, shares of a new class of Convertible Preferred Stock of Viking with a face value of $10,000 per share (the “Viking Series E Preferred Stock”), or pay cash to Jedda, if applicable, as follows:

No.

 

 

Purchase Price*

 

 

When Due

 

No. of  Pref. Shares

 

 

Conversion Price

 

 

No. of Underlying Common Shares

 

 

Estimated Revenues if Sales Target Achieved**

 

 

1

 

 

$

250,000

 

 

On closing

 

 

N/A

 

 

$

0.60

 

 

 

416,667

 

 

 

N/A

 

 

2

 

 

$

4,750,000

 

 

On closing

 

 

475

 

 

$

0.60

 

 

 

7,916,667

 

 

 

N/A

 

 

3

 

 

$

1,000,000

 

 

Upon the sale of 10k units

 

 

100

 

 

$

0.75

 

 

 

1,333,333

 

 

$

50,000,000

 

 

4

 

 

$

2,000,000

 

 

Upon the sale of 20k units

 

 

200

 

 

$

1.00

 

 

 

2,000,000

 

 

$

100,000,000

 

 

5

 

 

$

3,000,000

 

 

Upon the sale of 30k units

 

 

300

 

 

$

1.25

 

 

 

2,400,000

 

 

$

150,000,000

 

 

6

 

 

$

4,000,000

 

 

Upon the sale of 50k units

 

 

400

 

 

$

1.50

 

 

 

2,666,667

 

 

$

250,000,000

 

 

7

 

 

$

6,000,000

 

 

Upon the sale of 100k units

 

 

600

 

 

$

2.00

 

 

 

3,000,000

 

 

$

500,000,000

 

Total

 

 

$

21,000,000

 

 

 

 

 

2,075

 

 

$

1.06(avg.)

 

 

19,733,334

 

 

$

500,000,000

 

___________ 

*

The $5 million due on closing was payable solely in stock of Viking. All other payments, if the subject sales targets are met, are payable in cash or in shares of convertible preferred stock of the Company, at the seller’s option.

**

These are estimates only. There is no guarantee any sales targets will be reached.

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Table of Contents

Notwithstanding the above, the Company shall not effect any conversion of any shares of Viking Series E Preferred Stock, and Jedda shall not have the right to convert any shares of Viking Series E Preferred Stock, to the extent that after giving effect to the conversion, Jedda (together with Jedda’s affiliates, and any persons acting as a group together with Jedda or any of Jedda’s affiliates) would beneficially own in excess of 4.99% of the number of shares of the Camber Common Stock outstanding immediately after giving effect to the issuance of shares of Camber Common Stock issuable upon conversion of the shares of Viking Series E Preferred Stock by Jedda. Jedda, upon not less than 61 days’ prior notice to Camber, may increase or decrease the beneficial ownership limitation, provided that the beneficial ownership limitation in no event exceeds 9.99% of the number of shares of Camber Common Stock outstanding immediately after giving effect to the issuance of shares of Camber Common Stock upon conversion of the Preferred Share(s) held by Jedda and the beneficial ownership limitation provisions of this Section shall continue to apply. Any such increase or decrease will not be effective until the 61st day after such notice is delivered to Camber.

Viking Protection was formed on or about January 31, 2022, and Jedda was issued all 100 units of Viking Protection in consideration of Jedda’s assignment to Viking Protection of all of Jedda’s intellectual property and intangible assets, including patent rights, know-how, procedures, methodologies, and contract rights in connection with an electric transmission ground fault prevention trip signal engaging system, and related patent application(s). On February 9, 2022 Viking acquired 51 units (51%) of Viking Protection from Jedda with Jedda retaining the remaining 49 units (49%) of Viking Protection, and Viking issued the 475 shares of Viking Series E Preferred Stock to Jedda. Viking and Jedda then entered into an Operating Agreement on February 9, 2022 governing the operation of Viking Protection. The Company determined the acquisition of a 51% interest in Viking Protection was the acquisition and initial consolidation of a VIE that is not a business. The acquisition was recorded as follows:

Purchase Price:

 

 

 

Fair value of stock at closing

 

$4,433,334

 

Fair value of contingent consideration

 

 

939,889

 

Total consideration

 

$5,373,223

 

 

 

 

 

 

Purchase Price Allocation:

 

 

 

 

Intangible asset

 

$10,059,765

 

Non-controlling interest

 

 

(4,686,542)

Camber ownership interest

 

$5,373,223

 

The Company consolidates any VIEs in which it holds a variable interest and is the primary beneficiary. Generally, a VIE, is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group the holders of the equity investment at risk lack (i) the ability to make decisions about an entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The primary beneficiary of a VIE is generally the entity that has (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

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Table of Contents

The Company has determined that it is the primary beneficiary of three VIEs, Viking Ozone, Viking Sentinel and Viking Protection, and consolidates the financial results of these entities, as follows:

 

 

Viking

 

 

Viking

 

 

Viking

 

 

 

 

 

Ozone

 

 

Sentinel

 

 

Protection

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intangible asset

 

$4,916,057

 

 

$457,518

 

 

$10,059,765

 

 

$15,433,340

 

Non-controlling interest

 

 

(2,420,189)

 

 

(224,184)

 

 

(4,686,542)

 

 

(7,330,915)

Camber ownership interest

 

$2,495,868

 

 

$233,334

 

 

$5,373,223

 

 

$8,102,425

 

Upon consummation of the Merger between Viking and Camber, all shares of Viking Series E Preferred Stock were exchanged for Camber Series H Preferred Stock, with substantially the same rights and terms with respect to Camber.

Note 9.Related Party Transactions

The Company’s CEO and Director, James Doris, renders professional services to the Company through AGD Advisory Group, Inc., an affiliate of Mr. Doris’s. During the years ended December 31, 2023 and 2022, the Company paid or accrued $460,000 and $360,000, respectively, in fees to AGD Advisory Group, Inc. As of  December 31, 2023 and 2022, the total amount due to AGD Advisory Group, Inc. was $600,000 and $370,000, respectively, and is included in accounts payable.

The Company’s CFO, John McVicar, renders professional services to the Company through 1508586 Alberta Ltd., an affiliate of Mr. McVicar’s. During the years ended December 31, 2023 and 2022, the Company paid or accrued $280,000 and $140,000, respectively, in fees to 1508586 Alberta Ltd.

The Company’s previous CFO, Frank W. Barker, Jr., rendered professional services to the Company through FWB Consulting, Inc., an affiliate of Mr. Barker’s. During the years ended December 31, 2023 and 2022, the Company paid or accrued $20,000 and $130,000, respectively, in fees to FWB Consulting, Inc.

Due to Parent

In 2021 and 2022, prior to the Merger of Camber and Viking, Camber made various cash advances to the Viking.  The advances were non-interest bearing and stipulated no repayment terms or restrictions. These balances have been eliminated upon consolidation at December 31, 2023. As of December 31, 2022, the amount due to Camber from Viking was $6,572,300.

Simson-Maxwell

At the time of acquisition, Simson-Maxwell had several amounts due to/due from related parties and notes payable to certain employees, officers, family members and entities owned or controlled by such individuals. Viking assumed these balances and loan agreements in connection with the acquisition.

The balance of amounts due to and due from related parties as of December 31, 2023 and 2022 are as follows:

 

 

Due from

related party

 

 

Due to

related party

 

 

Net due

(to) from

 

December 31, 2023

 

 

 

 

 

 

 

 

 

Simmax Corp. & majority owner

 

$334,437

 

 

$(643,121)

 

$(308,684)

Adco Power Ltd.

 

 

-

 

 

 

-

 

 

 

-

 

 

 

$334,437

 

 

$(643,121)

 

$(308,684)

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Simmax Corp. & majority owner

 

$327,132

 

 

$(629,073)

 

$(301,941)

Adco Power Ltd.

 

 

-

 

 

 

-

 

 

 

-

 

 

 

$327,132

 

 

$(629,073)

 

$(301,941)

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Table of Contents

Simmax Corp. owns a 17% non-controlling interest in Simson-Maxwell and is majority owned by a Director of Simson-Maxwell. Adco Power Ltd., an industrial, electrical and mechanical construction company, is a wholly owned subsidiary of Simmax Corp., and conducts business with Simson-Maxwell.

The notes payable to related parties as of December 31, 2023 and 2022 are as follows:

 

 

Years Ended

 

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Total notes payable to related parties

 

$986,017

 

 

$684,069

 

Less current portion of notes payable - related parties

 

 

(407,154)

 

 

(56,916)

Notes payable - related parties, net of current portion

 

$578,863

 

 

$627,153

 

On June 1, 2023, Simson-Maxwell issued CAD$457,000 ($345,060) in promissory notes to related parties. The notes bear interest at 12% per annum, payable monthly, and mature on June 1, 2024.

Note 10. Noncontrolling Interests

The following discloses the effects of changes in the Company’s ownership interest in Simson-Maxwell, and on the Company’s equity for the year ended December 31, 2023:

Noncontrolling interest - January 1, 2023

 

$3,013,996

 

 

 

 

 

 

Net loss attributable to noncontrolling interest

 

 

(249,981)

 

 

 

 

 

Noncontrolling interest – December 31, 2023

 

$2,764,015

 

The following discloses the effects of the Company’s ownership interest in Viking Ozone, Viking Sentinel and Viking Protection in the aggregate, and on the Company’s equity for the year ended December 31, 2023:

Noncontrolling interest - January 1, 2023

 

$7,162,514

 

 

 

 

 

 

Net loss attributable to noncontrolling interest

 

 

(121,866)

 

 

 

 

 

Noncontrolling interest – December 31, 2023

 

$7,040,648

 

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Table of Contents

Note 11. Long-Term Debt and Other Short-Term Borrowings

Long term debt and other short-term borrowings consisted of the following at December 31, 2023 and 2022:

Years Ended

December 31,

2023

2022

Long-term debt:

Note payable to Discover Growth Fund, pursuant to a Secured Promissory Note dated December 24, 2021 and funded on January 3, 2022 in the original amount of $26,315,789 with interest and principal due at maturity on January 1, 2027. The note bears interest at a rate equal to the Wall Street Journal Prime Rate (3.25%) as of the effective date and is secured by lien on substantially all of the Company’s assets. The balance at December 31, 2023 is shown net of unamortized debt discount of $9,714,868.

16,600,921

-

Note payable to Discover Growth Fund, LLC pursuant to a 10.0% Secured Promissory Note dated April 23, 2021 in the original amount of $2,500,000 with interest and principal due at maturity on January 1, 2027. Pursuant to an amendment dated December 24, 2021 the interest rate was adjusted to the Wall Street Journal Prime Rate (3.25%) as of the amendment date. The Note is secured by a lien on substantially all of the Company’s assets.

2,500,000

-

Note payable to Discover Growth Fund, pursuant to a 10.0% Secured Promissory Note dated December 22, 2020 in the original amount of $12,000,000 with interest and principal due at maturity on January 1, 2027. Pursuant to an amendment dated December 24, 2021 the interest rate was adjusted to the Wall Street Journal Prime Rate (3.25%) as of the amendment date. The Note is secured by a lien on substantially all of the Company's assets.

12,000,000

-

Note payable to Discover Growth Fund, pursuant to a 10.0% Secured Promissory Note dated December 11, 2020 in the original amount of $6,000,000 with interest and principal due at maturity on January 1, 2027. Pursuant to an amendment dated December 24, 2021 the interest rate was adjusted to the Wall Street Journal Prime Rate (3.25%) as of the amendment date. The Note is secured by a lien on substantially all of the Company’s assets.

 

 

6,000,000

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Promissory note payable by Mid-Con Petroleum LLC, a wholly owned subsidiary, to Cornerstone Bank dated July 24, 2019 in the amount of $2,241,758, bearing interest at 6%, payable interest only through July 24, 2021, then on August 24, 2021, payable in monthly installments of principal and interest of $43,438, with a final payment due on a maturity date of July 24, 2025. The note was secured by a first mortgage on all of the assets of Mid-Con Petroleum, LLC and a guarantee of payment by Viking. On March 10, 2023, the promissory note was amended to include a conversion feature and to include Viking as an additional obligor. In April 2023, Viking issued 588,235 shares of common stock to convert $200,000 of the outstanding principal balance. On July 31, 2023, the outstanding principal balance was assigned by Cornerstone Bank to FK Venture LLC and in August 2023 the Company issued a total of 5,189,666 shares of common stock to convert the total outstanding principal balance owed by both Mid-Con Petroleum LLC and Mid-Con Drilling LLC. The balance at December 31, 2022 is shown is net of unamortized discount of $12,224.

 

 

-

 

 

 

1,766,422

 

 

 

 

 

 

 

 

 

 

Promissory note payable by Mid-Con Drilling LLC, a wholly owned subsidiary, to Cornerstone Bank dated July 24, 2019 in the amount of $1,109,341, bearing interest at 6%, payable interest only through July 24, 2021, then on August 24, 2021, payable in monthly installments of principal and interest of $21,495, with a final payment due on a maturity date of July 24, 2025. The note was secured by a first mortgage on all of the assets of Mid-Con Drilling, LLC and a guarantee of payment by Viking. On March 10, 2023, the promissory note was amended to include a conversion feature and to include Viking as an additional obligor. On July 31, 2023, the outstanding principal balance was assigned by Cornerstone Bank to FK Venture LLC and in August 2023 the Company issued a total of 5,189,666 shares of common stock to convert the total outstanding principal balance owed by both Mid-Con Petroleum LLC and Mid-Con Drilling LLC. The balance at December 31, 2022 is shown is net of unamortized discount of $12,190.

 

 

-

 

 

 

813,571

 

 

 

 

 

 

 

 

 

 

On May 5, 2023, Viking signed a securities purchase agreement with FK Venture LLC under which FK Venture LLC agreed to purchase convertible promissory notes from the Company in the amount of $800,000 on the 5th day of each month commencing May 5, 2023 for 6 months, for a minimum commitment of $4,800,000. FK Venture LLC has the right to purchase up to $9,600,000 of such notes. The notes bear interest at 12% per annum. The maturity date of the notes is the earlier of (i) July 1, 2025, or (ii) 90 days following the date that the Company completes a direct up-listing of its common stock to a national securities exchange (not including any merger or combination with Camber). FK Venture LLC shall have the right to convert all or any part of the outstanding and unpaid principal balance into common stock of the Company. The conversion price shall be the lesser of (i) $0.75, or (ii) if the Merger with Camber closes, 50% of the trading price of Camber Energy, Inc.’s common stock on the day prior to the closing of the Merger with Camber ($0.4158 per share). At December 31, 2023, the Buyer had purchased six notes and converted two of these notes subsequent to the closing of the Merger in exchange for 3,848,004 shares of the Company’s common stock. The Company recorded a loss on early extinguishment of $35,402 related to these conversions. The balance at December 31, 2023 is shown is net of unamortized discount of $488,270.

 

 

2,711,730

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Loan of $150,000 dated July 1, 2020 from the U.S. Small Business Administration. The loan bears interest at 3.75% and matures on July 28, 2050. The loan is payable in monthly installments of $731 with the remaining principal and accrued interest due at maturity. Installment payments were originally due to start 12 months from the date of the note but the date was extended to January 2023. Accrued interest from the original installment due date to January 2023 was capitalized to the loan principal balance.

 

 

162,019

 

 

 

163,623

 

 

 

 

 

 

 

 

 

 

Total long-term debt

 

 

39,974,670

 

 

 

2,743,616

 

Less current portion and debt discount

 

 

(2,743)

 

 

(637,335)

Total long-term debt, net of current portion and debt discount

 

$39,971,927

 

 

$2,106,281

 

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Table of Contents

Principal maturities of long-term debt for the next five years and thereafter are as follows:

Twelve-month period ended December 31,

 

 

 

 

 

 

 

 

 

 

 

Principal

 

 

Unamortized Discount

 

 

Net

 

2024

 

$2,743

 

 

$-

 

 

$2,743

 

2025

 

 

3,202,848

 

 

 

(488,270)

 

 

2,714,578

 

2026

 

 

2,956

 

 

 

-

 

 

 

2,956

 

2027

 

 

46,818,858

 

 

 

(9,714,868)

 

 

37,103,990

 

2028

 

 

3,186

 

 

 

-

 

 

 

3,186

 

Thereafter

 

 

147,217

 

 

 

-

 

 

 

147,217

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$50,177,808

 

 

$(10,203,138)

 

$39,974,670

 

Bank Credit Facility

Simson-Maxwell has an operating credit facility with TD Bank, secured by accounts receivable and inventory, bearing interest at prime plus 2.25% on Canadian funds up to CAD $5,000,000 and the bank’s US dollar base rate plus 2.25% on US funds, plus a monthly administration fee of CAD 500. The balance outstanding under this credit facility is CAD $4,457,947 ($3,365,995) and CAD $4,139,785 ($3,111,350) as of December  31, 2023 and 2022, respectively.

Note 12. Derivative Liability

Series C Preferred Stock

The Series C Preferred Stock contains an embedded derivative due to the potential conversion into a variable number of shares of common stock. Upon conversion of the Series C Preferred Stock is described below:into shares of common stock, the Company has a potential obligation to issue additional shares of common stock to satisfy the True-Up obligation. Both the Conversion Premium and the True-Up obligation are derivatives and are required to be recorded at fair value.

 

Prior to April 20, 2021

IssuanceConversion of the face value of the Series C Preferred Stock is fixed at $162.50 per share of common stock. The Conversion Premium is convertible into shares of common stock based on a variable that is not an input to fair value of a fixed-for-fixed option as defined in FASB ASC 815-40 and is a derivative liability and is recorded at fair value.

 

Upon issuance we determined that the Series C Stock included an embedded derivative and, because the conversion was generally outside the control of theThe Company the Series C Stock were required to be recorded as temporary equity.  Upon issuance of the Series C Stock, we determined the amount to be the allocated to the derivative liability to be the Conversion Premium, assuming a cash settlement and we determineddetermines the redemption value of the face value of the Series C Preferred Stock to be the fair value of the shares of common sharesstock issuable to satisfy the conversion of the Series C Stock.  To the extent that consideration paid forface value of the Series C Stock was less thanPreferred Stock. The fair value of the redemptionConversion Premium is determined to be the fair value plusof the derivative liability, we first allocated the consideration to the derivative liability and recorded the difference as a loss on derivative liability. The consideration received never exceeded the derivative liability.  Consequently, no proceeds were allocated to the redemption value.  The redemption value was recorded as temporary equity and a deemed dividend. The cash obligationshares required to satisfy the Conversion Premium, less cash received was recorded as a derivative liability.

Conversion of the Series C Stock Premium.

 

The Company receives notice of conversion from the holder with a calculation of the number of shares of common sharesstock required to be issued to satisfy the redemption value plus the Conversion Premium. The Company has never elected to satisfy the conversion premium in cash.  The Company then issues the number of shares of common sharesstock determined by the holder using a VWAP calculation for the Measurement Period before the conversion date. The shares may be issued over time due to ownership limitations of the holder. Upon conversion of the Series C Preferred Stock, the Company reduces the derivative liability by the amount that was originally recorded for the number of Series C Preferred Stock converted. Any difference between the current fair value of the common shares issued to satisfy the conversion premium and the originally recorded derivative liability wasis recorded as a loss on derivative liability.  Temporary equity is also reduced by the fair value the common shares issued to satisfy the redemption value (amounts recorded in temporary equity).  Any difference is recorded as additional deemed dividend or an equity contribution. 

 

The holder may be entitled to additional shares subsequent to the conversion date if the VWAP calculation for the portion of the Measurement Period following the date of conversion is lower than the VWAP for the portion of the Measurement Period prior to the date of conversion, referred to as “true-up”True-Up shares. If the VWAP calculation is higher, no true-upTrue-Up shares are issued.

 

Management has determined that theThe potential obligation to issue “true-up”True-Up shares under the Conversion Premium creates an additional derivative liability. The determination of the number of true-upTrue-Up shares due, if any, is based on the lowest VWAP calculation over the Measurement Period that extends beyond the conversion date. In addition, if the Company has not complied with certain provisions of the Certificate of Designation,COD, the Measurement Period does not end until the Company is in compliance. The potential obligation to issue true-upTrue-Up shares after the conversion date is a derivative liability.

 

The derivative liability for the True-Up Shares at the end of each period represents Series C Preferred Stock conversions in respect of which the Measurement Period had not expired as of the period end. The fair value of the derivative liability has been estimated using a binomial pricing model, the estimated remaining Measurement Period, the share price and the historical volatility of the Company’s common stock.

 

Adjustments to the Carrying value of the Series C Stock and the Derivative Liability

At each reporting period the Company determined the fair value of the common shares required to satisfy the redemption of the outstanding Series C Stock and recorded an additional deemed dividend or an equity contribution for any differences.  The redemption Conversion Premium was assumed to be settled in cash because cash settlement is more favorable to the Company. The fair value of the common shares required to satisfy the redemption of the Series C Stock was determined generally using the closing share price of the Company’s stock as of the reporting date.  The amount of cash required to settle the Conversion Premium was generally fixed at the time of issuance.  Consequently, the fair value of the derivative liability relating to the cash obligation to satisfy the Conversion Premium is generally unchanged until conversion.

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Table of Contents

The cash required to settle the conversion premium was unchanged until the dividend rate of 24.95% was increased in accordance with the terms of the Series C Stock to 34.95% due to covenant violations.  The increase in the conversion premium was recorded as an increase in the derivative liability and a loss on change in fair value of derivative liability.

The fair value of the derivative liability relating to the potential obligation to issue true-up shares is subject to adjustment as the Company’s stock price changes. Such changes are recorded as changes in fair value of derivative liability. 

 

   April 20, 2021 Amendment to the Series C Stock COD

On April 20, 2021, the Company amended the Series C Stock certificate of designation (COD) to require all conversions to be in common shares, thus removing the cash option for redemption of the Conversion Premium.  We determined that the amendment required reclassification of the Series C Stock recorded in temporary equity to be reclassified to permanent equity with no further quarterly adjustments.

Effect on derivative liability

We determined that the removal of the cash option for conversion of the Conversion Premium changed the cash redemption assumption to assume, in all cases, share redemption.  Therefore, the derivative liability is required to be recorded at the fair value of the equivalent number of common shares issuable to satisfy the Conversion Premium.  We recorded an adjustment to derivative liability and loss on derivative on April 20, 2021 and we will record changes in fair value of the derivative liability each quarter thereafter as long as any Series C Stock are outstanding.  We estimated the fair value of the derivative liability for the outstanding Series C Stock Conversion Premium using the period end number of shares required to satisfy the Conversion Premium at the period end closing share price of the Company’s common stock, except as noted below. 

Limitations on using the closing price of the Company’s common stock to determine fair value

The Company is a smaller reporting company and is traded on the NYSE American exchange.  Historically, our stock price has been extremely volatile and subject to large and sometimes unexplained price variations on a daily or weekly basis.  In addition, the Company declared four reverse stock splits in 2018 and 2019 and the Company’s common stock generally trades at less than $1.00 per share.   These factors have exacerbated daily volatility of our stock price.  Consequently, we believe that the closing price of our stock on the reporting date may not, in all cases, represent the fair value of the common share required to satisfy the redemption of the Series C Stock.   Recognizing that the closing share price of our publicly traded stock is an observable input to fair value, we used such price for determining fair value in most cases and only considered an alternative measure of fair value when the closing price of the Company’s common stock varied by more than 20% from the five-day moving average immediately prior to the measurement date.  In such cases, we used an average closing price of the previous 30-day period as an estimate of fair value, adjusted for stock splits if applicable. In addition, conversion of the Series C shares require a significant number of common shares to be issued in relation to the total number of shares outstanding.  We do not believe that the market price of the Company’s common stock appropriately reflects the potential for significant dilution caused by a large conversion and may not be representative of market value.   In cases where the number of common shares required to satisfy a conversion of the Series C shares into common stock was significant in relation to the total number of shares outstanding (approximately 30% or greater) we determined the fair value of the embedded features based on the historical market capitalization of the Company.

 
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Table of Contents

 

Activities for derivative Series C Preferred Stock derivative liability during the year ended December 31, 2021 and the nine months ended December 31, 2020 were2023 was as follows:

 

 

 

2021

 

 

2020

 

Carrying amount at beginning of period

 

$93,981,234

 

 

$77,636,666

 

Issued Series C preferred shares

 

 

46,238,850

 

 

 

15,412,950

 

Change in fair value

 

 

152,831,568

 

 

 

41,878,821

 

Settlement of Obligation (issuance of common shares)

 

 

(199,943,084)

 

 

(40,947,203)

Carrying amount at end of period

 

$93,108,568

 

 

$93,981,234

 

 

 

December 31,

 2023

 

Carrying amount at beginning of year

 

$-

 

Derivative liability recognized on Merger

 

 

3,540,036

 

Change in fair value

 

 

7,383,811

 

Settlement of obligation (issuance of shares of common stock)

 

 

(7,060,526)

Carrying amount at end of year

 

$3,863,321

 

Convertible Debt

On March 10, 2023, the terms of the promissory notes held by Mid-Con Petroleum, LLC and Mid-Con Drilling, LLC described in Note 11 were amended to include a conversion feature granting the holder of the note the option to convert the principal balance of the debt, in whole or in part, into common stock of Viking. The conversion price is equal to the lesser of : (i) the average of the 5 lowest individual daily volume weighted average prices (“VWAP”) of Viking common stock during the 30-day period prior to the date of the notice of conversion; or (ii) one dollar ($1.00) per share. All other terms of the promissory notes remained unchanged.

The modification to the terms of the promissory notes was treated as a debt extinguishment and the Company recorded a loss on the extinguishment of debt of $154,763.

 

The fair value of the debt was determined as the total number of shares, equal to the face value of the debt on March 10, 2023 divided by the VWAP, multiplied by the closing share price on that day.

The value of the conversion option was based upon the fair value of Viking’s common stock. As the option was convertible into a variable number of shares, it was considered to be a derivative liability has been estimatedto be continuously recognized at fair value, with changes to fair value recorded in the statement of operations. The fair value of the conversion feature at the date of modification was determined to be $2,276,217 using a binomial model andoption pricing model. The derivative liability is classified as a Level 3 liability in the historical volatility of the Company’s common stock as of the date of conversion.Fair Value Hierarchy.

 

The Series G Preferred Shares contain an embedded derivative similar to the Series C shares described above that is required to be recorded at fair value.  The Company has determined thatAt March 31, 2023, the fair value of the embedded conversion feature associated withwas remeasured and determined to be $2,810,824 using a binomial option pricing model. Consequently, the Series G Shares is negligible at December 31, 2021

NOTE 11 – COMMITMENTS AND CONTINGENCIES

Legal Proceedings

From time to time suits and claims against Camber ariseCompany recorded a loss of $534,607 on the change in fair value of the derivative liability in the ordinary courseaccompanying consolidated statement of Camber’s business, including contract disputes and title disputes.

Camber records reserves for contingencies when information available indicates that a loss is probable, and the amount of the loss can be reasonably estimated.operations.

 

On October 29, 2021,April 28, 2023, $200,000 of the promissory note was assigned and converted into 588,235 shares of common stock. The Company recorded a Class Action Complaint (i.e. C.A.No.4:21-cv-03574)reduction to the derivative of $330,823 related to the conversion and recognized a loss on early extinguishment of debt of $8,541.

On June 30, 2023, the fair value of the conversion feature was filed againstremeasured and determined to be $1,762,648 using a binomial option pricing model, and the Company its CEO and CFO by Ronald E. Coggins, Individually andrecorded a gain of $717,352 on Behalfthe change in fair value of All Others Similarly Situated v. Camber Energy, Inc., et al.;the derivative liability in the U.S. District Court foraccompanying consolidated statement of operations.

On July 31, 2023, the Southern District of Texas, Houston Division, pursuant to which the Plaintiffs are seeking to recover damages alleged to have been suffered by them as a resultfair value of the defendants’ violationsconversion feature was remeasured and determined to be $3,712,041 using a binomial option pricing model, and the Company recorded a loss of federal securities laws. The defendants deny$1,949,393 on the allegations containedchange in fair value of the derivative liability in the Class Action Complaint, and have engaged Baker Botts L.L.P. to defend the action.

Maranatha Oil Matteraccompanying consolidated statement of operations.

 

In November 2015, Randy L. Robinson, d/b/a Maranatha Oil Co. suedAugust 2023, the Company in Gonzales County, Texas (Cause No. 26160). The plaintiff alleged that itbalance of the promissory notes was assigned oil and gas leases toconverted into 5,189,666 shares of common stock of the Company in April 2010, retaining a 4% overriding royalty interest and 50% working interest and that the Company failed to pay such overriding royalty interest or royalty interest. The interests relate to certain oil and gas properties which the Company subsequently sold to Nordic Oil USA in April 2013. The petition alleges causes of actions for breach of contract, failure to pay royalties, non-payment of working interest, fraud, fraud in the inducement of contract, money had and received, constructive trust, violation of theft liability act, continuing tort and fraudulent concealment. The suit seeks approximately $100,000 in amounts alleged owed, plus pre-and post-judgment interest.Company. The Company has filedrecorded a denialloss on early extinguishment of debt of $406,801 related to this conversion and reduced the claims and intendsvalue of the derivative liability to vehemently defend itself against the allegations.nil.

Note 13.Equity

(a) Common Stock

The Company is authorized to issue 500,000,000 shares of Common Stock, par value $0.001 per share.

 

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PetroGlobe Energy Holdings, LLC and Signal Drilling, LLC

In March 2019, PetroGlobe and Signal sued the Company in the 316th Judicial District of Hutchinson County, Texas (Cause No. 43781). The plaintiffs alleged causes of action relating to negligent misrepresentation; fraud and willful misconduct; gross negligence; statutory fraud; breach of contract; and specific performance, in connection with a purchase and sale agreement entered into between the parties in March 2018, relating to the purchase by plaintiffs of certain oil and gas assets from the Company, and a related joint venture agreement. The lawsuit seeks in excess of $600,000 in damages, as well as pre- and post-judgment interest, court costs and attorneys’ fees, and punitive and exemplary damages. Additionally, a portion of the revenues from the properties in contention are being held in suspense as a result of the lawsuit. On October 31, 2019, the Company brought counterclaims against PetroGlobe and Signal, and Petrolia Oil, LLC, and Ian Acrey, including bringing claims for causes of actions including declaratory judgment (that PetroGlobe and certain other plaintiffs represented that a lease and related wells were free of all agreements and rights in favor of third parties and provided a special warranty of title pursuant to the purchase and sale agreement); breach of contract (in connection with the purchase and sale agreement); statutory fraud; common law fraud (against Mr. Acrey and other plaintiffs); fraud by non-disclosure (against Mr. Acrey and other plaintiffs); negligent misrepresentation (against Mr. Acrey and other plaintiffs); breach of fiduciary duty (against Mr. Acrey and other plaintiffs) and seeking attorney’s fees and pre- and post-judgment interest.

On May 30, 2019, the Company received a Severance Order from the Texas Railroad Commission (the “TRC”) for noncompliance with TRC rules, suspending the Company’s ability to produce or sell oil and gas from its Panhandle leases in Hutchinson County, Texas, until certain well performance criteria were met. Subsequent to that date, the Company followed TRC procedures in order to regain TRC compliance for the Panhandle wells.

On January 31, 2020, the Company entered into a Compromise Settlement Agreement (the “Settlement Agreement”) with PetroGlobe Energy Holdings, LLC (“PetroGlobe”), Signal Drilling, LLC (“Signal”), Petrolia Oil, LLC (“Petrolia”), Prairie Gas Company of Oklahoma, LLC (“PGCO”), and Canadian River Trading Company, LLC (“CRTC”). Pursuant to the Settlement Agreement, the Company agreed to pay PetroGlobe $250,000, of which $100,000 was due upon execution of the Settlement Agreement, which payment has been made, and $150,000 was paid to an escrow account, which release was subject to approval by the Company upon the successful transfer of all wells and partnership interests of the Company’s current wholly-owned subsidiary CE to PetroGlobe, which occurred on July 16, 2020.

On July 16, 2020, the Company completed all of the requirements of the Settlement Agreement and assigned PetroGlobe all of its right, title, and interest in all wells, leases, royalties, minerals, equipment, and other tangible assets associated with specified wells and properties, located in Hutchinson County, Texas, the $150,000 held in escrow was released to PetroGlobe and the Settlement Agreement transactions closed. As a result of the transfers, the Company no longer owns CE, and no longer has any interest in or any liabilities related to the Hutchinson County, Texas wells.

The Company recognized a net settlement cost of $204,842 included in general and administrative expenses on the statement of operations for the year ended March 31, 2020, in connection with the settlement.

All provisions of the settlement were finalized, and the $150,000, held in escrow pending final approvals, was released on July 16, 2020.

The Company released the parties to the Settlement Agreement, including Ian Acrey, individually, as well as their officers, directors, or members from any claims asserted in the lawsuit, and the parties to the Settlement Agreement along with Ian Acrey, individually, released the Company, its officers, directors, shareholders and affiliate corporations from any claims asserted in the lawsuit. The Company did not release any claims or causes of action against N&B Energy, LLC, Sezar Energy, LLP related to Richard Azar, or any of their affiliates, or predecessors, or successors, and is currently evaluating its plans.

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The parties filed a motion and order to dismiss the lawsuit with prejudice shortly after the execution of the Settlement Agreement.

Apache Corporation

In December 2018, Apache Corporation (“Apache”) sued Camber, Sezar Energy, L.P., and Texokcan Energy Management Inc., in the 129th Judicial District Court of Harris County, Texas (Cause 2018-89515). Apache alleged causes of action for Breach of Contract, Money Had & Received and Conversion, relating to amounts Apache alleged it was owed under a joint operating agreement. Apache is seeking $656,908 in actual damages, exemplary damages, pre- and post-judgment interest, court costs, and other amounts to which it may be entitled. Camber filed a general denial to the claims and asserted the affirmative defense of failure to mitigate. On July 13, 2020, Apache filed a Second Amended Petition against Camber, Sezar, Texokcan, N&B Energy, LLC, and Richard N. Azar, II alleging Breach of Contract, Defaults under a Joint Operating Agreement, Money Had & Received and Conversion, relating to amounts Apache allegedly overpaid Sezar and Azar and Unjust Enrichment. On October 26, 2020, the Company entered into an agreement with Apache to obtain a release of all liability (both parties provided mutual releases) for $20,000 which the Company paid in October 2020, which is included in general and administrative expenses on the statement of operations for the nine months ended December 31, 2020. The litigation was dismissed against the Company.

N&B Energy

On October 21, 2020, litigation was settled through binding arbitration and an arbitration award in favor of N&B Energy was granted in the amount of approximately $52,000, which is included in general and administrative expenses on the statement of operations for the nine months ended December 31, 2020. The Company paid all amounts due in December 2020 and the litigation was dismissed.

Litigation as a Result of “Short Report”

The Company was the target of a “short” report issued by Kerrisdale Capital in early October, 2021, and as a result of such short report there was an action commenced against the Company, James Doris and Frank Barker by or on behalf of certain shareholders of Camber in connection with losses alleged to have been suffered by the shareholders. There were also derivative actions commenced against the Company and its directors. The Company and its officers and directors have retained the firm of Baker Botts LLP to defend the action, and deny the allegations contained in the claim.

NOTE 12 – REVENUE FROM CONTRACTS WITH CUSTOMERS

Oil and Gas Contracts

The following table disaggregates revenue by significant product type for the year ended December 31, 2021 and the nine months ended December 31, 2020 respectively:

 

 

December 31,

2021

 

 

December 31,

2020

 

Oil sales

 

$273,234

 

 

$109,570

 

Natural gas sales and liquids

 

 

127,988

 

 

 

41,244

 

Total oil and gas revenue from customers

 

$401,222

 

 

$150,814

 

There were no significant contract liabilities or transaction price allocations to any remaining performance obligations as of December 31, 2021 or 2020, respectively.

Revenue is generated from three customers, one of which represents in excess of 90% for both years.

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NOTE 13 – LINEAL MERGER AGREEMENT AND DIVESTITURE

Merger Agreement

On July 8, 2019 (the “Closing Date”), the Company entered into and closed the transactions contemplated by, the Lineal Plan of Merger, by and between the Company, Camber Energy Merger Sub 2, Inc., the Company’s then newly formed wholly-owned subsidiary, Lineal, and the Lineal Members. Pursuant to the Lineal Plan of Merger, the Company acquired 100% of the ownership of Lineal from the Lineal Members in consideration for newly issued shares of Series E Redeemable Convertible Preferred Stock and Series F Redeemable Preferred Stock.

Divestiture

On December 31, 2019, the Company entered into and closed the transactions contemplated by the Preferred Stock Redemption Agreement (the “Redemption Agreement”), by and between the Company, Lineal, and the holders of the Company’s Series E Preferred Stock and Series F Preferred Stock (the “Preferred Holders”), pursuant to which, the Company redeemed the Company’s Series E and F Preferred Stock issued in connection with the Lineal Merger and ownership of 100% of Lineal was transferred back to the Preferred Holders, and all of the Series E Preferred Stock and Series F Preferred Stock of the Company outstanding were canceled through the redemption (the “Lineal Divestiture”).

The Redemption Agreement also provided for (a) the entry by Lineal and the Company into a new unsecured promissory note in the amount of $1,539,719, the outstanding amount of the July 2019 Lineal Note together with additional amounts loaned by Camber to Lineal through December 31, 2019 (the “December 2019 Lineal Note”); (b) the unsecured loan by the Company to Lineal on December 31, 2019, of an additional $800,000, entered into by Lineal in favor of the Company on December 31, 2019 (“Lineal Note No. 2”); and (c) the termination of the prior Lineal Plan of Merger and Funding Agreement entered into in connection therewith (pursuant to which all funds previously held in a segregated account for future Lineal acquisitions, less amounts loaned pursuant to Lineal Note No. 2, were released back to the Company). The December 2019 Lineal Note and Lineal Note No. 2, accrue interest, payable quarterly in arrears, beginning on March 31, 2020, and continuing until December 31, 2021, when all interest and principal is due, at 8% and 10% per annum (18% upon the occurrence of an event of default), respectively. As of December 31, 2021 and 2020 respectively, the notes are in default, and the full amount of principal and accrued interest has been fully reserved.

NOTE 14 – INCOME TAXES

The Company recorded no provision for income taxes for the year ended December 31, 2021 and for the nine months ended December 31, 2020.

The following is a reconciliation between actual tax expense (benefit) and income taxes computed by applying the U.S. federal income tax rate of 21% to income from continuing operations before income taxes for the year ended December 31, 2021 and the nine months ended December 31. 2020:

 

 

December 31,

2021

 

 

December 31,

2020

 

Tax expense (benefit), computed at expected tax rates

 

$(966,854)

 

$(1,613,788)

Nondeductible expenses

 

 

-

 

 

 

-

 

Change in valuation allowance

 

 

966,854

 

 

 

1,613,788

 

Total

 

$-

 

 

$-

 

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Tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred liabilities are presented below:

 

 

December 31

 

 

December 31,

 

 

 

2021

 

 

2020

 

Deferred tax assets (liabilities):

 

 

 

 

 

 

Net operating tax loss carryforwards

 

$9,601,492

 

 

$10,939,143

 

Depreciation, depletion and amortization

 

 

608,206

 

 

 

606,948

 

(Income) loss from equity interests

 

 

2,399,766

 

 

 

419,267

Stock-based compensation

 

 

625,664

 

 

 

302,916

 

Bad debt reserve

 

 

535,034

 

 

 

535,034

 

Total deferred tax assets (liabilities)

 

 

13,770,162

 

 

 

12,803,308

 

Less: valuation allowance

 

 

(13,770,162)

 

 

(12,803,308)

Total

 

$-

 

 

$-

 

The above estimates are based on management’s decisions concerning certain elections which could change the relationship between net income and taxable income.

Management decisions are made annually and could cause the estimates to vary significantly.

The Company experienced an “ownership change” within the meaning of IRC Section 382 during the year ended March 31, 2017. As a result, certain limitations apply to the annual amount of net operating losses that can be used to offset post ownership change taxable income. The Company has estimated that $44.5 million of its pre-ownership change net operating loss could potentially be lost due to the IRC Section 382 limitation for the year ended March 31, 2017. This amount may increase if the Company experiences another ownership change(s) since the last ownership change. However, the income tax effect of those ownership change(s) should be nil as the Company had recorded a full valuation allowance against its deferred assets. As of December 31, 2020, there have not been any additional ownership changes that the Company believes would lead to further IRC Section 382 limitations.

At December 31, 2021and 2020, the Company had estimated net operating loss carryforwards for federal income tax purposes of approximately $58.5 million and $52.1 million, respectively, adjusted for the ownership change limitation discussed above, which will begin to expire, if not previously used, beginning in the fiscal year 2028. A valuation allowance has been established for the entire amount of the deferred tax assets for the year ended December 31, 2021 and for the nine months ended December 31, 2020.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the 2017 Tax Cuts and Jobs Act (“2017 Tax Reform”). The 2017 Tax Reform significantly revised the future ongoing U.S. corporate income tax by, among other things, lowering U.S. corporate income tax rates and implementing a territorial tax system. The Company has reasonably estimated the effects of the 2017 Tax Reform and recorded provisional amounts in the consolidated financial statements as of March 31, 2018. This amount is primarily comprised of the re-measurement of federal net deferred tax liabilities resulting from the permanent reduction in the U.S. statutory corporate tax rate to 21%, from 34%. The Company will continue to monitor additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, so we may make adjustments to the provisional amounts (if any). However, management’s opinion is that future adjustments due to the 2017 Tax Reform should not have a material impact on the Company’s provision for income taxes.

On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief, and Economic Security Act” (“CARES ACT”). The CARES Act, among other things, includes provisions relating to net operating loss (“NOL”) carryback periods. The Company is evaluating the impact, if any, that the CARES Act may have on the Company’s future operations, financial position, and liquidity in fiscal year 2021. At this time, the Company does not expect to realize the benefits of the NOL carryback provisions.

The Company files income tax returns for federal and state purposes. Management believes that with few exceptions, the Company is not subject to examination by United States tax authorities for periods prior to 2017.

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NOTE 15 – STOCKHOLDERS’ DEFICIT

Common Stock

During the year ended December 31, 2021,2023, the Company issued 1,500,094 sharesa total of restricted common stock to service providers in consideration for investor relations and marketing services, and recognized $1,493,358, based on the grant date fair value of the Company’s common stock, in stock-based compensation expense corresponding to the issuance of these shares. During the nine months ended December 31, 2020, the Company issued 176,514 shares of restricted common stock to service providers in consideration for investor relations and marketing services, and recognized $209,502, based on the grant date fair value of the Company’s common stock, with $36,502 being recorded in stock-based compensation expense and $173,000 in satisfaction of prior period common stock issuable.

Included in such 176,514105,646,799 shares of common stock, as follows:

(i)

A total of 8,525,782 shares of common stock on the conversion of 240 shares of Series C Preferred Stock. Of this total, 1,093,358 shares were 175,000 shares issued subsequent to the Merger.

(ii)

A total of 31,022,321 true-up shares related to prior conversions of Series C Preferred Stock as a result of the continuation of the Measurement Period (as defined in the Series C COD with respect to such Series C Preferred Stock) associated with such conversions and a decline in the price of the Company’s shares of common stock within the Measurement Period. Of this total, 23,670,894 shares were issued subsequent to the Merger.

(iii)

588,235 shares of common stock related to the assignment and conversion of $200,000 of promissory notes payable to Cornerstone Bank.

(iv)

3,849,306 shares of common stock on the exercise of 3,888,889 warrants.

(v)

A total of 5,189,666 shares of common stock related to the assignment and conversion of $2,232,273 of promissory notes payable to Cornerstone Bank.

(vi)

3,333,333 shares of common stock related to the conversion of 200 shares of Series H Preferred Stock.

(vii)

A total of 3,848,004 shares of common stock related to the conversion of two promissory notes, each in the amount of $800,000 (for a total of $1,600,000), due to FK Venture, LLC.

(viii)

A total of 49,290,152 shares of common stock to the former shareholders of Viking Energy Group, Inc. as part of the Merger.

(b) Preferred Stock

The Company is authorized to Sylva International LLC d/b/a SylvaCap Media (“SylvaCap”). On February 15, 2020, the Company entered into a letter agreement with SylvaCap, pursuant to which SylvaCap agreed to act as the Company’s non-exclusive digital marketing service provider in consideration for an aggregate of 100,000issue 10,000,000 shares of restricted common stock, which are fully-earned upon their issuance, and $50,000Preferred Stock, par value $0.001 per month during the term of the agreement, which was to end on June 15, 2020. On May 19, 2020, the Company entered into a first amendment to the SylvaCap agreement. Pursuant to the amendment, the Company and SylvaCap extended the term of the letter agreement to October 19, 2020. The 100,000 shares were issued on May 15, 2020. On August 31, 2020, the parties entered into a second amendment to the agreement. Pursuant to the amendment, the parties agreed to amend the engagement agreement to increase the stock fee payable thereunder to 175,000 shares of common stock of the Company and to provide for the agreement to remain in place until the earlier of (a) October 19, 2020; and (b) the closing of the Company’s currently contemplated merger with Viking.share (the “Preferred Stock”).

 

(i) Series A Convertible Preferred Stock

 

On August 31, 2020,1, 2023, the Board of Directors approved the designation ofCompany issued 28,092 shares of Series A Convertible Preferred Stock (the “new Series A Preferred Stock”), which were designated with the Secretary in exchange for 28,092 outstanding shares of State of Nevada on August 31, 2020 (the “Series A Designation”) to have substantially similar rights as theold Series C Preferred Stock of Viking (as amended), as adjusted for the exchange ratio of the Merger agreement at that time.

On December 23, 2020, the Company entered into (i) a termination agreement with Viking terminating the Amended and Restated Agreement and Plan of Merger, dated August 31, 2020, as amended to date.

On February 15, 2021, the Company entered into a new Agreement and Plan of Merger with Viking.Energy Group Inc. Pursuant to the terms ofCOD for the Agreement and Plan of Merger with Viking, upon closing of the Merger, each one (1) share of Viking Series C Preferred Stock (“Viking Preferred Stock”) issued and outstanding immediately prior to the Effective Time, shall be converted into the right to receive one (1) share of the to be designated Series A Convertible Preferred Stock of Camber (the “New Camber Preferred”).

Each share of Camber Series A Preferred Stock will be(the “Series A COD”), each share of Series A Preferred Stock is convertible into 890 shares of common stock of Camber subjectCommon Stock (subject to a 9.99% beneficial ownership limitation willpreventing conversion into Camber Common Stock if the holder would be deemed to beneficially own more than 9.99% of Camber Common Stock), is treated equally with the Company’s common shareholdersCamber Common Stock with respect to dividends and liquidation, and will have no rightonly has voting rights with respect to vote on any matters, questions or proceedings of Camber except:voting: (a) on a proposal to increase or reduce Camber’s share capital; (b) on a resolution to approve the terms of a buy-back agreement; (c) on a proposal to wind up Camber; (d) on a proposal for the disposal of all or substantially all of Camber’s property, business and undertaking; (f) during the winding-up of Camber; and/or (g) with respect to a proposed merger or consolidation in which Camber is a party or a subsidiary of Camber is a party.

 

As of December 31, 2021 and 2020, the Company had no(ii) Series A Convertible Preferred Stock issued or outstanding.

Series BC Redeemable Convertible Preferred Stock

 

AsHolders of December 31, 2020 and March 31, 2020, the Company had no Series B Redeemable ConvertibleC Preferred Stock issuedare entitled to cumulative dividends in the amount of 24.95% per annum (adjustable up to 34.95% if a Trigger Event, as described in the Series C COD occurs), payable upon redemption, conversion, or maturity, and outstanding.

Effectivewhen, as and if declared by our board of directors in its discretion, provided that upon any redemption, conversion, or maturity, seven years of dividends are due and payable on May 15, 2020, duesuch redeemed, converted or matured stock. The Series C Preferred Stock ranks senior to the fact that nocommon stock. Except as prohibited by applicable law or as set forth herein, the holders of shares of Series BC Preferred Stock were outstanding,have the Boardright to vote together with holders of Directors approved,Common Stock on all matters other than: (i) the election of directors; (ii) and any shareholder proposals, including proposals initiated by any holder of shares of Series C Preferred Stock), in each instance on an as-if converted basis, subject to the Company filed, a Certificatebeneficial ownership limitation in the COD, even if there are insufficient shares of Withdrawalauthorized Common Stock to fully convert the shares of Certificate of Designation relating to such series of preferred stock with the Secretary of State of Nevada and terminated the designation of its Series BC Preferred Stock.

The Series C Preferred Stock effective asmay be converted into shares of our common stock at any time at the option of the same date.holder, or at Camber’s option if certain equity conditions (as defined in the Series C COD), are met. Upon conversion, Camber will pay the holders of the Series C Preferred Stock being converted through the issuance of common stock, in an amount equal to the dividends that such shares would have otherwise earned if they had been held through the maturity date (i.e., seven years), and issue to the holders such number of shares of common stock equal to $10,000 per share of Series C Preferred Stock (the “Face Value”) multiplied by the number of such shares of Series C Preferred Stock divided by the applicable conversion price of $162.50 (after adjustment following the December 21, 2022 reverse stock split) adjusted for any future forward or reverse splits.

 

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Series C Redeemable Convertible Preferred Stock

On February 3, 2020, the Company sold 525 shares of Series C Preferred Stock for total proceeds of $5 million. In the event the Merger Agreement entered into with Viking in February 2020 is terminated for any reason, we (until June 22, 2020, when such terms were amended) these shares were required to be redeemed at a 110%The conversion premium in an aggregate amount equal to $5,775,000. Because of the previous redemption requirement and due to certain redemption features, which are outside the control of the Company,under the Series C Preferred Stock is classified as temporary equity on the March 31, 2021 and December 31, 2020 balance sheets. Temporary equity is a security with redemption features that are outside the control of the issuer, is not classified as an asset or liability in conformity with GAAP, and is not mandatorily redeemable.  In addition, the Series C Preferred Stock contains an embedded derivative and an additional derivative upon conversion.  (See note 10)

On June 22, 2020, the Company sold 630 shares of Series C Preferred Stock to Discover in consideration for $6 million. On December 11, 2020, the Company entered into an Exchange Agreement with Discover, the sole shareholder at the time, of the Company’s Series C Preferred Stock. The transactions contemplated by the Exchange Agreement closed on December 11, 2020. Pursuant to the Exchange Agreement, as an accommodation to the Company, and in order to reduce the potential dilutive impact of the Series C Preferred Stock, by reducing the number of outstanding shares of Series C Preferred Stock, Discover exchanged 600 shares of Series C Preferred Stock, which had an aggregate face value of $6,000,000 (600 shares each with a face value of $10,000 per share), for a $6,000,000 secured Promissory Note. As this investment was appropriately classified as temporary equity prior to the exchange, and it had mandatory redemption options associated with certain contingencies that were outside the control of the issuer, the Company determined that the exchange should be accounted for similar to a debt extinguishment in exchanging the temporary equity instrument for a debt instrument at the same carrying value, and there should be no gain or loss recognized on the transaction.

On January 8, 2021, the Company issued 1,890 shares of Camber’s Series C Preferred Stock to EMC Capital Partners, LLC, one of Viking’s lenders, in full satisfaction of a secured promissory note previously issued by Viking to EMC, accrued interest and certain other liabilities totaling approximately $18,900,000.  The issuance was recorded as an additional investment by the Company in Viking.

The Company has not declared any dividends on the Series C Preferred stock, but recognized cumulative dividends as an adjustment to income available to common stockholders and an increase in the carrying value of the Series C Preferred Stock.

As of December 31, 2021, Discover is entitled to approximately 38,185,136 True-up shares relating to previously converted Series C Preferred Stock. Such shares were issued subsequent to year end, but may be subject to further adjustment as the Measurement Period has not expired on such shares. The Company estimates the liability associated with the obligation to issue True-Up shares and records the obligation as a derivative ‘liability based on estimated fair value using a binomial pricing model, the historical volatility of the Company’s common stockpayable and the lesser of the conversion price or the lowest closing price subsequent to the conversion date. The Company records a gain or loss on the change in fair value. During the year ended December 31, 2021, the Company recorded a loss on the change in fair value of $152,831,568 and had a derivative liability of $93,108,568. During the nine-month period ended December 31, 2020, the Company recorded a loss on the change in fair value of $41,878,821 and had a derivative liability of $93,981,234. The Derivative Liability is reduced when True-Up shares are issued. A Derivative Liability associated with a conversion ofdividend rate under the Series C Preferred Stock is no longer recognized whenadjustable. Specifically, the Measurement Period expires and the holder is no longer entitled to True-Up shares.

As of December 31, 2021 Discover and Antilles held 2,093 shares of Series C Preferred Stock (518 held by Discover and 1,575 held by Antilles). 

Between January 1, 2022 and March 7, 2022 Discover converted 488conversion rate of such shares into 64,653,948 common shares,premiums and dividends equals 95% of the average of the lowest 5 individual daily volume weighted average prices during the Measuring Period (as defined below), not to exceed 100% of the lowest sales prices on May 16, 2022 Discover converted 30 Series C Preferred Stock into 3,848,450 common shares, leaving a balancethe last day of 0 Series C Preferred Stock held by Discover.  If Camber’s stock price falls below $0.3475the Measuring Period, less $0.05 per share prior toof common stock, unless a trigger event has occurred, in which case the Company being in compliance with allconversion rate equals 85% of the Equity Conditions set out in the Certificate of Designation, Discover may be entitled to additional True-Up Shares, i.e. additional common shares, regarding shares of Series C Preferred Stock converted by Discover at a VWAP higher than $0.3475 since the Measurement Period in respect of those prior conversions has not expired given the Company is not at the moment in compliance with all of the Equity Conditions set out in the Certificate of Designation.

As of May 16, 2022, the only Series C Preferred Stock outstanding are the 1,175 shares held by Antilles.

Antilles is entitled to convert the face value of the 1,175 Series C Preferred Stock at a fixed conversion price of $3.25, and to convert the value of the associated Conversion Premium at a price equal to (A x B) – C whereas: A equals the lowest daily volume weighted average price during the MeasurementMeasuring Period, (the “VWAP”); B equals 0.85; and C equals $0.10. Neitherless $0.10 per share of common stock not to exceed 85% of the Measurementlowest sales prices on the last day of such the Measuring Period, nor VWAP are certain with respect toless $0.10 per share. The “Measuring Period” is the 1,175 shares of Series C Preferred Stock held by Antilles but the VWAP is estimated to be $0.4503, and assuming: (i) a Triggering Eventperiod beginning, if no trigger event has occurred, (which is30 trading days, and if a trigger event has occurred, 60 trading days, before the case at the moment) and no waiver for sameapplicable notice has been obtained; and (ii)provided regarding the highest possible dividend rate of 34.95%, the Company estimates that the 1,175 Series C Preferred Stock held by Antilles would convert into approximately 105,264,519 common sharesexercise or conversion of the Company, subject toapplicable security, and ending, if no trigger event has occurred, 30 trading days, and if a trigger event has occurred, 60 trading days, after the 9.99% ownership limitation set forthapplicable number of shares stated in the initial exercise/conversion notice have actually been received into the holder’s designated brokerage account in electronic form and fully cleared for trading. Trigger Events are described in the designation of the Series C Preferred Stock. These Series C Preferred sharesStock, but include items which would convert into additional common sharestypically be events of default under a debt security, including filing of reports late with the Company if the VWAP during the Measurement Period falls below $0.4503.SEC.

 

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On December 14, 2020, the Company, with the approval of the Board of Directors of the Company and the sole holder of the Company’sThe Series C Preferred Stock filedhas a certificatematurity date that is seven years after the date of corrections with the Secretary of State of Nevada to correct the original designation ofissuance and, if the Series C Preferred Stock and the first amended and restated designation thereof.

Also on December 14, 2020, the Company, with the approvalhas not been wholly converted into shares of the Board of Directors of the Company and the sole holder of the Company’scommon stock prior to such date, all remaining outstanding Series C Preferred Stock filed a second amended and restated designationwill automatically be converted into shares of common stock, to the Series C Preferred Stock with the Secretary of State of Nevada which was effective upon filing (the “Second Amended and Restated Designation”).

On April 15, 2021, the Company, with the approval of the Board of Directors and holders of the Company’s Series C Preferred Stock, filed certificate of corrections with the Secretary of State of Nevada to correct the original designation of the Company’s Series C Redeemable Convertible Preferred Stock and the subsequent amended and restated designations thereof, to correct certain errors which were identified in such designations, and to clearly state the original intent of the parties, as follows:

Section I.D.2(e) of the prior Certificates of Designation implicitly excluded as a “Deemed Liquidation Event”, an event or proposal that was initiated by or voted upon by the holder of the Series C Preferred Stock, and the Designations have been clarified to expressly exclude such occurrence. Section I.F.4 of the Designations failed to include language to clarify that the Company is not obligated to redeem the Preferred Shares for cash for any reason that is not solely within the control of the Company. Section I.G.1 of the Designations mistakenly included two subsection b.’s where only one was intended, and the unintended subsection b.extent Camber has been removed. Section I.G.1(e) of the Designations failed to include language to clarify that the Company not having sufficient authorized but unissued shares solely within the control of the Company and excludingcommon stock available for issuance upon conversion. Notwithstanding any event that is not solely within the controlother provision of the Company, is not a reason that would otherwise trigger the obligations in such section. Sections I.G.1(f) and (g) of the Designations failed to include language to clarify the particular obligations apply only if the Company has sufficientthis designation, available authorized and unissued shares. Section I.G.7(e)shares of the Designations mistakenly referenced the incorrect Conversion Price. Section I.G.9 of the Designations failed to include language to clarifycommon stock will be a limit and cap on the maximum number of shares of common sharesstock that could be potentially issuable with respect to all conversions and other events that are not solely within the control of the Company, that the Dividend Maturity Date isCamber. Camber will at all times use its best efforts to be indefinitely extended and suspended untilauthorize sufficient authorized and unissued shares become available, theshares. The number of shares required to settle the excess obligation is fixed on the date that net share settlement occursoccurs. The Dividend Maturity Date will be indefinitely extended and that all provisionssuspended until sufficient authorized and unissued shares become available. 100% of the Designations areFace Value, plus an amount equal to be interpreted soany accrued but unpaid dividends thereon, automatically becomes payable in the event of a liquidation, dissolution or winding up by Camber.

Camber may not issue any preferred stock that net share settlement is withinpari passu or senior to the controlSeries C Preferred Stock with respect to any rights for a period of one year after the earlier of such date (i) a registration statement is effective and available for the resale of all shares of common stock issuable upon conversion of the Company.Series C Preferred Stock, or (ii) Rule 144 under the Securities Act is available for the immediate unrestricted resale of all shares of common stock issuable upon conversion of the Series C Preferred Stock.

 

The correctionsSeries C Preferred Stock is subject to a beneficial ownership limitation, which prevents any holder of the Series C Preferred Stock from converting such Series C Preferred Stock into common stock, if upon such conversion, the holder would beneficially own greater than 9.99% of Camber’s outstanding common stock.

Pursuant to the Series C COD, holders of the Series C Preferred Stock are permitted to vote together with holders of common stock on all matters other than election of directors and shareholder proposals (including proposals initiated by any holders of preferred shares), on an as-if converted basis, subject to the beneficial ownership limitation in the CertificatesSeries C COD, even if there are insufficient shares of Correction were effective asauthorized common stock to fully convert the Series C Preferred Stock. Also pursuant to certain agreements entered into with the holders of the original filing datesSeries C Preferred Stock in October 2021, due to the occurrence of a Trigger Event, Camber no longer has the right to conduct an early redemption of the Series C Preferred Stock as provided for in the Series C COD unless the Company’s indebtedness to Discover is paid in full.

On October 31, 2022, Camber filed with the Secretary of State of Nevada an amendment to the Series C COD (the “Series C Amendment”), dated as of October 28, 2022 (the “Series C Amendment Date”), pursuant to agreements between Camber and each of Discover and Antilles signed on October 28, 2022, which amended the Company’s originalSeries C COD such that (i) beginning on the Series C Amendment Date and thereafter, when determining the conversion rate for each share of Series C Preferred Stock designation (August 25, 2016)based on the trading price of Camber’s common stock over a certain number of previous days (“Measurement Period”), no day will be added to what would otherwise have been the Company’s first amendedend of any Measurement Period for the failure of the Equity Condition (as defined in the Series C COD), even if the volume weighted average trading price (“Measuring Metric”) is not at least $1.50 and restatedeach holder of Series C Preferred Stock designation (July 8, 2019), andwaived the Company’s second amended and restatedright to receive any additional shares of common stock that might otherwise be due if such Equity Condition were to apply after the Series C Preferred Stock designation (December 14, 2020), subjectAmendment Date, including with respect to certain exceptions set forth inany pending Measurement Period; and (ii) (A) beginning on the Nevada Revised Statutes. The corrections correctedSeries C Amendment Date and for the designations to reflectperiod through December 30, 2022, the original intentionsMeasuring Metric will be the higher of the partiesamount provided in Section I.G.7.1(ii) of the Series C COD and to conform such designations to$0.20, and (B) beginning at market close on December 30, 2022 and thereafter, the wayMeasuring Metric will be the volume weighted average trading price of the common stock on any day of trading following the date of first issuance of the Series C Preferred Stock had been accounted for in practice since its original designation/issuance as a component of permanent equity.Stock.

 

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November 2022 Agreement with Discover Growth Fund, LLC

On April 20, 2021,November 3, 2022, the Company entered into an agreement with the approvalDiscover, pursuant to which Discover absolutely and unconditionally waived and released any and all rights to receive further or additional shares of the BoardCompany’s common stock (the “Conversion Shares”) with respect to any and all shares of Directors of the Company, and the holders of the Company’s Series C Preferred Stock filed a third amended and restated designation ofpreviously converted by Discover including, but not limited to, the right to deliver additional notices for more Conversion Shares under the Series C Preferred Stock with the Secretary of State of Nevada, which amended the Designations to state that dividends and conversion premiums will only be paid in shares of Company common stock, and state that redemption amounts will only be paid in shares of Company common stock. As a result of the third amended and restated designation of the Series C Preferred Stock the Company has determined that there are no provisions requiring redemption that are outside the control of the Company. Subsequent to yearend, the Series C Preferred Shares were reclassified to permanent equity during the second quarter of 2021.COD.

 

On July 10, 2021, the Company, with the approval of the Board of Directors of the CompanyDiscover also absolutely and the holders of the Company’s Series C Preferred Stock, filed an amendment to its designation of its Series C Preferred Stock with the Secretary of State of Nevada (the “Fourth Amendedunconditionally waived and Restated Designation”), solely to increase the number of preferred shares designated as Series C Preferred Stock from 5,000 to 5,200.

On November 8, 2021, the Company filed with the Secretary of State of Nevada a Fifth Amendedreleased any and Restated Designation regarding its Series C Preferred Stock which amended the Designations to provide votingall rights to holdersconvert all or any part of the Series C Preferred Stock as required by the October 2021 Agreements (as defined herein).

In November 2021, as a further accommodation to the Company and in order to help facilitate implementation of the Company’s business plans and continued trading on the NYSE American, the investors agreed to extend the deadline for the Filing Requirement to December 6, 2021.  The deadline for the Reserve Requirement remains December 31, 2021, meaning the Company is to obtain on or before such date, approval of the proposals outlined in the preliminary proxy statement filed by the Company with the Securities and Exchange Commission on November 9, 2021.

On December 3, 2021 the Company entered into amending agreements (the “December Agreements”) with each of the First Investor and Second Investor (as disclosedany Promissory Notes previously executed by the Company in its Current Report Filed on Form 8-K filed with the Securities and Exchange Commission on December 6, 2021). Pursuant to the December Agreements, as a further accommodation to the Company and in order to help facilitate implementationfavor of Discover into shares of the Company’s business planscommon stock and continued trading on the NYSE American, the Investors agreed not to extend the deadline for the Filing Requirementconvert or attempt to December 17, 2021. The deadline for the Reserve Requirement remained December 31, 2021.

Pursuant to the December 24th Agreements, as a further accommodation to the Company and in order to help facilitate implementationconvert any portion of the Company’s business plans and continued trading on the NYSE American, the parties agreed:

(i)

the deadline for the Filing Requirement is extended to January 14, 2022;

(ii)

the deadline for the Reserve Requirement remains December 31, 2021, meaning the Company is required to obtain on or before such date, approval of the proposals outlined in the preliminary proxy statement filed by the Company with the Securities and Exchange Commission on November 9, 2021 (to increase the Company’s authorized common stock);

(iii)

each and every Measurement Period (as defined in the COD) with regard to any share of Preferred converted by Investor or any affiliate of Investor prior to December 24, 2021 will terminate, and the provisions of Section I.G.1.d of the COD shall no longer apply with respect to any shares of Preferred converted prior to December 24, 2021;

(iv)

If the Reserve Requirement and the Filing Requirement are not met by the deadlines mentioned above, Company acknowledges and agrees that (A) Company will be in uncured material breach and default under all of the Notes and Agreements, and (B) all Measurement Periods will remain open and continue to run in accordance with the terms of the COD.

The Company satisfied the Reserve Requirement by the required deadline but did not satisfy the Filing Requirement.any Promissory Notes, at any particular price or at all.

 

As of December 31, 2021 and 2020, the2023, Antilles held 30 shares of Series C Preferred shares wereStock. The Series C Preferred Stock was convertible into a substantial number of the Company’s shares of common sharesstock which could result in significant dilution of the Company’s existing shareholders. If the outstanding Series C Preferred Stock were converted as of December 31, 2021 and 2020,2023, the Company estimates that the following shares of common sharesstock would be required to be issued to satisfy the conversion of shares of the Series C Preferred shares:Stock:

 

 

 

December 31,

2021

 

 

December 31,

2020

 

Estimated number of shares issuable for conversion at $3.25 per share

 

 

11,956,923

 

 

 

6,440,000

 

Estimated number of common shares required to satisfy Conversion Premium using VWAP at period end

 

 

150,167,722

 

 

 

103,226,626

 

 

 

 

162,124,645

 

 

 

109,666,626

 

December 31,

2023*

Estimated number of shares issuable for conversion at $ 162.50 per share at September 30, 2023

1,846

Estimated number of shares of common stock required to satisfy Conversion Premium using VWAP at period end

8,994,433

8,996,279

 

Additionally.*based on 30 shares of Series C Convertible Preferred Stock outstanding as of such date and an estimated low VWAP as at such date

Additionally, even if the shares of the Series C preferred sharesPreferred Stock were  converted on the above dates, the Company could, pursuant to terms out in the COD, be required to issue additional shares of common sharesstock (true-up shares).

 

The CertificatesAs of DesignationsDecember 31, 2023, Antilles was entitled to approximately 34,488,937 true-up shares in connection with respect to the Company’sprior conversion by Antilles of 240 shares of Series C Preferred Stock and/orthroughout 2023 as a result of: (i) the Stock Purchase Agreements regarding the sale ofMeasurement Period in connection with such Series C Preferred Stock and Series G Preferred Stock (collectively, the “SPA’s”), contain covenants requiring the Companyconversions continuing to timely file all reports required to be filed by the Company pursuant to the Exchange Act (the “Filing Requirement”).  The Company did not satisfy the Filing Requirement and, consequently, on or about March 9, 2022, the preferred stock holders, Discover and Antilles, filed a Verified Complaint against the Company (the “Discover/Antilles Complaint”)extend as a result of the default byCompany’s previously announced outstanding deficiency with the Company underNew York Stock Exchange regarding continued listing standard(s) concerning minimum stockholders’ equity requirements; and (ii) the CODs.  A default underCompany’s stock price declining following the CODs and/or SPA’s is also considered an event of default under eachinitial conversion(s) of the Promissory Notes executed by the Company in favor240 shares of Discover (collectively, the “Discover Notes”) (see subsequent events), and upon an event of default under the Discover Notes, Discover may, at its option, declare the principal and any and all interest then accrued thereon, at once due and payable, and exercise any other rights under applicable agreements.  Discover did not exercise its right to declare the amount owing under the Discover Notes immediately due and payable, but Failure by Discover to exercise such right does not constitute a waiver of the right to exercise the same in the event of any subsequent default.  As of April 18, 2022, Discover, Antilles and the Company entered into a Settlement Agreement to settle the Discover/Antilles Complaint, and the Settlement Agreement was approved by the Court on or about May 12, 2022.  If the Company fails to satisfy future Filing Requirements, it would be considered a default under the CODs and SPA’s, which in turn would constitute an event of default under the Discover Notes.Series C Preferred Stock. 

 

(iii) Series EG Redeemable Convertible Preferred Stock and Series F Convertible Preferred Stock

 

As described above in “Note 1 – General” and “Note 13 – Lineal Merger Agreement and Divestiture”, on the Closing Date, pursuant to the Lineal Plan of Merger,On or about December 30, 2021, the Company acquired 100% of the ownership of Lineal from the Lineal Members in consideration for 1,000,000 of the newly issued sharescreated a new class of Series EG Preferred Stock, and 16,750having a face value of the newly issued shares of Series F Preferred Stock and effective on December 31, 2019, the Company divested its ownership in Lineal and the Series E Preferred Stock and Series F Preferred Stock were returned to the Company and cancelled.$10,000 per share.

 

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Effective on May 15, 2020, due toThe rights, entitlements and other characteristics of the fact that no shares of Series EG Preferred Stock and Series F Preferred Stock were outstanding,are set out in the Board of Directors approved, and the Company filed, Certificates of Withdrawal of the Certificate of Designations relating to such series of preferred stock with the Secretary of State of Nevada and terminated the designation of its Series E Preferred Stock and Series F Preferred Stock effective as of the same date.

Series G Redeemable Convertible Preferred StockCOD.

On December 30, 2021, the Company filed with the State of Nevada a Certificate of Designations of Preferences, Powers, Rights and Limitations of Series G Redeemable Convertible Preferred Stock (the “COD”).

 

Pursuant to the Series G COD, the Series G Redeemable Convertible Preferred Stock (“Series G Preferred Stock”) may be converted into shares of common stock at any time at the option of the holder at a price per share of common stock equal to one cent above the closing price of the Company’s common stock on the date of the issuance of such shares of Series G Preferred Stock, or as otherwise specified in the Stock Purchase Agreement, subject to adjustment as otherwise provided in the COD. Upon conversion, the Company will pay the holders of the Series G Preferred Stock being converted a conversion premium equal to the amount of dividends that such shares would have otherwise earned if they had been held through the maturity date.

 

The Series G Preferred Stock, with respect to dividend rights and rights upon liquidation, winding-up or dissolution, rank: (a) senior to the Company’s common stock; (b) junior to the Series C Redeemable Convertible Preferred Stock, (c) senior to the Series E Redeemable Convertible Preferred Stock and Series F Redeemable Convertible Preferred Stock, as such may be designated as of the date of this Designation, or which may be designated by the Company after the date of this Designation; (d) senior, pari passu or junior with respect to any other series of Preferred Stock, as set forth in the Certificate of Designations of Preferences, Powers, Rights and LimitationsCOD with respect to such Preferred Stock; and (d) junior to all existing and future indebtedness of the Company.

 

Except as prohibited by applicable law or as set forth herein, the holders of shares of Series G Preferred Stock will have the right to vote together with holders of common stock and Series C Preferred on all matters other than: (i) the election of directors; (ii) and any shareholder proposals, including proposals initiated by any holder of shares of Series G Preferred Stock), in each instance on an as-converted basis, subject to the beneficial ownership limitation in the COD even if there are insufficient shares of authorized common stock to fully convert the shares of Series G Preferred Stock into common stock.

 

Commencing on the date of the issuance of any such shares of Series G Preferred Stock, each outstanding share of Series G Preferred Stock will accrue cumulative dividends at a rate equal to 10.0% per annum, subject to adjustment as provided in the COD, (to a maximum of 30% per annum), of the Face Value.Dividends will be payable with respect to any shares of Series G Preferred Stock upon any of the following: (a) upon redemption of such shares in accordance with the Series G COD; (b) upon conversion of such shares in accordance with the Series G COD; and (c) when, as and if otherwise declared by the board of directors of the Corporation.

 

Dividends, as well as any applicable Conversion Premium payable hereunder, will be paid in shares of common stock valued at (i) if there is no Material Adverse Change (“MAC”) as at the date of payment or issuance of shares of common sharesstock for the Conversion Premium, as applicable, (A) 95.0% of the average of the 5 lowest individual daily volume weighted average prices of the common stock on the Trading Market during the applicable Measurement Period, which may be non-consecutive, less $0.05 per share of common stock, not to exceed (B) 100% of the lowest sales price on the last day of such Measurement Period less $0.05 per share of common stock, or (ii) during the time that any MACMaterial Adverse Change is ongoing, (A) 85.0% of the lowest daily volume weighted average price during any Measurement Period for any conversion by Holder, less $0.10 per share of common stock, not to exceed (B) 85.0% of the lowest sales price on the last day of any Measurement Period, less $0.10 per share of common stock.

 

On the Dividend Maturity Date, the Corporation may redeem any or all shares of Series G Preferred Stock by paying Holder, in registered or unregistered shares of common stock valued at an amount per share equal to 100% of the Liquidation Value for the shares redeemed, and the Corporation will use its best efforts to register such shares.

 

SaleIn the first quarter of Shares of Series G Preferred Stock:

On December 30, 2021,2022, pursuant to a stock purchase agreement between the Company and an accredited institutional investor (the Investor“Investor”) entered into a stock purchase agreement (the “Stock Purchase Agreement”) pursuant to whichdated on or about December 30, 2021, the Investor purchased from the Company 10,544 shares of newly designated Series G redeemable convertible preferred stock (the “Series G Preferred Stock,”), having a face value of $10,000 per share, for an aggregate price of $100,000,000 (the “Purchase Price”), representing at a 5% original issue discount.

 

The Purchase Price was paid by the Investor via payment of $5,000,000 in cash, on December 31, 2021, and the execution and delivery of four Promissory Notes (each a “Note” and collectively, the “Notes”) from the Investor in favor of Company, each in the amount of $23,750,000 and payable by the Investor to the Company on March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022, respectively.

 

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There are 2,636 shares of Series G Preferred Stock associated with each Note, and the Investor may not convert the shares of preferred stock associated with each Note into shares of common stock or sell any of the underlying shares of common stock (the “Conversion Shares”) unless that Note is paid in full by the Investor.

 

The Company may in its sole discretion redeem the 2,636 shares of Series G Preferred Stock associated with each Note by paying the Investor $1,375,000 as full consideration for such redemption. Also, the Investor may offset the then outstanding balance of each Note against the 2,636 shares of Series G Preferred Stock associated with that Note by electing to cancel the 2,636 shares as full consideration for cancellation of the Note in the event of a breach or default of any of the transaction documents by the Company.

 

F-30

On December 31, 2021, the Company also executed and delivered a Warrant Agreement (the “Warrant Agreement”) in favor of the Investor entitling the Investor to purchase up to 100,000,000 shares of common stock of the Company (the “Warrant Shares”) at an exercise price of $2.00 per share for the first 50,000,000 shares and an exercise price of $4.00 per share for the remaining 50,000,000 shares. The Warrant Agreement has a term of five years.

The Company agreed to use its best efforts to file with the Securities and Exchange Commission as promptly as practicable, and in any event within 30 days after the date on which the Company files all reports required to be filed pursuant to the Securities Exchange Act of 1934 (the “Act”), a Registration Statement on Form S-3 registering the delayed and continuous resale of all Conversion Shares and Warrant Shares pursuant to Rule 415 under the Act, subject to any limitations imposed by applicable securities laws as to the number of Conversion Shares and/or Warrant Shares that are eligible for registration, and to use best efforts to cause such Registration Statement to be declared effective under the Act as promptly as practicable and in any event within 60 days after filing. No Registration Statement will be declared effective unless the Investor pays for the particular tranche of shares of Series G Preferred Stock in full.

The net cash proceeds received of $5.0 million was allocated to the Series G Preferred Stock and the warrants based on relative fair value.  The fair value of the warrants was determined using a Black Scholes model and the Company’s stock price, volatility, risk free rate of return and the term of the warrants of five years.  The fair value of the Series G preferred Stock was based on the net redemption value. The proceeds allocated to the Series G Stock was allocated to the embedded derivative up to the fair value of derivative liability, which the Company determined to be negligible due to inherent restrictions on conversion.  The Company recorded the fair value of the warrants in additional paid-in capital and recorded a deemed dividend for the fair value of the warrants less the proceeds allocated to the warrants.  The fair value of the warrants was determined to be $82,165,769 of which $77,749,461 was recorded as a deemed dividend.

 Partial Redemption of Series G Preferred Stock

 On March 10,In 2022, the Company paid Antilles $1,375,000the Investor $2,750,000 and redeemed the 2,6365,272 shares of Series G Preferred Stock associated with the NoteNotes due March 31, 2022 and June 30, 2022, thereby canceling such NoteNotes and reducing the number of shares of Series G Preferred Stock outstanding from 10,544 to 7,908.  Antilles5,272. The Investor may not convert any of the remaining shares of preferred stockSeries G Preferred Stock associated with any remaining Note into shares of common stock or sell any of the underlying shares of common stock unless that Note is paid in full by Antilles,the Investor, and the Company may redeem the shares of Series G Preferred Stock associated with each Note by paying Antillesthe Investor $1,375,000 as full consideration for such redemption. As of December 31, 2023, none of the outstanding Notes had been paid in full and thus the underlying shares were not convertible.

 

Warrants(iv) Series H Convertible Preferred Stock

 

The followingOn August 1, 2023, the Company issued 475 shares of new Series H Preferred Stock in exchange for 475 outstanding shares of old Series E Preferred Stock of Viking Energy Group inc. Pursuant to the COD for the Series H Preferred Stock (the “Series H COD”), each share of New Camber Series H Preferred Stock has a face value of $10,000 per share, is convertible into a summarycertain number of shares of Camber Common Stock, with the conversion ratio based upon achievement of certain milestones by Viking’s subsidiary, Viking Protection Systems, LLC (provided the holder has not elected to receive the applicable portion of the Company’spurchase price in cash pursuant to that certain Purchase Agreement, dated as of February 9, 2022, by and between Viking and Jedda Holdings, LLC), is subject to a beneficial ownership limitation of 4.99% of Camber Common Stock (but may be increased up to a maximum of 9.99% at the sole election of a holder by the provision of at least 61 days’ advance written notice) and has voting rights equal to one vote per share of Camber Series H Preferred Stock held on a non-cumulative basis. On or about August 9, 2023, Jedda Holdings converted 200 of the 475 shares of Series H Preferred Stock into 3,333,333 shares of common stock, leaving a balance of 200 shares of Series H Preferred Stock outstanding warrantsas at December 31, 2021:2023.

Warrants

 

 

Exercise

 

 

Expiration

 

lntrinsic Value at

 

Outstanding

 

 

Price ($)

 

 

Date

 

September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

3

(1)

 

$195,312.50

 

 

September 12, 2022

 

$0

 

 

32

(2)

 

$12,187.50

 

 

May 24, 2023

 

$0

 

 

50,000,000

(3)

 

$2.00

 

 

December 30, 2026

 

$0

 

 

50,000,000

(3)

 

$4.00

 

 

December 30, 2026

 

$0

 

 

100,000

(4)

 

$0.705

 

 

April 25, 2022

 

$0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100,100,035

 

 

 

 

 

 

 

 

$0

 

 

(1)(c) Warrants

Warrants issued in connection with funding. The warrants were exercisable on the grant date (September 12, 2017) and remain exercisable until September 12, 2022.

 

(2)

Warrants issued in connection with a Severance Agreement with Richard N. Azar II,The following table represents stock warrant activity as of and for the Company’s former Chief Executive Officer. The warrants were exercisable on the grant date (May 25, 2018) and remain exercisable until May 24, 2023.year ended December 31, 2023:

 

 

Number

of Shares

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Remaining

Contractual Life

 

Aggregate

Intrinsic

Value

 

Warrants Outstanding – December 31, 2022

 

 

9,259,261

 

 

 

0.62

 

 

4.03 years

 

 

-

 

Granted

 

 

-

 

 

 

 

 

 

 

 

 

-

 

Exercised

 

 

3,888,889

 

 

 

 

 

 

 

 

 

-

 

Forfeited/expired/cancelled

 

 

1,679,229

 

 

 

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants Outstanding – December 31, 2023

 

 

3,691,143

 

 

$0.66

 

 

2.62 years

 

$-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding Exercisable – December 31, 2023

 

 

3,691,143

 

 

$0.66

 

 

2.62 years

 

$-

 

 

(3)

Warrants issued in connection with the Series G Preferred Stock and remain exercisable until December 30, 2026.

(4)

Warrants issued to a consultant for services and are exercisable until April 25, 2022.

NOTE 16 – SHARE-BASED COMPENSATION

Common Stock

The Company stockholders approved the 2014 Stock Incentive Plan (as amended to date, the “2014 Plan”) at the annual stockholder meeting held on February 13, 2014. The 2014 Plan provides the Company with the ability to offer up to 2.5 million (i) incentive stock options (to eligible employees only); (ii) nonqualified stock options; (iii) restricted stock; (iv) stock awards; (v) shares in performance of services; or (vi) any combination of the foregoing, to employees, consultants and contractors as provided in the 2014 Plan.

The Company stockholders approved the Lucas Energy, Inc. 2012 Stock Incentive Plan (“2012 Incentive Plan”) at the annual stockholder meeting held on December 16, 2011. The 2012 Incentive Plan provides the Company with the ability to offer (i) incentive stock options (to eligible employees only); (ii) nonqualified stock options; (iii) restricted stock; (iv) stock awards; (v) shares in performance of services; or (vi) any combination of the foregoing, to employees, consultants and contractors as provided in the 2012 Incentive Plan.

The Company stockholders approved the Lucas Energy, Inc. 2010 Long Term Incentive Plan (“2010 Incentive Plan” or “2010 Plan”) at the annual stockholder meeting held on March 30, 2010. The 2010 Incentive Plan provides the Company with the ability to offer (1) incentive stock options, (2) non-qualified stock options, and (3) restricted shares (i.e., shares subject to such restrictions, if any, as determined by the Compensation Committee or the Board) to employees, consultants and contractors as performance incentives.

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Under the 2010 Incentive Plan, 58 shares of the Company’s common stock are authorized for initial issuance or grant, under the 2012 Incentive Plan, 96 shares of the Company’s common stock are authorized for initial issuance or grant, and under the 2014 Incentive Plan, as amended, 2,500,000 shares of the Company’s common stock are authorized for issuance or grant. As of March 31, 2020, there was an aggregate of 1 share available for issuance or grant under the 2010 Incentive Plan, 5 shares were available for issuance or grant under the 2012 Incentive Plan and an aggregate of approximately 1,999 securities were available for issuance or grant under the 2014 Incentive Plan as amended for future issuances and grants, respectively. The number of securities available under the 2010, 2012 and 2014 Plans is reduced one for one for each security delivered pursuant to an award under the Plans. Any issued or granted security that becomes available due to expiration, forfeiture, surrender, cancellation, termination or settlement in cash of an award under the Incentive Plans may be requested and used as part of a new award under the Plans.

The Plans are administered by the Compensation Committee and/or the Board in its discretion (the “Committee”). The Committee interprets the Plans and has broad discretion to select the eligible persons to whom awards will be granted, as well as the type, size and terms and conditions of each award, including the exercise price of stock options, the number of shares subject to awards, the expiration date of awards, and the vesting schedule or other restrictions applicable to awards.

Camber measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award over the vesting period.

NOTE 17– INCOME (LOSS) PER COMMON SHARE

The calculation of earnings (loss) per share for the year ended December 31, 2021 and the nine months ended December 31, 2020 was as follows:

 

 

 Year Ended

 

 

Nine Months Ended

 

 

 

 December 31,

2021 

 

 

December 31,

2020

 

Numerator:

 

 

 

 

 

 

Net loss

 

$(169,675,169)

 

$(52,011,388)

Less preferred dividends

 

 

(84,156,455)

 

 

(6,929,910)

Net loss attributable to common stockholders

 

$(253,831,624)

 

$(58,941,298)

Denominator

 

 

 

 

 

 

 

 

Weighted average share – basic

 

 

124,077,234

 

 

 

17,556,725

 

Dilutive effect of common stock equivalents options/warrants

 

 

-

 

 

 

-

 

Preferred C shares

 

 

-

 

 

 

-

 

Denominator

 

 

 

 

 

 

 

 

Total Weighted average common shares – diluted

 

 

124,077,234

 

 

 

17,556,725

 

Income (loss) per common share – basic

 

 

 

 

 

 

 

 

Income (loss) per common share from continuing operations

 

$(2.05)

 

$(3.36)

Income (loss) per common share – diluted

 

 

 

 

 

 

 

 

Income (loss) per common share from continuing operations

 

$(2.05)

 

$(3.36)

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For the year ended December 31, 2021 and the nine months ended December 31, 2020, the following common share equivalents related to convertible debt, Series C Preferred Stock, warrants and options to purchase shares of common stock were excluded from the computation of diluted net income (loss) per share as the inclusion of such shares would be anti-dilutive.  The Series G Stock is not currently convertible.

 

 

Year Ended December 31,

2021

 

 

Nine Months Ended

December 31,

2020

 

Common Shares Issuable for:

 

 

 

 

 

 

Convertible Debt

 

 

276

 

 

 

276

 

Options and Warrants

 

 

100,100,035

 

 

 

38

 

Series C Preferred Shares

 

 

162,124,645

 

 

 

109,666,626

 

Total

 

 

262,224,956

 

 

 

109,666,940

 

NOTE 18– RELATED PARTY TRANSACTIONS

The Company’s CEO and director, James Doris, renders professional services to the Company through AGD Advisory Group, Inc., an affiliate of Mr. Doris’.  Amounts paid for the years ended December 31, 2021 and 2020 were $180,000 and $0, respectively.

The Company’s CFO, Frank W. Barker, Jr., renders professional services to the Company through FWB Consulting, Inc., an affiliate of Mr. Barker’s.  Amounts paid for the years ended December 31, 2021 and 2020 were $180,000 and $0, respectively.

NOTE 19 - SUBSEQUENT EVENTS

Certain subsequent events are described in Note 1 to the consolidated financial statements.

Redemptions of Series C Stock in 2022:

On or about January 3, 2022, the Company purchased for cancellation 1,664 shares of Series C Stock held by EMC Capital Partners, LLC for a redemption price of $18,850,000.

True-Up Issuances in 2022:

Between January 18, 2022 and February 22, 2022, the Company issued Discover 38,185,136 shares of common stock in connection with the shares of Series C Stock converted by Discover in 2021. This “true-up” entitlement was a result of the price of the Company’s common stock being lower during the portion of the Measurement Period following the initial conversions than the low VWAP of the common stock during the portion of the Measurement Period prior to the initial conversions.

Conversions of Series C Stock in 2022:

On or about January 4, 2022, EMC converted 129 shares of Series C Preferred Stock, entitling EMC to receive 16,548,332 shares of common stock, of which 2,052,507 shares of common stock were issued to EMC and the balance of 14,495,825 were issued May 16, 2022.

From February 23, 2022 through March 7, 2022, Discover converted 488 shares of Series C Preferred Stock into approximately 62,601,441 shares of common stock.  On May 16, 2022, Discover converted their remaining 30 shares of Series C Preferred Stock into 3,848,450 shares of common stock.

On May 16, 2022, Antilles converted 400 shares of Series C Preferred Stock into approximately 35,834,731 shares of common stock.

Outstanding Series C Stock

As of May 16, 2022, Discover no longer holds any Series C Preferred Stock and Antilles holds 1,175 shares of Series C Preferred Stock. 

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Amendments to Articles

On December 30, 2021, the Company filed an amendment to the Company’s articles of incorporation to effect a proposal approved at a Special Meeting of Stockholders on December 30, 2021 whereby the Company’s stockholders approved an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of common stock from 250,000,000 to 1,000,000,000.

Share Issuances & Consulting Arrangements

On or about October 14, 2021 the Company executed an amendment to an existing Consulting Agreement with Regal Consulting which extended the term of the consulting arrangement to April 22, 2022. Pursuant to the terms of the amendment, the Company agreed to pay the consultant a cash fee of $20,000 per month and issue the consultant 5,000 shares of the Company’s common stock per month until the end of the amended term.

On or about January 5, 2022 the Company executed an amendment to an agreement with Sylva International LLC, effective January 1, 2022, which extended the term of the agreement to June 30, 2022. Pursuant to the terms of the amendment, the Company agreed to pay the consultant a cash fee of $50,000 per month and issue the consultant 150,000 shares of the Company’s common stock.

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Amendments to Existing Promissory Notes

Effective December 24 2021, Camber executed amendments to Promissory Notes previously executed by the Company in favor of Discover Growth Fund, LLC, in the aggregate principal amount of $20,500,000, pursuant to which: (i) the Maturity Date of each Promissory Note was extended from January 1, 2024 to January 1, 2027; (ii) the conversion price was increased from $1.25 to $1.50 per share of common stock; and (iii) the interest rate was decreased from 10% per annum to the WSJ Prime Rate.

New Financing Transactions

$1,000,000 Loan:

On or about December 9, 2021, the Company received $1,000,000 from an investor and in connection therewith executed and delivered the following in favor of the investor: (i) a promissory note dated on or about December 8, 2021 in the principal amount of $1,052,631.58, representing a 5% original issue discount (the “Investor Note”), accruing interest at the rate of 10% per annum and maturing March 8, 2022; (ii) a Security Agreement-Pledge granting the Investor a first-priority security interest in Camber’s common shares of Viking Energy Group, Inc.; and (iii) a general security agreement granting the Investor a first-priority security interest in Camber’s other assets. The Investor may convert amounts owing under the Investor Note into shares of common stock of Camber at a fixed price of $1.25 per share, subject to beneficial ownership limitations. The Investor Note was paid in full by the Company on January 4, 2022.

$25,000,000 Loan:

The Company entered into a Loan Agreement on December 24, 2021 with the investor named therein (the “Investor”) pursuant to which the Investor agreed to loan the Company $25,000,000 subject to, among other things, the Company having increased its authorized capital of common shares on or before December 31, 2021, which increase occurred on December 30, 2021.

On January 3, 2022 the Company received $25,000,000 (the “Loan Proceeds”) from the Investor, and in connection therewith executed and delivered the following in favor of the Investor: (i) a promissory note dated on or about December 31, 2021 in the principal amount of $26,315,789.47, representing a 5% original issue discount (the “Investor Note”), accruing interest at a rate equal to the Wall Street Journal Prime Rate, payable at maturity, and maturing January 1, 2027; (ii) a Security Agreement-Pledge (the “Pledge Agreement”) granting the Investor a first-priority security interest in Camber’s common shares of Viking Energy Group, Inc.; and (iii) a general security agreement (the “Security Agreement”) granting the Investor a first-priority security interest in Camber’s other assets. The Investor may convert amounts owing under the Investor Note into shares of common stock of Camber at a fixed price of $1.50 per share, subject to beneficial ownership limitations. The obligations under the Investor Note are supported by a Guaranty from Viking Energy Group, Inc.

The majority of the Loan Proceeds of the loan were used to: (i) redeem shares of Series C Redeemable Convertible Preferred Stock of the Company not owned by the Investor or its affiliates; and (ii) pay in full the secured loan disclosed by the Company in a Current Report Filed on Form 8-K filed with the SEC on December 17, 2021 that was due on March 8, 2022.

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NYSE Approval Requirement

The Company agreed to use its best efforts to obtain an exception to any shareholder approval requirement from NYSE American or to obtain such approval regarding the issuance of the Conversion Shares and Warrant Shares as soon as possible and in any event no later than the Company’s next annual meeting of stockholders.

Registration Statement

The Company agreed use its best efforts to file with the Securities and Exchange Commission as promptly as practicable, and in any event within 30 days after the date on which the Company files all reports required to be filed pursuant to the Securities Exchange Act of 1934 (the “Act”), a Registration Statement on Form S-3 registering the delayed and continuous resale of all Conversion Shares and Warrant Shares pursuant to Rule 415 under the Act, subject to any limitations imposed by applicable securities laws as to the number of Conversion Shares and/or Warrant Shares that are eligible for registration, and to use best efforts to cause such Registration Statement to be declared effective under the Act as promptly as practicable and in any event within 60 days after filing. No Registration Statement will be declared effective unless the Investor pays for the particular tranche of shares of Series G Preferred Stock in full.

Other Agreements

On or about December 24, 2021, the Company entered into two agreements (collectively, the “December 24th Agreements”) as follows: one agreement (the “First Agreement”) was entered into with an investor (the “First Investor”) that holds shares of Series C Preferred Stock of the Company (the “Preferred Shares”), and the second agreement (the “Second Agreement”) was entered into with another investor (the “Second Investor”, together with the First Investor, the “Investors”) that holds Preferred Shares along with four promissory notes, with an aggregate principal amount totaling $21,552,631.58, previously executed by the Company in favor of the Second Investor (collectively, the “Notes”). The December 24th Agreements are identical as to their terms.

The original securities purchase agreements between the Company and the Investors regarding the purchase and sale of the Preferred Shares (the “SPAs”) require the Company to, among other things, timely file all reports required to be filed by Company pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and to maintain sufficient reserves from its duly authorized Common Stock for issuance of all Conversion Shares (as such term is defined in the Certificate of Designation regarding the Preferred Shares (the “COD”), or the shares of Company common stock to be issued upon conversion of the Preferred Shares). On October 6, 2021, the Company received notice from the Investors that they believed the Company breached the SPAs by failing to comply with those two requirements in the SPAs, and the Notes also contain a provision stating a breach by the Company of any terms within the SPA or COD is also a breach under the Notes, which would result in an immediate acceleration of the Notes at the holder’s option.

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On October 9, 2021Note 14.Commitments and Contingencies

Office lease – Petrodome

In April 2018, the Company’s subsidiary, Petrodome entered into a 66-month lease for 4,147 square feet of office space for its corporate office in Houston, Texas. The annual base rent commenced at $22.00 per square foot and escalates at $0.50 per foot each year through expiration of the lease term. Operating lease expense is recognized on a straight-line basis over the lease term. Operating lease expense was $80,318 and $96,382 for the years ended December 31, 2023 and 2022, respectively. The lease expired on November 30, 2023 and the Company entered into amendinghas moved to new premises rented on a month-to-month basis.

Building, vehicle and equipment leases – Simson-Maxwell

The Company has right-of-use assets and operating lease liabilities associated with various operating lease agreements (the “October Agreements”) withof Simson-Maxwell pertaining to seven business locations, for the premises, vehicles and equipment used in operations in the amount of $6,947,307. These values were determined using a present value discount rate of 3.45% for the premises, and 7.5% for vehicles and equipment. The leases have varying terms, payment schedules and maturities. Operating lease expense is recognized on a straight-line base over each of the First Investor and Second Investor (as disclosed by the Company in its Current Report Filed on Form 8-K filed with the Securities and Exchange Commission on October 13, 2021), pursuant to which the Investors agreed to refrain from declaring defaults or bringing a breach of contract action under the SPAs, and the Second Investor agreed to refrain from declaring defaults or bringing a breach of contract action under the Notes, provided the Company: (i) within 30 days of the date of the October Agreements, amended the COD to provide that holders of the Preferred Shares will vote together with holders of common stock on all matters other than election of directors and shareholder proposals (including proposals initiated by any holders of Preferred Shares), on an as-if converted basis, subject to the beneficial ownership limitation in the COD, even if there are insufficient shares of authorized common stock to fully convert the Preferred Shares (the “COD Amendment Requirement”); (ii) files by November 19, 2021 all reports required to be filed by the Company pursuant to the Exchange Act (the “Filing Requirement”); and (iii) implements and maintains, as soon as possible but no later than December 31, 2021, a sufficient reserve from its duly authorized Common Stock for issuance of all Conversion Shares (the “Reserve Requirement”). The Company complied with the COD Amendment Requirement on November 8, 2021.lease terms.

 

On November 18, 2021 the Company entered into amending agreements (the “November Agreements”) withPayments due in each of the First Investornext five years and Second Investor (as disclosed by the Company in its Current Report Filed on Form 8-K filed with the Securities and Exchange Commission on November 19, 2021). Pursuant to the November Agreements, as a further accommodation to the Company and in order to help facilitate implementation of the Company’s business plans and continued trading on the NYSE American, the Investors agreed to extend the deadline for the Filing Requirement to December 6, 2021. The deadline for the Reserve Requirement remainedthereafter at December 31, 2021.2023 under these leases are as follows:

 

On December 3, 2021 the Company entered into amending agreements (the “December Agreements”) with each of the First Investor and Second Investor (as disclosed by the Company in its Current Report Filed on Form 8-K filed with the Securities and Exchange Commission on December 6, 2021). Pursuant to the December Agreements, as a further accommodation to the Company and in order to help facilitate implementation of the Company’s business plans and continued trading on the NYSE American, the Investors agreed to extend the deadline for the Filing Requirement to December 17, 2021. The deadline for the Reserve Requirement remained December 31, 2021. 

Pursuant to the December 24th Agreements, as a further accommodation to the Company and in order to help facilitate implementation of the Company’s business plans and continued trading on the NYSE American, the parties agreed:

 

 

 Building

 

 

 Vehicle and Equipment

 

 

 

 

 

 Leases

 

 

 Leases

 

 

 Totals

 

 

 

 

 

 

 

 

 

 

 

2024

 

$919,650

 

 

$489,312

 

 

$1,408,962

 

2025

 

 

666,068

 

 

 

335,381

 

 

 

1,001,449

 

2026

 

 

402,657

 

 

 

160,882

 

 

 

563,539

 

2027

 

 

411,392

 

 

 

37,298

 

 

 

448,690

 

2028 and thereafter

 

 

889,519

 

 

 

3,950

 

 

 

893,469

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$3,289,286

 

 

$1,026,823

 

 

$4,316,109

 

Less imputed interest

 

 

 

 

 

 

 

 

 

 

(370,169)

Present value of remaining lease payments

 

 

 

 

 

 

 

 

 

$3,945,940

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

 

$1,357,653

 

Non-current

 

 

 

 

 

 

 

 

 

$2,588,287

 

 

(i)

the deadline for the Filing Requirement is extended to January 14, 2022;

(ii)

the deadline for the Reserve Requirement remains December 31, 2021, meaning the Company is required to obtain on or before such date, approval of the proposals outlined in the preliminary proxy statement filed by the Company with the Securities and Exchange Commission on November 9, 2021 (to increase the Company’s authorized common stock);

(iii)

each and every Measurement Period (as defined in the COD) with regard to any share of Preferred converted by Investor or any affiliate of Investor prior to December 24, 2021 will terminate, and the provisions of Section I.G.1.d of the COD shall no longer apply with respect to any shares of Preferred converted prior to December 24, 2021; and

(iv)

If the Reserve Requirement and the Filing Requirement are not met by the deadlines mentioned above, Company acknowledges and agrees that (A) Company will be in uncured material breach and default under all of the Notes and Agreements, and (B) all Measurement Periods will remain open and continue to run in accordance with the terms of the COD.

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The Company satisfiedOperating lease expense for these leases was $1,586,879 and $1,474,960 for the Reserve Requirement by the required deadline but did not satisfy the Filing Requirement.years ended December 31, 2023 and 2022, respectively.

Legal matters

 

Legal Proceedings. From time-to-time suits and claims against Camber arise in the ordinary course of Camber’s business, including contract disputes and title disputes. Camber records reserves for contingencies when information available indicates that a loss is probable, and the amount of the loss can be reasonably estimated.

Merger-Related Litigation

On February 9, 2024, plaintiff Lawrence Rowe, on behalf of himself and all other similarly situated former public minority shareholders of Viking, filed against the Company and its CEO a putative Class Action Complaint (i.e. C.A. No.4:24-cv-00489) styled Lawrence Rowe, Individually and on Behalf of All Others Similarly Situated v. James A. Doris and Camber Energy, Inc., in the U.S. District Court for the Southern District of Texas, Houston Division.  The Complaint alleges breaches of fiduciary duty in connection with the merger between Viking and the Company and seek to recover damages for the alleged breaches.  The defendants deny the allegations and intend to move to dismiss the case.

Shareholder-Related Litigation

The Company was the target of a “short” report issued by Kerrisdale Capital in early October 2021, and as a result of such short report, on October 29, 2021, a Class Action Complaint (i.e. C.A.No.4:21-cv-03574) was filed against the Company, its CEO and CFO by Ronald E. Coggins, Individually and on Behalf of All Others Similarly Situated v. Camber Energy, Inc., et al.; in the U.S. District Court for the Southern District of Texas, Houston Division, pursuant to which the Plaintiffs sought to recover damages alleged to have been suffered by them as a result of the defendants’ violations of federal securities laws.   The Company and the other Defendants filed a Motion to Dismiss (“MTD”) the Class Action Complaint, and on September 22, 2023, the Court granted the MTD in full.  On October 25, 2023, the Court signed a joint stipulation submitted by the parties, dismissing the case with prejudice.

 

On or about April 18,June 30, 2022, the Company was made aware of a Shareholder Derivative Complaint filed within the U.S. District Court in Clark County, Nevadafor the Southern District of Texas, Houston Division (Case No.: A-22-848486-B) 4:22-cv-2167) against the Company, and its current directors, and on or about May 4, 2022 the Company was made awarecertain of a second Shareholderits former directors (the “Houston Derivative Complaint against the Company and its directors.Complaint”). The allegations contained in the derivativeHouston Derivative Complaint involve state-law claims for breach of fiduciary duty and unjust enrichment and a federal securities claim under Section 14(a) of the Securities Exchange Act of 1934.  On January 20, 2023, the U.S. District Court held that certain claims brought by the plaintiff relating to director actions are similarand statements made in proxy statements prior to thoseJune 30, 2019, were time barred, but did not dismiss certain claims brought by plaintiff relating to director actions and statements made in proxy statements after June 30, 2019.  Pursuant to Article 6 of the Amended and Restated Bylaws, on February 15, 2023, the Company’s Board of Directors (the “Board”) formed a Committee of the Board (the “Special Litigation Committee”) to investigate, analyze, and evaluate the remaining allegations in the above-noted Class ActionHouston Derivative Complaint. The Special Litigation Committee completed its investigation and found no basis to conclude that any Camber officer’s or director’s conduct “involved intentional misconduct, fraud or a knowing violation of law,” which would be required under applicable Nevada law to prevail on any claims for breach of fiduciary duty or federal proxy violations; and, on November 17, 2023, filed with the U.S. District Court a Motion to Terminate or, in the alternative, schedule an evidentiary hearing on the Motion. Briefing on the Motion was completed on January 12, 2024, and it remains pending. The defendants deny the allegations contained in the Houston Derivative Complaints,Complaint.

Maranatha Oil Matter

In November 2015, Randy L. Robinson, d/b/a Maranatha Oil Co. sued the Company in Gonzales County, Texas (Cause No. 26160). The plaintiff alleged that it assigned oil and havegas leases to the Company in April 2010, retaining a 4% overriding royalty interest and 50% working interest and that the Company failed to pay such overriding royalty interest or royalty interest. The interests relate to certain oil and gas properties which the Company subsequently sold to Nordic Oil USA in April 2013. The petition alleges causes of actions for breach of contract, failure to pay royalties, non-payment of working interest, fraud, fraud in the inducement of contract, money had and received, constructive trust, violation of theft liability act, continuing tort and fraudulent concealment. The suit seeks approximately $100,000 in amounts alleged owed, plus pre-and post-judgment interest. The Company has filed a denial to the claims and intends to vehemently defend itself against the allegations.

Pinch vs. Petrodome Matter

In or about late 2011 or early 2012, Petrodome Operating, LLC (“Petrodome Operating”), a wholly-owned subsidiary of Petrodome Energy, LLC (which in or about December, 2017 become a wholly owned subsidiary of Viking), on behalf of various working interest owners, including Petrodome East Creole, LLC, another subsidiary of Petrodome Energy, LLC, coordinated the drilling of an approx. 13,000 foot well in the Kings Bayou Field in Cameron Parish, LA.  Petrodome Operating engaged Baker Botts L.L.P.a third party to complete the drilling work.  The subject well produced hydrocarbons from 2012 until approximately June 2016, at which time production ceased, after which Petrodome Operating arranged for the well to be plugged in accordance with State guidelines.  During the time the well was producing hydrocarbons, royalty and/or over-riding royalty payments were made to various mineral and/or land/owners (collectively, “Mineral Owners”).   In or about October, 2019 the Mineral Owners commenced an action against Petrodome Operating, Petrodome East Creole, LLC and others claiming the Mineral Owners suffered damages (i.e. a loss of royalty and/or over-riding royalty payments) as a result of the subject well not, according to the Mineral Owners, being drilled and/or completed properly.  Petrodome Operating, Petrodome East Creole, LLC and the other defendants denied the Mineral Owners’ claims and engaged counsel to defend the actions.action.

 

Effective asIn or about November, 2023, the parties, without the subject Petrodome entities admitting liability, agreed to fully and completely settle the matter and pay the Mineral Owners a total sum of April 18, 2022,$6.5 million, of which Petrodome is liable for $4.15 million. Payment of Petrodome’s portion of the settlement is fully covered by insurance.  At December 31, 2023, the Company entered intorecorded an accrued liability in respect of this settlement and a Settlement Agreement (the “Settlement Agreement”) with Discover and Antilles (collectivelyreceivable related to the Investors”), pursuant to whichinsurance proceeds in the Company agreed to settle claims assertedamount of $4.15 million.  In or about February, 2024, the action commenced by the Investors in the Verified Complaint filed by the Investors against the Company in the United States District Court (the “Court”) for the Southern District of Texas (Case No. 4:22-cv-755) on or about March 9, 2022, which complaint alleged that the Company breached its Stock Purchase AgreementsMineral Owners was dismissed with the Investors, pursuant to which the Investors had purchased shares of Series C Redeemable Convertible Preferred Stock and Series G Redeemable Convertible Preferred Stock of the Company (collectively the “Preferred Stock”), by failing to timely file all reports required to be filed by the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Conditioned upon the Court approving the Settlement Agreement, the Company and its transfer agent are required to issue “free-trading” shares of Company common stock to the Investors without restrictive legend pursuant to the conversion terms in the Certificates of the Designation governing the Preferred Stock. The Investors and the Company are required to jointly request a stipulated order (a) finding that (i) under Section 3(a)(10) of the Securities Act of 1933, as amended (the “Securities Act”) that the exchange of Preferred Stock for shares of Company common stock provided for in the Settlement Agreement is fair, (ii) the shares of Company common stock issued upon conversion of the shares of Preferred Stock previously purchased by the Investors are not required to be registered under the Securities Act, and (iii) the Investors are not required to register as dealers pursuant to Section 15(b) of the Exchange Act; (b) requiring 500,000,000 shares of Company common stock to be reserved for issuance on conversion of all shares Preferred Stock currently held by the Investors, or which the Investors are entitled to acquire under their purchase agreements; and (c) requiring the immediate issuance of free-trading shares of Company common stock on delivery of a conversion request regarding shares of Preferred Stock. On April 18, 2022, the parties submitted that stipulated order to the Court for approval. No payments are due to the Investors pursuant to the Settlement Agreement, and the number of shares of common stock to be issued to the Investors upon conversion of the Preferred Stock will be calculated pursuant to the terms of the applicable Certificate of Designation, the terms of which have not been modified by the Settlement Agreement. On May 12, 2022, the Court approved the Settlement Agreement.

The Stock Purchase Agreements between the Investors and the Company remain in full force and effect, as do the Promissory Notes executed and delivered by Antilles Family Office, LLC (“Antilles”) in favor of the Company (the “Antilles Notes”). Among other things, (i) Antilles shall not be entitled to sell or convert any Series G Redeemable Convertible Preferred Stock unless Antilles has paid all amounts owing under the Antilles Notes, and (ii) the Company is still entitled to redeem the remaining Series G Redeemable Convertible Preferred Stock pursuant to the terms of the Stock Purchase Agreements and/or Antilles Notes.

SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES – (unaudited)

The following supplemental unaudited information regarding Camber’s oil and gas activities is presented pursuant to the disclosure requirements of ASC 932. Camber’s oil and gas activities are all located in the United States.prejudice.

 

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ResultsNote 15. Income Taxes

The Company files income tax returns in the United States and Canada federal jurisdictions. At December 31, 2023, the Company had estimated net operating loss carry forwards realized subsequent to the date of Operations –the Merger of approximately $4.4 million. At December 31, 2023 and 2022, Camber Energy, Inc. had pre-Merger operating loss carryforwards of approximately $71.9 million and $67.1 million, respectively, which can be applied only to the future taxable income of Camber Energy Inc. The Company has estimated that $44.5 million of this net operating loss could potentially be lost due to the IRC Section 382 limitation as a result of an ownership change that occurred during the year ended March 31, 2017. At December 31, 2023 and 2022, Viking Energy, Inc. had pre-Merger operating loss carryforwards of approximately $49.2 million and $48.0 million, respectively, which can be applied only to the future taxable income of Viking Energy Inc. In addition, the Company, through its subsidiary Simson-Maxwell, has estimated foreign loss carryforwards of approximately $6.8 million and $6.3 million as of December 31, 2023 and 2022, respectively, which expire between 2038 and 2043. The potential benefit of these net operating losses has not been recognized in these financial statements because the Company cannot be assured it is more likely than not that it will utilize the net operating losses carried forward in future years. 

The current and deferred income tax expense (benefit) consists of the following for the years ended December 31, 2023 and 2022:

 

 

For the Years Ended

 

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

Federal

 

$

  -

 

$(2,019,576)

State

 

 

-

 

 

 

-

 

Foreign

 

 

-

 

 

(1,606,355)

Total current tax benefit

 

$-

 

$(3,625,931)

 

 

 

 

 

 

 

 

 

Deferred tax timing differences

 

 

 

 

 

 

 

 

Federal

 

$(3,642,729)

 

$(703,407)

State

 

 

-

 

 

 

-

 

Foreign

 

 

(173,847

)

 

 

-

 

Total deferred tax timing differences

 

$(3,816,576)

 

$(703,407)

 

 

 

 

 

 

 

 

 

Increase in valuation allowance

 

 

3,816,576

 

 

 

4,329,338

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

$-

 

 

$-

 

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As a result of the Merger, the Company acquired approximately $20.3 million of deferred tax timing differences against which a valuation allowance of approximately $20.3 million had been recorded.

The components of deferred tax assets and liabilities as of December 31, 2023, and 2022 is as follows (2022 figures have been revised to reflect final tax filing):

 

 

December 31,

 

 

 

2023

 

 

2022

 

Deferred tax assets:

 

 

 

 

 

 

NOL carry forwards

 

$26,907,258

 

 

$11,732,997

 

Bad debt reserves

 

 

535,033

 

 

 

-

 

Impairment of oil and gas assets

 

 

8,351,170

 

 

 

8,278,289

 

Unrealized loss

 

 

695

 

 

 

695

 

Derivative losses

 

 

5,712,723

 

 

 

3,791,126

 

Book tax depletion difference

 

 

10,771,641

 

 

 

9,125,130

 

Loss on financing settlements

 

 

127,156

 

 

 

-

 

Share based compensation

 

 

4,993,410

 

 

 

4,341,757

 

Intangible drilling costs

 

 

 648,017

 

 

 

 -

 

Loss from equity interests

 

 

 4,386,760

 

 

 

 -

 

 

 

 

 

 

 

 

 

 

Total deferred tax assets

 

$62,433,863

 

 

$37,269,994

 

 

 

 

 

 

 

 

 

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Derivative gains

 

$(121,947)

 

$(121,947)

Bargain purchase and other gains

 

 

(10,836,356)

 

 

(9,760,490)

 

 

 

 

 

 

 

 

 

Total deferred tax liabilities

 

 

(10,958,303)

 

 

(9,882,437)

 

 

 

 

 

 

 

 

 

Deferred tax assets - before valuation allowance

 

 

51,475,560

 

 

 

27,387,557

 

Less valuation allowance

 

 

(51,475,560)

 

 

(27,387,557)

 

 

 

 

 

 

 

 

 

Deferred tax asset (liability) - net

 

$-

 

 

$-

 

A reconciliation of the federal and state statutory income tax rates to the Company’s effective income tax rate applicable to income before income tax benefit from continuing operations is as follows for the years ended December 31, 2023 and 2022:

 

 

For the Years Ended

 

 

 

December 31,

 

 

 

2023

 

 

2022

 

Continuing operations

 

-

%

 

-

%

Expected provision at US statutory rate

 

 

21.0%

 

 

21.0%

State income tax net of federal benefit

 

-

%

 

-

%

Higher tax rate on foreign source income

 

 

0.2%

 

 

3.8%

Other items effecting timing differences

 

-

%

 

-

%

Valuation allowance

 

 

(21.2)%

 

 

(24.8)%

Effective income tax rate

 

 

0%

 

 

0%

The Company files income tax returns in the United States and Canada federal jurisdictions. As of December 31, 2023, the U.S. and Canadian tax returns for the Company for the years ending 2018 through 2022 remain open to examination by the respective tax authorities. The Company and its subsidiaries are not currently under examination for any period. No material change in the reserve for uncertain tax positions is expected in the next 12 months.

As a result of Viking becoming a majority-owned subsidiary of Camber as discussed in Note 1, Viking has undergone an ownership change as defined in Section 382 of the Internal Revenue Code, and its tax net operating loss carry forwards generated prior to the ownership change will be subject to an annual limitation, which could reduce or defer the utilization of these losses. The Company intends to complete a Section 382 analysis before any net operating loss carryforwards are utilized.

Note 16. Business Segment Information and Geographic Data

The Company has two reportable segments: Power Generation and Oil and Gas Exploration. The power generation segment provides custom energy and power solutions to commercial and industrial clients in North America and the oil and gas segment is involved in exploration and production with properties in central and southern United States. We evaluate segment performance based on revenue and operating income (loss).

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Information related to our reportable segments and our consolidated results for the year ended December 31, 20212023 is presented below.

 

 

Year Ended December 31, 2023

 

 

 

Oil and Gas

 

 

Power Generation

 

 

Total

 

Loss from Operations is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$1,042,024

 

 

$31,012,299

 

 

$32,054,323

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods

 

 

-

 

 

 

21,340,506

 

 

 

21,340,506

 

Lease operating costs

 

 

658,505

 

 

 

-

 

 

 

658,505

 

General and administrative

 

 

4,864,323

 

 

 

10,010,569

 

 

 

14,874,892

 

Impairment of oil and gas and intangible assets

 

 

347,050

 

 

 

669,710

 

 

 

1,016,760

 

Depreciation, depletion and amortization

 

 

595,360

 

 

 

407,202

 

 

 

1,002,562

 

Accretion - ARO

 

 

155,463

 

 

 

-

 

 

 

155,463

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

6,620,701

 

 

 

32,427,987

 

 

 

39,048,688

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

$(5,578,677)

 

$(1,415,688)

 

$(6,994,365)

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment assets

 

$6,625,287

 

 

$22,414,398

 

 

$29,039,685

 

Corporate and unallocated assets

 

 

 

 

 

 

 

 

 

 

72,672,262

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consolidated Assets

 

 

 

 

 

 

 

 

 

$101,711,947

 

 

 

Year Ended December 31, 2022

 

 

 

Oil and Gas

 

 

Power Generation

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

Loss from Operations is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$3,984,122

 

 

$20,054,038

 

 

$24,038,160

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods

 

 

-

 

 

 

13,627,457

 

 

 

13,627,457

 

Lease operating costs

 

 

1,633,765

 

 

 

-

 

 

 

1,633,765

 

General and administrative

 

 

4,245,434

 

 

 

10,584,883

 

 

 

14,830,317

 

Stock based compensation

 

 

1,614,334

 

 

 

-

 

 

 

1,614,334

 

Impairment of intangible assets

 

 

-

 

 

 

451,772

 

 

 

451,772

 

Depreciation, depletion and amortization

 

 

1,104,240

 

 

 

394,926

 

 

 

1,499,166

 

Accretion - ARO

 

 

55,521

 

 

 

-

 

 

 

55,521

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

8,653,294

 

 

 

25,059,038

 

 

 

33,712,332

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

$(4,669,172)

 

$(5,005,000)

 

$(9,674,172)

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment assets

 

$3,937,839

 

 

$25,033,951

 

 

$28,971,790

 

Corporate and unallocated assets

 

 

 

 

 

 

 

 

 

 

20,940,899

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consolidated Assets

 

 

 

 

 

 

 

 

 

$49,912,689

 

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Note 17. Subsequent Events

Series C Preferred Stock:

On or about February 14, 2024 the low VWAP of the Company’s stock for the purpose of calculating the Conversion Premium associated with its Series C Preferred Stock was approximately $0.158.  Consequently, as of March 20, 2024, the Company estimates there to be: (i) approximately 21.4 million underlying shares of common stock associated with the potential conversion of the 30 shares of Series C Preferred Stock outstanding; and (ii) approximately 105.6 million true-up shares of common stock due to Antilles in connection with its prior conversion of 240 shares of Series C Preferred Stock throughout 2023. 

On or about February 15, 2024, the nine monthsCompany and Antilles entered into the February 2024 Antilles Agreement in relation to an amendment to the fifth amended and restated certificate of designations regarding its Series C Preferred Stock, as amended (the “COD”). Particularly, in exchange for the release and indemnity as provided for in the Agreement, Antilles agreed to certain amendments to the COD.  On February 21, 2024, the Company filed with the Secretary of State of Nevada an amendment to the COD (the “Amendment), dated as of February 21, 2024 (the “Amendment Date”), pursuant to the Agreement, which amended the COD to (i) establish a floor price in connection with determining the Conversion Premium (as defined in the COD) associated with conversions of Series C Preferred Stock, (ii) confirm that the Company may make an early redemption of any outstanding Series C Preferred Stock provided that outstanding promissory notes in favor of the Investor or its affiliates (collectively, the “Notes”) are paid in full, and (iii) confirm that no additional conversion shares will be owed to the Investor if the Notes are paid in full and all then outstanding shares of Series C Preferred Stock have been redeemed.  Specifically, the Amendment provides that (i) beginning on the Amendment Date and thereafter, the Measuring Metric will be the higher of (x) the volume weighted average price of the Common Stock on any Trading Day following the Issuance Date of the Series C Preferred Stock and (y) $0.15, (ii) notwithstanding any other provision of the COD or any other document or agreement between the parties, the Company may make an early redemption pursuant to Section I.F.2 of the COD even though multiple Trigger Events (as defined in the COD) have occurred, subject to full repayment of any outstanding Notes, and (iii) if all outstanding Notes are paid in full and all then outstanding shares of Series C Preferred Stock are redeemed, the Investor will not thereafter deliver any Additional Notices (as defined in the COD) with respect to then already-converted shares of Series C Preferred Stock, and no additional Conversion Shares (as defined in the COD) will be owed to Antilles.

In addition, pursuant to the Agreement, (i) beginning on February 15, 2024 and thereafter, the Company agreed to pay at least fifty percent of the net proceeds received by the Company in connection with any registered or unregistered offering of equity or debt securities of the Company toward repayment of any outstanding Notes, and (ii) Antilles rescinded its prior notice to increase the beneficial ownership limitation to 9.99%, such that the limitation is restored to 4.99% effective five Business Days from the date of the Agreement.

Asset Sale:

On February 1, 2024, the Company sold its non-operated working interest in properties producing from the Cline and Wolfberry formations in Texas for proceeds of $205,000.

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SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (unaudited)

The following supplemental unaudited information regarding the Company’s oil and gas activities is presented pursuant to the disclosure requirements of ASC 932, “Extractive Activities – Oil and Gas”. Camber’s oil and gas activities are located in the United States.

On November 5, 2023, Mid-Con Petroleum, LLC and Mid-Con Drilling, LLC, wholly owned subsidiaries of Viking, sold 100% of their interest in oil and gas assets in Kansas, consisting of 168 producing wells, 90 injector wells and 34 non-producing wells. On December 1, 2023, a subsidiary of Petrodome Energy, LLC (“Petrodome”), a wholly owned subsidiary of Viking, sold its non-operated working interest in a producing oil well in Texas. These two dispositions represented 100% of the reserves owned by Viking and its subsidiaries. The Company’s remaining reserves at December 31, 2023 consist solely of the reserves acquired on the merger with Camber.

Results of Operations

Oil and Gas Sales by geographic area for the years ended December 31, 20202023 and 2022:

 

 

United States

 

 

Years Ended

 

 

United States

 

 

December 31,

 

 

December 31,

2021

 

 

December 31,

2020

 

 

2023

 

 

2022

 

Sales

 

$401,222

 

$150,814

 

 

$1,042,024

 

$3,984,122

 

Lease operating costs

 

(134,684)

 

(131,937)

 

(658,505)

 

(1,633,765)

Depletion, accretion and impairment

 

 

(5,993)

 

 

(6,615)

 

 

(783,5766)

 

 

(788,615)

Net operating income (loss)

 

$260,545

 

 

$12,262)

 

$(400,057)

 

$1,561,742

 

 

Reserve Quantity Information

 

The supplemental unaudited presentation of proved reserve quantities and related standardized measure of discounted future net cash flows provides estimates only and does not purport to reflect realizable values or fair market values of the Company’s reserves. The Company emphasizes that reserve estimates are inherently imprecise and that estimates of new discoveries are more imprecise than those of producing oil and gas properties. Accordingly, significant changes to these estimates can be expected as future information becomes available.

 

ProvedUnder SEC reporting requirements, proved undeveloped reserves areinclude only those estimated reserves in which the Company has current plans to develop, generally within five years. During 2023 and 2022, the Company made several strategic dispositions which has modified its capital expenditure plans. The Company currently has no firm commitments to drill or otherwise develop its proved undeveloped reserves. As of crude oil (including condensate and natural gas liquids) and natural gas that geological and engineering data demonstrate with reasonable certaintyDecember 31, 2022, the Company has reclassified all of its proved undeveloped properties to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved developed reserves are those expected to be recovered through existing wells, equipment, and operating methods.unproved reserves.

 

Estimated Quantities of Proved Reserves (BOE)

 

 

United States

 

 

United States

 

 

December 31,

 2021

 

 

December 31,

2020

 

 

Years Ended December 31,

 

 

 

 

 

 

 

2023

 

 

2022

 

Proved Developed, Producing

 

73,800

 

86,217

 

 

61,045

 

105,375

 

Proved Developed, Non-Producing

 

 

-

 

 

 

-

 

 

 

-

 

 

 

21,369

 

Total Proved Developed

 

73,800

 

86,217

 

 

61,045

 

126,744

 

Proved Undeveloped

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Total Proved

 

 

73,800

 

 

 

86,217

 

 

 

61,045

 

 

 

126,744

 

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Petroleum and Natural Gas Reserves

 

Reserves are estimated remaining quantities of oil and natural gas and related substances, which by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible - from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations - prior to the time at which contracts providing the right to operate expire.

All of the Company’s reserves are located in the United States. The following tables sets forth the changes in Camber’s net proved reserves (including developed and undeveloped reserves) for year ended December 31, 2021 and the nine months ended December 31, 2020.

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The following table sets forth Camber’s proved developed and undeveloped reserves at December 31, 2021 and 2020.

 

 

December 31,

2021

 

 

December 31,

2020

 

 

 

 

 

 

 

 

Proved Developed Producing Reserves

 

 

 

 

 

 

Crude Oil (Bbls)

 

 

48,400

 

 

 

35,700

 

Natural Gas (Mcf)

 

 

25,400

 

 

 

20,317

 

NGL (Bbls)

 

 

-

 

 

 

30,200

 

Oil Equivalents (Boe)

 

 

73,800

 

 

 

86,217

 

 

 

 

 

 

 

 

 

 

Proved Developed Non-Producing Reserves

 

 

 

 

 

 

 

 

Crude Oil (Bbls)

 

 

-

 

 

 

-

 

Natural Gas (Mcf)

 

 

-

 

 

 

-

 

NGL (Bbls)

 

 

-

 

 

 

-

 

Oil Equivalents (Boe)

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Proved Undeveloped Reserves

 

 

 

 

 

 

 

 

Crude Oil (Bbls)

 

 

-

 

 

 

-

 

Natural Gas (Mcf)

 

 

-

 

 

 

-

 

NGL (Bbls)

 

 

-

 

 

 

-

 

Oil Equivalents (Boe)

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Proved Reserves

 

 

 

 

 

 

 

 

Crude Oil (Bbls)

 

 

48,400

 

 

 

35,700

 

Natural Gas (Mcf)

 

 

25,400

 

 

 

20,317

 

NGL (Bbls)

 

 

-

 

 

 

30,200

 

Oil Equivalents (Boe)

 

 

73,800

 

 

 

86,217

 

 

Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Reserves

 

The standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves and the changes in standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves were prepared in accordance with provisions of ASC 932 - Extractive Activities - Oil and Gas.932. Future cash inflows at December 31, 20202023 and 20192022 were computed by applying the unweighted, arithmetic average of the closing price on the first day of each month for the 12-month period prior to December 31, 20202023 and 20192022 to estimated future production. Future production and development costs are computed by estimating the expenditures to be incurred in developing and producing the proved oil and natural gas reserves at year-end, based on year-end costs and assuming continuation of existing economic conditions.

 

Future income tax expenses are calculated by applying appropriate year-end tax rates to future pretax net cash flows relating to proved oil and natural gas reserves, less the tax basis of properties involved. Future income tax expenses give effect to permanent differences, tax credits and loss carry forwards relating to the proved oil and natural gas reserves. Future net cash flows are discounted at a rate of 10% annually to derive the standardized measure of discounted future net cash flows. This calculation procedure does not necessarily result in an estimate of the fair market value of the Company’s oil and natural gas properties.

 

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The standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves for the year ended December 31. 2021 and the nine monthsyears ended December 31, 20202023 and 2022 are as follows:

 

 

United States

 

 

United States

 

 

Years Ended December 31,

 

 

December 31,

2021

 

 

December 31,

2020

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

Future cash inflows

 

$3,889,900

 

$1,333,900

 

 

$3,516,730

 

$11,366,550

 

Future production costs

 

(1,638,400)

 

(856,500)

 

(1,908,490)

 

(6,809,540)

Future development costs

 

-

 

-

 

 

-

 

(53,224)

Future income tax expense

 

 

-

 

 

 

(30,518)

 

 

-

 

 

 

-

 

 

 

 

 

 

Future net cash flows

 

2,251,500

 

446,882

 

 

$1,608,240

 

$4,503,786

 

10% annual discount for estimated timing of cash flows

 

 

(993,500)

 

 

(132,582)

 

 

(669,870)

 

 

(1,532,187)

 

 

 

 

 

Standardized measure of DFNCF

 

$1,258,000

 

 

$314,300

 

 

$938,370

 

 

$2,971,599

 

 

Changes in Standardized Measure of Discounted Future Net Cash Flows

 

The changes in the standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves for the yearyears ended December 31, 20212023 and the nine months ended December 31, 20202022 are as follows:

 

 

United States

 

 

United States

 

 

December 31,

2021

 

 

 December 31,

2020

 

 

Years Ended December 31,

 

 

 

 

 

 

 

2023

 

 

2022

 

Balance - beginning

 

$314,300

 

$963,889

 

 

$2,971,599

 

$15,014,652

 

Net changes in prices and production costs

 

-

 

(384,470)

 

(828,303)

 

1,578,808

 

Net changes in future development costs

 

-

 

(789,302)

 

(35,117)

 

(1,033,849)

Sales of oil and gas produced, net

 

(266,538)

 

(472,127)

 

(290,073)

 

(1,646,513)

Extensions, discoveries and improved recovery

 

-

 

-

 

 

-

 

-

 

Purchases of reserves

 

-

 

-

 

 

948,578

 

-

 

Sales of reserves

 

-

 

-

 

 

(2,708,234)

 

(12,334,224)

Revisions of previous quantity estimates

 

(59,613)

 

(93,587)

 

(115,831)

 

(549,347)

Previously estimated development costs incurred

 

-

 

-

 

 

-

 

9,813

 

Net change in income taxes

 

181,718

 

207,874

 

 

-

 

-

 

Accretion of discount

 

125,800

 

31,430

 

 

297,160

 

1,501,495

 

Other

 

 

962,333

 

 

 

850,593

 

 

 

698,590

 

 

 

430,764

 

 

 

 

 

 

Balance - ending

 

$1,258,000

 

 

$314,300

 

 

$938,370

 

 

$2,971,599

 

 

In accordance with SEC requirements, the pricing used in the Company’s standardized measure of future net revenues is based on the 12-month un-weightedunweighted arithmetic average of the first-day-of-the-monthfirst day-of-the-month price for the period January through December for each period presented and adjusted by lease for transportation fees and regional price differentials. The use of SEC pricing rules may not be indicative of actual prices realized by the Company in the future.

 

 
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

On September 16, 2021, the Audit Committee of the Board of Directors (the “Audit Committee”) of Camber Energy, Inc, Inc. (the “Company”), dismissed Marcum LLP (“Marcum”) as its independent registered public accounting firm, effective as of such date.

The report of Marcum on the Company’s consolidated financial statements as of March 31, 2020 and March 31, 2019 and for the years then ended did not contain an adverse opinion or disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope, or accounting principles, other than an explanatory paragraph relating to the Company’s ability to continue as a going concern. The consolidated financial statements as of March 31, 2020 and March 31, 2019, and for the years then ended were the most current audited financial statements of the Company, the Company changed its fiscal year to December 31st on February 4, 2021, and on September 11, 2021, the Company determined that those audited financial statements should not be relied on, and filed a Current Report on Form 8-K with the Securities and Exchange Commission on or about September 16, 2021, regarding that non-reliance.

During the Company’s fiscal year ended December 31, 2021, the transition period ended December 31, 2020, and through May 6, 2022, there were no disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) with Marcum on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Marcum, would have caused Marcum to make reference to the matter in its report on the consolidated financial statements for such year.

On September 17, 2021, the Audit Committee approved the appointment of Turner, Stone & Company, L.L.P. (“Turner Stone”) as the Company’s independent registered public accounting firm for the fiscal years ended March 31, 2020 and March 31 2019, and for the transition period ended December 31, 2020, and such engagement was formalized on September 21, 2021.None.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and that such information is accumulated and communicated to management, including the Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosures.

 

Evaluation of Disclosure Controls and Procedures

 

In connection with the preparation of this Annual Report on Form 10-K, our management, with the participation of our Principal Executive Officer and our Principal Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2020,2023, as required by Rule 13a-15 of the Exchange Act. Based on the evaluation described above, our management, including our principal executive officer and principal financial officer, have concluded that, as of December 31, 2020,2023, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

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Table of Contents

Management’s Report on Internal Control over Financial Reporting

 

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed under the supervision of our Interim Principal Executive Officer and Principal Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP and includes those policies and procedures that:

 

 

·

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer;

 

 

 

 

·

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and

 

 

 

 

·

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material effect on the financial statements.

 

Due to inherent limitations, internal control over financial reporting may not prevent or detect misstatements and, even when determined to be effective, can only provide reasonable, not absolute, assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate as a result of changes in conditions or deterioration in the degree of compliance.

 

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Table of Contents

Management has identified the following material weaknesses in the Company’s system of internal control over financial reporting:

 

 

1.

The Company does not have sufficient staff to maintain a proper segregation of duties;

 

 

 

 

2.

The Company lacks sufficient internal resources to analyze and interpret accounting for certain complex features of the Series C Preferred shares and other complex accounting issues; and

 

 

 

 

3.

The Company doeshas not have enough competentdesigned controls to ensure that financial information is reviewed and approved by an individual at the same or higher level than the preparer of the financial information. Specifically, the CFO is the primary preparer of most of the financial information, including the complex accounting staffareas such as equity transactions, derivative liabilities, impairment and senior management that can provide proper oversight and detectionbusiness combinations. There is no review or approval of errors.this information.

 

Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 20212023 based on the criteria framework established in the 2013 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on the assessment, our management has concluded that our internal controls over financial reporting were not effective as of December 31, 2021.2023.

 

This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

 

Limitations on the Effectiveness of Controls

 

The Company’s disclosure controls and procedures are designed to provide the Company’s Principal Executive Officer and Principal Financial Officer with reasonable assurances that the Company’s disclosure controls and procedures will achieve their objectives. However, the Company’s management does not expect that the Company’s disclosure controls and procedures or the Company’s internal control over financial reporting can or will prevent all human error. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Furthermore, the design of a control system must reflect the fact that there are internal resource constraints, and the benefit of controls must be weighed relative to their corresponding costs. Because of the limitations in all control systems, no evaluation of controls can provide complete assurance that all control issues and instances of error, if any, within the Company are detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur due to human error or mistake. Additionally, controls, no matter how well designed, could be circumvented by the individual acts of specific persons within the organization. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and such design may not succeed in achieving its stated objectives under all potential future conditions.

 

Changes in Internal Control Over Financial Reporting

 

There have not been any changes in our internal control over financial reporting during the quarteryear ended December 31, 20212023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 9B. OTHER INFORMATION

 

None.During the three months ended December 31, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

  

 
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PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Information about our Executive Officers and Directors

 

The following table and accompanying descriptions indicate the name of each officer and director, including their age, principal occupation or employment, and the year in which each person first became a director.

 

Name

 

Position

 

Date First Elected/Appointed as Officer or Director

 

Age

James A. Doris

 

Chief Executive Officer and Director

 

December 23, 2020

 

5051

Frank W. Barker, Jr.John McVicar

 

Chief Financial Officer, and Treasurer

 

December 23, 2020September 1, 2023

 

6660

Fred Zeidman

 

Director

 

January 11, 2018

 

74

James G. Miller

Director

July 10, 2018

7276

Robert Green

 

Director

 

December 23, 2020

 

5960

David Herskovits

Director

December 7, 2023

73

Lawrence B. Fisher

Director

December 7, 2023

84

 

Information Concerning the Board of Directors and its CommitteesCommittees.

 

All directors hold office until the next annual meeting of stockholders and until their successors have been duly elected and qualified. There are no agreements with respect to the election of directors. We have historically compensated our directors for their service on the Board and committees thereof through the issuance of shares of common stock, stock options and cash compensation for meeting fees. Additionally, we reimburse directors for expenses incurred by them in connection with thetheir attendance at meetings of the Board and any committee thereof (as described below). The Board appoints annually the executive officers of the Company and the executive officers serve at the discretion of the Board.

 

The business experience of each of the persons listed above during the past five years is as follows:

 

James A. Doris, Chief Executive Officer

 

Mr. Doris was appointed as Chief Executive Officer and Chairman of the Board of Directors for the Company on December 23, 2020 in conjunction with the acquisition of Viking by the Company. He has been an officer and director of the Viking Energy Group, Inc. since 2014 and has been an integral part of transitioning the Company’s to an appropriate platform to facilitate growth. He has over 25 years of experience negotiating national and international business transactions. Formerly a lawyer in Canada, Mr. Doris represented domestic and foreign clients regarding their investment activities in Canada for over 16 years. Prior to starting his own law firm, Mr. Doris served as Executive Vice President and In-House Counsel for a real estate investment and development company as well as working at one of Canada’s leading law firms. Mr. Doris graduated cum laude from the University of Ottawa.

 

Frank W. Barker, Jr.John McVicar, Chief Financial Officer

Mr. BarkerMcVicar joined Viking as CFO in June 2022 and was appointed as Chief Financial Officer for the Companynamed CFO of Camber on December 23, 2020September 1, 2023. He brings 35 years of international business experience in conjunction with the acquisition of Viking by the Company. Mr. BarkerManagement Consulting and Finance. He is a Certified Public Accountant licensed to practiceretired partner of EY LLP where he spent a total of 23 years in the State of Florida. Mr. Barkermanagement consulting and audit. He has been providing professional services to Viking Energy Group, Inc. since the beginning of 2015. On December 29, 2017, Mr. Barker accepted the position as Chief Financial Officer of Viking Energy Group, Inc. Mr. Barker has vast experience providing strategic, financial, accounting and tax-related services in various capacities to both Public and Private entities, including Compliance Reporting with the Securities and Exchange Commission, the planning, preparation and oversight of annual audit functions, presentation of financial data to Public Company Boards, turn-around management, bankruptcy and asset recovery, Strategic planning for survival of troubled companies, financial forecasting and cash flow management, litigation support and forensic analysis, mergers and acquisitions and reverse mergers. Mr. Barker hasalso served as Chief Financial OfficerCFO of TSX and TSXV listed companies and held several Public Companiesregional finance leadership roles with Revenueslarge U.S. and Canadian multinationals in excess of $40 million.Canada, the U.S., South America and Asia. Mr. Barker’s Industry experience include the fields of Defense Contracting, Manufacturing, Alternative Energy, Electrical Contracting, Healthcare ResearchMcVicar is a CPA, CA and Construction, Oilreceived an MBA from Duke University and Gas, Health Care Services and Administration, Not for Profit, Retail, Distribution, Gaming, Real Estate, Professional Services, Internet Technologies, Media Communications, Web Based Technologies, Banking, Investments, Insurance, Private Equity, Municipal and County Governments and Treasure Exploration. Mr. Barker received a B.A. in Accounting and FinanceB. Comm from Queen's University. He also holds an ICD.D from the UniversityInstitute of South Florida, Tampa, Florida in 1978.Corporate Directors.

 

 
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Fred S. Zeidman, Director

 

In December 2014, Mr. Zeidman was appointed as Chairman of Gordian Group LLC, a U.S. investment bank specializing in board level advice in complex, distressed or “story” financial matters. Mr. Zeidman currently serves as Director of External Affairs of MCNA Dental, lead Director of Straight Path Communications, Inc., Director REMA and Director Prosperity Bank in Houston. He was formerly Restructuring Officer of TransMeridian Exploration Inc. and Chief Bankruptcy Trustee of AremisSoft Corp.

 

Mr. Zeidman, Chairman Emeritus of the United States Holocaust Memorial Council, was appointed by President George W. Bush in March 2002 and served in that position from 2002-2010. A prominent Houston based business and civic leader, Mr. Zeidman also is Chairman Emeritus of the University of Texas Health Science System Houston and Director and Chief Financial Officer of the Texas Heart Institute. He is on the board of the Development Corp of Israel (Israel Bonds) and served on the Board of the National World War II Museum.

 

Over the course of his distinguished 50-year career, Mr. Zeidman has been involved in numerous high-profile workouts, restructurings and reorganizations. He was the former CEO, President and Chairman of Seitel, Inc., a Houston-based onshore seismic data provider where he was instrumental in the successful turnaround of the Company. He held the post of Chairman of the Board and CEO of Unibar Corporation, the largest domestic independent drilling fluids company, until its sale to Anchor Drilling Fluids in 1992.

 

Mr. Zeidman holds a Bachelor’s degree from Washington University in St. Louis and a Master’s in Business Administration from New York University.

 

Director Qualifications:

 

The Board of Directors believes that Mr. Zeidman is highly qualified to serve as a member of the Board of Directors due to his significant experience serving as a director of public and private companies and institutions and his substantial understanding of the oil and gas industry in general.

 

James G. Miller, Director

Mr. Miller is a retired corporate executive, having served as president and CEO of several energy companies. He has previously served on the Board of Directors of companies listed on NYSE, NASDAQ and the Australian Stock Exchange. From 2009 until 2016, Mr. Miller served as a Director of Guardian 8 Holdings. From December 31, 2010 through March 2018, he was a Director of Enerjex Resources, Inc. (NYSE American), an oil and gas exploration and production company, and chaired the Audit Committee. In March 2018, Enerjex executed a merger which concluded his Board service.

He also served on the Board of Trustees of The Nature Conservancy, Missouri Chapter, for 16 years and is a past Board Chair. Mr. Miller holds a BS in Electrical Engineering and an MBA in management from the University of Wisconsin-Madison.

Director Qualifications:

The Board of Directors believes that Mr. Miller is highly qualified to serve as a member of the Board due to his experience having served as president and CEO of several energy companies and serving on the Board of Directors of several publicly-traded companies.

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Robert Green, Director

 

Robert Green was appointed to the Board of Directors in conjunction with the acquisition of Viking and is a former Fortune 100 chief executive officer in the energy, telecommunication and utility industries, and has extensive experience in capital markets, mergers and acquisitions, and regulatory and legislative strategies. Mr. Green has served on the boards of directors of seven publicly traded companies and was elected chairman of the board of two New York Stock Exchange (NYSE) companies and three other publicly listed companies. He guided these companies and others in capital markets strategies involving initial public offerings (IPOs) and private investments with a combined value of more than $5 billion and more than 50 merger, acquisition and divestiture transactions, some of which surpassed $1 billion. Mr. Green has been a Partner at the law firm Husch Blackwell since 2003.

 

Director Qualifications:

 

The Board of Directors believes that Mr. Green is highly qualified to serve as a member of the Board of Directors due to his experience having served as a CEO of several energy companiesa publicly traded company and servinghaving served on the Board of Directors of several publicly-tradedpublicly traded companies.

David Herskovits, Director

Mr. Herskovits is a retired audit partner of Deloitte & Touche LLP. Mr. Herskovits joined Deloitte in 1974, was admitted to the partnership in 1985, and retired in 2013. During his career, Mr. Herskovits was responsible for major audit engagements for public and private companies. He also served in several technical and quality assurance roles at the firm. Mr. Herskovits received an MBA from Harvard University and a B.S. from Cornell University. Mr. Herskovits previously served as a Director of Viking.

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Director Qualifications:

The Board of Directors believes that Mr. Herskovits is highly qualified to serve as a member of the Board of Directors due to his experience having been a partner for several years of an internationally recognized accounting firm and having served on the Board of Directors of Viking, including serving as Chair of Viking’s Audit Committee, for approximately five years.

Lawrence B. Fisher, Director

Mr. Fisher practiced securities law in New York City for over 40 years. He was Partner in the law firm Orrick, Herrington & Sutcliffe for 11 years until retirement in 2002. While at the firm, Mr. Fisher was Partner-In-Charge of the New York office and a member of the firm’s Executive Committee. Prior to Orrick, Mr. Fisher was a partner in the New York law firm Kelley, Drye & Warren for 10 years, including 3 years as a member of the firm’s Executive Committee, and prior to his time at Kelley, Drye & Warren, Mr. Fisher was associate and then partner in the law firm Parker, Chapin and Flattau for an aggregate of 22 years, 5 as an associate and the remainder as a partner. There, too, Mr. Fisher was a member of the firm’s Executive Committee. Mr. Fisher graduated from Columbia College in 1960 and Columbia Law School in 1963 and was a Research Fellow at the London School of Economics from 1963-1965. Mr. Fisher was a member of the Board of Directors of National Bank of New York City in excess of 30 years until retirement in 2000, and he was a member of the Board of Directors of Financial Federal Corporation until its sale 7 years ago. In December 2020, Mr. Fisher joined the Board of GBS, Inc., a publicly traded life science company. Mr. Fisher previously served as a Director of Viking.

Director Qualifications:

The Board of Directors believes that Mr. Fisher is highly qualified to serve as a member of the Board of Directors due to his experience having advised several publicly traded companies for approximately 40 years and having served on the Board of Directors of Viking for approximately five years.

 

Family Relationships

 

There are no family relationships among our directors or executive officers.

 

Arrangements between Officers and Directors

 

To our knowledge, there is no arrangement or understanding between any of our officers and any other person, including directors, pursuant to which the officer was selected to serve as an officer.

 

Involvement in Certain Legal Proceedings

 

To the best of our knowledge, during the past ten years, none of our directors or executive officers were involved in any of the following: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being a named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, (5) being the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of (i) any Federal or State securities or commodities law or regulation; (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or (6) being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

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Information Concerning the Board and its CommitteesCommittees.

 

All directors hold office until the next annual meeting of stockholders and until their successors have been duly elected and qualified. There are no agreements with respect to the election of directors. We have previously compensated our directors for their service on the Board and committees thereof through the issuance of shares of common stock, stock options and cash compensation for meeting fees. Additionally, we reimburse directors for expenses incurred by them in connection with thetheir attendance at meetings of the Board and any committee thereof (as described below). The Board appoints annually the executive officers of the Company and the executive officers serve at the discretion of the Board.

 

66

The Board of Directors does not currently have a lead director. However, because of its capable and experienced independent directors and its strong committee system (as described more fully below), we believe this leadership structure is appropriate for the Company and allows the Board of Directors to maintain effective oversight and management and, therefore, a lead director is not necessary at this time.

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Executive Sessions of the Board

 

The independent members of the Board of the Company meet in executive session (with no management directors or management present) from time to time, but at least once annually. The executive sessions include whatever topics the independent directors deem appropriate.

 

Risk Oversight

 

The Board exercises direct oversight of strategic risks to the Company. The Audit Committee reviews and assesses the Company’s processes to manage business and financial risk and financial reporting risk. It also reviews the Company’s policies for risk assessment and assesses steps management has taken to control significant risks. The Compensation Committee oversees risks relating to compensation programs and policies. In each case management periodically reports to our Board or relevant committee, which provides the relevant oversight on risk assessment and mitigation.

 

Communicating with our Board

 

Stockholders may contact the Board about bona fide issues or questions about the Company by writing to the Secretary at the following address: Attn: Secretary, Camber Energy, Inc., 15915 Katy Freeway,12 Greenway Plaza, Suite 450,1100, Houston, Texas 77094.77046.

 

Our Secretary, upon receipt of any communication other than one that is clearly marked “Confidential,” will note the date the communication was received, open the communication, make a copy of it for our files and promptly forward the communication to the director(s) to whom it is addressed. Upon receipt of any communication that is clearly marked “Confidential,” our Secretary will not open the communication, but will note the date the communication was received and promptly forward the communication to the director(s) to whom it is addressed. If the correspondence is not addressed to any particular Board member or members, the communication will be forwarded to a Board member to bring to the attention of the Board.

 

Board and Committee Activity and Compensation

 

For the nine monthsfiscal year ending December 31, 2020,2023, the Board of Directors held 14 meetingsvideo conferences and took various other actionscorresponded via email as necessary but held no formal meetings. All material decisions of the Board of Directors were evidenced via the unanimous written consent of the Board of Directors and the various committees described below. AllThough no formal meetings were held, all directors attended at least 75% of the Board of Directors meetings and committee meetings relating to the committees on which each director served.Directors’ video conferences. All of the then current directors attended our fiscal year 20202023 Annual Stockholder meeting held on March 11, 2020.December 7, 2023. The Company encourages but does not require all directors to be present at annual meetings of stockholders.

 

The Board has a standing Audit Committee, Compensation Committee, and Nominating and Governance Committee. Mr. Fred Zeidman, Mr. Robert Green, Mr. David Herskovits and Mr. James G. MillerLawrence B. Fisher are “independent” members of the Board, as defined in Section 803(A) of the NYSE American Company Guide. Committee membership and the functions of those committees are described below.

 

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Board of Directors Committee Membership

 

 

 

Audit

Committee

 

Compensation Committee

 

 Nominating and Governance Committee

James A. Doris

Robert Green

 

 

 

 

 

 

 

Fred Zeidman

 

M

 

C

C

Robert Green

David Herskovits

 

C

James G. Miller

 

Lawrence B. Fisher

 

M

 

M

M

 

C Chairman of Committee.Committee

M – Member.

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Audit Committee

 

The Board has selected the members of the Audit Committee based on the Board’s determination that the members are financially literate and qualified to monitor the performance of management and the independent auditors and to monitor our disclosures so that our disclosures fairly present our business, financial condition and results of operations.

 

The Audit Committee’s function is to provide assistance to the Board in fulfilling the Board’s oversight functions relating to the integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the independent auditor’s qualifications and independence and the performance of the Company’s independent auditors, and to perform such other activities consistent with its charter and our Bylaws as the Committee or the Board deems appropriate. The Audit Committee produces an annual report for inclusion in our proxy statement. The Audit Committee is directly responsible for the appointment, retention, compensation, oversight and evaluation of the work of the independent registered public accounting firm (including resolution of disagreements between our management and the independent registered public accounting firm regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. The Audit Committee shall review and pre-approve all audit services, and non- audit services that exceed a de minimis standard, to be provided to us by our independent registered public accounting firm. The Audit Committee carries out all functions required by the NYSE American, the SEC and the federal securities laws.

 

The Audit Committee has the sole authority, at its discretion and at our expense, to retain, compensate, evaluate and terminate our independent auditors and to review, as it deems appropriate, the scope of our annual audits, our accounting policies and reporting practices, our system of internal controls, our compliance with policies regarding business conduct and other matters. In addition, the Audit Committee has the authority, at its discretion and at our expense, to retain special legal, accounting or other advisors to advise the Audit Committee.

 

The Board has determined that Mr. Fred Zeidman, Mr. Lawrence B. Fisher and Mr. James G. MillerDavid Herskovits are “independent,” and that Mr. MillerHerskovits is an “audit committee financial expert” (as defined in the SEC rules) because he has the following attributes: (i) an understanding of generally accepted accounting principles in the United States of America (“GAAP”) and financial statements; (ii) the ability to assess the general application of such principles in connection with accounting for estimates, accruals and reserves; (iii) experience analyzing and evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by our financial statements; (iv) an understanding of internal control over financial reporting; and (v) an understanding of audit committee functions. Mr. Miller has acquired these attributes by means of having held various positions that provided relevant experience, as described in his biographical information above.

 

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For the nine-month period endedfiscal year ending December 31, 2020,2023, the Audit Committee held threefour formal meetings, and took various actions via a unanimous written consentvideo conference, each taking place prior to the filing of the committee.Companies’ annual and quarterly reports. The Audit Committee’s charter is available on our website at www.camber.energy at “Governance -Policies” and was filed as Exhibit 14.3 to our Annual Report on Form 10-K/A for the year ended March 31, 2009, filed with the Commission on July 29, 2009.

 

Compensation Committee

 

The Compensation Committee is responsible for the administration of our stock compensation plans, approval, review and evaluation of the compensation arrangements for our executive officers and directors and oversees and advises the Board on the adoption of policies that govern the Company’s compensation and benefit programs. In addition, the Compensation Committee has the authority, at its discretion and at our expense, to retain advisors to advise the Compensation Committee. The Compensation Committee may delegate its authority to subcommittees of independent directors, as it deems appropriate.

 

For the fiscal year endedending December 31, 2020,2023, the Compensation Committee held no formal meetings. The Compensation Committee’s charter is available on our website at www.camber.energy at “Governance” - “Policies” and was filed as Exhibit 14.5 to our Annual Report on Form 10-K/A for the year ended March 31, 2009, filed with the Commission on July 29, 2009.

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Nominating and Governance Committee

 

The Nominating and Governance Committee is responsible for (1) assisting the Board by identifying individuals qualified to become Board members; (2) recommending individuals to the Board for nomination as members of the Board and its committees; (3) leading the Board in its annual review of the Board’s performance; (4) monitoring the attendance, preparation and participation of individual directors and to conduct a performance evaluation of each director prior to the time he or she is considered for re-nomination to the Board; (5) reviewing and recommending to the Board responses to shareowner proposals; (6) monitoring and evaluating corporate governance issues and trends; (7) providing oversight of the corporate governance affairs of the Board and the Company, including consideration of the risk oversight responsibilities of the full Board and its committees; (8) assisting the Board in organizing itself to discharge its duties and responsibilities properly and effectively; and (9) assisting the Board in ensuring proper attention and effective response to stockholder concerns regarding corporate governance. We have not paid any third party a fee to assist in the process of identifying and evaluating candidates for director.

 

The Nominating and Governance Committee uses a variety of methods for identifying and evaluating director nominees. The Nominating and Governance Committee also regularly assesses the appropriate size of the Board and whether any vacancies on the Board are expected due to retirement or other circumstances. In addition, the Nominating and Governance Committee considers, from time to time, various potential candidates for directorships. Candidates may come to the attention of the Nominating and Governance Committee through current Board members, professional search firms, stockholders or other persons. These candidates may be evaluated at regular or special meetings of the Nominating and Governance Committee and may be considered at any point during the year.

 

The Nominating and Governance Committee evaluates director nominees at regular or special Committee meetings pursuant to the criteria described above and reviews qualified director nominees with the Board. The Committee selects nominees that best suit the Board’s current needs and recommends one or more of such individuals for election to the Board.

 

The Nominating and Governance Committee will consider candidates recommended by stockholders, provided the names of such persons, accompanied by relevant biographical information, are properly submitted in writing to the Secretary of the Company in accordance with the manner described below. The Secretary will send properly submitted stockholder recommendations to the Committee. Individuals recommended by stockholders in accordance with these procedures will receive the same consideration received by individuals identified to the Committee through other means. The Committee also may, in its discretion, consider candidates otherwise recommended by stockholders without accompanying biographical information, if submitted in writing to the Secretary.

 

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In addition, the Company’s Bylaws permit stockholders to nominate directors at an annual meeting of stockholders or at a special meeting at which directors are to be elected in accordance with the notice of meeting pursuant to the requirements of the Company’s Bylaws and applicable NYSE American and SEC rules and regulations.

 

For the fiscal year endedending December 31, 2021,2023, the Nominating and Governance Committee held no formal meetings, but did take various actions via a unanimous written consent of the committee. The Nominating and Governance Committee’s charter is available on our website at www.camber.energy at “Governance” - “Policies” and was filed as Exhibit 99.2 to the Company’s Annual Report on Form 10-K for the year ended March 31, 2013, filed with the Commission on June 28, 2013.

 

Director Nominations Process. As described above, the Nominating and Governance Committee will consider qualified director candidates recommended in good faith by stockholders, provided those nominees meet the requirements of NYSE American and applicable federal securities law. The Nominating and Governance Committee’s evaluation of candidates recommended by stockholders does not differ materially from its evaluation of candidates recommended from other sources. Any stockholder wishing to recommend a nominee should submit the candidate’s name, credentials, contact information and his or her written consent to be considered as a candidate. These recommendations should be submitted in writing to the Company, Attn: Secretary, Camber Energy, Inc., 1415 Louisiana,12 Greenway Plaza, Suite 3500,1100, Houston, Texas 77002.77046. The proposing stockholder should also include his or her contact information and a statement of his or her share ownership. The Committee may request further information about stockholder recommended nominees in order to comply with any applicable laws, rules, the Company’s Bylaws or regulations or to the extent such information is required to be provided by such stockholder pursuant to any applicable laws, rules or regulations.

 

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Delinquent Section 16(a) Reports

 

None.The Company’s previous Chief Financial Officer, Frank Barker, filed a late Form 3 on August 2, 2023, which should have been filed within 10 days after December 23, 2020, the date that the Reporting Person became subject to Section 16 of the Exchange Act. The Company’s current Chief Financial Officer, John McVicar, filed a late Form 3 on March 8, 2024, which should have been filed within 10 days after September 1, 2023, the date that the Reporting Person became subject to Section 16 of the Exchange Act. The Company’s Director, Robert Green, filed a late Form 3 on August 3, 2023, which should have been filed within 10 days after December 23, 2020, the date that the Reporting Person became subject to Section 16 of the Exchange Act. The late filings were due to administrative oversight.

 

CODE OF BUSINESS AND ETHICAL CONDUCT

 

On November 29, 2016, the Board of Directors approved and adopted an amended and restated Code of Business and Ethical Conduct (the “Revised Code”), which applies to all officers, directors and employees. The Revised Code replaced the Company’s prior Code of Ethics adopted in June 2009 and reflects, among other matters, clarifications and revisions relating to conflicts of interest, confidentiality, compliance with laws, reporting and enforcement, and other matters intended to update the Company’s Code of Ethics.

 

You can access our Revised Code on our website at www.camber.enerwww.camber.energygy,, and any stockholder who so requests may obtain a free copy of our Code of Ethics by submitting a written request to our Secretary. Additionally, the Code of Ethics was filed as an exhibit to the Company’s Form 8-K dated November 29, 2016, filed with the SEC on December 5, 2016, as Exhibit 14.1 thereto.

 

We intend to disclose any amendments or future amendments to our Revised Code and any waivers with respect to our Revised Code granted to our principal executive officer, our principal financial officer, or any of our other employees performing similar functions on our website at www.camber.energy within four business days after the amendment or waiver. In such case, the disclosure regarding the amendment or waiver will remain available on our website for at least 12 months after the initial disclosure. There have been no waivers granted with respect to our Revised Code to any such officers or employees.

 

The Revised Code includes a policy on reporting illegal or unethical business or workplace conduct by employees, officers or members of the Board, which replaced our prior Whistleblower Protection Policy adopted in 2009.

 

Policy on Equity Ownership

 

The Company does not have a policy on equity ownership at this time.

 

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Policy Against Hedging

 

The Company does not currently have a policy against hedging.

 

Compensation Recovery

 

UnderEffective December 1, 2023, the Sarbanes–OxleyCompany adopted a Compensation Recovery Policy which implements the incentive-based compensation recovery provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2002 (the “Sarbanes-Oxley Act”), in2010 as required under the eventlisting standards of misconductthe New York Stock Exchange, and requires recovery of incentive-based compensation received by current or former executive officers during the three fiscal years preceding the date it is determined that results in a financial restatement that would have reduced a previously paid incentive amount, we can recoup those improper payments from our Chief Executive Officer and Chief Financial Officer. We planthe Company is required to implement a clawback policy in the future, although we have not yet implemented such policy.prepare an accounting restatement.

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ITEM 11. EXECUTIVE COMPENSATION

 

Summary Compensation Table

 

The following table sets forth information concerning the compensation of our Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and the most highly compensated executive officer other than the CEO and CFO who was serving as an executive officer of the Company for the yearyears ended December 31, 2021and for the nine months ended December 31, 20202023 and 2022. (the Company did not have any executive officers other than its CEO and CFO as of December 31, 20212023 and December 31, 2020)2022), and up to two additional individuals for whom disclosure would have been required had they been serving as an executive officer at the end of the last completed fiscal year (collectively, the “Named Executive Officers”).

 

Name and Principal Position

 

Period Ending

 

Consulting

Fees/Salary

 

 

Bonus

 

 

Stock

Awards

 

 

All Other

Compensation*

 

 

Total

 

 

Period Ending

 

Consulting

Fees/Salary

 

 

All Other

Compensation*

 

 

Total

 

James A. Doris

 

December 31, 2021 

 

$

 

$

 

$

 

$180,000

(2)

 

$180,000

 

 

December 31, 2023

 

$390,000

(2)

 

$-

 

$390,000

 

Chief Executive Officer (1)

 

December 31, 2020

 

N/A

 

N/A

 

N/A

 

N/A

 

N/A

 

 

December 31, 2022

 

240,000

(2)

 

-

 

240,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Frank W. Barker, Jr.

 

December 31, 2021

 

$

 

$

 

$

 

$180,000

(4)

 

$180,000

 

John McVicar

 

December 31, 2023

 

$120,000

(4)

 

$-

 

$120,000

 

Chief Financial Officer (3)

 

December 31, 2020

 

N/A

 

N/A

 

N/A

 

N/A

 

N/A

 

 

December 31, 2022

 

 

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Louis G. Schott

 

December 31, 2021

 

$176,836

(7)

 

$-

 

$

 

-

 

$176,836

 

 

December 31, 2023

 

$-

 

$-

 

$-

 

Former Interim Chief Executive Officer (5)

 

December 31, 2020

 

$300,000

(7)

 

$150,000

 

$

 

$38,851

(8)

 

$488,851

 

 

December 31, 2022

 

$14,860

(6)

 

$-

 

$14,860

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Robert Schleizer

 

December 31, 2021

 

$165,052

(9)

 

$-

 

$

 

$

-

(10)

 

$165,052

 

Frank W. Barker Jr.

 

December 31, 2023

 

$160,000

(8)

 

$-

 

$160,000

 

Former Chief Financial Officer (6)(7)

 

December 31,2020

 

$360,000

(9)

 

$150,000

 

$

 

$40,000

(10)

 

$550,000

 

 

December 31,2022

 

$240,000

(8)

 

$-

 

$240,000

 

 

* Does not include perquisites and other personal benefits, or property, unless the aggregate amount of such compensation is more than $10,000.

 

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No executive officer earned any bonus, stock awards, option awards, non-equity incentive plan compensation or nonqualified deferred compensation during the periods reported above. The value of the Stock Awards in the table above was calculated based on the fair value of such securities calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718.

 

 

(1)

Mr. Doris was appointed as Chief Executive Officer on December 23, 2020.

 

 

 

 

(2)

The amountamounts included in “All Other Compensation”“Consulting Fees/Salary” for the yearyears ended December 31, 2021, is2023 and 2022, are comprised of $180,000$390,000 and $240,000, respectively, paid AGD Advisory Group, Inc., a company affiliated with Mr. Doris.

 

 

 

 

(3)

Mr. BarkerMcVicar was appointed as Chief Financial Officer on December 23, 2020.September 1, 2023.

 

 

 

 

(4)

The amountamounts included in “All Other Compensation”“Consulting Fees/Salary” for the year ended December 31, 2021, is2023, are comprised of $180,000$120,000 and nil, respectively, paid FWB Consulting, Inc.to 1508586 Alberta Ltd., a company affiliated with Mr. BarkerMcVicar.

 

 

 

 

(5)

Mr. Schott served as the Interim Chief Executive Officer of Camber from May 2018 through his resignation on December 23, 2020.

 

 

 

 

(6)

Mr. Schleizer served as Chief Financial Officer (beginning as Interim Chief Financial Officer) since June 2, 2017, as a member of the Board of Directors since October 6, 2017, and as Treasurer of Camber since January 9, 2018. He resigned from all three positions on December 23, 2020.

(7)

Mr. Schott worksworked on a consulting basis through Fides Energy LLC (“Fides”). Total fees paid by Camber to Fides during the yearyears ended December 31, 20212023 and the nine months ended2022 were nil and $14,860, respectively.

(7)

Mr. Barker served as Chief Financial Officer from December 23, 2020 to August 31, 2020 were $176,836 and In addition to his monthly $25,000 fee, plus expenses, throughout 2020, Fides was paid a $150,000 bonus for past services and upon completion of the Viking acquisition, and a CEO termination fee of $86,742.2023.

 

 

 

 

(8)

RepresentsThe amounts paid to Mr. Schottincluded in connection with reimbursement“Consulting Fees/Salary” for health insurance premiums.

(9)

Mr. Schleizer is the Managing Partner of BlackBriar Advisors LLC (“BlackBriar”). In addition to financial management, BlackBriar provides accounting, treasury, administrative and financial reporting services to Camber. Total fees paid by Camber to BlackBriar during the yearyears ended December 31, 20212023 and the nine-month period ended December 31, 2020 were $165,0422022, are comprised of $160,000 and 550,000, respectively.

(10)

$240,000, respectively, paid FWB Consulting, Inc., a company affiliated with Mr. Schleizer also received director’s fees from Camber for the nine months ended December 31, 2020 of $40,000.Barker.

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Employment Agreements

As of December 31, 2021,2023, the Company did not have any formal compensation arrangements with any executive except thatexecutive. Effective from the date of the Merger (August 1, 2023),  the Company hadhas orally agreed to pay commencing April 2021, the entity of the Company’s CEO $20,000$50,000 per month and the entityto AGD Advisory Group, Inc., an affiliate of the Company’s CFO $20,000 per month. The Company has no employees, but engages professional consultants as needed.

Engagement Agreement

Mr. Louis G. Schott was appointed as InterimJames Doris, our Chief Executive Officer of the Company on May 25, 2018. In connection with Mr. Schott’s appointment as Interim Chief Executive Officer of the Company, the Company entered into an engagement letter with Fides (the “2018 Engagement”). Pursuant to the letter, Fides agreed to supply Mr. Schott’sfor professional services to the Company as Interim Chief Executive Officer and we agreed to pay Fides $25,000 per month for the use of Mr. Schott’s services. The agreement was terminated can be terminated by either party with 90 days’ notice and terminates automatically upon the death of Mr. Schott. Pursuant to the agreement, Mr. Schott is also eligible to receive bonus compensation at the discretion of the Board of Directors. Mr. Schott received a $150,000 bonus on December 23, 2020 and the 2018 Engagement was also terminated.

Letter Agreement

Effective on December 1, 2017, the Company entered into a letter agreement (the “2017 Engagement”) with BlackBriar Advisors LLC (“BlackBriar”), pursuant to which BlackBriar agreed to provide advisory and accounting serviceshe renders to the Company, and $30,000 per month to make Mr. Robert Schleizer available1508586 Alberta Ltd., an affiliate of John McVicar, our Chief Financial Officer, for professional services he renders to the Company as the Company’s Chief Financial Officer. In consideration for such services, the Company agreed to pay BlackBriar a fee of $40,000 per month, and to reimburse BlackBriar for reasonable customary and necessary expenses including for travel and related costs. BlackBriar is also eligible for bonuses in the discretion of the Compensation Committee of the Company. The letter agreement includes customary indemnification obligations and can be terminated at any time upon written notice of either party with no penalty. Mr. Schleizer received a $150,000 bonus on December 23, 2020 and the 2017 Engagement was also terminated on December 23, 2020.

 

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

 

None of our Named Executive Officers had any stock options or stock awards outstanding as of December 31, 2021.2023.

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DIRECTOR COMPENSATION

 

The following table sets forth compensation information with respect to our non-executive directors for the year ended December 31, 2021.2023.

 

 

 

Fees Earned

or Paid

 

 

Option

 

 

All Other

 

 

 

Name

 

 in Cash

($)

 

 

Awards

($)

 

 

 Compensation

($)

 

 

 Total

($)

 

Fred S. Zeidman (1)

 

$53,336

 

 

$

 

 

$-

 

 

$53,336

 

James G. Miller (1)

 

$53,336

 

 

$

 

 

$-

 

 

$53,336

 

Robert Green (1)

 

$53,336

 

 

$

 

 

$-

 

 

$53,336

 

 

 

Fees Earned

or Paid

 

 

All Other

 

 

 

Name

 

 in Cash

($)

 

 

 Compensation

($)

 

 

 Total

($)

 

Fred S. Zeidman

 

$53,336

 

 

$-

 

 

$53,336

 

James G. Miller (1)

 

$49,819

 

 

$-

 

 

$48,819

 

Robert Green

 

$53,336

 

 

$-

 

 

$53,336

 

David Herskovits (2)

 

$3,516

 

 

$-

 

 

$3,516

 

Lawrence B. Fisher (3)

 

$3,516

 

 

$-

 

 

$3,516

 

 

(1)

72

Mr. Miller elected not to seek re-election as a Director on December 7, 2023.

(2)

Mr. Herskovits was elected as a Director on December 7, 2023.

Table of Contents

(3)

Mr. Fisher was elected as a Director on December 7, 2023.

 

The table above does not include the amount of any expense reimbursements paid to the above directors. No directors received any Stock Awards, Option Awards, Non-Equity Incentive Plan Compensation, or Nonqualified Deferred Compensation Earnings during the period presented. Does not include perquisites and other personal benefits, or property, unless the aggregate amount of such compensation is more than $10,000.

 

In 20212023 and 2020,2022, the Company paid each member of the Board of Directors their pro rata portiona fee of a $40,000 quarterly Board fee in cash, payable in arrears and based on the number of members of the Board at the end of each calendar quarter (for example if there are three (3) members of the board at the end of a calendar quarter, each member would receive $13,333 in total compensation for such applicable calendar quarter).per quarter.

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table presents certain information as of December 31, 2021,2023, as to:

·

The 2014 Stock Incentive Plan (the “2014 Plan”),

·

The Lucas Energy, Inc. 2012 Stock Incentive Plan (the “2012 Plan”);

·

The Lucas Energy, Inc. 2010 Long Term Incentive Plan (the “2010 Plan”) and

·

Viking’s legacy 2011 Fiscal Year Professional/Consultant Stock Compensation Plan (the “Viking Plan”).

 

 

Number of securities to be issued upon exercise of outstanding options, warrants and rights

 

 

Weighted-average exercise price of outstanding options, warrants and rights

 

 

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

 

2014 Plan

 

 

 

 

 

 

 

 

2,500,000

 

2012 Plan

 

 

 

 

 

 

 

 

96

 

2010 Plan

 

 

 

 

 

 

 

 

58

 

Viking Plan

 

 

3,691,143

 

 

$0.66

 

 

 

 

Total

 

 

3,691,143

 

 

$0.66

 

 

 

2,500,154

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table presents certain information as of December 31, 2023, as to:

 

 

·

each stockholder known by us to be the beneficial owner of more than five percent of our outstanding shares of common stock,

 

 

 

 

·

each director,

 

 

 

 

·

each Named Executive Officer, and

 

 

 

 

·

all directors and executive officers as a group.

 

The percentages shownpercentage ownership of our common stock in the table under the column “Percent” areis based on 360,111,110144,663,684 shares of common stock issued and outstanding as of May 6, 2022.December 31, 2023, assuming exercise of all warrants to purchase common stock and the conversion of all shares of Series A Preferred Stock and Series C Preferred Stock issued and outstanding as of December 31, 2023, subject to applicable beneficial ownership limitations.

 

Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and/or investing power with respect to securities. These rules generally provide that shares of common stock subject to options, warrants or other convertible securities that are currently exercisable or convertible, or exercisable or convertible within 60 days of the applicable date of determination, are deemed to be outstanding and to be beneficially owned by the person or group holding such options, warrants or other convertible securities for the purpose of computing the percentage ownership of such person or group, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person or group.

 

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To our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to applicable community property laws. Unless otherwise indicated, the address for each of the officers or directors listed in the table below is 15915 Katy Freeway,12 Greenway Plaza, Suite 450,1100, Houston, Texas 77094.77046.

 

Stockholder

 

Number

of Shares of Common Stock

 

 

Percent of Common Stock(#)

 

Executive Officers and Directors

 

 

 

 

 

 

James A. Doris

 

 

 

 

 

%

Frank W. Barker

 

 

 

 

 

%

Robert Green

 

 

 

 

 

%

Fred S. Zeidman

 

 

 

 

 

%

James G. Miller

 

 

 

 

 

%

All Executive Officers and Directors as a Group (Four Persons)

 

 

 

 

 

 

Greater than 5% Stockholders

 

 

 

 

 

 

 

 

Discover Growth Fund (1)

 

 

35,975,100

 

 

 

9.99%

____________

* Indicates beneficial ownership of less than 1% of the outstanding common stock.

(1) 103 South Church Street, 4th Floor, Grand Cayman KYI-002, Cayman Islands. The holder holds 2,093 shares of Series C Redeemable Convertible Preferred Stock; provided that the Company may not issue shares which, when aggregated with all other shares of common stock then deemed beneficially owned by the holder, would result in the reporting person holding at any one time more than 9.99% of all common stock outstanding immediately after giving effect to such issuance.

Stockholder

 

Number

of Shares of Common Stock

 

 

Percent of Common Stock

 

Executive Officers and Directors

 

 

 

 

 

 

James A. Doris (1)

 

 

14,451,902

 

 

 

9.99%

John McVicar

 

 

-

 

 

-

%

Robert Green

 

 

-

 

 

-

%

Fred S. Zeidman

 

 

-

 

 

-

%

David Herskovits (2)

 

 

73,890

 

 

-

%

Lawrence B. Fisher (3)

 

 

47,323

 

 

-

%

All Executive Officers and Directors as a Group (Six Persons)

 

 

14,573,115

 

 

 

10.1%

 

(1)

73

Includes 1,666,667 warrants to purchase common stock, 222,223 shares of common stock, and partial conversion of 28,092 Series A Preferred Stock, subject to a 9.99% ownership restriction.

(2)

Includes 66,667 warrants to purchase common stock and 7,223 shares of common stock.

Table

(3)

Includes 44,444 warrants to purchase common stock and 2,879 shares of Contentscommon stock.

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

 

Related Party Transactions

 

Certain Relationships and Related Transactions

The Company’s CEO and director,Director, James Doris, renders professional services to the Company through AGD Advisory Group, Inc., an affiliate of Mr. Doris’. These services and the dollar amounts ascribed thereto are described in further detail above in Note 9 to the Financial Statements.

 

The Company’s CFO, John McVicar, renders professional services to the Company through 1508586 Alberta Ltd., an affiliate of Mr. McVicar’s. These services and the dollar amounts ascribed thereto are described in further detail above in Note 9 to the Financial Statements.

The Company’s previous CFO, Frank W. Barker, Jr., rendersrendered professional services to the Company through FWB Consulting, Inc., an affiliate of Mr. Barker’s. These services and the dollar amounts ascribed thereto are described in further detail above in Note 9 to the Financial Statements.

 

Related Party Office Space UseTransaction Policy

 

AsThe Board of December 31, 2020,Directors has adopted a Related Party Transaction Policy, which is designed to monitor and ensure the proper review, approval, ratification, and disclosure of our related party transaction. This policy applies to any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which (i) the Company consolidatedor any of its officesubsidiaries is or will be a participant, (ii) the aggregate amount involved will or may be expected to exceed $120,000 in any fiscal year, and (iii) any related party has or will have a direct or indirect interest. The Audit Committee must review, approve and ratify a related party transaction if such transaction is consistent with the Related Party Transaction Policy. While reviewing a related party transaction, the Audit Committee shall take into Viking’s officeaccount, among other factors it deems appropriate, (i) whether the transaction was undertaken in Houston. Priorthe ordinary course of business of the Company, (ii) whether the related party transaction was initiated by the Company, a subsidiary, or the related party, (iii) whether the transaction with the related party is proposed to be, or was, entered into on terms no less favorable to the Company than terms that BlackBriar provided Camber’s office space without chargecould have been reached with an unrelated third party, (iv) the purpose of, and the potential benefits to Camber.the Company of, the related party transaction, (v) the approximate dollar value of the amount involved in the related party transaction, particularly as it relates to the related party, (vi) the related party’s interest in the related party transaction and (vii) any other information regarding the related party transaction or the related party that would be material to investors in light of the circumstances of the particular transaction.

 

Director Independence

 

During the year ended December 31, 2021,2023, the Board determined that 75%80% of the Board is independent under the definition of independence and in compliance with the listing standards of the NYSE American listing requirements. Based upon these standards, the Board has determined that Mr. MillerZeidman, Mr. Green, Mr. Herskovits and Mr. Zeidman and Mr. GreenFisher are “independent” members of the Board of Directors as defined in Section 803(A) of the NYSE American Company Guide, and Mr. Doris is not “independent” due to his status as an officer of the Company (see “Item 10. Directors, Executive Officers and Corporate Governance”).

 

 
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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

Our Audit Committee of the Board of Directors approves in advance the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services.

 

The following table sets forth the fees billed by our former independent accounting firm, Marcum LLP and our current independent accounting firm Turner, Stone & Company, LLP, and prior independent accounting firms, for each of our last two fiscal years. (see Item 9)years for the categories of services indicated.

 

 

 

December 31,

2021

 

 

December 31,

2020

 

Marcum

 

$495,505

 

 

$323,100

 

Turner Stone

 

 

145,000

 

 

 

-

 

 

 

Years Ended

 

 

 

December 31,

 

Category

 

2023

 

 

2022

 

Audit Fees

 

$106,950

 

 

$145,500

 

Audit Related Fees

 

 

24,500

 

 

 

7,000

 

Tax Fees

 

 

7,500

 

 

 

7,320

 

All Other Fees

 

 

-

 

 

 

-

 

Total

 

$138,950

 

 

$159,820

 

 

Audit Related Fees: A totalfees. Consists of $100,000 of the fees disclosed abovebilled for fiscal 2020 relate to the audit of Linealour annual financial statements and review of our interim financial information and services that are normally provided by the accountant in connection with the Company’s July 2019 acquisitionyear-end and quarter-end statutory and regulatory filings or engagements.

Audit-related fees. Consists of Lineal (which has since been divested).fees billed for services relating to review of other regulatory filings including registration statements, periodic reports and audit related consulting.

 

Tax Fees: None.fees. Consists of professional services rendered by our principal accountant for tax compliance, tax advice and tax planning.

 

All Other Fees: A total of $30,000 of the fees disclosed above for fiscal 2020 relate to the review of the Company’s pro forma financial statements relating to the July 2019 acquisition of Lineal (which has since been divested).fees. Other services provided by our accountants.

 

We do not use the auditors for financial information system design and implementation. Such services, which include designing or implementing a system that aggregates source data underlying the financial statements or that generates information that is significant to our financial statements, are provided internally or by other service providers. We do not engage the auditors to provide compliance outsourcing services.

 

 
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PART IV

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

(a) Documents filed as part of this report

 

(1) All financial statements

 

Index to Financial Statements

 

Page

 

Report of Independent Registered Public Accounting Firm

 

F-1

 

Consolidated Balance Sheets as of December 31, 20202023 and March2022

F-2

Consolidated Statements of Operations for the years ended December 31, 20202023 and 2022

 

F-3

 

Consolidated Statements of Operations for the Nine Months Ended December 31, 2020 and the Year Ended March 31, 2020

F-4

Consolidated Statement of Changes in Stockholders’ Equity (Deficit)Deficit for the Nine Months Endedyears ended December 31, 20202023 and the Year Ended March 31, 20202022

 

F-5

 

Consolidated Statements of Cash Flows for the Nine Months Endedyears ended December 31, 20202023 and the Year Ended March 31, 20202022

 

F-6F-7

 

Notes to Consolidated Financial Statements

 

F-7F-8

 

 

(2) Financial Statement Schedules

 

All financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the financial statements and notes thereto included in this Form 10-K.

 

(2) Exhibits required by Item 601 of Regulation S-K

 

The information required by this Section (a)(3) of Item 15 is set forth on the exhibit index that follows the Signatures page of this Form 10-K.

 

ITEM 16. FORM 10–K SUMMARY

 

None.

 

 
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SIGNATURES

 

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

 

CAMBER ENERGY, INC.

 

 

 

BY:

/s/ James A. Doris

 

James A. Doris

 

 

Chief Executive Officer

 

 

(Principal Executive Officer)

 

 

Dated: June 7, 2022March 25, 2024 

 

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

Signature

 

Title

 

Date

 

 

 

 

 

/s/ James A Doris

 

Chief Executive Officer

 

June 7, 2022March 25, 2024

James A. Doris

 

(Principal Executive Officer)

 

 

 

 

and Director

 

 

 

 

 

 

 

/s/ Frank W. Barker, Jr.John McVicar

 

Chief Financial Officer

 

June 7, 2022March 25, 2024

Frank W. Barker, Jr.John McVicar

 

(Principal Financial and Accounting Officer)

 

 

 

 

 

 

 

/s/ Fred S. Zeidman

 

Director 

 

June 7, 2022March 25, 2024

Fred S. Zeidman

/s/ James Miller

Director 

June 7, 2022

James Miller

 

 

 

 

 

 

 

 

 

/s/ Robert Green

 

Director

 

June 7, 2022March 25, 2024

Robert Green

/s/ David Herskovits

Director

March 25, 2024

David Herskovits

/s/ Lawrence B. Fisher

Director

March 25, 2024

Lawrence B. Fisher

 

 

 

 

 

 
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EXHIBIT INDEX

 

Exhibit No.

 

Description

 

 

 

2.1

Asset Purchase Agreement by and between Lucas Energy, Inc., as purchaser, Segundo Resources, LLC, as seller representative to the various sellers named therein, and the sellers named therein dated December 30, 2015+ (incorporated by reference to Exhibit 2.1 of the Form 8-K filed by the Company with the SEC on December 31, 2015)

2.2

First Amendment to Asset Purchase Agreement by and between Lucas Energy, Inc., as purchaser, Segundo Resources, LLC, as seller representative to the various sellers named therein, and the sellers named therein dated April 20, 2016 and effective April 1, 2016 (Filed as Exhibit 2.2 to the Company’s Report on Form 8-K, filed with the Commission on April 25, 2016, and incorporated herein by reference)(File No. 001-32508)

2.3

Second Amendment to Asset Purchase Agreement by and between Lucas Energy, Inc., as purchaser, Segundo Resources, LLC, as seller representative to the various sellers named therein, and the sellers named therein dated August 25, 2016 (Filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the Commission on August 31, 2016, and incorporated herein by reference)(File No. 001-32508)

2.4

Third Amendment to Asset Purchase Agreement by and among the Company, as purchaser, Segundo Resources, LLC, as seller representative to the various sellers named therein, and the sellers named therein dated August 25, 2016 (Filed as Exhibit 2.4 to the Company’s Current Report on Form 8- K, filed with the Commission on January 27, 2017, and incorporated herein by reference)(File No. 001-32508)

2.5

Asset Purchase Agreement by and Between N&B Energy, LLC, as Purchaser and Camber Energy, Inc., as Seller, dated July 12, 2018 (Filed as Exhibit 2.1 to the Company’s Report on Form 8-K, filed with the Commission on July 13, 2018 and incorporated herein by reference) (File No. 001- 32508)

2.6

First Amendment to Asset Purchase Agreement by and Between N&B Energy, LLC, as Purchaser and Camber Energy, Inc., as Seller, dated August 2, 2018 (Filed as Exhibit 2.2 to the Company’s Report on Form 8-K, filed with the Commission on August 7, 2018 and incorporated herein by reference) (File No. 001-32508)

2.7

Second Amendment to Asset Purchase Agreement by and Between N&B Energy, LLC, as Purchaser, Camber Energy, Inc., as Seller and CE Operating, LLC, dated September 24, 2018 (Filed as Exhibit 2.3 to the Company’s Report on Form 8-K, filed with the Commission on September 25, 2018 and incorporated herein by reference) (File No. 001-32508)

2.8#

 

Agreement and Plan of Merger by and between Camber Energy, Inc., Camber Energy Merger Sub 2, Inc., Lineal Star Holdings, LLC, and the Members party thereto dated as of July 8, 2019 (Filed as Exhibit 2.1 to the Company’s Report on Form 8-K, filed with the Commission on July 9, 2019 and incorporated herein by reference) (File No. 001-32508)

 

 

 

2.9#2.2

 

Preferred Stock Redemption Agreement dated December 31, 2019, by and among Camber Energy, Inc., Lineal Star Holdings LLC, Lineal Industries Inc., Lineal Star, Incorporated and each of the holders of the Series E Redeemable Convertible Preferred Stock and Series F Redeemable Preferred Stock of Camber (Filed as Exhibit 2.1 to the Company’s Report on Form 8-K, filed with the Commission on January 3, 2019 and incorporated herein by reference) (File No. 001-32508)

 

 

 

2.10#2.3

 

Agreement and Plan of Merger by and Between Viking Energy Group, Inc., and Camber Energy, Inc. dated as of February 3, 202015, 2021 (Filed as Exhibit 2.1 to the Company’sCamber’s Report on Form 8-K, filed with the Commission on February 5, 2020 and incorporated herein by reference) (File No. 001- 32508)

2.11

First Amendment to Agreement and Plan of Merger, dated as of May 27, 2020, by and between Viking Energy, Inc. and Camber Energy, Inc. (Filed as Exhibit 2.2 to the Company’s Report on Form 8-K, filed with the Commission on June 1, 2020 and incorporated herein by reference) (File No. 001- 32508)

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2.12

Second Amendment to Agreement and Plan of Merger, dated as of June 16, 2020, by and between Viking Energy, Inc. and Camber Energy, Inc. (Filed as Exhibit 2.3 to the Company’s Report on Form 8-K, filed with the Commission on June 16, 202018, 2021 and incorporated herein by reference) (File No. 001-32508)

 

 

 

2.132.4

 

ThirdFirst Amendment to Agreement and Plan of Merger dated as of June 25, 2020, by and betweenBetween Viking Energy Group, Inc., and Camber Energy, Inc. dated as of April 18, 2023 (Filed as Exhibit 2.42.1 to the Company’sCamber’s Report on Form 8-K, filed with the Commission on June 26, 2020April 19, 2023 and incorporated herein by reference) (File No. 001-32508)

 

 

 

3.1

 

Articles of Incorporation (Filed as Exhibit 3.1 to the Company’s Annual Report on Form 10-KSB for the fiscal year ended November 30, 2005 filed with the SEC on February 14, 2006, and incorporated herein by reference)(File No. 000-51414)

 

 

 

3.2

 

Certificate of Amendment to Articles of Incorporation (Incorporated by reference herein to Exhibit B to the Company’s Information Statement on Schedule 14C filed with the SEC on June 1, 2006) (File No. 000-51414)

 

 

 

3.3

 

Certificate of Amendment to Articles of Incorporation (Incorporated by reference herein to Exhibit B to the Company’s Information Statement on Schedule 14C filed with the SEC on February 20, 2007)(File No. 000-51414)

 

 

 

3.4

 

Certificate of Amendment to Articles of Incorporation (Incorporated by reference herein to Exhibit B to the Company’s Proxy Statement on Schedule 14A filed with the SEC on March 11, 2010) (File No. 001-32508)

 

 

 

3.5

 

Certificate of Amendment to Articles of Incorporation (Filed as Exhibit 3.1 to the Company’s Report on Form 8-K, filed with the Commission on January 11, 2011, and incorporated herein by reference)(File No. 001-32508)

 

 

 

3.6

 

Certificate of Amendment to Articles of Incorporation (1-for-25 Reverse Stock Split of Common Stock) (Filed as Exhibit 3.1 to the Company’s Report on Form 8-K, filed with the Commission on July 2, 2015, and incorporated herein by reference)(File No. 001-32508)

 

 

 

3.7

 

Certificate of Amendment to the Articles of Incorporation, amending the Company’s name to “Camber Energy, Inc.”, filed with the Secretary of State of Nevada on January 3, 2017 (Filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on February 14, 2017, and incorporated herein by reference)(File No. 001-32508)

 

 

 

3.8

 

Certificate of Amendment to the Company’s Articles of Incorporation to increase the number of our authorized shares of common stock from 200,000,000 to 500,000,000, as filed with the Secretary of State of Nevada on January 10, 2018 (Filed as Exhibit 3.1 to the Company’s Report on Form 8-K, filed with the Commission on January 12, 2018 and incorporated herein by reference) (File No. 001-32508)

 

 

 

3.9

 

Certificate of Amendment to Articles of Incorporation (1-for-25 Reverse Stock Split of Common Stock) filed with the Nevada Secretary of State on March 1, 2018, and effective March 5, 2018 (Filed as Exhibit 3.1 to the Company’s Report on Form 8-K, filed with the Commission on March 2, 2018 and incorporated herein by reference) (File No. 001-32508)

 

 

 

3.10

 

Certificate of Change Pursuant to Nevada Revised Statutes Section 78.209, as filed by Camber Energy, Inc. with the Secretary of State of the State of Nevada on December 20, 2018 (Filed as Exhibit 3.1 to the Company’s Report on Form 8-K, filed with the Commission on December 26, 2018 and incorporated herein by reference)(File No. 001-32508)

 

 

 

3.11

 

Certificate of Amendment to the Company’s Articles of Incorporation to increase the number of our authorized shares of common stock from 20,000,000 to 250,000,000, as filed with the Secretary of State of Nevada on April 10, 2019 (Filed as Exhibit 3.1 to the Company’s Report on Form 8-K, filed with the Commission on April 11, 2019, and incorporated herein by reference)(File No. 001-32508)

73

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3.12

 

Certificate of Amendment to Articles of Incorporation (1-for-25 Reverse Stock Split of Common Stock) filed with the Nevada Secretary of State on July 3, 2019, and effective July 8, 2019 (Filed as Exhibit 3.1 to the Company’s Report on Form 8-K, filed with the Commission on July 8, 2019 and incorporated herein by reference) (File No. 001-32508)

 

 

 

3.13

 

Camber Energy, Inc. Amended and Restated Certificate of Designations of Preferences, Powers, Rights and Limitations of Series C Redeemable Convertible Preferred Stock as filed with the Secretary of State of Nevada on July 8, 2019 (Filed as Exhibit 3.1 to the Company’s Report on Form 8- K, filed with the Commission on July 9, 2019 and incorporated herein by reference) (File No. 001-32508)

 

 

 

3.14

 

State of Delaware Certificate of Merger of Domestic Corporation Into Domestic Limited Liability Company, filed with the Secretary of State of Delaware on July 10, 2019, and effective July 9, 2019, merging Camber Energy Merger Sub 2, Inc. into Lineal Star Holdings LLC (Filed as Exhibit 3.8 to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on August 14, 2019 and incorporated herein by reference) (File No. 001-32508)

 

 

 

3.15

 

Certificate of Change Pursuant to Nevada Revised Statutes Section 78.209, filed by Camber Energy, Inc. with the Secretary of State of Nevada on October 25, 2019 and effective on October 29, 2019 (Filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the Commission on October 29, 2019 and incorporated herein by reference) (File No. 001-32508)

 

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3.16

 

Certificate of Amendment to Articles of Incorporation (Increase in Authorized Common Stock to 25 Million Shares) filed with the Nevada Secretary of State on April 16, 2020, and effective April 16, 2020

 

 

 

3.17

 

Certificate of Withdrawal of Certificate of Designation of Series A Convertible Preferred Stock filed with the Secretary of State of Nevada on May 15, 2020 (Filed as Exhibit 3.1 to the Company’s Report on Form 8-K, filed with the Commission on May 19, 2020, and incorporated herein by reference)(File No. 001-32508)

 

 

 

3.18

 

Certificate of Withdrawal of Certificate of Designation of Series B Redeemable Convertible Preferred Stock filed with the Secretary of State of Nevada on May 15, 2020 (Filed as Exhibit 3.2 to the Company’s Report on Form 8-K, filed with the Commission on May 19, 2020, and incorporated herein by reference)(File No. 001-32508)

 

 

 

3.19

 

Certificate of Withdrawal of Certificate of Designation of Series D Convertible Preferred Stock filed with the Secretary of State of Nevada on May 15, 2020 (Filed as Exhibit 3.3 to the Company’s Report on Form 8-K, filed with the Commission on May 19, 2020, and incorporated herein by reference)(File No. 001-32508)

 

 

 

3.20

 

Certificate of Withdrawal of Certificate of Designation of Series E Redeemable Convertible Preferred Stock filed with the Secretary of State of Nevada on May 15, 2020 (Filed as Exhibit 3.4 to the Company’s Report on Form 8-K, filed with the Commission on May 19, 2020, and incorporated herein by reference)(File No. 001-32508)

 

 

 

3.21

 

Certificate of Withdrawal of Certificate of Designation of Series F Redeemable Preferred Stock filed with the Secretary of State of Nevada on May 15, 2020 (Filed as Exhibit 3.5 to the Company’s Report on Form 8-K, filed with the Commission on May 19, 2020, and incorporated herein by reference)(File No. 001-32508)

 

 

 

3.22

Certificate of Amendment to Articles of Incorporation of Camber Energy, Inc. (Filed as Exhibit 3.1 to Camber’s Report on Form 8-K, filed with the Commission on April 27, 2023 and incorporated herein by reference) (File No. 001-32508)

3.23

Certificate of Designation of Series A Convertible Preferred Stock, dated August 1, 2023 (Filed as Exhibit 3.1 to Camber’s Report on Form 8-K, filed with the Commission on August 1, 2023 and incorporated herein by reference) (File No. 001-32508)

3.24

Certificate of Designation of Series H Convertible Preferred Stock, dated August 1, 2023 (Filed as Exhibit 3.2 to Camber’s Report on Form 8-K, filed with the Commission on August 1, 2023 and incorporated herein by reference) (File No. 001-32508)

3.25

Second Amendment to Fifth Amended and Restated Designation of Series C Preferred Stock, dated February 21, 2024 (Filed as Exhibit 3.1 to Camber’s Report on Form 8-K, filed with the Commission on February 21, 2024 and incorporated herein by reference) (File No. 001-32508)

3.26

 

Amended and Restated Bylaws (effective March 29, 2016) (Filed as Exhibit 3.1 to the Company’s Report on Form 8-K, filed with the Commission on April 1, 2016, and incorporated herein by reference)(File No. 001-32508)

 

 

 

4.1*

 

Description of Securities of the Registrant

 

 

 

10.1

 

Form of Redeemable Convertible Subordinated Debenture (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 7, 2016)(File No. 001-32508)

 

 

 

10.2

 

Form of Common Stock Purchase First Warrant (Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the SEC on April 7, 2016)(File No. 001-32508)

74

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10.3

 

Form of Preferred Stock Purchase Agreement (Filed as Exhibit 10.2 to the Company’s Report on Form 8-K, filed with the Commission on April 7, 2016, and incorporated herein by reference)(File No. 001-32508)

 

 

 

10.4

 

Form of First Amendment to Stock Purchase Agreement (Filed as Exhibit 10.1 to the Company’s Report on Form 8-K, filed with the Commission on May 2, 2016, and incorporated herein by reference)(File No. 001-32508)

 

 

 

10.5 ***

 

Loan Agreement dated August 25, 2016, between Lucas Energy, Inc., as borrower, Richard N. Azar, II, Donnie B. Seay, Richard E. Menchaca, RAD2 Minerals, Ltd., DBS Investments, Ltd., and Saxum Energy, LLC, as guarantors, and International Bank of Commerce, as lender (Filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the Commission on August 31, 2016, and incorporated herein by reference)(File No. 001- 32508)

10.6

Real Estate Lien Note dated August 25, 2016, by Lucas Energy, Inc., as borrower in favor of International Bank of Commerce, as lender (Filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed with the Commission on August 31, 2016, and incorporated herein by reference) (File No. 001-32508)

10.7

Security Agreements dated August 25, 2016 by Lucas Energy, Inc. in favor of International Bank of Commerce (Filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed with the Commission on August 31, 2016, and incorporated herein by reference)(File No. 001-32508)

10.8

Form of Limited Guaranty Agreement in favor of International Bank of Commerce dated August 25, 2016 (Filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K, filed with the Commission on August 31, 2016, and incorporated herein by reference)(File No. 001-32508)

80

Table of Contents

10.9

Second Amendment to Stock Purchase Agreement dated September 29, 2016 (Filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Commission on October 3, 2016, and incorporated herein by reference)(File No. 001-32508)

 

 

 

10.1010.6

 

Form of Third Amendment to Stock Purchase Agreement dated November 17, 2016 (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on November 21, 2016, and incorporated herein by reference)(File No. 001-32508)

 

 

 

10.11 ***

Service Agreement, dated as of April 27, 2017 and effective May 1, 2017, by and between Camber Energy, Inc. and Enerjex Resources (Filed as Exhibit 10.1 to the Company’s Report on Form 8-K, filed with the Commission on May 1, 2017 and incorporated herein by reference)(File No. 001- 32508)

10.12 ***

Severance Agreement and Release between Anthony C. Schnur and the Company dated June 2, 2017 (Filed as Exhibit 10.2 to the Company’s Report on Form 8-K, filed with the Commission on June 6, 2017 and incorporated herein by reference)(File No. 001-32508)

10.13 ***

Termination Agreement dated May 23, 2017, between Camber Energy, Inc. and Richard N. Azar, II (Filed as Exhibit 10.52 to the Company’s Annual Report on Form 8-K for the year ended March 31, 2017, filed with the Commission on July 14, 2017 and incorporated herein by reference)(File No. 001-32508)

10.1410.7

 

Form of Stock Purchase Agreement relating to the purchase of $16 million in shares of Series C Redeemable Convertible Preferred Stock dated October 5, 2017 (Filed as Exhibit 10.1 to the Company’s Report on Form 8-K, filed with the Commission on October 5, 2017 and incorporated herein by reference)(File No. 001-32508)

 

 

 

10.15

 Extension Agreement between Camber Energy, Inc. and International Bank of Commerce relating to the August 30, 2017 payment (Filed as Exhibit 10.2 to the Company’s Report on Form 8-K, filed with the Commission on January 30, 2018 and incorporated herein by reference) (File No. 001- 32508)

10.16

 Extension and/or Modification and Release Agreement Commercial Indebtedness effective September 30, 2017, by Camber Energy, Inc., as borrower, Richard N. Azar, II, Donnie B. Seay, Richard E. Menchaca, RAD2 Minerals, Ltd., DBS Investments, Ltd., and Saxum Energy, LLC, as pledgors, and International Bank of Commerce, as lender (Filed as Exhibit 10.2 to the Company’s Report on Form 8-K, filed with the Commission on January 30, 2018 and incorporated herein by reference) (File No. 001-32508)

10.17

 Extension and/or Modification and Release Agreement Commercial Indebtedness effective October 30, 2017, by Camber Energy, Inc., as borrower, Richard N. Azar, II, Donnie B. Seay, Richard E. Menchaca, RAD2 Minerals, Ltd., DBS Investments, Ltd., and Saxum Energy, LLC, as pledgors, and International Bank of Commerce, as lender (Filed as Exhibit 10.3 to the Company’s Report on Form 8-K, filed with the Commission on January 30, 2018 and incorporated herein by reference) (File No. 001-32508)

10.18

Extension and/or Modification and Release Agreement Commercial Indebtedness effective November 30, 2017, by Camber Energy, Inc., as borrower, Richard N. Azar, II, Donnie B. Seay, Richard E. Menchaca, RAD2 Minerals, Ltd., DBS Investments, Ltd., and Saxum Energy, LLC, as pledgors, and International Bank of Commerce, as lender (Filed as Exhibit 10.4 to the Company’s Report on Form 8-K, filed with the Commission on January 30, 2018 and incorporated herein by reference) (File No. 001-32508)

10.19

Extension and/or Modification and Release Agreement Commercial Indebtedness effective December 30, 2017, by Camber Energy, Inc., as borrower, Richard N. Azar, II, Donnie B. Seay, Richard E. Menchaca, RAD2 Minerals, Ltd., DBS Investments, Ltd., and Saxum Energy, LLC, as pledgors, and International Bank of Commerce, as lender (Filed as Exhibit 10.47 to the Company’s Quarterly Report on Form 10-Q, for the quarter ended December 31, 2017, filed with the Commission on February 14, 2018 and incorporated herein by reference) (File No. 001-32508)

10.2010.8

 

Form of Amendment to Stock Purchase Agreement dated March 2, 2018 (Filed as Exhibit 10.2 to the Company’s Report on Form 8-K, filed with the Commission on March 5, 2018 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.21 ***

Separation and Release Agreement between Camber Energy, Inc. and Richard N. Azar II dated May 25, 2018 (Filed as Exhibit 10.1 to the Company’s Report on Form 8-K, filed with the Commission on May 25, 2018 and incorporated herein by reference) (File No. 001-32508)

81

Table of Contents

10.2210.9 ***

 

Common Stock Purchase Warrant granted to Richard N. Azar II dated May 25, 2018 (Filed as Exhibit 10.2 to the Company’s Report on Form 8-K, filed with the Commission on May 25, 2018 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.23 ***

Engagement Letter with Fides Energy LLC/Louis G. Schott dated May 25, 2018 (Filed as Exhibit 10.3 to the Company’s Report on Form 8-K, filed with the Commission on May 25, 2018 and incorporated herein by reference) (File No. 001-32508)

10.24

Agreement in Connection with the Loan by and Between Camber Energy, Inc. and International Bank of Commerce (Filed as Exhibit 10.1 to the Company’s Report on Form 8-K, filed with the Commission on August 7, 2018 and incorporated herein by reference) (File No. 001-32508)

10.25

Assumption Agreement dated September 26, 2018, by and between International Bank of Commerce, Camber Energy, Inc., CE Operating, LLC, N&B Energy, LLC, Richard N. Azar, II, RAD2 Minerals, Ltd., Donnie B. Seay, and DBS Investments, Ltd. (Filed as Exhibit 10.1 to the Company’s Report on Form 8-K, filed with the Commission on September 27, 2018 and incorporated herein by reference) (File No. 001-32508)

10.26

Assignment of Production Payment, effective August 1, 2018, by and among N&B Energy, LLC and CE Operating, LLC (Filed as Exhibit 10.2 to the Company’s Report on Form 8-K, filed with the Commission on September 27, 2018 and incorporated herein by reference) (File No. 001-32508)

10.2710.10

 

Assignment of Overriding Royalty Interest, effective August 1, 2018, by CE Operating, LLC in favor of Camber Royalties, LLC (Orion Properties) (Filed as Exhibit 10.3 to the Company’s Report on Form 8-K, filed with the Commission on September 27, 2018 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.2810.11

 

Assignment of Overriding Royalty Interest, effective August 1, 2018, by N&B Energy, LLC in favor of Camber Royalties, LLC (TAW Leases) (Filed as Exhibit 10.4 to the Company’s Report on Form 8-K, filed with the Commission on September 27, 2018 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.2910.12

 

Form of Stock Purchase Agreement relating to the purchase of $3.5 million in shares of Series C Redeemable Convertible Preferred Stock dated October 26, 2018 (Filed as Exhibit 10.1 to the Company’s Report on Form 8-K, filed with the Commission on November 1, 2018 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.3010.13

 

Consulting Agreement dated November 15, 2018, by and between Camber Energy, Inc. and Regal Consulting (Filed as Exhibit 10.1 to the Company’s Report on Form 8-K, filed with the Commission on November 20, 2018 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.3110.14

 

Form of Stock Purchase Agreement relating to the purchase of $28 million in shares of Series C Redeemable Convertible Preferred Stock dated November 23, 2018 (Filed as Exhibit 10.1 to the Company’s Report on Form 8-K, filed with the Commission on November 23, 2018 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.3210.15

 

Form of First Amendment to Stock Purchase Agreement relating to the purchase of $28 million in shares of Series C Redeemable Convertible Preferred Stock dated December 3, 2018 (Filed as Exhibit 10.2 to the Company’s Report on Form 8-K, filed with the Commission on December 7, 2018 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.3310.16

 

Digital Marketing Agreement dated February 13, 2019 by and between Camber Energy, Inc. and SylvaCap Media (Filed as Exhibit 10.14 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2018, filed with the Commission on February 14, 2019, and incorporated herein by reference)(File No. 001-32508)

 

 

 

10.3410.17

 

First Amendment to Consulting Agreement dated February 13, 2019 by and between Camber Energy, Inc. and Regal Consulting (Filed as Exhibit 10.15 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2018, filed with the Commission on February 14, 2019, and incorporated herein by reference)(File No. 001-32508)

 

 

 

10.3510.18 ***

 

Camber Energy, Inc. Amended and Restated 2014 Stock Incentive Plan (Filed as Exhibit 4.1 to the Company’s Report on Form 8-K, filed with the Commission on February 22, 2019, and incorporated herein by reference)(File No. 001-32508)

 

 

 

10.36

Agreed Conversion Agreement dated May 15, 2019, by and between Camber Energy, Inc. and Alan Dreeben

10.37 ***

December 1, 2017 Letter Agreement between Camber Energy, Inc. and BlackBriar Advisors LLC (Filed as Exhibit 10.41 to the Company’s Annual Report on Form 10-K, filed with the Commission on July 1, 2019, and incorporated herein by reference)(File No. 001-32508)

82

Table of Contents

10.3810.19

 

Security Exchange Agreement dated July 8, 2019, by and between Camber Energy, Inc., and the investor party thereto (Filed as Exhibit 10.1 to the Company’s Report on Form 8-K, filed with the Commission on July 9, 2019 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.3910.20

 

Termination Agreement dated July 8, 2019, by and between Camber Energy, Inc., and the investor party thereto (Filed as Exhibit 10.2 to the Company’s Report on Form 8-K, filed with the Commission on July 9, 2019 and incorporated herein by reference) (File No. 001-32508)

75

Table of Contents

10.4010.21

 

Funding and Loan Agreement dated July 8, 2019, by and among Camber Energy, Inc., Lineal Star Holdings, LLC, and the preferred shareholders party thereto (Filed as Exhibit 10.3 to the Company’s Report on Form 8-K, filed with the Commission on July 9, 2019 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.4110.22

 

$1,050,000 Promissory Note by Lineal Star Holdings, LLC as borrower in favor of Camber Energy, Inc. as lender, dated July 8, 2019 (Filed as Exhibit 10.4 to the Company’s Report on Form 8-K, filed with the Commission on July 9, 2019 and incorporated herein by reference) (File No. 001- 32508)

 

 

 

10.4210.23

 

Form of Indemnification Agreement of Officers and Directors (Filed as Exhibit 10.5 to the Company’s Report on Form 8-K, filed with the Commission on July 9, 2019 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.4310.24

 

Second Amendment to Consulting Agreement with Regal Consulting effective July 1, 2019 (Filed as Exhibit 10.6 to the Company’s Report on Form 8-K, filed with the Commission on July 9, 2019 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.4410.25

 

July 8, 2019 Letter Agreement with Sylva International LLC dba SylvaCap Media (Filed as Exhibit 10.7 to the Company’s Report on Form 8-K, filed with the Commission on July 9, 2019 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.4510.26

 

$1,539,719 Promissory Note effective December 31, 2019, evidencing amounts owed by Lineal Star Holdings, LLC to Camber Energy, Inc. (Filed as Exhibit 10.1 to the Company’s Report on Form 8-K, filed with the Commission on January 3, 2020 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.4610.27

 

$800,000 Promissory Note No. 2 effective December 31, 2019, evidencing amounts owed by Lineal Star Holdings, LLC to Camber Energy, Inc. (Filed as Exhibit 10.2 to the Company’s Report on Form 8-K, filed with the Commission on January 3, 2020 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.4710.28 +

 

Form of Stock Purchase Agreement relating to the purchase of $5 million in shares of Series C Redeemable Convertible Preferred Stock dated February 3, 2020 (Filed as Exhibit 10.1 to the Company’s Report on Form 8-K, filed with the Commission on February 5, 2020 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.4810.29

 

Form of Waivers and Amendments to Stock Purchase Agreements dated February 3, 2020, by and between Camber Energy, Inc. and the Investor Named Therein (Filed as Exhibit 10.2 to the Company’s Report on Form 8-K, filed with the Commission on February 5, 2020 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.4910.30 +

 

Securities Purchase Agreement dated as of February 3, 2020 by and Between Camber Energy, Inc. (Purchaser) and Viking Energy Group, Inc. (Filed as Exhibit 10.3 to the Company’s Report on Form 8-K, filed with the Commission on February 5, 2020 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.5010.31

 

$5,000,000 10.5% Secured Promissory Note Issued by Viking Energy Group, Inc. to Camber Energy, Inc. Dated February 3, 3020 (Filed as Exhibit 10.4 to the Company’s Report on Form 8-K, filed with the Commission on February 5, 2020 and incorporated herein by reference) (File No. 001- 32508)

 

 

 

10.5110.32

 

Security and Pledge Agreement, dated as of February 3, 2020 by and among Viking Energy Group, Inc. and Camber Energy, Inc. (Filed as Exhibit 10.5 to the Company’s Report on Form 8-K, filed with the Commission on February 5, 2020 and incorporated herein by reference) (File No. 001- 32508)

 

 

 

10.5210.33

 

Security and Pledge Agreement, dated as of February 3, 2020 by and among Viking Energy Group, Inc. and Camber Energy, Inc. (Filed as Exhibit 10.6 to the Company’s Report on Form 8-K, filed with the Commission on February 5, 2020 and incorporated herein by reference) (File No. 001- 32508)

 

 

 

10.53

Assignment of Membership Interests by Viking Energy Group, Inc. in favor of Camber Energy, Inc. dated February 3, 2020 (Filed as Exhibit 10.7 to the Company’s Report on Form 8-K, filed with the Commission on February 5, 2020 and incorporated herein by reference) (File No. 001-32508)

83

Table of Contents

10.5410.34

 

Compromise Settlement Agreement executed January 31, 2020 between PetroGlobe Energy Holdings, LLC, Signal Drilling, LLC, Petrolia Oil, LLC, Prairie Gas Company of Oklahoma, LLC, Canadian River Trading Company, LLC, and Camber Energy, Inc. (Filed as Exhibit 10.8 to the Company’s Report on Form 8-K, filed with the Commission on February 5, 2020 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.5510.35

 

February 15, 2020 Letter Agreement with Sylva International LLC dba SylvaCap Media (Filed as Exhibit 10.1 to the Company’s Report on Form 8- K, filed with the Commission on May 13, 2020 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.5610.36

 

Form of Stock Purchase Agreement relating to the purchase of $6 million in shares of Series C Redeemable Convertible Preferred Stock dated June 22, 2020 (Filed as Exhibit 10.1 to the Company’s Report on Form 8-K, filed with the Commission on June 23, 2020 and incorporated herein by reference) (File No. 001-32508)

76

Table of Contents

10.5710.37

 

Form of Amendment to Stock Purchase Agreements dated June 22, 2020, by and between Camber Energy, Inc. and the Investor Named Therein (Filed as Exhibit 10.2 to the Company’s Report on Form 8-K, filed with the Commission on June 23, 2020 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.5810.38 +

 

Securities Purchase Agreement dated as of June 25, 2020 by and Between Camber Energy, Inc. (Purchaser) and Viking Energy Group, Inc. (Filed as Exhibit 10.1 to the Company’s Report on Form 8-K, filed with the Commission on June 26, 2020 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.5910.39

 

$5,000,000 10.5% Secured Promissory Note Issued by Viking Energy Group, Inc. to Camber Energy, Inc. Dated June 25, 2020 (Filed as Exhibit 10.2 to the Company’s Report on Form 8-K, filed with the Commission on June 26, 2020 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.6010.40

 

Security and Pledge Agreement, dated as of June 25, 2020 by and among Viking Energy Group, Inc. and Camber Energy, Inc. (Filed as Exhibit 10.3 to the Company’s Report on Form 8-K, filed with the Commission on June 26, 2020 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.6110.41

 

Amended and Restated Security and Pledge Agreement, dated as of June 25, 2020 by and among Viking Energy Group, Inc. and Camber Energy, Inc. (Filed as Exhibit 10.4 to the Company’s Report on Form 8-K, filed with the Commission on June 26, 2020 and incorporated herein by reference) (File No. 001-32508)

 

 

 

10.6210.42

 

Assignment of Membership Interests by Viking Energy Group, Inc. in favor of Camber Energy, Inc. dated June 25, 2020 (Filed as Exhibit 10.5 to the Company’s Report on Form 8-K, filed with the Commission on June 26, 2020 and incorporated herein by reference) (File No. 001-32508)

 

 

 

16.110.43

 

LetterSecurities Purchase Agreement (with Cancellation Agreement), by and between Camber Energy, Inc. and Viking Energy Group, Inc., dated December 22, 2020 (incorporated by reference to Viking’s Current Report on Form 8-K filed on December 28, 2020)

10.44

Form of Guaranty, issued by Viking Energy Group, Inc., dated December 22, 2020 (incorporated by reference to Viking’s Current Report on Form 8-K filed on December 28, 2020)

10.45

Securities Purchase Agreement, by and between Camber Energy, Inc. and Viking Energy Group, Inc., dated December 31, 2020 (incorporated by reference to Viking’s Current Report on Form 8-K filed on January 13, 2021)

10.46

Form of Guaranty, issued by Viking Energy Group, Inc., dated April 23, 2021 (incorporated by reference to Viking’s Current Report on Form 8-K filed on April 27, 2021)

10.47

Securities Purchase Agreement, by and between Camber Energy, Inc. and Viking Energy Group, Inc., dated July 29, 2021 (incorporated by reference to Viking’s Current Report on Form 8-K filed on July 30, 2021)

10.48

Share Purchase Agreement, by and between Viking Energy Group, Inc., Simmax Corp., Remora EQ LP and Simson-Maxwell Ltd., dated August 6, 2021 (incorporated by reference to Viking’s Current Report on Form 8-K filed on August 9, 2021)

10.49

Subscription Agreement between Viking Energy Group, Inc. and Simson-Maxwell Ltd., dated August 6, 2021 (incorporated by reference to Viking’s Current Report on Form 8-K filed on August 9, 2021)

10.50

Unanimous Shareholders Agreement, by and between Viking Energy Group, Inc., Simmax Corp., Remora EQ LP and Simson-Maxwell Ltd., dated August 6, 2021 (incorporated by reference to Viking’s Current Report on Form 8-K filed on August 9, 2021)

10.51

First Amendment to Unanimous Shareholders Agreement, by and between Viking Energy Group, Inc., Simmax Corp., Remora EQ LP and Simson-Maxwell Ltd., dated October 18, 2021 (incorporated by reference to Viking’s Quarterly Report on Form 10-Q filed on November 15, 2021)

10.52

Exclusive Intellectual Property License Agreement between ESG Clean Energy, LLC and Viking Energy Group, Inc., dated August 18, 2021 (incorporated by reference to Viking’s Current Report on Form 8-K filed on August 23, 2021)

10.53

Securities Purchase Agreement, by and between Viking Energy Group, Inc., and Choppy Group LLC, dated as of January 18, 2022 (incorporated by reference to Viking’s Current Report on Form 8-K filed on January 24, 2022)

10.54

Operating Agreement of Viking Ozone Technology, LLC, by and between Viking Energy Group, Inc., and Choppy Group LLC, dated as of January 18, 2022 (incorporated by reference to Viking’s Current Report on Form 8-K filed on January 24, 2022)

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10.55

Manufacturing License Agreement, by and between Viking Ozone Technology, LLC and Simson-Maxwell, dated February 2, 2018 from GBH CPAs, PC2022 (incorporated by reference to Viking’s Current Report on Form 8-K filed on February 3, 2022)

10.56

Securities Purchase Agreement, by and between Viking Energy Group, Inc., and Virga Systems LLC, dated as of February 9, 2022 (incorporated by reference to Viking’s Current Report on Form 8-K filed on February 15, 2022)

10.57

Operating Agreement of Viking Sentinel Technology, LLC, by and between Viking Energy Group, Inc., and Virga Systems LLC, dated as of February 9, 2022 (incorporated by reference to Viking’s Current Report on Form 8-K filed on February 15, 2022)

10.58

Securities Purchase Agreement, by and between Viking Energy Group, Inc., and Jedda Holdings LLC, dated as of February 9, 2022 (incorporated by reference to Viking’s Current Report on Form 8-K filed on February 15, 2022)

10.59

Operating Agreement of Viking Protection Systems, LLC, by and between Viking Energy Group, Inc., and Jedda Holdings LLC, dated as of February 9, 2022 (incorporated by reference to Viking’s Current Report on Form 8-K filed on February 15, 2022)

10.60

Promissory Note by Mid-Con Drilling, LLC and Viking Energy Group, Inc., in favor of Cornerstone Bank, dated March 10, 2023 (incorporated by reference to Viking’s Quarterly Report on Form 10-Q filed on May 12, 2023)

10.61

Promissory Note by Mid-Con Petroleum, LLC and Viking Energy Group, Inc., in favor of Cornerstone Bank, dated March 10, 2023 (incorporated by reference to Viking’s Quarterly Report on Form 10-Q filed on May 12, 2023)

10.62

Warrant Termination Agreement, by and between Camber Energy, Inc. and the Securities and Exchange CommissionInvestor named therein, dated as of April 25, 2023 (Filed as Exhibit 16.110.1 to the Company’sCamber’s Report on Form 8-K, filed with the Commission on August 2, 2018April 26, 2023 and incorporated herein by reference) (File No. 001-32508)

 

 

 

21.1*10.63

 

Warrant Termination Agreement, by and between Camber Energy, Inc. and the Investor named therein, dated as of April 25, 2023 (Filed as Exhibit 10.2 to Camber’s Report on Form 8-K, filed with the Commission on April 26, 2023 and incorporated herein by reference) (File No. 001-32508)

10.64

Securities Purchase Agreement, by and between Viking Energy Group, Inc., and FK Venture LLC, dated May 5, 2023 (incorporated by reference to Viking’s Current Report on Form 8-K filed on May 10, 2023)

10.65

Convertible Promissory Note, dated May 5, 2023, by Viking Energy Group, Inc., in favor of FK Venture LLC (incorporated by reference to Viking’s Current Report on Form 8-K filed on May 10, 2023)

10.66

Agreement by and between Camber Energy, Inc. and the Investor named therein, dated February 15, 2024 (Filed as Exhibit 10.1 to Camber’s Report on Form 8-K, filed with the Commission on February 21, 2024 and incorporated herein by reference) (File No. 001-32508)

10.67

Securities Purchase Agreement, dated as of February 3, 2020, Issued by Viking Energy Group, Inc. and Camber Energy, Inc. (incorporated by reference to Viking’s Current Report on Form 8-K filed on February 5, 2020)

10.68

$5,000,000 10.5% Secured Promissory Note, dated as of February 3, 2020, Issued by Viking Energy Group, Inc. to Camber Energy, Inc. (incorporated by reference to Viking’s Current Report on Form 8-K filed on February 5, 2020)

10.69

Security and Pledge Agreement, dated as of February 3, 2020, by and between Viking Energy Group, Inc. and Camber Energy, Inc. (incorporated by reference to Viking’s Current Report on Form 8-K filed on February 5, 2020)

10.70

Security and Pledge Agreement, dated as of February 3, 2020, by and between Viking Energy Group, Inc. and Camber Energy, Inc. (incorporated by reference to Viking’s Current Report on Form 8-K filed on February 5, 2020)

10.71

Assignment of Membership Interests by Viking Energy Group, Inc. in favor of Camber Energy, Inc. dated February 3, 2020 (incorporated by reference to Viking’s Current Report on Form 8-K filed on February 5, 2020)

10.72

Mutual Termination Agreement, by and between Viking Energy Group, Inc. and Camber Energy, Inc., dated December 22, 2020 (incorporated by reference to Current Report on Form 8-K filed on December 28, 2020)

10.73

Assignment of Membership Interests, by Camber Energy, Inc. in favor of Viking Energy Group, Inc., dated December 22, 2020 (incorporated by reference to Current Report on Form 8-K filed on December 28, 2020)

10.74

Cancellation Agreement, by and between Viking Energy Group, Inc. and EMC Capital Partners, LLC, dated December 31, 2020 (incorporated by reference to Viking’s Current Report on Form 8-K filed on January 13, 2021)

10.75

Assignment of Membership Interests, by and between Viking Energy Group, Inc. and TO Ichor 2021, L.L.C., dated October 5, 2021 (incorporated by reference to Viking’s Current Report on Form 8-K filed on October 12, 2021)

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Table of Contents

10.76

Assignment of Membership Interests, by and between Viking Energy Group, Inc. and Elysium 2021, L.L.C., dated October 12, 2021 (incorporated by reference to Viking’s Current Report on Form 8-K filed on October 18, 2021)

10.77

Purchase and Sale Agreement, by and between Viking Energy Group, Inc., and the seller named therein, dated June 7, 2022 (incorporated by reference to Viking’s Current Report on Form 8-K filed on June 8, 2022)

10.78

Letter Agreement, between Viking Energy Group, Inc. and John McVicar, dated June 8, 2022 (incorporated by reference to Viking’s Current Report on Form 8-K filed on June 14, 2022)

10.79

Purchase and Sale Agreement by and between Petrodome Napoleonville, LLC and Napoleonville, L.L.C. (incorporated by reference to Viking’s Current Report on Form 8-K filed on July 14, 2022)

10.80

Purchase and Sale Agreement by and between Petrodome Napoleonville, LLC and WPP Petro, L.L.C. (incorporated by reference to Viking’s Current Report on Form 8-K filed on July 14, 2022)

10.81

Purchase and Sale Agreement by and between Petrodome Bloomington, LLC and Bloomington, L.L.C. (incorporated by reference to Viking’s Current Report on Form 8-K filed on July 14, 2022)

10.82

Purchase and Sale Agreement by and between Petrodome Bloomington, LLC and WPP Petro, L.L.C. (incorporated by reference to Viking’s Current Report on Form 8-K filed on July 14, 2022)

10.83

Purchase and Sale Agreement by and between Petrodome Pineville, LLC and Bay Springs North, L.L.C. (incorporated by reference to Viking’s Current Report on Form 8-K filed on July 14, 2022)

10.84

Purchase and Sale Agreement by and between Petrodome Pineville, LLC and WPP Petro, L.L.C. (incorporated by reference to Viking’s Current Report on Form 8-K filed on July 14, 2022)

10.85

Purchase and Sale Agreement by and between Petrodome Louisiana Pipeline, LLC and East Mud Lake, L.L.C. (incorporated by reference to Viking’s Current Report on Form 8-K filed on July 14, 2022)

10.86

Purchase and Sale Agreement by and between Petrodome Louisiana Pipeline, LLC and WPP Petro, L.L.C. (incorporated by reference to Viking’s Current Report on Form 8-K filed on July 14, 2022)

10.87

Convertible Promissory Note, dated June 5, 2023, by Viking Energy Group, Inc. in favor of FK Venture LLC (incorporated by reference to Viking’s Current Report on Form 8-K filed on June 6, 2023)

10.88

Membership Interest Purchase Agreement between Camber Energy, Inc. and RESC Renewable Holdings, LLC dated January 20, 2023 (Filed as Exhibit 10.1 to Camber’s Report on Form 8-K, filed with the Commission on January 20, 2023 and incorporated herein by reference) (File No. 000-29219).

21.1*

Subsidiaries

23.1*

Consent of Independent Registered Public Accounting Firm

23.2*

Consent of Netherland, Sewell & Associates, Inc.

 

 

 

31.1*

 

Section 302 Certification of Periodic Report of Principal Executive Officer

 

 

 

31.2*

 

Section 302 Certification of Periodic Report of Principal Financial Officer

 

 

 

32.1**

 

Section 906 Certification of Periodic Report of Principal Executive Officer

 

 

 

32.2**

 

Section 906 Certification of Periodic Report of Principal Financial Officer

 

 

 

99.1*97.1*

 

Compensation Recovery Policy

99.1*

Report of GravesNetherland, Sewell & Co. Consulting LLCAssociates, Inc.

 

 

 

99.2

 

Charter of the Audit and Ethics Committee (Filed as Exhibit 14.3 to our Annual Report on Form 10-K/A for the year ended March 31, 2009, filed with the Commission on July 29, 2009 and incorporated herein by reference)

 

 

 

99.3

 

Charter of the Compensation Committee (Filed as Exhibit 14.5 to our Annual Report on Form 10-K/A for the year ended March 31, 2009, filed with the Commission on July 29, 2009 and incorporated herein by reference)

 

 

 

99.4

 

Charter of The Nominating and Corporate Governance Committee (Filed as Exhibit 99.2 to the Company’s Annual Report on Form 10-K for the period ended March 31, 2013, filed with the Commission on June 28, 2013, and incorporated herein by reference)

 

 

 

99.5

 

Letter to Shareholders in Accordance with NRS 78.0296 (Furnished as Exhibit 99.1 to the Company’s Report on Form 8-K, filed with the Commission on July 9, 2019 and incorporated herein by reference) (File No. 001-32508)

 

 

 

*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).Document.

*101.SCH

 

Inline XBRL Taxonomy Extension Schema DocumentDocument.

*101.CAL

 

Inline XBRL Taxonomy Extension Schema DocumentCalculation Linkbase Document.

*101.LAB

 

Inline XBRL Taxonomy Extension DefinitionLabel Linkbase DocumentDocument.

*101.PRE

 

Inline XBRL Taxonomy Extension LabelPresentation Linkbase DocumentDocument.

*101.DEF

 

Inline XBRL Taxonomy Extension PresentationDefinition Linkbase Document

*104

Cover Page Interactive Data File (embedded within the Inline XBRL document)Document.

 

* Exhibits filed herewith.

** Exhibits furnished herewith.

*** Management contract or compensatory plan.

+ Certain schedules and exhibits have been omitted pursuant to Item 601(b)(2) and/or Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished supplementally to the Commission upon request; providedprovided.

  

 

84

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